Effects Of Implementing CRM Systems
Disclaimer: This dissertation has been submitted by a student. This is not an example of the work written by our professional dissertation writers. You can view samples of our professional work here.
Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.
Effects Of Implementing CRM Systems And Its Strategic Issues In An Organisation
Definition Of CRM:
Any organisation will profit from adopting a definition of what CRM means in strategic terms for their business and ensuring that this definition is used in a regular manner all the way through their organization.
One of the most important definitions of a CRM has been given by Davenport et al. (2001), stating that CRM systems are “all the tools, technologies and procedures to control, manage and improve or facilitate sales, support and related interactions with customers, and business partners throughout the enterprise”.
According with Siebel, (one of the mayor players in the CRM market) “CRM is an integrated approach to identifying, acquiring, and retaining customers. By enabling companies to deal with and coordinate customer interactions across several channels, departments, lines of business, and geographies, CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance.”
Another concept about CRM, provided by John Wiley, author of the book “CRM unplugged”, is “CRM is not about technology, it's about attracting and serving clients in more attractive ways”.
Many organisations in recent years identified the importance to become friendlier with the customers facing with increased worldwide competition. Therefore Customer Relationship Management (CRM) has risen to the agenda of many organisational strategies. Customer Relationship Management systems can be viewed as information systems meant to enable organisations to realise a customer focus. An increasing number of organisations are adopting CRM yet surveys are beginning to highlight the potential risks. Although CRM systems are proving an extremely popular choice for implementation. It is obvious that there is still a need for further observed studies of CRM but, only a few are available.
Now a day in the business market, management finds that customers are the central part of a business and that a company's success depends on effectively managing relationships with them. So, one of the initial goals that management has its employees to achieve is based on a saying such as “the customers are always right,” “do whatever it takes to deliver your promise” or something similar. All objectives are decided to one crucial goal that is to make customers satisfy because they are the ones who keep the business run. Not too long ago, many companies did not consider this an important factor and often uncared for their customers with the result that many of these customers did not come back. Frequently, these objectives become constraints for businesses and their employees when they do not have suitable tools, equipment, or methods to achieve this goal. Now a day, technology provides to the businesses with systems that can help companies track customers' communications with the firms and allow the firms' employees to rapidly get back all the data about the customers. This idea is known as a customer relationship management (CRM) system and if used correctly, could improve an organisation's ability to achieve the ultimate goal of retaining customers and so gain a strategic improvement over its competitors. (Gefen, D. 2002)
CRM can be interpreted as a process of digitizing a staff's knowledge about his or her customers. This is because in a usual business process, customer relation staff would normally be required to remember their clients' requirements, behaviours, tastes, preferences, etc. In real meaning, CRM focuses on building long-standing and sustainable customer relationships that adds value for both the customer and the organisation. (Daft, 2003).
CRM system is frequently incorporated with other decision support systems across all functional areas, such as (ERP) Enterprise Recourse Planning system, (EIS) Executive Information Systems, (SCM) Supply Chain Management System, and Product Life-Cycle Management Systems. By doing so, organizations can produce better management information in terms of planning, acquiring, and controlling across all channels and thus have greater products and services that direct to larger revenues and larger profits. CRM systems can also assist organizations increase their abilities to interact with their customers. This not only leads to improved quality but will improve the speed response to customer's needs (Anderson, 2006).
By itself, CRM makes a required tool for business because it distinguishes an organization from its competitors with the knowledge resources about product ideas and the ability to identify and find solutions to customer's issues. CRM can cut down the distance between customers and the organization, contributing to organizational success through customer loyalty, greater service, better data gathering, and organizational learning. Some have argued that customer satisfaction and loyalty is a science; however, Phelon (2004) takes it up a level by saying that “customer leverage is an art.”
Operational CRM is also called front office CRM which involves the areas where the customers meet directly and this type of interactions is called as touchpoints. A touchpoint is of two types, one is inbound e.g., a call to an organisation's customer support hotline and the other is outbound e.g., an in-person sales call or an e-mail support. Operational CRM enables communications to and from customers but this doesn't mean useful service. (Dyche 2001).
The benefits of Operational CRM are: It delivers personalised and well-organized marketing, sales and service through multi-channel collaboration. It also enables a 360 degree view of your customer while you are interacting with them. The people who are included in sales and service can access complete history of all the customer interaction with the company, regardless of the touch point.
Analytical CRM is also called as back office or strategic CRM which involves the customer actions that takes place in front office. Analytical CRM needs technology that total customer data and provide analysis of the customer data to progress managerial decision making and actions. Analytical CRM involves large amounts of cross-functional information and this information is stored on a data warehouse. The analytical CRM is based on the technologies such as warehousing and data mining. In this, the customer database should be accessible from all the departments like marketing, sales and customer service. Analytical CRM forms the foundation for planning and evaluation of marketing campaigns and assists cross selling and up selling functionalities. (Adrian Payne 2005).
Collaborative CRM is said to be an approach to the CRM in which there are many departments such as sales, marketing, and technical support share the data which they collect from interactions with the customers. For example we can say customer feedback is a main aspect for customer satisfaction and loyalty since the customer feedback gathered from a technical support department could inform marketing staff about the products and services that might be great help to the customers. The point of collaboration is to improve the quality of customer service which results in increase customer satisfaction and loyalty.
Source: Handbook of CRM: achieving excellence in customer managementBy Adrian Payne (2005).
