Development Strategies for Customer Relationship Management - Case Study Example

Development Strategies for Customer Relationship Management Introduction These days, success in business depends on relationships with customers and how satisfied they are. Customer relationship management is a strategy approach whose goal is to get everyone in an organisation, not just the marketer, to recognize the importance of customers (Kudzu). This results in lifelong business for the enterprise and hence, long term rewards. Customer relationship management is not just using information technology to improve relationships, but it is a tool to finding out more about customers’ needs and behaviours (Business Link). The identification of needs and behaviour helps an enterprise to develop appropriate strategies that would strengthen relationships with customers. Customer Relationship Management is important because it helps businesses to survive in the market. Today’s market condition requires businesses to fulfil customer needs’ and not what the business thinks satisfies their needs. Thus, customer relationship management enables a firm to optimize profits through a customer focused strategy and environment (White Papers). However, establishing long lasting relationships with customers is not easy and requires meticulous planning, as a lot of finance is involved. Customer Relationship Management is approached in several ways, but we will consider three of the most common: Operational, Analytical, and Collaborative (Alexandrou, Marios). Operational Customer Relationship Management is when front office processes which are directly linked to customers are changed in a way that facilitates relationship. For instance, sales staffs which are directly involved with the customer would be given proper sales training to handle sales. Training would focus on issues such as how to protect and further the enterprise’s image, and how to best handle and resolve customer enquiries and questions. On the other hand, analytical customer relationship management approach is the back office work, which is associated with analyzing data and creating marketing strategies accordingly. For example, month to month changes in sales data would be analyzed to prepare an appropriate market strategy, which would both be economical and reach the intended audience. Finally, collaborative approach combines the operational and analytical approach. It is a way that facilitates interactions with customers through all channels (personal, letter, fax, phone, web, email) and supports co-ordination of employees teams and channels. It is a solution that brings people, processes and data together so companies can better serve and retain their customers. Step 1: Create a Customer-Centric Strategy In today’s shifting and unpredictable business climate, corporations need to constantly adapt to different situations and make customers happy. On paper, most companies satisfy their customers, but in reality very few companies are doing what customers like. According to infoquestcrm.co.uk, customer satisfaction surveys get a 70-75% average rating (Infoquest). The customers giving an average rating are most likely to check out on competition in the market before coming back to buy a product. Therefore, a company needs to satisfy the customer totally. “Studies have shown that a totally satisfied customer is as much as ten times more likely to buy again than a customer who is merely ‘somewhat satisfied’”(Infoquest). Hence, a totally satisfied customer would be loyal and come back without an eye to check for competition in the market. A business whether small or large, needs to build a customer-centric strategy in order to survive and dig in the big rewards. There are six key things to consider and possibly change in order to prepare a customer-centric strategy (Susan and Derek Nash): 1. Define the meaning of the word customer-centric, and identify the mission and vision of the enterprise. 2. Provide Customer Service. 3. Motivating and empowering the workforce. 4. Establishing efficient processes. 5. Follow the Japanese way of ‘continuous improvement’. 6. Making managers leaders. Being a customer relationship manager, I feel that in order to build a customer-centric strategy, everyone in the organization needs to understand its meaning. A customer-centric strategy means a strategy that serves the interests of the company as well as completely satisfies its customers in the best possible way. This means that customers are equal in importance to financial figures, that is; customers cannot be sacrificed for financial rewards. After being a customer-centric enterprise, profits would hop in automatically, but we have to spend money to transform our enterprise and build a solid block for the future. In our context, the mission statement should be customer is king, and our slogan should be “Serving none other, but: You, the Customer”. Step 2: Organisational Alignment Organisational alignment means that the whole organisation has changed strategy, value chain objectives, and tactics to become customer-centric (Niko). Organisational alignment is a key part to becoming customer-centric, but it is not just a set of ideas put on paper that aligns the organisation. It is the implementation phase of organisational alignment which is difficult to achieve. Most enterprises are successful in defining organisational alignment, but very few enterprises are able to align their structure according to their plan. Organisational alignment will only be made possible when there exists a vision, and a leader is required to communicate that vision. In today’s tough market conditions, effective communication is very important. The organisation might have the ideas, but those ideas have to be communicated in the right manner to implement the ideas as implemented. Vision cannot be implemented without an effective leader who can convey the envisioned future to the workforce. Management plays an important role. Management would need to be involved at every level in the enterprise and would have to