4 CRM models that strengthen customer loyalty

It's five times cheaper to keep an existing customer than to land a new one. But how can you strengthen customer loyalty and keep your best customers for the long term?

Customer Relationship Management (CRM) helps companies develop strategic processes to secure the loyalty of their best customers and improve the buying experience.

Below, we explain how.

What is CRM?

CRM is the abbreviation for Customer Relationship Management. It is the basic strategy that a company resorts to in order to develop a customer-oriented culture. The focus is on managing and optimizing existing and future customer relationships.

In short, companies that specialize in CRM help other companies analyze the data that results from their customer interactions. In this way, the value offered to the customer can be increased. This, in turn, fosters customer loyalty and, in the long run, increases profits.

In other words, CRM models are based on a deep understanding of the customer(s) (viewed both individually and collectively) in order to meet their needs, exceed expectations, and add value. Ultimately, companies that act accordingly have an advantage over their competitors.

Note: "CRM" also often refers to the software or technology solutions used to manage customer relationships and implement CRM strategies. To avoid confusion, we refer to this software as "CRM software".

The purpose of CRM models

The goal of any business is to make a profit from its products or services. With this in mind, the purpose of CRM is to optimize the relationships that the company maintains with its strategically important customers, thereby maximizing profits and ensuring long-term success.

Strategically important customers are those customers that are most valuable to a company. Generally, these strategically important customers account for only about 20% of the customer base, but generate 80% of the revenue. Because they generate a higher level of revenue, loyalty and value than the average customer, they are an important part of any company's strategy.

In terms of CRM, there is a particular focus on these strategically important customers. By taking advantage of the most valuable customer segments, companies can improve their long-term profitability and competitiveness.

The top 4 CRM models

Customer relationship management (CRM) encompasses different strategies and models. Below, we will briefly discuss four of the most common CRM models.

IDIC Model

The so-called "IDIC Model" was developed by the Peppers & Rogers Group as a general blueprint for implementing CRM in a variety of situations. The abbreviation "IDIC" stands for the four phases of implementing a CRM: "Identify, Differentiate, Interact & Customize".


The first step is to identify your customers. Companies can do this by capturing information such as the customer's name, address and purchase history at every touchpoint across the organization.

The goal is to gather as much information or data as possible about each customer to better understand their needs and wants and their buying patterns.


The next step in this CRM model is to differentiate or segment your customers based on their current and projected lifetime value. Remember, not all customers have the same value to the company.

By differentiating your customers based on their value to the company, you can prioritize your customer relationship efforts, that is, prioritize the most valuable customers. It also allows you to best tailor your interactions to each segment to ensure optimal profitability.


In the third phase, you apply your plans to interacting with your customers. Once your customers are analyzed and categorized, you can develop interactions tailored to each individual customer. For example, you can offer loyalty benefits or rewards to valuable customers to strengthen customer loyalty and encourage further spending on their part.

Keep in mind that you should learn from each interaction to continuously improve future interactions.


Once you have documented your customer interactions, you can analyze them to develop a more customized service. The goal here is to ensure that your customers' needs and expectations are met, and that you have defined each very precisely (or very narrowly).

QCI Model

Categorized as a customer management model rather than a CRM model, the QCI model ("Quality Competitive Index") comprises three main activities: Acquisition, Customer Retention, and Penetration.

In the QCI model, the customer's external environment is the starting point. Their problem areas, business goals and other factors influence whether they are ready to make purchases or even interact with your sales team. This impacts the customer experience. The customer experience then, in turn, influences the offer you make to the customer, as well as customer management activities. As can be seen from the enlarged version of the inner circle, many activities play a role in customer acquisition and retention.

The QCI model also considers the people and technologies that sustain the entire system. Even if QCI does not have the word "relationship" or "relationship" directly in its name, this model still stands or falls with the people.

Five Forces Model according to Payne

The Five Forces Model for CRM was developed by Adrian Payne and Pennie Frow. This CRM model focuses on a cross-functional approach to effective CRM processes.

There are two main components: cross-functional CRM processes and key elements of CRM implementation.

Payne's model envisions five processes:
  1. Strategy development
  2. Value creation
  3. Integration of multiple channels
  4. Information management
  5. Performance evaluation
Four key elements are required for successful CRM implementation:
  • Readiness for CRM
  • Change management with regard to CRM
  • Project management with regard to CRM
  • Employee management
When implementing a CRM strategy, companies should assess readiness for CRM to determine how prepared they are to implement a new CRM process.

In addition, because CRM involves fundamental cultural and operational change, companies should also invest in change management and project management for CRM as the new strategies are rolled out and the complexity of CRM initiatives increases.

Finally, employee buy-in is critical to CRM success. Make sure your workforce understands the strategies and processes and embraces the new customer-centric culture.

If these underlying conditions and elements are not met, CRM processes will remain unsuccessful.

CRM Value Chain

A value chain is an overarching model developed by Michael Porter that is used to identify a company's processes for providing an end product or service to the customer. The goal of the value chain model is to identify and prioritize the activities that are most valuable to the company and optimize processes to gain a competitive advantage.

In the CRM value chain model, this principle is applied to customer relationships. This model takes into account all the phases and activities required to build a relationship with a customer.

These activities are divided into two phases: the primary phase and support.

Primary phase

The primary phase of CRM includes five key processes that enable the strategy.
  • Customer portfolio analysis: similar to the IDIC model, the first step in the value chain model is to analyze your customers to identify the strategically valuable customers (i.e., the customers that create the most value for the company). This analysis phase helps companies understand their customers so they can better meet their needs and expectations, while also developing strategies to maximize their lifetime value.
  • Customer intimacy: The next step is to engage with the customer, drawing on the initial information database. Companies should collect interaction data at every touchpoint to better understand and serve the customer. The better you know your customer (and tailor your service accordingly), the more likely you are to retain that customer long-term.
  • Network development: A company's network includes all the people and entities involved in the value chain, such as partners, suppliers, customer service, investors, etc. The goal is to use your customer data to design the processes at each level of your network accordingly. This is the only way to harmonize the entire system, i.e., to focus on optimizing the customer experience.
  • Developing the value proposition: the customer information and interaction data you collect enables you to create value for your target customers. It's about shifting the focus from product to service and reducing process costs to create customer-facing value.
  • Relationship management: The final phase of the value chain model is to manage the lifecycle of your customers. This process involves evaluating your business processes and organizational structure to manage acquisition, retention, and customer development.
Support Phase

There are five supporting conditions required to successfully implement the strategic processes of the primary phase:
  • Leadership and culture
  • Procurement processes
  • Human resources management processes
  • IT/data management processes
  • Organizational design
The creation and development of these basic prerequisites paves the way for the successful implementation of a CRM value chain.

Use Lucidchart to model your CRM strategy

CRM is a big undertaking. Keeping track of all your processes and data can quickly become overwhelming. Fortunately, Lucidchart can help you do just that.

Lucidchart is a cloud-based charting solution that lets you easily create streamlined flowcharts and other diagrams.

Use Lucidchart to visualize your CRM model, document your processes, and even map the design of your sales organization. Lucidchart also integrates with Salesforce, so you can import your schema directly into your document to visualize your data and make connections more easily, using Salesforce's official shape library.