CRM is considered the second most important initiative after the security for the business, According to 2002 Goldman Sachs study. CRM is a main streams initiative, a technology driven competitive edge no longer. It is recognize as the way business should be conducted, rather than an option in a menu of multiple option to differentiate you from your competitor. The logic here is simply yet compelling. If every one is doing CRM or planning on it, how can it differentiate you, from your competitor? And every body is: 47% of business surveys by Forrester research are considering a CRM initiative: another 37 % were already implementing it in 2003.
(CRM at the speed of light ‘essential customer strategies for the 2001, page 8)
An effective CRM policy and implementation does not necessarily limit to acquiring of software and linking it to the sales database but it has to be a comprehensive process integrating people and technology together in a way that it reflects the importance of the customer for the organization. The feedback generated by CRM should be implemented to device, develop and implement the CRM on continuous bases. The competitive edge can only be achieved through effective implementation of the CRM process.
The recognition of human performance factors as a critical part of CRM programs; CRM writing in late 2002 on findings that human performance issue, not technology, were the corporate that led to the biggest failures. Pin pointing problems such as lack of user adoption and where the problem occurs became a refreshing clarifying agent.
Finally, it wasn't just a murky CRM that caused the problem, but it was, as IDC pointed out (2003) the lack of user input from the beginning of planning process that was a major contributing factor to failure over 47% of the time.
(CRM at the speed of light ‘essential customer strategies for the 2001, page 9)
CRM is a business process like any other business processes it has its identifiable components and characteristics. The technology part is nearly a tool and part of the whole process. People of the organization (all level of management) are the most important drivers of the process. Proper awareness and relevant training is very much essential to implement and effective CRM process. The vision and the goals of the organization should be integrated into the implementation process other wise the potential of the failure will always be there. CRM can not work in isolation instead every other process i.e. production, sales, and distribution etc. may benefit from the valuable feedback generated by an effective CRM.
CRM appeared on the heels of big ticket enterprise resource planning (ERP) initiatives as a big ticket item itself. But by the late 1990, ERP was notable for problems that benefits it size and its lack of identifiable ROI. ERP press was atrocious as large deal after large deal was either scrapped or never made it off the drawing boards, because ROI seemed to be unknown-able and implementation woes, both technical and functional, were extensive. Bad ERP press or not, CRM was still seen in the late 90's as, in effect, ‘customer – facing ERP ‘, a moniker that was to hunt it in 2001, 2002.
(CRM at the speed of light ‘essential customer strategies for the 2001, page 10)
CRM should be measured on its desired goals, based on direct out comes of its underline activities. CRM value comes from precisely targeting specific opportunity, measuring every thing and monitoring continuous improvement. Organization should have a strategic goal and the implementation approach should be step by step, at each step of the goal so returns can be clearly measured. One of the measures of CRM success should be customer loyalty, valuing customers in such a way that most valued customer should be given high priority instead of finding new customer with un-known value.
Strategic CRM is focus on the development of the customer centric business culture. This culture is dedicated to winning and keeping customers by creating and delivering value better than competitors. The culture is reflected in the leadership behaviour, the design of the formal system of the company and the myths and stories that are created within the firm. In a customer centric culture you would expect the resource to be allocated where they would best enhance customer value, reward system to promote employee behaviour that enhance customer satisfaction, and customer information is to be collected, shared and applied across the business.
(Customer relationship management, concept and tools author Francis buttle, page 4, 2008)
Level OF CRM
“The view of CRM at strategic level it perhaps defines best by the author in these lines. The scope and approach to bring the desired change in the organization culture and leadership behaviour would probably be the most important aspect of CRM at strategic level. Customer centricity competes with other business logics. Kottler identifies three other major business orientations: Product, production and selling”. These orientations are customer specific; however they involve three different business processes. But the ultimate goal is to achieve customer satisfaction through constant monitoring and adapting to customer requirements and competitive conditions.