take rapid corrective action. Our managers would need to be in contact with customers, more than in traditional product oriented enterprises. Also, transforming into a customer-centric organisation, we would need to do what the market tells us about our customers, and not what we want the customers to do. Furthermore, we have to instil a culture of customer service in our enterprise. That would only come through proper training and motivation. Everyone should be properly trained in their respective area of operation, and the front office staff should be trained specifically to provide customers with excellent service. Therefore, training specialists would need to be hired to properly conduct training workshops. However, excellent service should not in any way harm the image of the company. Training is one way we would be able to motivate our workforce. “Training may improve the image of the company. Customers are more likely to have confidence in personnel who are confident, competent, and have knowledge of products or processes.” (Hall, D. & Jones, and B). Apart from that, the workforce should also be motivated through financial rewards and bonuses. This would make the workforce feel that the enterprise recognises their work and commitment. This way, employees would work for the sake of the enterprise, and not just for the sake of merely work. Also, the workforce needs to be empowered in order to ensure quick decision-making. Employees are closer to the customer than people at the upper crust of an enterprise, and are thus, in a better position to make a quality decision. Making a quick and quality decision, yet riskier one makes a process faster and helps facilitates customer service. Another way of improving customer service is through creating a cross-training culture in the enterprise (Barrington, R). Cross-training is when employees train each other. This process helps an employee to perform as an all-rounder rather than a specialized person. This way, the workforce would know their specialized work, as well as other work. This would be a display of knowledge and the customer would feel that the enterprise is expanding its workforce by hiring talented people. Furthermore, it would increase productivity as idle time during slow periods of the work would be utilised through performing other tasks. Step 3: Process mapping and Alignment Process mapping is a identifying the flow of work and distinguishing between how work is actually done and how it should be done (Business Dictionary). The flows can also be information flows within departments, and interconnections. After successful process mapping, we need to shift our focus to process alignment. Process alignment is reviewing the processes through mapping, and then finding new ways to improve these processes. We as a customer centric enterprise would need to reduce delay time between processes. This would make processes easier, faster, make customers happy, and cut costs for the company. In order to successfully implement change, we need to instil confidence in the workforce, trust their ability, and give them responsibility to take riskier, but quality and timed decisions that can make or break the deal. In this age of technology, processes can be broken down into much more simpler and easier tasks. In transforming ourselves from product oriented to a customer-centric enterprise, we would need to make efficient use of technology by converting non value adding steps into automated steps (Effective CRM). This would further reduce burden on the employees, and give them more time to focus on our most important asset, the customer. We, as managers and leaders, would need to instil a culture of the well known phrase, ‘Customer is king’. Our main objective should be to, ‘Win Customers for Life.’ Process alignment would take some time, but careful planning would result in an efficient processing system and would really help our enterprise prosper. The manager of each and every process would have to be trained in such a way that they do not order their subordinates, delegate authorities, and yet take out the most from their subordinates. This can be established by making employees to think in groups and make decisions in teams. Thus, establishing an environment of team work would motivate the workforce, and would give them a sense of belonging and responsibility. However, it is the manager’s responsibility to act as leaders and take corrective action in case of mistakes by the team. Moreover, the workforce should be asked for recommendations regarding the process improvement. Hence, every employee would be involved in advising for improvement, and it would make them strive for ‘continuous improvement’. Furthermore, processes should be aligned in such a way that they could be tailored to specific customer needs’ (Narducci, J). This way, each and every customer would feel that the enterprise values them, and they would be totally satisfied. The workforce should be encouraged to forward proposals for innovative products and services. Step 4: Define the IT Strategy After completing the overall strategy of the enterprise, now let’s build a strategy for using technology and incorporating that into the overall customer-centric strategy. We have to make use of information technology and facilitate change in the enterprise. Information technology in our enterprise would be to using technology in a way that helps us identify methods of finding out customer needs’. Customer needs’ is our core objective. It is the best way to satisfy a customer totally. The most important form of storing information is through an enterprise-wide database network which would link all the functioning departments with each other (Business Link). This would create a very good form of contact between departments and would help them function effectively, as information would be easily exchangeable within departments. Step 5: Implementing the IT Strategy Technological change costs a lot to every organisation due to the technical nature of the work. However, it is beneficial because it