Benefits Of CRM:
A right CRM implementation can benefit to the organisations as well as to the customers. CRM is a next wave of computer aided marketing because it is a way of doing business. Below are the some of the benefits that a CRM or Customer Relationship Management system can bring. Peck et al. (1999)
A major benefit from the Customer Relationship Management can be the development of strong relationships with the ongoing customers which can lead to:
- Improved sales through better timing due to anticipating needs based on past trends.
- Organisation can identify needs of the customers more effectively by understanding specific customer requirements.
- Cross- selling and up-selling of other services and products by highlighting and telling alternatives or enhancements.
- Organisations can identify the customers who are profitable and who are not profitable to the company.
Finally this could lead to:
- The improved customer satisfaction and retention, showing that the organisation is having good reputation in the market place.
- Increased value from the customers and reduced cost associated with supporting and servicing them, growing the overall efficiency.
- Enhanced profitability by focusing on the most profitable customers so that the organisation ca more concentrates on the unprofitable customers dealing them with the more cost effective ways. Some other benefits which are mean to the organisations are:
Shared or distributed data: Now a day's companies realize that customer relationships are very important on many levels, they begin to understand the need for data sharing throughout the organisation. A CRM system is an enabler for making informed decisions and follow-up on all the levels.
Cost reduction: The strong point in the CRM is making customers as their business partner and not just a subject. Because customers are doing their own order entry and are empowered to find the information they need to make a decision, less order entry and customer staff is needed.
Better customer service: The information related to the interactions to the customers is centralised, so the customer support department can really benefit from this because they have all the information they needed at their fingertips. No need to ask the customer for infinity times and no need to estimate. And mostly the customer can do this on their own because the CRM system is more and more able to expect the need of the customer. The experience got to the customer is greatly enhanced.
Increased customer satisfaction: If the customer feels that he is the most important part of the team instead of just a topic for marketing and sales, customer service is better and the needs are predictable. There is no question of customers are dissatisfied with the product or service.
Better customer retention: If a Customer Relationship Management system can help to fascinate customers then it can be said that this will increase customer loyalty, and the customers will come back to buy again and again which produce customer retention.
More repeat business: If the customers are pleased then we can repeat business. Initially customers are in a doubt of mind, if the service is good and if the customer is pleased he turns into loyal advocate to the business.
Purpose Of The Study:
The purpose of the study is to understand the CRM application strategies and their successful implementation to bring about maximum customer satisfaction. By doing so, we hope to make Customer Relationship Management applications more useful to the customers.
With reference to the above stated research problem, “what are the factors effecting for a successful CRM implementation”? The following research questions have been posed to conduct the study to realize the purpose.
- What are the benefits obtained to the customers from the CRM implementation?
- What are the challenges for implementing Customer Relationship Management?
- What are the factors that help in successful implementation of CRM? And
- What are the risks involved in implementing CRM in the organisation?
Thus, this dissertation deals with CRM introduction and effects of implementing CRM systems in an organisation in order to give an insight into the current issues and status of the technology. The literature review will analyze, examine and explore the benefits and problems involved in implementing CRM systems.
Structure Of The Dissertation:
Chapter 1: Introduction And Research Rationale
This part gives a brief introduction about the purpose of the thesis. It also details the rationale for doing the thesis and validity of the research. This part also states the aims and objectives of the research to be done.
Chapter 2: Literature Review
This part covers the literature on the CRM issues and its functions using journals articles. The existing function will be presented and the information regarding the subject will be outlined and analysed from the academic literature available.
This part analyses the data collected i.e. CRM implementation problems with an overview of the different departments. The current system will be critically reviewed and the effectiveness of the system will be evaluated. Each of the problems research issues is analyzed, interpreted, and the detailed findings are presented
Chapter 3:Research Methododlogy:
This part covers the process of research to be done and the research approach. It implies the selection of the method on how the research is to be done and the methodological consideration of the data collection, sample collection and the data analysis
Chapter 4: Data Analysis And Critical Discussion:
This part provides a summary of the findings and conclusions of the research objective and issues, discusses the contribution of the research findings to the literature and theory, reviews the implications of the findings, discusses the limitations of the research, and concludes with suggested direction for future research
CRM: An overview
CRM: Customer Relationship Management is a process that manages the interactions between the organisations and its customers. In other words Customer Relationship Management can be defined as a Management process that looks to maximise the profits, to shareholders by developing and implementing the strategies to build the relationships of trust with high value customers and to create a sustainable differential advantage. (Newell, 2000)
In the current situation of business world there are many hand held devices and websites where the consumers trying to interact with the companies. There are some examples like direct marketing, call centres, advertising, and retail stores and also at home. At every interaction customer has an impact on the company and the brand name.
The main objective of customer relationship management is to better understand the customer needs and also maintain long term relationship with those customers. CRM systems allow businesses to build relationships with customers. Organisational thinking must be changed to meet the objectives of CRM. Firms believe they exist simply to produce a product or deliver a service. But the firms need to be customer centric. (Clemons 2000).
Even there are many definitions of CMR by different authors, the main idea behind the CRM concept it is the use of tools to document and maintain a relationship between the costumer and the company, incrementing the satisfaction of the costumer and creating loyalty to the company: it has been proven by many companies that is more profitable to maintain a customer in the long term rather that single sale customers.
