The customer relationship management

Executive summary

Customer relationship management is a widely recognized business strategy whose implementation is aimed at nurturing and managing company's relationships with its clients and its prospects in sales. According to (Cunningham 2002), technology plays a major role in organizing, automation and sales activities synchronizing as customer service, marketing activities and technical support. The main objective in CRM is to attract, win and retain clients, attract back the past customers while reducing marketing and customer service costs.

Customer Relationship Management (CRM) is concept that is IT driven and is aimed at designing a business and the business processes that surround customers needs. This concept has attracted scholars and practitioners attention and most companies are implementing programs, tools and strategies whose technology is customer centric in order to develop customer relationship management that is effective, this is in response to increasing need for integrated and in-depth customer knowledge that builds customer relationships that are partnering and cooperative. The emergence of technology and business channels has altered the interface of companies with customers; this has brought about the need for change in the scope of CRM in regard to the processes and the value of buyer-seller relationship which are collaborative and cooperative. CRM is imperative in various marketing disciplines including channels like advertising, business-to-business marketing since it lays the foundation of relationship management in terms of customer selectivity, classification, accounts management, programs that enhance loyalty and other forms of customer partnering and strategic alliances like joint marketing and co-branding, (Kinkaid 2002).

Effective relationship management requires new techniques and methodologies that enhance front-line information systems that are efficient. Several technology solutions and software tools have been developed whose commercial applications have advanced most companies CRM, such techniques include expert systems that are rule-based, collaborative filtering and relational database that has developed customer information management solutions.

Overview of First American Corporation

First American Corporation (FAC) made a loss of $60 Million in 1990 and its operation was under regulators agreement letters. FAC is one of the most profitable and innovative companies in America's industry for financial services. The company heavily invested in data warehousing as a strategic vision which they called Tailored Client Solution TCS that saw the change in fortune. The strategy placed customer central in all the company's operations which meant redesigning all its operations in order to meet customers' needs through product design, customer knowledge and enhanced distribution channels, and meet the company's goals in profitability, this was a long-term strategy which saw FAC survive the great competition in banking industry. The strategy execution was made effective by use of data warehouse referred to as VISION which maintained customers buying preferences, value and behaviors (product use, transactions). Low-cost provider was not a possible strategy for FAC since its economies of scale were not large while other strategies like product differentiation were not feasible due to product duplication by other banks, (Kinkaid 2002).

Tailored Client Solutions

Implementation of the TCS meant a great change in FAC's employees thinking and jobs and a shift from banking through intuition to banking through information and analysis. These changes led to a profit of over $211 million, this transformation was enhanced through emphasized information technology. The tailored Client Solution's first component is client information; the focus here is FAC's knowledge of its customers' accessibility and leveraging through various bank-client interactions, and use of the knowledge in all the business operations, (Phelps 2001).

The second TCS's component is product line's flexibility; its vital that a bank offers products that meet the needs of the client which is based on understanding of customers and accurate information on profitability, FAC does this by modifying the unprofitable products and designing lucrative alternatives which are client-needs oriented. The strategy's third component is consistence in service which focuses on determining customers needs and meeting them, selling what the clients ask for or the hottest market product does not mean that the bank has met the best of the client's needs, TCS therefore shifts the focus in sales culture; FAC starts customer relationship through a discussion on the client's financial situation and the intended future goals, this allows them to explore the banks products together thereby accomplishing the customer objectives by providing tailor-made products to the customers, (Rajola 2003).

The final component is the distribution management, various channels (ATMs, bank branches and PC banking) are used in delivering various banking products.FAC gathers information on customer use of its bank products and their future intended use under various circumstances, and with the information it's able to maximize the banks distribution channels in order to meet client needs while lowering the cost. Each of these four strategic components focuses on meeting customers' needs and together they create a very powerful synergy. The components were successfully installed and the TCS formally announced in 1997, (Dyche 2004).

Data Warehouse; The VISION Project

According to (Buttle 2004), each component of the TCS required better and accessible client information, this required information technology to be achieved. VISION is a critical IT piece that contains integrated information on customer and product profitability and distribution costs as well as revenues. VISION was developed as multiphased initiative where each phase had a to bear tangible benefits to the business while moving the projects overall objective forward. The first phase was designed to assist managers understand FAC overall revenue image, the benchmark data was provided by a consulting group called the First Manhattan, formulas of cost, revenues and profits were developed to be used with the VISION's data. The transactions data and formulas were added to the client information system, additional transactions were added as well as newly designed products in he subsequent phases and the final phase's target was to implement a whole data warehouse, (Peelen 2005).

The VISION; Data Warehouse

This change has not however been a comfort one since those who were unable to accommodate the changes had to leave while those who adapted the many changes and took initiative that would enhance their performance were able to retain their jobs, gain more experience with the exiting changes. Some departments experience a turn over of 100% while others experienced turn over at reasonable levels, (Anderson & Kerr 2002).

FAC assesses TCS benefits through projects tracking which displays the applications and the users' benefits. TCS strategy together with the data warehouse; VISION, has substantially changed FAC management and generated significant financial returns, making the bank a leader in innovation. It has also affected FAC perception by other banks since the strategy has made the bank an attractive buyer at the forefront of new enterprise systems; customer relationship management which has significantly improved the bank's financial performance, (Foss & Stone 2002).

References

Anderson, K., & Kerr, C. (2002).Customer relationship management. New York USA: McGraw-Hill Professional.

Buttle, F. (2004). Customer relationship management: concepts and tools. Oxford; Butterworth-Heinemann.

Peelen, E. (2005). Customer relationship management Customer Relationship Management. Financial Upper Saddle River, New Jersey: Times Prentice Hall.

Rajola, F. (2003). Customer relationship management: organizational and technological perspectives. Chicago USA: Springer.

Dyche', J. (2003). The CRM handbook: a business guide to customer relationship management. Arlington New Jersey: Addison-Wesley.

Kincaid, J. (2002). Customer relationship management: getting it right! Upper Saddle River, New Jersey: Prentice Hall PTR.

Cunningham, M. (2002). Customer Relationship Management. Magdalen Road, Oxford: Capstone.

Phelps, R.G. (2001). Customer relationship management: how to turn a good business into a great one! London: Hawksmere.

Foss, B., & Stone, M. (2002). CRM in financial services: a practical guide to making customer relationship management work. Pentonville Road, London: Kogan Page Publishers.

Villanueva, J. (2002). Customer relationship management: customer behavior, organizational challenges, and econometric models. Cambridge (MA, USA): Marketing Science Institute.

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