Customer Relationship Management and its implication to the Information Flow and Business Strategy - Essay Example

Executive Summary Introduction Impact of CRM on Information Flows Impact on Business Strategy Conclusions References Executive Summary This is a report is prepared on the topic ‘Customer Relationship Management and its implication to the Information Flow and Business Strategy’. The first section of the report deals with the introduction part. Introduction covers brief introduction of Customer Relationship Management, socio-technical dimension of CRM application and information management and system strategy. The section ‘Impact of Information Flows’ covers the impact which CRM application has within the organization. The next section throws light on the impact of the CRM in the business strategy. Introduction Customer relationship management is no longer a new term for any customer oriented organization. A recent survey says that there is a significant shift across UK’s top 500 companies. This is a positive shift towards the CRM. According to the report 53% of the top 500 companies in UK report the positive return on the investments in CRM solutions. CRM application is a set of technology, process and people, based on strategy and vision of the organization implemented to understand consumer behavior and create value for them. Customer relationship is visible in the small retail shop which takes the orders over the phone and notes down on a piece of paper and responds to its customer as well as large organizations with complex and highly sophisticated products or services are also having the same concerns with a dedicated department for customer service. Customer Relationship Management Customer Relationship Management is defined in various ways by various professionals and experts. Some of the definitions are given below:- CRM is a business approach that integrates People, Processes and Technology to maximize the relations of an organization with all types of customers. Aris Pantazopoulos - Founder, CRM Today As one can understand from the above definition the technology, process and people all are integrated together to achieve business objectives through managing the customer relationship effectively. The other definition by Dr. Shaw have emphasized on the investment and return aspect of CRM. Customer relationship management is an interactive process for achieving the optimum balance between corporate investments and the satisfaction of customer needs to generate the maximum profit. Dr Robert Shaw - Shaw Consulting In matured markets like UK and US, retaining consumers is primary concern of the companies. Customers should be served best to ensure their loyalty. Growing competition and higher cost of acquisition of new customer leaves no scope for mistakes. Socio Technological Dimension CRM Application is a set of hard ware and software installed according to the requirement of the organizational goals. The components are CRM software, Automatic Call Distribution (ACD), Interactive Voice Response (IVR) software, computer telephony integration and the employees or agents. Three important factor of CRM are processes, technology and people. Any organization that has successfully implemented CRM application knows very well the importance of synchronization of the technical and social aspects. CRM should be shared with each and every member of the organization. “The introduction of a new technical system is likely to disturb each of these variables. A new level of technology will bring with it a new man-machine relationship incorporating both opportunities and constraints - Mumford (1995) The constraints here can be complexity of the application, resistance to change and gap between the promised value and the delivered one. Implementing CRM means new set of work principles, new ways of doing the work, a change in the overall setup. Everyone is resistant to change. Benefits of the new technology should be communicated properly. The mind block should be removed by training and encouraging workforce to put their queries related to the new system. Volunteers, team leaders and influencers should be trained for the new concept and technology. If possible all those who are directly related to the processes should be involved in decision making process. This will help in developing association and ownership with the project among them that helps in accepting the project and putting efforts in the success of the implementation. Trist (1981) while commenting on social and technical aspects of any socio technical project cited, “The distinctive characteristics of each must be respected or else their contradictions will intrude and their complementarities will remain unrealized.” CRM is based on socio technical approach towards the information and the customer knowledge. Highly successful companies appear to place equal emphasis on the technical side as on the social side of the organization. (Ahmed, Kok and Loh, 2002: 93) Technology at one hand enables the firm to achieve the business targets while social factors enable it to handle the technology smoothly. The barriers related to process, people or technology should be identified and addressed to assure the success of the application. For example the flow of information, responsibility and scope should be decided earlier. Under the following conditions people working on any technology will work efficiently and effectively: 1. Proper knowledge of the Technology Here I would like to emphasize about the need to answer certain questions related to the technology. These are the simple questions like why, how, when, where and with whom. People should know it clearly that why they are working on that CRM platform, how should they work or and handle them, when is the project starting and review meetings will take place, where will it start first and whom should they contact regarding operational and technical issues of the application. 