would help us to function with greater efficiency and hence, would reduce operating costs. Technological change can be divided into three types (Mc-Graw Hill): Reporting Technology: This type of technology would help us identify customers across other applications. Reporting is asking what happened. Examples of such data can be: What is the total revenue by customer, what are total sales by product, where did we sell the products etc? Analysis Technology: This is a technological change which would enable us to segment our customers into categories such as best and worst customers. Analysis is asking why it happened. Example of such data can be: Why did we not sell as many units as last year, who are our customers, and why was customer revenue so high etc? Predicting Technology: This form of latest technology will utilise the different software applications to make predictions regarding customer behaviour such as trends, and which customers might be put off by stiff competition from competitors. Meanwhile, predicting is asking what will happen. Examples of such data can be: What customers are at risk of leaving, what is the best way to reach a customer, what is the average profitability of a customer etc? Thus, technology will help us smooth the transition from a product oriented enterprise to a customer-centric one. Now, we have the portfolio of products, and then we would have the portfolio of customers (Slide Share). Also, technology can be used to store valuable data about customers and it can trigger the marketing department to decide which customers to target. The best and the most profitable customers are the ones to target, and the worst customers are where the least effort has to be exerted. Step 6: Measure The last step that we as an enterprise need to carry out is to measure. Measuring involves the final review of what we have done. Have we succeeded in finding out the best needs that satisfy customers, or have we failed to deservingly call ourselves “customer-centric”. Measuring level of performance would give us an insight of what we have achieved and what we can achieve in the future. It also allows us to correct our mistakes and further our enterprise towards perfection. One of the ways to measure is through questionnaires. Questionnaires are a very powerful form of feedback about the enterprise from the customer’s perspective. It gives us a way to analyze our mistakes, learn from them, and hope that customers who come back never go again. Although we cannot satisfy all our customers, we need to aim to satisfy our most important customers, because those customers make a large share of where our profits come from. Creating a customer-focused culture would take time and money, but that money would be paid off quite easily and quickly, if we implement the strategy effectively. It is not an easy task to transform the culture in any enterprise, but given the above strategy, the transition can be both smooth and economical. In short, a learning organisation is one ‘that facilitates the learning of all its members and thus continually transforms itself’ (Hall). A business needs to be able to learn to survive in today’s market. References 1. Kudzu. (n.d). Glossary of Terms. Available from: < http://bizsuccess.kudzu.com/?p=41> Date Accessed: 12-10-09 2. Business Link. (n.d.) Why CRM? Available from: http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073861197&r.lc=en&r.l3=1075422922&r.l2=1075422920&r.i=1075422939&type=RESOURCES&itemId=1075422931&r.t=RESOURCES Date Accessed: 12-10-09 3. White Papers. (Aug 2003), Gonzaga University. Development Strategies for Customer Relationship Management. Available from: Date Accessed: 12-10-09 4. Alexandrou. (n.d). CRM Definition. Available from: < http://www.mariosalexandrou.com/definition/crm.asp> Date Accessed: 12-10-09 5. Infoquest. (n.d). Customer Satisfaction Surveys. Available from: < http://www.infoquestcrm.co.uk/> Date Accessed: 12-10-09 6. Infoquest. (n.d). Customer Satisfaction Surveys. Available from: < http://www.infoquestcrm.co.uk/> Date Accessed: 12-10-09 7. Susan and Derek Nash. (2005). Customer Relationship Management. Available from: < http://www.teamtechnology.co.uk/customerservice.html> Date Accessed: 12-10-09 8. (Niko).Customer Think. (Apr 2004). Organisational Alignment. Available from: < http://www.customerthink.com/forum/organizational_alignment_the_people_stupid> Date Accessed; 12-10-09 9. Hall, D. & Jones, R. Business Studies. People in Organisations: Induction, Training and Appraisal. Causeway Press Ltd 10. (Barrington, R). Vendor Guru. CRM Implementation Issues Before, After and During Launch. Available from: < https://www.hec.unil.ch/docs/files/53/322/lauching_crm.pdf> Date Accessed: 12-10-09 11. Business Dictionary. (n.d). Process Mapping Definition. Available from: < http://www.businessdictionary.com/definition/process-mapping.html> Date Accessed: 12-10-09 12. Effective CRM. (n.d). Effective Business Process Mapping For the Front Office. Available from: < http://www.effective-crm-consulting.com/business-process-mapping.html> Date Accessed: 12-10-09 13. Narducci, J. Narducci Enterprises. (n.d) 10 Criteria for a Robust Customer Centric Strategy. Available from: < http://www.salesvantage.com/article/1062/10-Criteria-for-a-Robust-Customer-Centric-Strategy> Date Accessed: 12-10-09 14. Business Link. (n.d). How to Implement CRM. Available from: http://www.businesslink.gov.uk/bdotg/action/detail?r.s=m&r.l1=1073861197&r.lc=en&r.l3=1075422922&r.l2=1075422920&r.i=1075422931&type=RESOURCES&itemId=1075422950&r.t=RESOURCES Date Accessed: 12-10-09 15. Mc-Graw Hill. (n.d). Customer-Centric Organisation. Available from: highered.mcgraw-hill.com/sites/dl/.../Chapter11_Student_PPT.ppt Date Accessed: 12-10-09 16. Slide Share. (n.d) Product-Centric Versus Customer-Centric Organization. Available from: http://www.slideshare.net/richard.claassens/productcentric-versuscustomer-centric-organization Date Accessed: 12-10-09 17. Hall, D., & Jones, R. Business Studies. People in Organisations: Efficiency and Strategy. Causeway Press Ltd 18. Read More