Customer Relationship Management - Case Study Example

a project failure Introduction relationship management (CRM) is one of the popular approaches used by private companies to reach potentialbuyers and improve their business. The case study depicts the failure of a private Chinese trading company located in Guangdong province. Inability for foreshadow changes, motivation and attitudes of employees lead to project failure and poor performance. The supplier company approaches customers in a largely passive and reactive manner, confident that it can select, acquire, understand, and readily retain them as desired. Processes for performance measurement are rudimentary, and so is internal and external communication. It is known that some companies engage in evaluating customer needs, training staff to be more proactive with customers, and/or creating teams or assigning individuals to upgrade customer services. In addition, performance-based companies more frequently compensate sales and other staff at least partially on customer satisfaction scores. This type of business requires effective and unique set of management tools in order to reach a customer and retain him. The aim of the paper is to prove, analyze and evaluate CRM and impact of these strategies on customer relations. Customer relationship Management The case study describes an attempt of the private Chinese trading company to introduce IT project and improve performance of the organization. I selected this case study for analysis, because it vividly portrays problems and difficulties faced by organizations in IT projects. The majority of case studies describes success factors of CRM but omits difficulties and weaknesses of planning process. The report describes culture and morale of the organizations, research methodology and data collection methods, and causes of the project failure. Then, it gives brief recommendations for other companies how to avoid project failure and introduce CRM (Dow, 1999). The goal of CRM is to examine and analyze customers' needs and wants in order to meet their requirement and expectations. CRM has a great impact on profitability and effective performance of organizations. The importance of CRM is explained by the fact that many organizations have begun to develop global markets and have established face-to-face sales teams either directly, using their own personnel, or indirectly, through contracted sales agents. Bergeron (2002) defines customer relationship management as "the dynamic process of managing a customer-company relationship such that customers elect to continue mutually beneficial commercial exchanges and are dissuaded from participating in exchanges that are unprofitable to the company" (p. 3). In modern environment, CRM and development influence profitability because the attention has shifted to a greater emphasis on the management of the whole system and its relationship with other systems. In this situation, CRM can be seen as a mediator which helps to cope with different demands both within the production system itself and between that and other systems. As environments change, they pose new problems for managers of organizations. Thus, with the emphasis on CRM comes the realization that increasing operating efficiency. CRM influences profitability because it includes changing knowledge and technology, new values, new markets, and changes in the global distribution of wealth. New knowledge, for instance, can invalidate the existing knowledge of an entire industry. When environments become turbulent, complex, and resource constrained, the knowledge and skills that companies once possessed can become useless, and even a hindrance to change. CRM projects acquire new knowledge and technology, and employ these assets in production quickly (Freeland, 2002). Current State of Customer Relationships Forms The case study underlines that the project manager needs excellent planning, management and control skills. He/she should have a good knowledge in psychology and human resource management in order to improve morale and motivation of employees. The company is strategically directed toward keeping customers, with attaining commitment and loyalty (of both staff and customers), a paramount objective (Stauss and Seidel 2005). Management style is often lattice or horizontal, with company focus on continuous improvement in all activities: understanding and serving customers, creating knowledge and information flow around customer needs, staff communication and empowerment, team process, and so forth. Performance measurement is ongoing, with improvement activity prioritized around customer retention, their intended market action, and proclivity to remain loyal. The supplier company has greater awareness and sensitivity regarding customers. Though management still tends to operate from a traditional hierarchy, the company has formal processes in place for measuring performance and collecting/acting on complaints (Dow, 1999). The main weaknesses of the private Chinese trading company are that it employs relatives but does not control their performance. Most of them do not aware of the duties and responsibilities assigned by the company. Non-relatives always feel as "outsiders" and foreigners in the company. According to Reynolds (2002), technology is a one of the environmental factor that continually threatens existing arrangements. The combination of goal difficulty and the extent of the person's commitment to achieving the goal regulate the level of effort expended. If employees understand specific CRM goals they perform better than employees with no set goal or only a vague goal such as do the best you can (Stauss and Seidel 2005). On the basis of recent experiences in several of its key businesses, including computers, printers, and medical products, successful CRM projects have concluded that this is indeed possible. The problem is that technology does not drive relations, and the importance of dialogue becomes more urgent for successful CRM. Technology is recasting the process of management, providing powerful new capabilities to help managers strategize and plan, organize, lead, and control. Technology implementation is one of the most complicated and important steps for any organization to react to changing environment and introduce new systems of management (Greenberg 2004). Confucianism and religious values of the employees have a great impact on their relations and performance. Decision-making and problem-solving is centralized. This leads to poor motivation and low morale among subordinates and lack of interest in new projects. It is known that firms with successful strategic systems have broken down organizational barriers that block the sharing of data across functions. Design, sales, and manufacturing departments must work together. The use of appropriate technology in properly planned systems can have dramatic effects on operations (Stauss and Seidel 2005). The private Chinese trading company takes a proactive approach to customers and internal processes. While management still tends to follow traditional hierarchical and bureaucratic models, inhibiting internal, horizontal communication somewhat, many of these companies have gotten closer to their customers. Methods of doing this include complaint monitoring and handling through customer service centers, segmentation of customers according to their needs, and more representative, thorough, and current measurements