How does customer relationship management (CRM) help a firm gain competitive advantage?

Customer relationship management (CRM) helps a firm gain competitive advantage by:

• segmenting markets based on demographic and behavioral characteristics;
• tracking sales trends and advertising effectiveness by customer and market segment;
• identifying which customers should be the focus of targeted marketing initiatives with predicted high customer response rates;
• forecasting customer retention (and defection) rates and providing feedback as to why customers leave the company;
• identifying which transactions are likely candidates to be fraudulent;
• studying which goods and services are purchased together, and what might be good ways to bundle them (that is, the customer benefit package);
• studying and predicting what Web characteristics are most attractive to customers and how the website might be improved; and
• linking the information above to competitive priorities by market segment and process and value chain performance.