2. Clear and logical distribution of job responsibility, authority and responsibility Every member of the organization should have clarity of their jobs. There should not be any duplication of work. People should be made responsible by providing adequate information and knowledge. Overloading of responsibilities and over expectation both are harmful for the effectiveness of the employee. Any change in his job profile or responsibility should be communicated and discussed with him to remove any kind of disparity. 3. Resource Allocation People should have provided with the proper resources to do their work efficiently. If a person handling technical queries should have adequate information material to handle that query. Same is applicable in the case of specialized products. 4. Physical Environment Working conditions should be adequate and comfortable. Eg People handling calls should have proper headphones and computer screen so that they can listen to the customer properly. The Human resource policies should encourage the team and learning spirit with in the organization. 5. Technical Support Any kind of technical problem can lead to disaster in CRM application. In terms of staff working on technology if they are not able to understand the technology or are facing some functional problems, they might not communicate this. The Technical support should be timely and convenient. People should be encouraged to talk about any technical issue they face while using the application. 6. Reviews and meetings Time to time review meetings and peer review meetings should be scheduled. The inputs and feedback regarding the application should be noted and the major concerns should be addressed. All the issues if possible should be addressed in a god manner. The frequencies of meeting and schedule should be fixed before. Unless there are some urgent issues management should follow the schedule. Excess of meetings will lead to time, energy and interest loss of the members. The same will be in the case of very few meetings; people will not be able to get information about developments or changes in the patterns. Information Management and System Strategy CRM is based on handling the information properly, the right word will be proper information management will lead to effective utilization of the application like CRM. 1. New Software and Old hardware: When the old system does not support the new application it creates problem for the user and hinders the information management process of the company. 2. People: When trained properly and given technical facilities the management of information becomes easier. It should be very clear that the employees working on the information systems have adapted it. 3. Management Support: When management and top level of the organization supports and appreciates any project, the acceptance to the project in the organization increases. 4. Data Entry: The common problem which system administrators face is entry of the data. Each customer care agent has his own way of using language. Sometimes the information entered by one person is hard to understand by the other. This can lead to major problem since anytime if someone else attends the same consumer will face the problem. 5. Data Files: Various Files for various topics leads to duplication of data, difficulty in data management and creates problem to retrieve any particular information. E.g. suppose any customer has called up the customer care for any specific query, which than gets transfer from him to specialized agent, consumer has touched two points for the same issue when both the places different data is entered this results in duplication of the query of the same customer. The platform used should be as such that one interface is available to all when it comes to customer queries and all. 6. Data Storage Facility: The application should be flexible enough to incorporate the changing business and organizational needs. 7. Process Analysis: Flow chart of the information flow and various processes should be prepared. This flow chart should be utilized to define the processes and analyze the old one. In a best condition, lengthy and cumbersome steps should be replaced with short and effective steps. 