Customer Relationship Management is a method designed to collect information related to customers, to collect the features of customers, and to apply those qualities in definite marketing activities (Swift, 2001). CRM is not a new method. Actually, CRM has continuously existed from the past. On the other hand, CRM has recently become the focus of attention. The backgrounds are as follows (Ahn, 2001):
Source: http://www.jscgroup.com/crm-call-centre-solutions.html Access 11/07/09
The relationship with customers is newly recognized as a key point to solidify competitive power of a company;
As companies procure large volumes of data related to customers, they can perform customer management more easily and efficiently using data warehousing, data mining, and other information technologies; and
The Web has opened up a new medium for business and marketing, and we can express customer actions in online into data. In other words, the scope of data to analyze behaviors of customers is extended, and the environment for one-to-one marketing has been enhanced.
Importance Of Crm:
The main task of Customer Relationship management is to gather information about the customers. And then the data is used to help the customer service transactions by using the information needed to solve the issues or concern readily available to those dealing with the customers. If the customer is satisfied then there will be more profitable business and more resources available to the support staff. Moreover Customer relationship Management is a great help to the management for a future way of a company. As mentioned, Customer relationship management need more data to work and these includes the customer name, address, date of transactions, pending and finished transactions, issues and complaints, status of order, shipping and fulfilment dates, account information and many more.
This information is important for the support staff to the customers for providing the answer that they needs to solve the issue without having to wait for a long time and not going to other departments. Moreover the customer service representative will also be able to see the previous concerns of the customer. (Lynette Ryals; Adrian Payne 2001) This is a great assist especially if the customer is calling about the same issue since the customer will not have to say again the story all over again. This takes less time to solve the issue causing higher productivity of the support staff.
Customer Relationship Management system is also important for the management because it gives the information like customer satisfaction and efficiency of service by the help desk people. This system is also important for the company's future course of act, whether it involves phasing out one of the products on the shelve or making adjustments to one of the goods sold. The information provided by Customer Relationship Management systems is also invaluable to marketing and advertising people, as they will be able to identify which ideas will works and which do not.
Integration of CRM systems in an organisation is very important and this is not an easy task as it seems. Most companies fail to integrate CRM systems that need to share the information for it to be effective. A CRM system also helps in expanding your businesses. Because CRM systems are able to handle huge amount of data, this systems help you in coping with the increased numbers of customers and their data. By installing a CRM systems and if the CRM systems are utilized properly it can be sure that the business will be successful and your customers are lot more satisfied than before. (Adrian Payne; Pennie Frow 2003)
There are many reasons why Customer Relationship Management is important to the organisations and some of the reasons are given below:
One of CRM's most important strength is that it organises and collects data of the customers and with this data one can analyze for the future opportunities for example by using the CRM data you can analyze the needs based to the customers such as what the customer's needs but they aren't buying. By using this information you can develop a sales strategy that will offer services in an attractive way even in cheaply difficult times. This includes package of new goods or services or products offering to the customers in an attractive price or with some incentives.
The other reason for the importance of CRM systems is every customer is important for the business but some of the customers are more worth than the others. By allocating the sales efforts accordingly, we can produce more profits per sales hour and also we can increase more sales. The CRM systems contain the tools for analyzing the customers so that we can classify the customers according to the sales. For example by using the CRM tools we can see which position are most profitable and which customers are expected to buy them.
Customer satisfaction is very important in the CRM systems because customer satisfaction involves two ideas: one is to keep the promises to the customers and the other is to meet their confirmed needs. For example if you promise to contact a customer on Tuesday and do not get back to him until Thursday, you not only reached the customer expectations but the company had delicately shows how much you value that customer. Similarly, CRM can be used to make sure that the company is meeting the customer expectations as fully as possible. This involves professional handling of after-sales contacts such as service calls, resolving customer issues or offering the customer the right product at right price.
At last, CRM is used to work the company's sales and customer support representatives smarter because of the improved information at their finger tips which is used to maximize revenue.
http://www.insidecrm.com/features/crm-important-recession-082508/ Access 21/08/09
The Role Of Internet And Website In CRM:
The evolution of internet as changed the opportunity of building a customer relationship. The important thing is the search engine, it made easier to the customers to find online merchants and communicate with them. These merchants are then offering customers more efficient ways of ordering and receiving products and services. And also, the internet simplified bidirectional communication, for the first time offering a better way for consumers to communicate personal information to the merchant. By using the internet or website a customer needed to send only a application through cyberspace, which results in short delivery time, improved accuracy, and quite often a higher positive awareness. (Jill Dyché 2001)
Internet users realised that not having to go out of their way to buy what they want, and the simple is the process which results in customer satisfaction. In fact web offered customers options they hadn't had with other delivery channels such as:
- 24-hour access
- Up-to-the-minute information for example stock levels, product features and prices
- The ability to research a product or merchant during a shopping trip
- Online customer support
- Online self-service
- Personalized content
In the past it takes lot of time to select a product for the customers but now by using the web version, the customer enters a key in his favourite search engine, which returns the web sites for several catalog window treatment firms. He chooses a company which contains a lot of options and prices. Before purchasing, he even browses more than a company of other window-ware web sites for additional prices and options finally placing his order in less than an hour. From this it clearly states that the web has made doing business easier than ever.
Source: (The CRM handbook: a business guide to Customer Relationship Management: August 2001, Addison-Wesley).
For Example The Loyalty Programs:
Companies in almost every industry are trying to use customer information to deal with the relationships. The creation of loyalty programs is one example. The airline industry gives the best examples of present initiatives. The Airline industry introduced the concept of loyalty cards long before anyone talked about CRM. It launched its advantage program in the year 1981 the term frequent flyer was introduced and loyalty marketing was changed forever. In earlier days of the airlines loyalty programs, American and United and the others who soon followed tracked little more than flight miles customer could accumulate for free award flights. Over the years as they have captured more and more knowledge about their millions of customers, the airlines have adopted the fundamental rules of CRM:
- Get hold of individual information about customers.
