Differentiation between Customer Relationship Management - Essay Example

Differentiation between Customer Relationship Management Introduction: Customer Relationship Management may be defined as a comprehensive approach, which creates, maintains & expands customer relationships. CRM does not imply extensive marketing & neither is it an inspiration for its information technology team, but having said that CRM touches all the above areas because of which it is internally integrated. If anyone of the above area is delegated the whole organization may suffer. (Anderson, 2001; Kerr, 2001, p.2) In today’s world when the changes are rapid & technology is seen as the next best thing the industry that has been mostly affected by it is banking industry. In the yester years banks used to invest in maintenance & development of operational systems but now they are considering their marketing campaigns (mainly offline) to boost up their overall earnings. (Rajola, 2003, p.17) Benefits that can be derived through CRM are the reporting tools that enable companies to have strategy in their businesses & also have the opportunity to keep the consumer’s contact. (Sharp, 2003, p.175) On the other hand Customer Experience Management (CEM) is an entire process of accumulating a consumer’s experience with a product or a particular company. The idea of CEM is mainly built on the orientation of the process & hence it tries to relate the relevance of a product or for that matter, the producer firm, to a customer’s life. In CEM the overall motto is not to sale the goods to any particular consumer, instead the idea is to maintain & share the experiences of the product with the consumers even after the sale. By doing this, value is created for the firm & a loyalty is built up among consumers. (Schmitt, 2003, pp 17-18) Customer Relationship Management & Customer Experience Management: comparative analysis Customer Experience Management is an approach that focuses mainly on the experience of consumers. It focuses on the consumers’ purchase & usage mannerisms. Thus the customers may feel delighted with newer products while on the contrary Customer Relationship Management rarely focuses on the emotional bond with the customer. In CRM customer’s feedback regarding a product or a service is not considered. (Schmitt, 2003, pp 16-17) Through Customer Experience Management new product development can be done as it is based on ‘sociocultural & business usage context’, companies would view this as an opportunity to have an insight in the development & deployment of newer products. On the other hand Customer Relationship Management concentrates mainly on the retaining old clients through their existing products & hardly tries to break the shackles by innovating newer products. (Schmitt, 2003, pp 16-17) Customer Experience Management is mainly process oriented while Customer Relationship Management is outcome oriented. CEM considers the relevance of a product to a consumer’s life. Moreover it tries to connect with the consumer at every point so that their experience can prove to be handy for their integration. An example is best suited to explain it. Let us suppose a person buys a motorbike or for that matter a computer system. Then in the first place it can be questioned why the person buys a car or for that matter a computer system? The question can be answered in the following two ways. Firstly in case of a bike it can be said that he does so because the product (which is the bike here) reflects the lifestyle of the consumer & secondly in case of a computer system it helps in adding imagination to the consumer instead of just occupying the space. (Schmitt, 2003, p.18) In Customer Relationship Management the focus is on the value of the consumers, which they derive from the organization while in case of Customer Experience Management the focus is on the value created by the consumer for the organization. (Ross, 2008, p.20) Customer Relationship Management is a marketing tool & its main emphasis lies in the identification of customers & retaining them while in Customer Experience Management the emphasis lies on the point of view of the customers as whatever they expect from their experiences must be exhibited in the portfolio of product & services. (Ross, 2008, p.20) In Customer Experience Management an intimate supply chain is created. The main reason behind constructing the chain is to support the consumer’s desire in engaging the consumer in the shopping experience. The customer’s biggest want from such a supply chain is to get an environment of emotional & psychological back up. The main reason behind the formation of the intimate supply chain is to create a loyal consumer brand without considering too much about the business a consumer can provide but by looking at the experience of the consumer from an emotional viewpoint from the suppliers. (Ross, 2008, p.187) Customer Relationship Management has got different meaning to different people. To some it is Online Data Analyzing Process (OLAP) while for others it is (CIC) which means Interacting with Customer Centers. However in practicality Customer Relation Management does have a strong database & software