8. Government Policies and Regulations There are different government policies and regulations for the convenience of people in general and companies. These policies can be different for different geographical locations like different countries. At any point of time and place it should be aligned with the policies and regulations of that place. Impact on Information Flows In any company which has CRM implemented the information can flow as mentioned below. Flow of Information: Whenever a customer calls up in the organization the information the call passes through the ACD/IVR and if it is not a routine query and he wants to speck to the agent it goes to the available agents desk. The CTI intelligently transfers the call to the agent who is not busy at that point of time. When the agent receives the call the computer screen pops up the history of the customer. His buying Pattern, closing deal, after sales support, his last communication with the company any special offer and any other relevant information appears. Based on the query placed the information is passed to the respective department. If it is any sales query, sales team will receive the information. If it is after sales or technical support query the information will pass to them. Any billing related information will move to accounts/billing department. Information Flow & Requirement CRM Application stores various data related to the customer. The data can be of various kind of customer information- Customer buying pattern & Sales query Sales history, Demographic information, Sales or account information or Information on response to any branding and promotional campaign. It provides updated information about the customer needs and behavior. This information can be viewed in a fraction of seconds or with few clicks. Depending upon the information sharing rights various departments can share this centralized information. The information to be collected can be decided on the basis of the business strategy. The customer information thus collected forms the base of the knowledge management and business intelligence. The executives collect everyday information. This operations level information is utilized by the company in various decision making process. As per the news on a famous CRM information portal, MSN UK has implemented automated software to increase customer engagement per month. Why a company like MSN who has around 16.2 million monthly visitors per month requires this kind of software when it already has powerful system of collecting consumer data on the website itself? For MSN, the customer always comes first. A tool that can measurably improve customer engagement and experience is therefore extremely powerful.’ -Amanda Anthony, Digital Marketing Manager at MSN UK On the website itself consumer has a specific behavior to avail different services and offers. It has an immediate impact on the revenues of the firm. Once the firm has information like time spent on a particular page or a particular section of the website the revenue model can be rebuilt on the basis of that. CRM has impact on the organization’s internal and external environment. Today in the information intensive communities where these organizations work the CRM application acts as a tool to survive and grow today Impact on Business Strategy The impact of the application on information use Day by day business is getting complex. Market is flooded with new products, specialized products and solutions and more new competitors. The environment is as such that companies are emphasizing more and more on the customer care, personalized solutions and more importantly customer service. It is the determination of the basic long term objectives of the enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals. -Harold Koontz & Heinz Weihrich Table of Business Strategy and Impact of CRM SN Factors of Business Strategy CRM Impact 1 Corporate Culture Mission Vision Leadership People & policies related to them Corporate Image Adaptability to change One of the tools to achieve organization vision. Better service can change corporate image positively Have impact on people directly. 2 Types of Strategies Advantage of nay factor of marketing mix Joint Venture/ Merger/Acquisition Resizing/downsizing/ restructuring Expansion Reengineering Number of customers, retained customer, lost customers, profitable customer, profitable products, units, areas are some of the examples of input which it provides. 3 Evaluation Benchmarking ROI Analysis Cost Analysis Sales/Profits/productivity/ analysis It provides various kinds of sales, customer and other MIS reports based on requirements which help in the evaluation of the performance of the company. 4 Environmental Analysis and Planning External/Internal: SWOT/PERT/Five Forces Model of Porter Internal: Core Competencies/Core business Product Analysis Value chain analysis Portfolio analysis It provides vital inputs for the environmental analysis and planning process. 5 Analysis for future It is a source of information. Based upon the analysis and trends future strategy can be analysed. Strategy holds the key to success to any business. The success of any business strategy depends primarily upon the following factors- 1. Clarity of business objective and target customer 2. Proper understanding of customer 3. Correct and continuous scanning of environment 4. Effective and efficient business intelligence system Let’s take each factor individually and related it to CRM and information flow. The example which I would like to use here is Pizza Hut, UK. Its business objectives are Belief in People, Recognition, Coaching and Support, Accountability, Executional Excellence, Positive Energy, Teamwork, Integrity and openness, Fun and Enthusiasm. It has implemented Avaya customer relationship management (CRM) in the year 2002. 