- Recognize what different customers are worth.
- Treat different customers differently.
And this has done in an excellent fashion with the creation of valuable perks for the best customers.
The word Technology is used differently by different people and gives different meaning. The role and impact of Technology in one's personal and professional life is ever growing. Technology is used to meet the human's need rather than just understanding the workings of the natural world, which is the aim of science. Technology involves planned way of doing things where it covers intended and unintended interactions between people and the products.
Customer Relationship Management is a combination of processes, people and technology that is used to understand an organisation's customers. CRM is an integrated approach to manage relationships with the customers. Customer Relationship Management technology supports the main processes of customer relationship management so the organisations can understand or analyze or track its contact with the customers. CRM technology enables enterprises to collect, handle large amount of data relating to the customers, carrying out strategies based on this information.
The techniques used by the Customer Relationship Management have been always around and made it possible for organisations and companies to apply the tools to number of customers at a time. There are some technologies used by the Customer Relationship Management are Database Technology, Interactivity and the Mass customization Technology.
It is the ability to analyze and plan large amounts of data besides to the storage capacity.
The interaction between the customers and the organisation using the websites, call centers, and any other means using internet or telecommunications.
Mass Customization Technology:
It is a computerized standardization enables company to break services or products into modules or templates. The all technologies together make possible for an organisation to connect in the activities of Customer Relationship Management.
Different Types Of CRM Systems:
CRM systems can be described as a technology based business management tool which is used to develop and control the knowledge to look after, maintain, and strengthen the relationships with the customers. The main functions of the CRM systems are to effectively segment customers, maintain long term relationships with the profitable customers, establish how to handle unprofitable customers, and modify market contributions and promotional efforts.
There are different types of Customer Relationship Management systems depending on the requirements for different levels of integration on the needs of the business. Some of the CRM systems are Sales systems, Call center and trouble ticketing and marketing systems.
This system includes all the systems that provide sales people, channels or customers themselves orders for new services. The main systems in the sales systems are sales force automation, point of sales and channel management systems.
Call Center And Trouble Ticketing:
This systems are the most challenging to integrate because of the more interfaces and more critical than any other systems. The main complicated issue is the timing and level of integration.
This system is the easiest system in all the different types of CRM systems. It is a system of high performance, flexible platform that one can use to perform targeted personalised e-marketing using web or e-mail. The marketing system includes support for the content targeting, up-sell and cross sell capabilities, advertisements and testing, e-mail campaigns.
Difference Between Transaction Customers And Relationship Customers:
There is a lot of difference between the customers for example there are customers who are most profitable and at the same time there are customers who are not so profitable. A company focuses on those customers who are profitable and help in the growth of the revenue. The main idea that a company have a profitable relationship with all the customers and the targeting customers with a different product or service is already in action in most of the financial services such as banking, insurance, credit cards etc. At the same time it is less recognized in many other businesses sectors like manufacturing. Clemons (2000)
There is one method to identify the group of customers by the concept of distinguishing between transaction and relationship customers. Transaction customers are very much unpredictable and have very little loyalty, other than that related to obtaining the best price. Whereas Relationship customers are far more possible for loyalty as they are regularly prepared to pay a premium price for a range of consistent goods or services. (Newell 2000).
Once Relationship customers are recruited than they are less possible to defect, provided they go on to receive quality service and products. Relationship customers are also more cost effective than new customers because they are already well-known with, and need far less guidance to buy the company's products or services. Peck et al. (1999) are among those who argue that for many organisations it would be beneficial to distinguish between the two types of customers and focus on relationship customers. He also suggests organisations to concentrate on the Relationship customers because they are the most profitable to the organisation.
According to Newell (2000) there are likely three different types of relationship customers and they are: the top, middle and lower groups. The first group that is the top group (top 10 percent) are the customers who are with excellent loyalty and of high profitability for the organisation. CRM is required to retain and propose them the best possible services and products in order to avoid them defecting to other competitors. Middle group customers (next 40-50 percent) are those delivering good profits and they are the customers who are possible for future growth and loyalty. The middle group of customers are the main probably giving some of their business to competitors. The main idea is to use CRM to target the middle group customers efficiently because they are the greatest source of probable growth. The last group is Lower group relational customers (bottom 40-50 percent) are slightly profitable to the organisations. In these some of them may have potential for growth but the cost and efforts involved in targeting such customers, effect the effectiveness of servicing existing relational customers in the remaining groups (Top and Middle groups). CRM should consider this group seriously and identify this group for the response required. Transactional customers add either nothing or have a poor effect on profitability. The agreement therefore is that CRM needs to identify transactional customers to assist organisations respond correctly.
CRM system supports all the stages of the interaction with the customers from order through delivery to after-sales service. CRM also covers the online ordering, e-mail, knowledge bases that can be used to generate customer profiles, and to personalize service, the generation of automatic response to e-mail, and automatic help. Rowley (2002). She also distinguishes the list of functions that might apply in a CRM application:
- Channel automation software
- Guided selling and buying
- Product configuration
- Collaborative commerce software
- Online storefront
- Multi-channel customer management
- E-mail response management
- Fulfilment software
- Order management
- Electronic agents
- Catalogue management
- Content management
- Self service (Rowley, 2002)
CRM And Its Channels:
The most important processes in CRM is the multi-channel integration process, because it will get the outputs of the business strategy and value creation processes and translates them into value-adding activities with customers. Also there are a increasing number of channels by which a company can interact with its customers for example field sales forces, internet, direct mail, business partners, and telephony.
