Critical Analysis on Potential Benefit of CRM in Organization - Case Study Example

Critical analysis on potential benefit of using CRM in organization Introduction The fast changing socio economic dynamics have created a fiercely competitive business environment and organizations tend to adapt to the constantly evolving business environment. The main objective of any business is profit making which it derives by making its products and services available to people. It is equally true that the rapid globalization has brought in a host of new issues and factors that fast changing the format of existing societies and economic environment across the globe. There is significant paradigm shift in the consumer behavior. The huge market opportunities’ galore, opened as a result of globalization has also provided the people with a wide choice of goods and services. CRM or customer relationship management, therefore, has become a critical factor in the business strategy of the organizations. Aims and Objectives Customer relationship management is a people-centric business strategy that integrates technology and various business processes around the customers. Analysis and identification of the changing trends of the customer requirements have become important ingredients to gain leverage against one’s business rivals. While the market strategy should be totally focused on the needs and requirements of the people and make continuous efforts to update its products line with that of the changing public demands. Understanding of consumer psychology, therefore, plays a vital role in the development of marketing strategy and planning. The behavioral pattern of the people, in the decision making process of buying products and services, help provide important clues for preparing appropriate advertising strategies and campaigns so that maximum mileage could be garnered for the products. The need for effective CRM strategy has therefore, become essential in the fast transforming socio-economical paradigms, so that they are able to meet the challenges of the external factors to maintain as well as increase their existing customer base. Purpose of the study The purpose of the study is to gauge the impact of the CRM in the overall business strategy and business decision outcome. Emerging markets are crucial in the era of globalization and can be defined as the new area with high income and where the demand for the product can be created with relative success. According to Nargundkar and Srivastava (2002), knowledge about customer and their required is considered to be critical for the long term success of a business (Nargundkar and Srivastava, 2002). But the studies have shown that only small percentage of business have detailed information about their customers and their requirements (McKeen and Smith, 2003; Kale, 2004). With vast diversity in values and ideologies within the social fabric in the global business environment, a company needs to formulate marketing and communication strategy in a way that would not only uphold a high standard of corporate ethics but it must be able to ensure and exhibit understanding of the cross cultural values and handle issues with sensitivity. Consumers, being the mainstay of any business, efforts must be made to develop better understanding with customers with regard to consumer demands. Hence, any strategy that is formed needs to be localized to suit the local conditions. Significance of the study The fast and efficient mode of communication through the internet technology has created a huge database of potential market for the businesses. The compulsions of the emerging new dynamics in the global businesses have necessitated for people-centric policies and plans that would meet the challenges of the changing social patterns and its changing demands. ‘A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both’ (Porter, 1996). While product is of vital importance and it’s pricing makes it a salable item, maintaining a good database of customers is intrinsic part of market strategy which helps one to know the changing preferences of the customers in the rapidly changing times. The critical analysis on the potential benefits of CRM would not only promote wider understanding of the changing preferences of the customers but it would also facilitate strategic leverage against their rivals. Indeed, the project is designed to study the imperatives of fast changing perspectives in customer relationship management within an organization and to study its impact on the performance outcome of the organization, as a whole. Research Question 1. Are the potential benefits of CRM intrinsic part of effective business strategy? 2. How the CRM can effectively exploit the changing customers’ demands for improved business outcome? Hypothesis A good marketer always tries to exploit the personal preferences of the persons to influence his behavior as a consumer of goods and services that he wishes to sell. Marketers excel in influencing the self concept and personality traits and behavior by developing market strategies of the products, keeping in mind the prevailing lifestyles of the people. Hence, different market strategy is adopted for different group of people. Effective customer relationship management helps to improve and improvise the customer base and thereby significantly impact the business outcome, even during recession and difficult time. Literature review Burnett and Kuhn (2002) have primarily defined CRM as ‘methodologies, processes, systems and software that help a business to manage customer relationships in a more organized and effective manner’ (Bernett and Kuhn, 2002). The changing socio-economic environment made it imperative that more consideration be paid to socio-cultural and political environment so that the requirements of the people became the focal point in the development of strategy. CRM can become effective if the organizational leadership ensures proactive participation of its workforce in the collective decision making process. McGregor has said, ‘The effectiveness of organisations could be at least doubled if managers could discover how to tap into the unrealised potential present in their workforces’ (McGregor, 