Building The General Model Of Customer Relationship Development With Markov Chain

With the development of globalization of world economy and the promotion of science and technology, the Customer Relationship Management (CRM) has become the key to winning. Any Customer Relationship Management with functions and levels realizes the ideal and goal of CRM on the basis of the customer relationship development. There are many studies abroad on CRM, but there is also room for improvement.1. Many theoretical studies related to CRM ,but little on the state of Customer Relationship Management;2. More management models on the researches of CRM, but little on the customer relationship model of development;3. The qualitative research method is mostly used in the research for the management model of CRM and the mode of customer relationship development, little using quantitative method;4. Many researchers described the questions on customer relationship development with the Markov chain and had made many valuable viewpoints. However, they are confined to certain special cases of the customer relationship development, and the research models are various special ones;5. The transition probability matrix of the Markov chain is used in depicting the changes of customer relationship development merely, thus only related to the volume described by the average (maths expectation), and the random variables are not used to describe the Markov chain, therefore difficult to vividly describe the development of customer relationship.In the background of the CRM, aimed at research of the CRM and the purpose of managing customer relationship ,this paper has studied the regulars of customer relationship development in the CRM for the purpose of identifying the general model of customer relations development. Enterprises can take advantage of the general model for quantitative analysis of customer relations and effective management for customer relationship. In this paper, the Markov chain is used to build the general mathematical model of customer relations and it is studied by the two forms of expression with the transfer matrix and the random variables. It is structured as follows:The first, building the development mode of customer relationship with the transfer matrix of Markov chain. The model does not impose any restrictions to the state of development of customer relationship, So it is the most general model of customer relationship. Meanwhile the model of enterprises in return is also established which closely related to the state of relationship. Then, the general assumption for the transfer of state customers, the general model of customer relationship has been built in the most general model: non-absorbed state model (model A) and absorption state model (model B).The second, describing the model of customer relationship development with Markov chain in the form of random variables. The article has defined the random variables of customer life cycle and the random variables of customer lifetime value (CLV),and has given the calculation formula of CLV random variables and has focused on the determinants of the CLV random variables.The third, the management of the CLV in continuous-time circumstances. Analysis of the profits to customers has used the geometric integral and has Identified a few special point in time in the customer life cycle. The function of the Weibull distribution has been used to determine the retention of dynamic customer in the life function.The fourth, Discussing the customer classification to the principle of de facto special customer life cycle.