There are many channels by which a customer can interact with the organisation, but there are six important channels based on the balance of physical or virtual contact. These include:
- Sales force,which includes field account management, service, and personal representation;
- Outlets, which includes retail branches, stores, depots, and kiosks;
- Direct marketing, this includes direct mail, radio, and traditional television;
- Telephony includes traditional telephone, facsimile, telex, and call center contact;
- E-commerce which includes e-mail, internet, and interactive digital television; and
- M-commerce consists of mobile telephony, short message service and text messaging, wireless application protocol, and 3G mobile services. (Payne and Frow, 2005)
Characteristics Of CRM:
The CRM is the process for every business because as the customer is the most important part of the business, the CRM is the procedure that analyzes the contact with the customers for example in a call centre. It is used for controlling the contacts with a customer either by phone, mail, fax and e-mail. The information which is collected is used for analysis and research of the customer relationship.
The characteristics of CRM systems are first it will track and report every interaction with a customer, relating to the customer's buying, purchase, interest or demand. It also reports the changing needs of the customer and the way business reacts successfully. Also CRM will be a global instrument for collecting information about the service requests, order entry, satisfaction and billing. It also used to measure the performance of the business on the basis of internal benchmarks. Finally CRM will make easy the working processes by emphasize on the positive and keep out the negative practices in your customer relations centre.
The opening characteristic is salesforce automation and in CRM systems, present customer, deal, product and competitor data are all stored in the CRM important database for salesforce recovery. The customers' sales procedure is configured into the function. The order placement and tracking are incorporated, so that each customer's sales cycle can be monitored and tracked. This gives the organisation a singular view of each customer which contains all contact details and sales history, available to everyone who has the right to use to the system. This allows data to be shortened by views such as area, territory, customer and product for target marketing campaigns. In addition, sales force has the right to use to product, pricing, sponsorship and discount information and how to make those marketing campaigns successful. Salesforce output is very much improved with the tools such as e-mail, Internet access, etc. As a result salesforce automation greatly empowers sales professionals within the project.
The next characteristic of CRM is customer service and support. Customer Relationship Management helps companies to integrate an excellent customer service into its central part. CRM also improves the organization's rejection rate by configuring the functions of tracking, monitoring and measuring customer service responses. It also makes it possible for the company to assign each question to the suitable authority, who can solve the customer call once the question from the customer comes up. Customer issues can be solved capably through practical customer support.
The third characteristic of CRM systems is field service. By means of the CRM system inaccessible staff can rapidly and efficiently communicate with customer service personnel to assemble customers' individual opportunity. Customers' requirements are logged, assigned, monitored and traced to make sure the qualities of customer services. Available and capable engineers are quickly assigned to each problem. Throughout the assignments, skill sets, accessibility, workload, geography, parts and tools availability are all satisfactorily taken into consideration. The knowledge base and detailed instructions for problem solving are all right away available on the first service call. Customer Relationship Management helps the organisation to decrease the service record cost to the lowest possibilities by automating fulfilment, replacement, and cycle counting functions.
The fourth and the last characteristic of Customer Relationship Management is marketing automation. This gives the most advanced information on customers' buying behaviour in order that the most successful marketing campaigns to cross-sell to current customers and attract new customers can be achieved. By using the CRM system, marketing intelligence, customer record and interactive communication technologies are united to allow organisations to better address customers' individual needs. As a result, the business captures a market before its competitors. It permits the company to study the clients liking and preferences so that they can better understand their requirements. Therefore companies are enabled to give more value to the customers than their competitors.
Pros And Cons Of CRM :
Customer Relationship Management solutions not only progress customer loyalty, but also the internal processes which in turn increase competence.
As of a marketing perspective, it recognises and targets the best customers based on recency, frequency and economic scoring. It also helps in manage marketing campaigns with clear goals and experimental objectives. It also creates and manages solid sales leads for field and telesales representatives and also the marketing and cross-selling opportunities are also improved. The enabled tight and exact targeting and one-to-one marketing improves returns on marketing investments. The CRM solutions also include more expensive knowledge gained directly from customer interaction and this knowledge improves product development process.
As of sales perspectives, Customer Relationship Management solutions progress telesales, field sales and sales management through real time data sharing among many employees and sales efficiency is increased through wireless and internet-based order entry. This leads to the improvement in the territory management with real time account information updates. The complete salesforce is improved by capturing, distributing and leveraging the success and knowledge of your highest performers. With focusing on growing the best accounts, the profits per call are also increased.
From the field service perspective, customer satisfaction and retention are ensured by solving customer issues very fast. The management of people and materials within the service organization are smoothly incorporated and the Customer satisfaction is ensured by allocating, scheduling and dispatching the right people, with the right parts, at the right time.
From the viewpoint of customer support, shared relationships with individualized customer care depending on definite customer records and preferences are strengthened. During automated scripting based on known solutions, call center efficiency and help desk support's quality are becoming improved. Support and service costs are also decreased when customer satisfaction is increased by extending web-based support functionality directly to the customers and all customer contact from sales, support, field service and marketing are centralized.
Success And Failure Of CRM System Implementations:
A successful CRM system implementation is achieved by the companies those are already excelled at controlling customer relationships. These companies likely used to new technologies to bond more strongly with customers faster than competitors did, and implemented CRM initiatives better. Many factors have been planned in determining the success of a CRM system and some of them are
- Achieving a full understanding of what CRM is for the customer.