1960). Reinatz and Chugh assert that using CRM as business strategy greatly enhances organizational capability to ‘gather, organize, understand, anticipate, and respond’ to the constantly evolving preferences of customers (Reinatz and Chugh, 2002). Leadership initiatives become imperative in CRM primarily because ‘strategies rather than operative planning and decision making, became the main factor of managerial leadership’ (Chandler, 1962; Ansoff, 1965; Andrews, 1971). Leadership encourages innovation of ideas and adaptability to changes. Sederberg claims that in organization the power belongs to those who can define or describe circumstances in ways that convince others that things are as they say they are’ (Sederberg, 1984). Scholars and social scientists have claimed that CRM as core business strategy leads to ‘bottom line benefits for the organization’ (Tschohl, 2001; Payne and Frow, 2005). The compulsions of the rapidly transforming societal paradigms and technological advancements are important factors that require more comprehensive and innovative approach to market strategy. CRM is important part of strategic marketing plans that are crucial to rebuild the trust amongst its customers. Hence, there is urgent need to address and evaluate the potential benefits of using CRM in the organizations. Methodology The proposed research study would be qualitative in nature but encompass elements of quantitative research also so that better and more accurate conclusions could be achieved. Qualitative research demonstrates and facilitates deeper understanding of the problem and helps to investigate the context in its entirety. Data collection Measurement techniques would comprise of questionnaires and interview schedules. Sample size of around 100, comprising of customer relationship managers from different types of organizations would be taken up. Primary data collection would be collected through detailed and qualitative and quantitative questionnaires prepared, whereas interviews can be carried out in one to one settings or can be in a group setting, often referred to as a focus group (Krueger, 1994). Because of the exploratory nature of the research, sampling becomes one of the most significant factors and therefore a judicious selection of sample becomes the mainstay of the research. Secondary information sources such as libraries, commercial bibliographic databases for peer review, internet resources and e journals would be used for literature review. Data analysis Data analysis would be undertaken by applying appropriate statistical techniques and developing patterns. Software like SPSS would also be used to analyze the data using different techniques and interpreting the data in the wider context to understand the intricacies of changing business paradigms that influence business decisions. Validity and reliability Validity is not the main concern of the qualitative research as the main purpose of the researcher is the deeper understanding of the views and thoughts of the persons rather than validation. Judicious and careful selection of sample would ensure the reliability of the data so that study would help to evaluate the existing modules of the various areas of business administration and would also help to analyse the needs and requirements of the changing business compulsions so that more innovative approach is encompassed in the CRM to meet the challenges of global and domestic competition. Limitations of the study The study would be limited to the framework of wider implications of the aims and objectives of the CRM where identification of customers’ changing preferences through innovative approach and leadership qualities are encouraged to exploit the emerging business opportunities. Sampling would be limited to the individuals that are directly or indirectly linked with the universities taken. Lack of absolute validity of obtaining proof and limitation of sample size because of financial constraints is also one of the reasons cited for accurate and efficient analysis of the factors that may have significant impact on the study. Time scale and plan The research activities would be entail comprehensive field work followed by data entry and analysis so that critical analysis of potential benefits of CRM can be proclaimed as intrinsic part of all business strategy. Serial Activity Days 1. Field Work 60 2. Compilation of data 30 3. Data entry and processing 15 4. Data analysis and evaluation 30 5. Writing and printing 60 Reference Ansoff, H Igor. (1965). Corporate Strategy: An Analytic approach to business policy for growth and expansion. NY. McGraw Hill. Andrews, K.R. (1971). The concept of corporate strategy. Homewood, IL. Bernett, H. G. and Kuhn, M. D. (2002). The emergence of electronic customer relationship management. The Telecommunications Review, pp91-96. Chandler, AD (1977). The Visible Hand: The Managerial Revolution in American Business. Boston: Harvard Business School Press. Kale, S. H. (2004). CRM failure and the seven deadly sins. Marketing Management, 13, pp.42-46. Krueger, Pergamon, R. A. (1994). Focus groups: A practical guide for applied research. Sage, Thousand Oaks, CA. McGregor, Douglas.(1960). The Human Side of Enterprise. McGraw-Hill. McKeen, J. D. and Smith, H. A. (2003). Making IT Happen: Critical Issues in IT Management. John Wiley and Sons Ltd, Chichester, UK. Nargundkar, S. and Srivastava, A. (2002). Analytical modeling for effective implementation of CRM Strategies in the credit business, Decision Sciences Institute 2002 Annual Meeting Proceedings (DSI2002), St. Louis, USA, 5-9th March, pp. 694-699. Payne, A., and Frow, P. (2005). A strategic framework for customer relationship management. Journalof Marketing, 69, pp.167-176. Porter, Michael E. (1996). What is Strategy. Harvard Business Review. Nov/Dec96. Vol.74 Issue 6, p61. Reinartz, W.J. and Chugh, P. (2002). Learning from experience: making CRM a success at last. International Journal of Call Centre Management, March/April, pp.207-219. Sederberg, Peter C.(1984). The Politics of Meaning: Power and Explanation in the Construction of Social Reality. University of Arizona. Tschohl, J. (2001). E-service. Best Sellers Publishing, Minneapolis, MN. Read More