(Customer relationship management, concept and tools author Francis buttle, page 4, 2008)
Operational CRM is focused on the automation of the customer facing part of the businesses. Various CRM software applications enables the marketing, selling and service function to be automated. The major application within operational CRM appears as:
1. Marketing Automation
* Market segmentation
* Campaign management
* Event base marketing
2. Sales force automation
* Opportunity management, including lead management
* Contact management
* Proposal generation
* Product configuration
3. Service automation
* Contact and call-centre operations
* Web-based service
* Field service
Forms of operational CRM
(CRM, concept and tools, author Francis buttle, page 5, 2008)
Analytical CRM is concerned with exploiting customer data to enhance both customer and company value. Analytical CRM builds on the foundation of the customer information. Customer data may be found in enterprise-wide repositories: Sales data (purchase history, financial data, payment history, credit score), marketing data (campaign response, loyalty scheme data), and service data. To these internal data can be added data from external resources, for example with the application of data mining tools, the company can interrogate these data. Intelligent interrogation provides answers to questions such as: who are our more value able customer? Which customer has the highest propensity to switch to competitors? Which customers are likely to respond to a particular offer? Analytical CRM has become an essential part of effective CRM implementation (CRM, concept and tools, author Francis buttle, page 10, 2004).
Analytical level is technology driven, providing the best relevant information for every level of management of an organization. This information can help to bring improvements in productions process, product design and development and above all customer relationship management. A customer centric organization will develop a cycle where every effort and action will lead to an integrated and coordinated function of every unit, of the organization.
Customer Satisfaction, Loyalty and business performance:
The rational for CRM is that it improves business performance by enhancing customer satisfaction and driving up customer loyalty. Satisfaction increases because customer inside allows companies to understand their customer better, and create improve customer value proposition. As customer satisfaction rises, so does customer repurchase intension. This in turn influences actual purchasing behaviour. This has a significant impact on business performance (CRM, concept and tools, author Francis buttle, page 20, 2004).
(Source: CRM, concept and tools, author Francis buttle, page 20, 2004)
Using people process and technology to differentiate
Organizations that have successfully develop support capabilities have applied a three step structure approach-based on people, process and technology- to achieve long term product and service differentiation.
The people piece of the approach account for 50% of the overall success. People are naturally resistance to change. Unless properly plan, change can actually be seen as destructive: people may be hesitance to want to compliment products and services with support capabilities to achieve long term differentiation. People make or break a company ability to develop and successfully implement support capabilities, to achieving long term product and service differentiation. Take time to work with people to drive success.
The process element:
The process part accounts for the 30% of the overall success of the complimenting the products and services with support capabilities to achieve long term differentiation. When implementing the process piece, the organization needs to map out and document key internal and external customer facing support process (e.g., Process for customer enquiries, customer request, problem resolution, customer feedback etc.).
* Ownership – a process may have more than one person or department participating in the process, but successful process will have only one owner.
* Metrics – does the process have a stated metric (e.g., “we will resolve 90% support queries 1h/day”). According to management Guru Peter Drucker, “if you can measure it, you cannot manage it.”
* Interface – what other persons or departments are involved in the process? In a successful process, these interfaces are well greased, and information flows seamlessly across persons or departments.
* Procedures – Does the process have clearly stated procedures, So that every one knows how to implement each step of the process?
* Integrity – Is the process practise the same way for all customers? All relevant personals have been trained to apply the process consistently.
* Vision: Does the process support the long term differentiations via support capabilities of the organization? With a successful process, this linkage is obvious.
Organization often gets carried away with process analysis and can get into analysis: paralysis too quickly. If you are stuck determining what constitute are key process, ask the customers.
Last of all is the technology is the piece of the approach. This piece accounts for at most 20% of the overall success of the expanding support capabilities. Its easy to get overwhelmed or even carried away by the technology piece of this structured approach. Remember, it starts with good internal support processes that are then extended to external customers. Next comes needed change management skills to ensure that people buy into the need for the change with the enhanced support capabilities. Then and only then are we able to turn to technology.
(CRM in real time: empowering customer relationship by Barton J. Goldenberg, page 187-190, 2008)
Enterprise Application and Integration:
As it is obvious from the term EAI technologies allows the movement and exchange of information within and between organizations. It also requires integrating different system at implementation stage. EAI introduces the concept of real time processing and incremental processing. EAI works in such a way that CRM system can get all or same data even though, it was written at a different time on a different location, using different development technologies. Hence customers do not have to give the same information every time when He/she interact with the company. EAI enabled CRM systems dramatically reduce time to benefit. However it is an expensive initiative.
