Research On Dynamic Customer Relationship Management Based On Hidden Markov Model

With the increasingly fierce of market competition, until the end of the1990s, many leading companies begin to focus on customer relationship instead ofproducts when making their marketing strategy. Study on Customer RelationshipManagement (CRM) is paid much attention by academic and commercialcommunity. Most study on CRM promlem in the existing literature calculatecustomer value or analyze customer behavior from a static perspective and canhardly meet the demand brought by the increasingly complex of marketenvironment. So, to study CRM problem from a dynamic perspective is a mainaspect of the field.Significant theory system and research method of Dynamic CustomerRelationship Management (DCRM) are not come into being up to now, so the studymethods of CRM are enriched by applying Hidden Markov Model (HMM) to thestudy of DCRM, at the meaning time, theory basis is provided when companiesimplementing CRM.The applicability of HMM for CRM issues is discussed, consumer behaviorand marketing strategy space of companies are analyzed, each component of HMMis settled by appropriate function, the dynamic model of CRM issues is establishedin this thesis then. In the application of the model, the parameters are estimated withmethod of the maximum likelihood, the significance and characteristics of theparameters are explained, the customer status and customer purchase options in thenext period are predicted with the model calculated, and the specific CRM advicesare presented.Long-term customer relationship status and short-term purchase options areidentified and predicted by the calculated model, and the established model withpurchase amount can be applied to more companies. For the setting method of theinitial state of the model, there is still room for improvement.