that track levels of company performance on key attributes and transactions. Some measurement programs also assess the importance of the attributes. The more progressive performance-based companies differentiate themselves by their approaches to organization built on higher emphasis, or focus, on customers. Management structure tends to be flatter, and customers are served on a local or departmental basis (Newel 2003). The main project management concepts applied to the case study are management and planning, customer relations and effective training. The main disadvantage of this approach is increased number of work load and a need for constant training. The company had to retrain many professional employees in order to meet CRM requirements. It took time and investments in employees and technologies. Carefully selecting the means by which information is fed to the new buyer can help reduce post-purchase dissonance. Consumers are becoming more concerned about service and how they are treated when they purchase something than they are about the price alone. Nurturing customer relationships is the cornerstone of a growing number of new customer marketing strategies, as reflected in the prevalence of offering of a long-term guarantee on products, service packages, investments, and other similar incentives. The connection between good levels of customer service and good levels of customer satisfaction and retention underpins the common association of customer service with keeping, rather than winning, customers. Customer service therefore plays a pivotal role in relationship marketing. But these packages, while providing an essential infrastructure, need to be supplemented by managerial processes to address such fundamental questions as which channels to use, and how best to use them to deliver customer value (Reynolds, 2002). The concepts are not effective because the managers do not take into account motivation of employees and needs of the company. Sill, they help a reader to grasp the idea at once and understand the fain factors of project failure (Stauss and Seidel 2005). CRM and development influence profitability of organizations because they allow management to design products around a number of independent modules that can be easily combined in a variety of ways. CRM tasks are designed and performed as independent modules that can be relocated or rearranged to support new requirements. Maintenance of high standards is a key factor to maximizing CRM outcomes. The purpose of maintenance of high standards is to attempt to maximize the performance of service by ensuring that it performs regularly and efficiently. The effective operation of trading systems is dependent on the maintenance of all parts of the system. There are more than a dozen different types of flexibility that CRM projects will not pursue here-design, volume, routing through the production system, product mix, and many others. Involving employees into CRM can offer good results obtained from these projects. The Chinese trading company provides custom products without the customers' knowing that a product has been customized for them. The main problem is lack of professional staff communication with customers which reduces their response. Faced with increasing pressure from its customers for quicker order fulfillment, employees would be able to meet all requirements only following CRM principles and tactics (Schwalbe, 2005). CRM and development influence profitability and effective performance because they allow companies to build longer-term customer relationships and maintain a dynamic knowledge of customers' requirements, preferences and expectations. Getting this role right, and to a standard of expertise that is superior to that of competitors and sustainable in the longer term, requires an in-depth understanding of the nature and nuance of customer service. CRM and development influence profitability because they allow organizations build customer value by offering customers both a wider range of channels, and more personalized treatment through the integration of channels (Reynolds, 2002). If I were a project manager of the company, I would pay for attention to motivation and training of employees. Resistance to change and new skills acquisition would be the core priorities of the company. The training company must revise its framework and policies to incorporate the customer satisfaction mind-set into the company's foundation to ensure employee involvement. A special attention to be given to intercultural communication patterns and continuous communication with buyers through e-news and press releases. For example, employee profit or gain-sharing programs should include customer satisfaction goals, and employee performance systems should include team work and customer satisfaction measures. As has already been demonstrated, the reality is that there is frequently little or no relationship between perceived satisfaction levels and the levels of sales, profits, or customer retention (Greenberg, 2004). When companies build appraisal and incentive compensation systems around customer satisfaction or perceived performance levels, they are likely to discover that they have created a very different culture, and different, perhaps, than intended. In some companies, sales staff and management have even corrupted, or at least infected, the system by hand-selecting customers to be included in the satisfaction research, or contacting them and stepping up levels of attention and service just prior to the survey. More progressive performance-based companies have evolved by setting up incentive compensation for all staff based on profit and revenue goals in addition to desired customer satisfaction/performance levels. This upgraded approach creates a win-win situation, with each employee having more direct investment in the company's short-term and long-term financial success (Reynolds, 2002). Conclusion The case study teaches managers that communication, morale and effective planning aret he core of any IT project. Thus, staff should be viewed as an essential component of strength and employee loyalty is encouraged. Companies wishing to create and sustain a customer commitment based culture and infrastructure must also create and sustain real value for the customer. Value can be expressed in terms of tangibles (time, money, efficiency, quality, etc.) or intangibles (pride and wellbeing). Customers have become increasingly selective and less strictly logical in their search for more attractive quality, service and price. Client follow-up strategy can be an important way to anchor the loyalty of both the company and the buyer. Bibliography Bergeron, B. 2002, Essentials of CRM, Wiley. Dow, D. 1999, "Exploding the Myth: Do All Quality Management Practices Contribute to Superior Quality Performance'" Production and Operations Management, 8, Spring. pp. 1-25. Freeland, J. 2002, The Ultimate CRM Handbook: Strategies and Concepts for Building Enduring Customer Loyalty and Profitability. McGraw-Hill1. Greenberg, P. 2004, CRM at the Speed of light, 3e. McGraw-Hill. Newel, F. 2003, Why CRM doesn't work. How to win by letting customers management the relationship. Cogan Page. Reynolds, J. 2002, A Practical Guide to CRM. CMP Books Schwalbe, K. 2005, Information Technology Project Management. Course Technology. Stauss, B., Seidel, W. 2005, Complaint management: The Heart of CRM, South-Western Educational Pub. Read More