- Educating and involving all the customers.
- Carefully identifying customer needs and researching CRM tools and technologies.
- Successfully controlling consultant and seller relationships.
- Be patient till the CRM strategy to succeed. And more important focus on customer requirements that will play an important role in success of CRM.
The successful implementation of CRM system depends upon the four important factors: CRM readiness assessment, CRM change management, CRM project management, and employee engagement.
2.10.1. CRM Readiness Assessment: A CRM readiness assessment is nothing but the overview audit which helps managers to measure the overall situation in terms of readiness to improve with CRM implementations and to recognize how well developed their organisation is relative to other companies.
2.10.2. CRM Change Management: A CRM change management involves some planned organisational change and cultural change. The main aspects in a complex CRM implementation are sponsorship, leadership, senior level understanding and cross- functional integration.
2.10.3. CRM Project Management: CRM project management require cross-functional teams of specialists who manage the enterprise's CRM implementation programme. A CRM project management is said to be successful when the CRM projects produce against the CRM objectives which are derived from the corporate objectives and support the overall business plan.
2.10.4. Employee Engagement: At last a CRM employee engagement comprises maintain and dedication of the employees towards the CRM projects. Dedication of the employees to the CRM projects is very important in success of CRM systems because companies cannot develop and function correctly customer focussed CRM systems and processes without enthused and trained employees.
Examples of current CRM successes include clothing retailer The Limited, which has seen sales rise as a result of cross-selling. Meanwhile, in the automobile industry, Ford Motor Company has seen good results from Siebel Systems and also has plans to implement other Siebel technologies.
Different opinions have been put for the failure of CRM systems and the main reason for CRM systems failure is the lack of strategic planning earlier to the implementation of CRM.
Maselli found that the reasons for failure of many CRM initiatives ranged from technological implementation problems to a lack of organisational integration and customer orientation.
Jain et al state that most such failures are recognized to poor design, planning and measurement of CRM projects. They even state that capturing the wrong customer data, uncertain goals, wrong selection and use of technology, failure to integrate people and processes and use of false metrics or improper measurement approaches are the major drawbacks in implementing and managing CRM systems.
According to Kale (2004), the seven deadly sins for poor CRM result are:
- Viewing the CRM initiative as a technology initiative.
- There is no perfect vision what the customer wants? i.e.., Lack of customer-centric vision.
- Insufficient appreciation of customer lifetime value.
- Too little support from higher officials.
- Showing no importance to the change management.
- Failing to re-engineer business processes and
- No idea on the difficulties involved in data mining and data integration.
Kale (2004) even states that the most of the executives and employees are not even aware of these issues and others disagree that the CRM failures are deeply influenced by the firm's lack of skill to integrate CRM technologies into its useful processes.
To avoid failures in CRM implementing, organisations should take care in strategic planning:
Talk to customers and staff and service to the customers should be better and keep them loyal. Products and services should be profitable and also meet their expectations and also the organisations should their strategy from product focus to customer focus. Organisations should build long term beneficial relationships with the customers.
Set up corporate needs and identify its problems and also decide how to implement the solution.
Encourage inter departmental communication and corporate wide support and also invest in key components such as data warehouse and analytical tools.
Integrate front end systems with back office data mining processes for the one view of customer and also set up a central data warehouse for new and old data which can be used for analysing.
Deliver customized customer service and provide consistent, convenient and fast, readily available customer interfaces and offer the same customer service level on all the channels (Croen 2001).
Let us look at a typical CRM failure:
The chief executive, possibly working with the IT director, buys a CRM solution and sets down the company goals. Since CRM packages are generally sold in combination with service agreements, outside temporary staff are brought in. Unfortunately, the in-house IT staffs is not in a position to drive the project forward. The staffs do not understand the company's goals because they were never integrated in the earlier discussions.
An industry body, known as CRM Forum lists many key reasons for CRM failure such as poorly managed organisational change, internal politics, and lack of the right skills, insufficient enterprise-wide understanding, and poor planning. It argues that at least 40 percent of the entire budget of corporate CRM projects should be spent on tackling these issues.
Consecutively to be effective, a CRM implementation will usually require a firm to change its practices, and this may change the pattern that some staff works. This progress may disturb some employees, though some may find their jobs become more rewarding. The solution is to expect issues and deal with these issues up-front, establishing clear channels of communication.
Key Issues In CRM Implementation:
It is clear to state that Customer relationship management should be a critical component for the organisations to achieve and maintain competitive advantage. On the other hand a high failure rate of CRM implementation has been widely witnessed around past few years. Myron et al (2002) exposed that nearly 60% of CRM projects failed worldwide due to failure of the performing organisations to resolve certain key issues, like organizational changes, integrations, etc.
Important issues that organisations need to think about in CRM implementation are shortened as follows:
- Organizational change
- Business justification of CRM
- CRM risk management
- Project ownership
Implementing CRM is likely to cause some organisational change in terms of business units reforming, acquiring new staff, and changing existing business activities. An important question need to be clarified is that, should business process or CRM software be changed? Dyche (2002) pointed out that the CRM engenders business change; a successful CRM program changes not only the way a company deals with its customers, but also changes the way customers deal with the company. Some CRM studies have revealed that most organisations will prefer rapid and easy implementation of CRM system, and require as little customization as possible because of limited financial and IT resources. Organisations should be alert of what kinds of organisational change might occur when adopting CRM strategy and technologies, identifying possible cost drivers from those changes, and developing practical business models to deal with changes as well as contingencies.