1. Clarity of business objective and target customer: Customer Relationship management provides valuable information to the company. This information can be utilized for formulating business strategies. It gives valuable information based on which company can derive new objectives for it. These can be strategy for market penetration, new product development, product/process innovation or development and diversification. Then business objective of Pizza Hut is very clear and communicated to all the employees during recruitment and training. The CRM application helps the company to segment its customer base. 2. Proper understanding of customer: The CRM information helps company to understand its customers well. It gives information regarding their preferences, perception and expectations. The CRM system of Pizza Hut supports its operations by providing a consistent customer experience which is and measurable. Each time when a consumer calls up they have his records like what he has ordered last, order date, timings etc. 3. Correct and continuous scanning of environment It calls for scanning of both the environment, external as well as internal. The important information which CRM can provide is Customer retention, Sales force effectiveness, Consumer feedback and satisfaction, Promotion Effectiveness Effectiveness of workforce 4. Effective and efficient business intelligence system The business intelligence includes customer intelligence, competitor intelligence and market intelligence. Frequencies and pattern of customer queries is stored along with the situation or context when consumer has contacted the agent of the organization. All these help in learning the pattern of the consumer behavior that can be utilized to leverage competitive advantages. Through CRM Pizza Hut obtains greater visibility of its internal operations. CRM provide quick and accurate information which reduces processing time. Due to increased efficiency the cost goes down. As rightly said retaining a consumer is 10 times cheaper than acquiring new consumer. Companies offering prompt services and proper response to consumer queries can earn their loyalty. Since decades companies which have focused on customers have survived and succeeded. Business Intelligence Business Intelligence helps the organization in strategy formulation process. It is an ongoing process. The company knows when the consumer has called up and why, it can actually identify different issues, in certain condition influenced by certain factors and can actually support the consumer proactively. As define in one of the portals of CRM, Business intelligence is a process — a process of leveraging customer information to enhance corporate behaviors and improve your relationship with current and target customers for enhanced profitability and competitive advantage. (Julie L. Hall, Unisys CRM Business Intelligence, 2004) Knowledge Management Knowledge management has become one of the key words today. The more we are developing in the area of information transmission the more is the need of knowledge management. Knowledge management consists of a set of cross-disciplinary organizational processes that seek the ongoing and continuous creation of new knowledge by leveraging the synergy of combining information technologies, and the creative and innovative capacities of human being. To bring about business benefits, knowledge management has to be aligned to the company’s strategic trust. (Ahmed, Kok and Loh, 2002: 9) David J Skyrme (2001) in his book ‘Capitalizing on Knowledge’ has explained various practices of knowledge management. It includes all the phases of knowledge management. Starting from the Knowledge creation wherein different ways are explained. The identification process segregates the consumer information in various ways like on the basis of customer query, complaints and support. This information can be identified and segregated. This information can be shared among various departments. They can learn on the basis of this information what is right or wrong, what kind of practices they should adopt. This will help them identifying the best practices. Marriot services have set examples of services marketing. The moment a customer/ guest enter from there onwards his experience starts. Marriot Hotels have utilized business intelligence and knowledge management effectively to provide all the information and tools to their employees. With the help of these tools these employees are able to meet the expectations of the customers. Once you are in Marriot hotel information like your preferences in food, lodging and other information will be collected. Now no matter whether you have visited Marriot London or Marriot Phuket, the database is shared as such that in the other place also the Marriot Employee will know your choices and preferences and you will find the room accordingly. Following are the primary area where any organization can utilize its CRM application. Customer Related: Retaining the customers Acquiring new customer cost effectively Attracting lost customers Analysis of consumer behavior Demand Analysis: Latent Demand Demand Pattern according to geographic area. Other Concerns: New Product Development Competitive Analysis Deliverables like consistency in customer service Consumer information is required in every step of the business strategy whether it is conceptualization, planning, implementation or