(A practical guide to CRM: building more profitable customer relationship by Janice Reynolds, page 257, yr: 2002)
In today's intense business competition and more globalize nature of business activity customers acquiring more and more importance in terms of their value to the business, firms are seeking to retain their existing customers by targeted value creation activities. Further this value can be classifies into functional value, social value, and emotional value, CRM performance will also have to account for the tangible and intangible aspects of customer value. However there is no clear definition of customer value, in available research so far. Traditionally customer value has been understood in terms of quality and price. (Customer relationship management, “Emerald in-side staff”, 2005, Publisher: Emerald group, Page 171,172). More recently the emphasis is shifting more towards emotional attachment of the customer with the brand and the brand company through customer experience. (Anderson et al, 2006: barber & strack, 2005: Bendapudi & Bendapudi, 2005: Mc Grath & Macmillan, 2005: Mascarenhas et al, 2004: Narayandas, 2005: Selden & Macmillan, 2006).
Total customer experience (TCE) has gone beyond just customer satisfaction as a new concept. As a result companies need to focus on the emotional value and value aspects instead of physical aspects of the product. Tools developed by TCE are more effective and sustainable to ensure lasting customer loyalty (Customer loyality, retention and customer relationship management, Leventhal, Richard C. (Editor), Emerald group publishing, 2006, page 397).
Analysing the customer value chain reveals that customer value is created through the development and effective delivery of the right proposition to the right customer.
Customer value can be created, destroyed or ignored at any customer management stage, but maximum value is created by those organizations that compound value creation at every customer management stage. The maximum value can only be created when all the elements of the model managed together and not in parts. It will help the organization to develop appropriate propositions and then to align it with its people, process, and technology element (Customer management scorecard: Managing CRM for profit, Wood cock; Stone, Merlin; Foss, Bryan. 2003, page 43).
The Customer management value chain
Source: Customer management scorecard: Managing CRM for profit, Wood cock, Neil; Stone, Merlin; Foss, Bryan. 2003, page 42)
Assessment of business performance vs. Customer management (correlation analysis):
A very interesting and important assessment was made for 21 companies using the correlation analysis and result was calculated at point 0.8. A score of 1.0 would be a perfect correlation and according to approach used 0.4 score was accepted as significant. Therefore, 0.8 is a very convincing and exciting correlation. The interpretation was simply means companies with better customer management practises were among the good business performance and vice versa
Successful Customer relationship marketing: new thinking, new strategy, new tools, for getting closer to your customer, Stone, Merlin; Foss, Bryan.2001, page 14-15, Pic p-15)
Multi-channel customer management:
(Changing times, changing channels)
With the advent of internet and revolutionary advancement in technology (hardware, software) the world has become multi-channel place. The impact of multi channel on CRM in general and the way to conduct the business in particular has transformed completely. As far as CRM is concern the task is to implement and integrate multi channels in such a way that the utility of these channels can be optimized to improve business performance and customer management. It can be started with separate channel managers, through segmentation targeted by separate channels, products align by channel asking customer to deal with specific channels and by measuring effectiveness only on the basis of business transacted on each channel.
Different channels can be best used for different task. For example in a technically complex business environment as person to person (sales person) and customer might be an ideal option for explaining the product and responding to the queries and setting up initial contacts, where as web or call centre may be a better channel for recording or checking progress with the delivery or different channels might be used in differentiated manner. For example if a customer want to buy an air ticket for last minute cancellation. He can be referred to a particular website as other channels can not support such a transaction in cost effective way. A multi-channel approach or strategy can provide numerous customers touch point options. Where different products and services are may be accessed. Multi channels may include:
* Direct channels, for example, telephone, internet, mobile phone, sms , and interactive television:
* Counter and kiosk services in branch network or retail outlets.
* Partnerships and alliances:
* Sales force:
* Service force:
In other cases it may also include broadcast media e.g. television, radio, process and web applications.
Multi channel customer management is mainly due to extra ordinary technological development that resulted into higher customer expectations to use technology and process, consistently and effectively across channels. If properly implemented there is not dearth of benefits that a business can attain from a use of multi channel. For example it will give more convenience to the customer and improve their experience, ultimately creating positive impacts on brand perception and customer retention.
It may also improve efficiency through sharing and integrating resources better ability to analysis and exploit customer data to identify customer needs etc. It will also add to the customer choice to interact ability to switch between channels depending on there preference and the type of interaction they need.
Customer management scorecard: Managing CRM for profit, Wood cock, Neil; Stone, Merlin; Foss, Bryan. 2003, page 316-318)
Sector Study: systems for utility customer management:
Utility companies are distinguished from other large organizations by the factor of ‘constant presence'. Customer uses their services constantly, but receives bills on a monthly or quarterly basis until the contract ends. This produces a strange gap in between the services receive over a period and experience the cost at the beginning or end of a particular time span. It makes bit difficult for customers to relate the services to the cost or in other words the benchmark contact between the utilities company and a customer is the bill (invoice).