programs which are used in the call centres. The biggest drawback however with Customer Relationship Management still remains as it never records the data that are less quantifiable instead it records only the measurable portion that attributes to the organization. (Schmitt, 2003, p.16) (“Customer Relationship Management Software” n.d.) The CEM & CRM practitioners tends to distinguish themselves as CRM is assumed to be inside out or operation centric approach while in case of CEM it is assumed to an outside in or highly consumer centric approach. Along with that CEM tends to address emerging markets more. (“Customer Experience Management Vs CRM” 2005) This is a strategy aiming mainly at the expedition & analysis of environment & customer behaviour. Customer Experience Management looks for an environment, which is highly customer centric, & also integrated strategies are made to use the experience of the consumers in finding better solutions for the future. Customer Relationship Management on the other hand aims mainly at the vigorous consumer strategy. In the coming years Customer Relationship Management will be more popular as operational environment are expected to mature. (“Customer Experience Management Vs CRM” 2005) Whenever we speak of Customer Relationship Management we always tend to prioritized the product side over and above the consumer’s satisfaction. One big difference that lies with both these management ways is that none tries to create any sort of impact while considering both the product side as well as the consumer’s satisfaction side. Customer Experience Management tries to make benefits through individual programs while the bigger benefits still elude them. The main reason which causes this differentiation is the narrow implementation of the strategy which does not include the measurement of the consumer’s experience. This is the reason why strategically Customer Experience Management misses the mark as it fails to engage the consumers with a comprehensive strategic planning. This causes a negative impact on the minds of the consumers. (“Customer Experience Management Vs CRM” 2005) In addition to the above point collection of revenues is also a point of distinction between both these management approaches. Customer Experience Management differs from the Customer Relationship Management as in CEM revenue is gathered through the contribution of the experience of the consumers while in case of CRM the revenue is collected by maintaining the contacts with the consumers. In case of Customer Experience Management broader thinking always plays a crucial role as in the modern era it takes outsourcing into an all together new level. Marking the missing skill sets & sharpening the comprehensive ideas will only be added advantages for CEM. This will help in adding the various key components (such as Customer Centricity & Marketing) to the overall business activity of the organization. (“Customer Experience Management Vs CRM” 2005) Is CRM a better tool than CEM? When two management processes are competing against one another it is very difficult to select one. But the analytical views on both must be shared. It has been for years that Customer Relationship Management was the main centre of attraction before the new concept of Customer Experience Management has come out in the scene. Recently it was analyzed that the Information Technology cost of CRM has been on the rise and this has made the same process suffer as it has been analyzed by many that at the Preliminary stage it cannot offer any sort of business success. So, where CRM does falter? The answer lies in the treatment of consumers. Consumers never want to expand their relationship with the organization as they feel that it is a bad habit of the organization to treat them like commodities and use their contacts for the benefit of the organization. So does this mean that “Customer Experience Management” is a clear winner? The answer is ‘yes’. It does score over Customer Relationship Management in its approach. “CEM” has a clinical approach towards consumers. Frontline representatives of the organization always try to optimize the day to day experience of the consumers. This causes a long term relationship to evolve between the consumer & the organization. Also a base of loyalty is created between both the parties. A relative instance can be illustrated in this light where the organization tries to hear the sales pitch of a consumer & at the same time tries to find the solution of the problem through the customer care website. All this adds up to the overall experience of the organization. Experience cannot create value for the organization in a short span of time but it takes long to deliver results. Also in case of “CEM” a probabilistic approach can be applied to find out the buying habits of the consumers & at the same time a prediction of the future revenues can also be made. Ability to deliver right knowledge at the right time can only come through experience & this causes a beneficial relation between the consumer & the organization. (“CRM & the Customer Experience” 2009) the following diagram illustrates the three most important aspects of CEM. (“Best