evaluation of particular product or process. The information which is collected through the CRM application acts as the foundation of Knowledge Management and Business Intelligence in the organization. Conclusion Any successful business today operates in a very competitive and complex environment. The competition is increasing day by day the margins are shrinking. Several environmental factors are affecting the profit margins of the companies. These factors are related to each other and at the same time it is also influencing the internal factors of the organization. Organizations need to fulfill the expectations of all its stake holders. There is always a need to understand the complex environment and consumer behavior on continuous basis so that the market is served properly with right solution, at right time with good profit margins. Customer relationship Management now has become key to any successful organization is a vast and complex area of studies. This helps the organizations to serve their customers effectively, efficiently and profitable, get competitive leverage on the database, standardize the all the customer touch points in the organization, smoothen the marketing and sales activities. The projects which have strategically proven positive investments are those which are successful in socio-technical dimensions. Terminology Automatic Call Distributor: It is a telephone facility that manages incoming calls and handles them based on the number called and an associated database of handling instructions. It is used to offer sales and service support to validate callers, make outgoing responses or calls, forward calls to the right party, allow callers to record messages, gather usage statistics, balance the use of phone lines, and provide other services. Interactive Voice Response: Interactive Voice Response (IVR) is a software application that accepts a combination of voice telephone input and touch-tone keypad selection and provides appropriate responses in the form of voice, fax, callback, e-mail and perhaps other media. IVR is usually part of a larger application that includes database access. Computer telephony Integration: It is the use of computers to manage telephone calls. The term is used in describing the computerized services of call centers, such as those that direct your phone call to the right department at a business youre calling. Its also sometimes used to describe the ability to use your personal computer to initiate and manage phone calls. References James Robertson, Published on 1 November 2005 10 principles of effective information management http://www.steptwo.com.au/papers/kmc_effectiveim/ accessed on 5 December 2005 MSN.co.uk Uses Content Personalized in Real-Time to Boost Homepage Appeal, Friday, 18 November 2005 http://www.crm2day.com/news/crm/116455.php 4 December 2005 How to Be the UKs Fastest Growing Company, http://www.wnim.com/archive/issue1703/salesprocess.htm accessed on 3 December 2005 IT and loyalty: A marketing view Russ Shaw, Computing Business 17 Nov 2005 http://www.infomaticsonline.co.uk/computing-business/analysis/2146244/russ-shaw-marketing-director-o2 accessed on 3 December 2005 What is really CRM? Aris Pantazopoulos, Founder, CRM Today http://www.crm2day.com/what_is_crm/ accessed on 3 December 2005 What is a socio-technical system? Last updated on 25/01/2005 http://www.computingcases.org/general_tools/sia/socio_tech_system.html accessed on 3 December 2005 The Power of Shared Knowledge By Hubert Saint-Onge http://www.microsoft.com/business/executivecircle/content/page.aspx?cID=1802&subcatID=7 on 4 December 2005 http://www.destinationcrm.com/articles/default.asp?ArticleID=1747 on 4 December 2005 http://ausweb.scu.edu.au/aw03/papers/jiang/paper.html on 4 December 2005 http://www.wisegeek.com/what-is-crm.htm?referrer=adwords_campaign=crm_ad=010292&_content_kw=crm%20customer%20relationship%20management on 4 December 2005 http://whatis.techtarget.com/definition/0,289893,sid9_gci213567,00.html on 4 December 2005 Mr. Hongwei Jiang Application of e-CRM to the Airline Industry http://www.destinationcrm.com/articles/default.asp?ArticleID=3206 on 3rd Dec 2005 Business Intelligence: The Missing Link in Your CRM Strategy by Julie L. Hall, Unisys CRM Business Intelligence http://www.unisys.com/services/insights/articles/articles.htm?insightsID=21130 on 3 December 2005 CRM: Deciding to use CRM http://www.is4profit.com/busadvice/crm_customer_relationship_management/2_deciding_use_crm.htm on 3 December 2005 CRM: Implementing the right CRM solutions http://www.is4profit.com/busadvice/crm_customer_relationship_management/4_implementing_crm_solution.htm 3 December 2005 http://www.shef.ac.uk/cics/about/report/itstrat/its_info1.html on 3 December 2005 http://doc.utwente.nl/fid/1187) on 5 December 2005 Source of Terminology: http://whatis.techtarget.com/definitionsAlpha/0,289930,sid9_alpI,00.html on 5 December 2005 http://www.avaya.com/gcm/master-usa/en-us/corporate/pressroom/pressreleases/2002/pr-020226.htm on 5 December 2005 Books: Zeithaml Valarie A. and Mary Jo Bitner, 2002 ‘Services Marketing-Integrating Customer Focus Across the Firm’ Tata McGraw-Hill Ahmed Pervaiz K, Lim Kwang Kok and Ann Y E Loh, 2002, ‘Learning Through Knowledge Management’ Butterworth Heinemann. Skyrme David J., 2001, Capitalizing on Knowledge- From e-Business to k-Business. Read More