Customers are managed through the network including both the service and sales network but the problem arises when a customer calls regardless whichever contact point in network contact has been made. Utility will not have access to relevant data such as customer needs and customer and hence, would not be able to optimise this contact in terms of improved service or increased sale. These issues need specific data base structure.
Regulatory and political factors:
Regulatory and political factor have pushed customers care into a very exposed position. A minor slip is quickly seized by media. For example delegating business to contractors by utilities like installation and after sales services and customers are often offended when they discovered that their problem is being dealt by a contractor. Price control has force a management distinction between regulated and unregulated activities which is apposed to normal marketing tendency to seek to add value and is an obstacle to achieve higher profitability.
Utilities mind set:
It refers to a set of marketing methods focusing on tariff and means of payment, and service measured internally rather than customer determine.
A comprehensive central customer data management function is mandatory, structured to store all the key data about customers and prospects.
An agent management function similar to the previous one structured to store acrobat rules links determining which agents are responsible for which customers and what products or service agents are eligible to handle.
A consumption/sales monitoring and billing functions – This function ensure updating to customer file on consumption/purchasing history, payment received and out standing payments generating invoices itemise bill on request. Part of this function is to take input meter readings through hand held or remote read terminals.
A maintenance function is providing services for field management. The purpose of this function is to match customer requirement for services to the service resources available and scheduling of the consequent work flow. It also closely linked with inventory management system that release spare parts.
Product/Price/Service function allows the identification of all the products and services available, the prices at which they can be sold and qualification criteria if any.
An inventory management function supports to maintain physical inventory required to fulfil the customer need for products maintenance etc.
A supplier management function holds the information about key suppliers.
A sales and marketing function is use to target customer for marketing sales initiatives. It also helps to improve the quality of information on customer file, using data auditing techniques. It also helps in campaign planning function.
A customer dialogue function provides an interactive interface between customers and the organization.
(Successful Customer Relationship Marketing: new thinking, new strategy, new tools, for getting closer to your customer, Stone, Merlin; Foss, Bryan. 2001, page 485-543)
eCRM: has brought new dimension to the marketing concept. The research has shown that adoption of e-market place reduces the number of suppliers used but more importantly, expand the relationship between the customer and the businesses.
(White & Daniel, “Best over all” paper at business information technology (BIT) conference held at Manchester metropolitan university in November 2002).
Customer buying Behaviour:
eCRM can also help create customer profile and customized product. Traditionally customer profile were either demographic or behaviour based. Demographic profile may include marital status, number of children, customer address etc. A behaviour profile may describe the number of times; a customer visited a particular website etc. eCRM can add intelligence to the customer profile and can help deploy customized product.
A company can utilize eCRM to increase online purchases and reduce abandoned purchases. Moving the ordering process to an online system will give customer better description of the product and better understanding to the customer service representative enhancing the chance to make a sale. Customer can track his/her order delivery status etc.
eCRM system provide better customer information allows a company to predict, what kind of the products that a customer will likely to buy and the timing of the purchase. With eCRM a company can choose a number of marketing strategies, for example strategic alliance, customer focus strategy and product differentiation.
An E-contact centre can provide personal customer service experience, catering individual needs of each customers. Customers who interact with an organization on the internet prefer to get their answers on the internet. Using the web customer can see their complete account information. eCRM does not change marketing but instead has brought new dimensions to it.
(“E-commerce relationship marketing”, Fjermestab, Jerry (editor), Romano J R, Pnicholas c (Editor ) 2004, page 410-415)
Prominent features of eCRM:
eCRM provides distinguish at cutting edge features to customer management at highly competitive cost. It provides easy and comprehensive interface between the customer and the organization. Customer can register their details and can provide his or her details. They can even update any relevant information, for example their contact details etc. Frequently ask question FAQ's can provide customers answer for the most common concerns about the product or services, they looking for. Live help through voice over internet protocol (VOIP) application customer can actually speak to a customer service representative while looking at the website. Email accounts can provide easy, instant mode of information exchange. Customer expects internet data to be more current and up to date compare to any printed material (Customer relationship Management, by Kristin Anderson and carol Kerr, 2002. Page 101-109)