Business Justification Of CRM:
Some enterprise-wide projects like ERP (Enterprise resource planning), SCM (Supply chain management), and the implementation of CRM project can involve an enormous amount of money, people and resource. This is frequently the prohibitive factor that impedes the implementation of CRM in Organisations since most organisations are generally facing steeping budget constraints. To gain maximum benefits from CRM implementation, it is, so, imperative for the organizations to perform cost-benefit analysis of CRM project in terms of business value. At the other end, organisations should be able to identify that, how much does a CRM program cost and what benefits in economic terms can companies attain after running CRM. To be adequate to say, ability to obtain exact result of ROI (Return on Investment) has improved the confidence of companies that want to go CRM. So, the bigger the CRM project size is, the harder the analysis of ROI is going to be. To address this problem, organisations should spend the necessary time and money on exactly scoping the project, undertaking systematic analysis of the chosen CRM solution to make sure a better ROI prediction.
CRM Risk Management:
As a result of its importance to success of project implementation, risk management is a critical part of whole project management. So, “The time for risk management to get involved with CRM is at the beginning.” Is stated by Mclaughlin (2001) in the article: your face to the customer: what if it is wrong? Managing CRM risks. Mclaughlin points out that risk occur when companies make changes to their internal functions in order to be CRM enabled. To provide a deeper insight into this issue, he described two type of risks exist with CRM initiatives as followings,
- Downside risk is defined as the risk of negative things that are not anticipated. Examples include wrong or unavailable web site content, fraud, stealing and so on.
- Upside occasion risk is the risk that the good things will not occur and so the benefits will not be realized, like declining customer satisfaction and service levels, failure to effectively up-sell or cross-sell products and services.
At the same time as the author says, risk management is quite new to CRM. Thus far there is little systematic research on this area. As a result, due to the fact that many organisations are looking for to be CRM-enabled, thorough analysis on this area is, certainly, making valuable contribution to CRM implementation success.
In order to provide a consistent way by which customers are interacting with companies, CRM does not just require integrating all front-office processes including sales, marketing and customer services, but also linking them with other legacy systems such as accounting, production and distribution Myron et al (2002) have revealed that lack of integration of CRM system is a significant contributor to CRM failure.
According to Goldenberg (2002), to achieve CRM success, companies are well advised to take the time to understand the issues impacting people, process and technology components individually, but also to proactively control the integration of all three components to make sure that the people, process, and technology mix is correct during all phase of CRM initiatives.
Therefore, organisations should carefully take into account the integration issues before implementing CRM, in order to keep away from a long and high-priced integration path following CRM implementation. Some important examples of issues are: how implemented CRM applications interact to and share data with others; is additional Enterprise Application Software necessary to address system incompatibility and how much is its applicable cost; what possible changes may occur to other systems when CRM applications get updated, etc.
Though there are many aspects to be measured when implementing a CRM solution, a key issue that must be addressed is project ownership. There must be a driving force within the organisation whose position is to make sure that the intended users are all set, willing and able to use the technology.
Fortunately, in many organisations there are no spare resources to dedicate this position to, and so project ownership can become difficult to manage. This can be said that this is one of the main factors that give to CRM failure. Kalakota et al (2000) suggested that ownership of the end-to-end project be put in the hands of a single manager, and team members partner with experienced business leaders and developer who understand how to deliver and deploy integrated applications.
Strategies For Implementing CRM:
One of the most important strategies of organisations is customer. To identify the target customer is based on the existing business model and corporate goal. By this before deciding on implementing CRM, organisations must get a better understanding on the different types of customers they are going to serve. Besides to this organisation must identify the different types of interactions with each section that add the greatest loyalty among the customers and the most profit for the business. One method of identifying the target customer is the use of customer centric models. It is a customer segment management which is a process of segmenting groups of customers depending on the same attributes and managing those segments in order to maximize both the benefits to the customers and long term profit to the organisation. A typical customer segment management model consists of many stages which are known as continuum. The stages are:
- Customer management
- Product centric analysis
- Marketing segmentation
- Customer segment advisors
- Customer segment owners and
- Customer-centric profit and loss
Depending on the nature of the organisation and what industries they are in, any stages on the continuum should be applicable. But the important thing is to achieve the correct balance on this continuum to choose the most suitable and effective channels to suit with organisations ability.
Issues Before Implementing CRM:
CRM is a tool that could help organisations reaches their goals but, applying CRM concepts and technologies to a business operation needs careful commitment. Organisations should research likely possible issues caused during the process of before, during and after implementing these applications. Some of the issues are referenced by Ramsey (2003) and describes as follows:
CRM is bounded with new concepts and new technologies, methodologies and which is currently growing. So, many organisations are uncertain of what to acquire in the new technology or where to start. Even the management is not sure how to approach CRM and how it would affect other aspects of the company's operation. In recent times most companies refer their customer service as customer relations though no main changes took place. The main mistake is that many organisations often become a victim of management that is to follow the trend of the current market to get the new technology.
Functional heads of CRM who often don't have adequate strategic plan or perspective experience of CRM are responsible for poor leadership. They are severely measured on improving specific performance within their activities whereas working on the overall strategies of the company should be the main focus.
The other issue is that most CRM programs are implemented based on a technical requirements focus rather than on the business needs focus. As described earlier CRM is a strategic approach that could assist companies increase a better understanding of their customer's priorities. Therefore organisations can provide these needs to their customers at the right time at the same time improving their processes (Oracle, 2006). The responsibility and commitment of the management is very important in for a success. Like many other projects many successful CRM implementations have a project succeed; a person with authority, a leader who can make things happen.