Practices” 2009) So will it be fair to conclude that ‘Customer Relationship Management’ is all but over? Is ‘CEM’ the new path to focus? Or are there any ways left to reframe the process of ‘CRM’? It sometimes becomes a point of worry when the best tend to fade out & something else takes its place. For years the process of management was handled by ‘CRM’ but now it is fading. So what are the areas that ‘CRM’ can improve upon?? It can only improve if the organization focuses more on its operations & on its analysis. The main aspect will be to focus more on the intelligence level & the ‘cross channel’ personification level. This will help the consumers as their knowledge will be enhanced & the overall bottom line of the organization will be incremented. In case of ‘operational’ area the automation of business will be involved. In simpler words it is a process where consumers can enhance their knowledge through ‘agencies’ or through ‘direct marketing’. It also includes ‘customer contact’ & ‘customer service charges’. One biggest advantage that operational activity can bring to the organization is that it directly affects the people & hence they are so appealing. ‘Analytical’ area on the other hand is the assimilation & understanding of the operational data. Realization of the opportunities can be made through this & interactions with the organizations can be optimized. One flaw with the analytical area is that it depends too heavily on the statistics as it is a ‘domain of actuary’. (Best, 2001) Concluding remarks What are the main reasons attributing to the overall success of the ‘CEM’? Customer Relationship Management mainly aims at the branding, the platform & the overall environment of the organization. Now if we deeply analyze each element we will find why ‘CEM’ is becoming so special. In case of ‘environmental’ analysis the stress is mainly given on the innovation part so that consumers does not get confused or feel discouraged to interact with the organization. Instead a more engaging atmosphere is created to nullify all such problems. While speaking about the ‘branding’ perspective it can be said that it is a very consequential strategy for the organization, as it involves the creation of brand market value of the organization & at the same time lot of innovation goes into it. Continuing the discussion on ‘branding’ we should now see what are the main elements that contribute to ‘branding’. Decision on the ‘logos’ & the ‘tagline’ is the starting point, as it helps to plan the pricing of the product. It is a very critical strategy as it develops the brand in the market. Through this a product gets recognition in the market & tries to separate itself from the rest of its competitors. While considering about the ‘platform’ side, the first thing that comes into the picture is the ‘logistics’ management & the overall ‘workforce’ of the organization. It involves all the goals starting from the ‘streamlining of operations’ to removing barriers for satisfying the consumers. (Duncan, 2006) In addition to that, reduction of costs & improving the overall consumer’s experience are the other major area which needs to be prioritized. References: 1. “Best Practices” (2009). ResponseTek. Available at: http://images.google.co.in/imgres?imgurl=http://www.responsetek.com/images/RT_circle_product.gif&imgrefurl=http://www.responsetek.com/best-practices.asp&usg=__gVIYCBR6TBeMGSkcqVHakYSnxZ8=&h=249&w=250&sz=30&hl=en&start=24&tbnid=9D-TstcncNrBcM:&tbnh=111&tbnw=111&prev=/images%3Fq%3Dcustomer%2Bexperience%2Bmanagement%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D20 (Accessed on Oct, 9,2009) 2. “Bolster Returns with Relationships.(Customer relationship management for the insurance industry) (Brief Article)”. (Aug 2001). ACCESS my LIBRARY. Available at: http://www.accessmylibrary.com/coms2/summary_0286-10350398_ITM (Accessed on Oct, 7, 2009) 3. “CRM & the Customer Experience”. (n.d.). Right Now. Available at: http://www.rightnow.com/crm-vs-cem.php (Accessed on Oct, 7,2009) 4. “Customer Relationship Management Software” (n.d.).Simple Thoughts. Available at : http://blog.taragana.com/index.php/t/customer-relationship-management-software/ ( Accessed on Oct, 9,2009) 5. “Customer Experience Management vs. CRM”. (2005). Knol. Available at: 6. “Just what is Customer Experience Management, Anyway?” (n.d.). Available at: http://www.marketingprofs.com/6/duncan3.asp# (Accessed on Oct, 7, 2009) 7. Anderson, K. & Kerr, C. (2001).Customer Relationship Management. New York City: McGraw-Hill Professional. 8. http://knol.google.com/k/leigh-duncan/customer-experience-management-vs-crm/92pi04uyy6au/6# (Accessed on Oct, 7, 2009) 9. Rajola, F.(2003). Customer relationship management: organizational and technological perspectives. New Mexico: Springer 10. Ross, D. F.(2008). The Intimate Supply Chain: Leveraging the Supply Chain to Manage the Customer Experience. North West Washington: CRC Press. 11. Schmitt, B. (2003). Customer experience management: a revolutionary approach to connecting with your customers. New Jersey: John Wiley and Sons. 12. Sharp, D.E. (2003). Customer relationship management systems handbook. North West Washington: CRC Press. Read More