What is Customer Value Matrix

Increasing competition in the tourism industry forces industry professionals to try increasingly harder to develop stronger ties with their customers to increase customer loyalty. Many firms invest heavily in customer relations management (CRM) practices to monitor changes in customer needs so as to be able to offer personalized services, differentiate themselves from competitors, and create competitive advantage. RFM is a popular CRM technique used to effectively classify large amounts of customer data according to how recently, how frequently, and how much a customer spends. RFM has been extended in different directions over time, for the purpose of coming up with more detailed segmentations. One such extension adds “length” of the relationship with the customer to the criteria, making LRFM a more effective segmentation method than RFM, especially for the service sector. This chapter describes the use and benefits of using LRFM as a CRM tool in the tourism sector.