CRM vendors are those who supply or introduce the new tools to the organisations. But, they only show up the CRM aspects that are concerned in their products rather than addressing the important issue of CRM in many parts of the business. If the CRM is applied correctly then the company's economic value is good as well as the competitive advantage. Organisations must understand some basic principles before incorporating a strategic view into all the efforts. Actually there are vendors who would convince the customers that by implementing CRM systems the customers can solve all the issues that they possibly facing.
Issues After Implementing CRM:
(Zimmer, 2006) A survey conducted by the research and advisory firm Gartner found that more than half of the organisations which have implemented CRM have difficulties after implementation. The main two reasons why CRM does not always meet the company's expectations and they are:
- The disconnection of CRM vision and execution and
- The rising standard for CRM excellence.
The first principle describes that many organisations did not have any idea of research and did not have appropriate planning before implementing CRM. One of the main reasons could be that the system does not have enough flexibility. CRM projects focuses on the technical rather than business strategy because to increase the value of customer relationship and also the issue is these projects do not have sufficient loyalty and support from top management because of this project executions often failed or may be suffer from lack of senior management support, insufficient skills to complete the project, or poor project management.
The second principle describes that in the past decades with the development of technology; the market has been changing quickly and become a very competitive place for businesses. Customers are becoming more challenging and growing faster day by day. In order to give a challenge in the current market place, organisations must exceed each other to be able to succeed. If these issues are not predictable organisations which ready to implement CRM programs will stagger. Not all the organisations which implement CRM are successful. Regularly, these companies ignored the critical issues that lie behind a CRM project and these issues include (Kovacs, 2006)
- Failure to support important functions or business units on goals and mission of the project.
- Failure to attain and retain executive support for the project.
- Failure to get successes early in the project.
- Failure to link the CRM project to greater level business strategies exactly.
- Focusing on ability building instead of ROI creation and
- Lack of an integrated plan for project implementation.
Successful CRM Implementation:
For a successful CRM implementation, Top management must make sure that they have through research in both the industry's best practices and the adaption capability of their organisation in the new application. The following are the recommended major issues to a successful CRM strategy (Crockett and Reed, 2003):
- The organisation should understand how CRM suits into the framework of the company's overall business strategy.
- The estimation is to be done to make sure the company's current CRM capabilities.
- The organisation needs a good reason to implement CRM other than a new technology fever.
- Generate and execute a plan which clearly defines how to achieve the goal and execute it.
Below Are A Few Industries Worldwide Which Are Successful After Using CRM:
Many companies use CRM to withstand in this competitive business market. Small and large organisations adopt CRM strategy for their individual goals for example small organisations make use of customer relationship management strategy for the profits, save time and also money and organise their client information where as larger organisations use for profits as well as for identifying new customers and retention purpose. Larger companies use CRM not only for beneficiary purpose but they want customers visit again and again.
Companies using CRM solutions today varies widely. Companies such as banks, hospitals, and universities and also small and large businesses found CRM to be beneficial. Some of the Companies using CRM are given below:
2.17.1. IBM: It is a longstanding technology organisation suffered from too many departments running on different platforms and applications that were no longer compatible, as some upgraded while others didn't and new systems were introduced. For IBM call centers and technical support it has been using Siebel's CRM solution, so when they needed support from sales and marketing they turned to Siebel once again to create a single integrated company- wide CRM solution platform that supports IBM sales and marketing worldwide by providing a single source for customer and market place data, in many languages and currencies.
Source: http://www-935.ibm.com/services/uk/bcs/html/bcs_crm.html Access 5/08/09
2.17.2. Alta Resources: It is an outsourcing for customized sales and service applications such as call center management and data analysis applications. Alta needed a CRM solution to keep up with increasing internet and global demands which integrates its clients. So Alta Resources turned to peoplesoft to create a integrated, seamless CRM solution that resulted in their ability to expand their business and enter into new markets, take on more clients and increase revenue within a short period of time.
http://www.altaresources.com/PS_Overview.aspx Access 9/08/09
2.17.3. Three Rivers Pharmaceuticals (3RP): This Company can be said as a example of a start-up company which implemented a CRM from the initial period for the increase in the revenue and efficiency during the most important growth period. 3RP was previously had a plan to do its CRM in-house but considering and researching on the amount of staff and financial resources it opted to outsource their software services to Oracle. Oracle fast implemented an e-business solution that allows 3RP to focus on its research and business development while the Oracle solutions handle its contracts, business transactions and help to automate reports.
http://www.oracle.com/pls/cis/Profiles.print_html?p_profile_id=6791 Access 13/08/09
2.17.4. America Online (AOL): AOL is the world's largest internet service provider, turned to SalesForce.com to manage its customer base and on the IT end, their customer interactions. America Online had an increasingly complex sales and marketing process. SalesForce.com provided AOL with a CRM solution that directs customers and employees through the fastest and efficient channels when seeking information or solutions, increasing productivity for the entire organisation.
http://www.salesforce.com/customers/communications-media/aol.jsp Access 14/08/09.
Organisations that were using to adopt CRM strategies are successful in implementing for several reasons. The main reason is the organisations able to define a CRM strategy fit for their business needs. There is an out-of-the-box solution with much functionality, but functionality by itself does not determine use. Business needs to be determining the functionality and it has to be developed and deployed. For example we have a look at the airline carriers have a different CRM strategy, but the online ticket selling systems m
Cite This Dissertation
To export a reference to this article please select a referencing stye below: