Implementation of a CRM in B2B with the Example of Aviation Business - Term Paper Example

?Implementation of a Relation Management System (CRM) in B2B with the Example of Aviation Business Table of Contents Introduction 3 2. The Strategy 4 2.1 Design CRM Strategy 4 2.2 Market Research 7 2.3 CRM Standards in Aviation 9 2.4 Possible CRM Process Overview 12 2.5 Possible Implementation 16 2.5.1 Modus Operandi 16 2.5.2 Special Features 19 19 2.6 CRM Change Management 20 3. Conclusion 22 4. References 23 5. Bibliography 27 1. Introduction Nowadays, the aviation industry across the world is confronting with major challenges due to the strong competitive environment. As the aviation companies are struggling to gain higher market share and to sustain lucrativeness in present day’s high demanding customer-driven market. Therefore, airline organisations need to develop new methods to manage the customer relationship in order to enhance customer loyalty and income. The impacts of global economic downturn along with the terrorist attack of 9/11 have severely impacted on the aviation business. The airline companies concentrate on operational developments in order to minimise expenses without ignoring the demand of customers. Customer relationship has nurtured for aviation companies to maintain competitive advantage and productivity in the long-run. The customer relationship management (CRM) has become a tool for aviation companies for managing good association with the customers (Boland & et. al., 2002). The paper explains the CRM system in B2B business with concentration on aviation business. B2B allows one business to interrelate with other business. The developing technologies have enabled businesses to apply CRM system in B2B. The chief resemblance between B2B and CRM is that they both work on online platform. Therefore, developing and implementing CRM strategy on the basis of B2B model can result in low managerial expenses, well-organised marketing promotion and improved customer receptiveness. By using CRM in B2B, aviation organisations can increase the reach of customers and lessen the expenses of quality management (Zeng & et. al., 2003). The paper describes how CRM can be conducted in B2B aviation organisation. The objective of the paper is to understand various aspects of CRM in aviation organisations concerning designing, implementation and procedure which must be considered in order to get positive results. 2. The Strategy 2.1 Design CRM Strategy Several organisations pursue expensive CRM initiatives without considering the challenges and the expenses involved in them. Therefore, they are unable to get the benefits of CRM. IT and CRM managers are responsible for economic reasoning in order to make sure that CRM plans get appropriate funding. Aviation organisations must realise that CRM is a business strategy with underlying technology and it necessitates huge spending of money in software, hardware, communication, consultation and employee training. Objectives of CRM The major objective of CRM is to enhance the level of customer satisfaction. The task of CRM is not only providing technological support to the business, but it also acts as marketing philosophy for organisations. The “one-to-one” marketing system which has appeared in present days, proposes organisations to be more prosperous if they focus on gaining and preserving a portion of every customer, rather than a portion of entire market. In this context, information technology i.e. CRM can become an enabling aspect for organisations. With the improvements in technological innovations and the emergence of internet, CRM has become powerful enough to forecast the behaviours of customers, develop value–added functions, reinforce the brand image and develop customer support functions. CRM is a technology empowered business approach whereby organisations influence increased customer information in order to establish commercial relationships, on the basis of optimisation of value provided to the customers. Customer satisfaction through implementation of CRM can be achieved by lessening of cost of services, development of customer services and efficiency, examination of new markets, study of competitors and business environments. Organisations use CRM for tailoring the products or the services for the consumers (Huang & Chen, 2007). Measurement of Customer Satisfaction An organisation should measure the commercial advantages associated with reduction of expenses of CRM and use the savings to build a persuasive reasoning for CRM plan. Furthermore, CRM measurement helps to ensure that aviation organisation receives predicted benefits and accomplishes the strategic objectives. A few organisations measure CRM on the basis of return on investment (ROI) and the total cost of ownership (TCO) (Gartner, Inc, 2004). The following figure will show the measurement of CRM for numerous organisations: Figure 1: Measurement of CRM Source: (Gartner, Inc, 2004) The performance of CRM in aviation organisations can be measured by developing certain matrices which can also be considered as the key performance indicators (KPI). The measurement can help to understand if the objectives of CRM are fulfilled or not. In B2B market, the metrics can be level of market share, volume of sales and revenue growth among others. The synchronisation of KPI indicators with the objectives of CRM help aviation organisations to view if they are fulfilling the expectations of customers or not (Parvatiyar & Sheth, 2002). 2.2 Market Research Service organisations confront with the challenge of different expectations of customers regarding the services they desire for. As customers have become more elegant, they expect faster and more reliable service twenty-four-hour-a-day. Therefore, CRM can provide customers the freedom to help themselves by providing the accessibility to custom-made services according to their requirements. Internet is the perfect way to find information rapidly and securely without any time boundary. CRM in B2B focuses on the base of the sustainable long-standing customer relationship. CRM has become a crucial component for the success of aviation business. For instance, in Boeing, the CRM system has been developed which has enabled to lower the operational expenses and increase the service quality for its B2B customers. The CRM system in Boeing provides customers with variety of information which helps to raise the amount of investment. The CRM not only helps aviation organisations to manage enhanced customer association, but also provides customers a commercial method to get valuable perception about them (aviation organisations) (Jiang, 2003). Due to dissimilarity in services of airline organisations, customers generally expect ambiguous idea regarding the services, even if they do not have any specific knowledge regarding it. This ambiguous idea is the area between preferred service and acceptable service of aviation organisations, which is also termed as “zone of tolerance”. The “zone of tolerance” of customers relies on different aspects such as price and quality. In certain aspects of service, customers cannot bear any kind of faults, for instance, the core services of aviation. It impacts on the customers’ expectations (Olli, 2007). There are two aspects which can encourage the desired expectations of customers in B2B which are individual requirements and viewpoints regarding service. Individual requirements fall under four groups which are physical, social, emotional and practical. All these groups rely on the condition of customers, i.e. the level of annoyance or level of happiness among others. The other service expectation is the personal viewpoint of customers. There are certain customers who expect delays in service, while others do not expect any kind of delays in service (Olli, 2007). The satisfactory service is the least level of service a customer finds tolerable in B2B. When the anticipated service prospects are occurring from stable approaches, the satisfactory service expectations become more adjustable, depending on the condition. There are five aspects which impact on the satisfactory service expectations of customers in B2B which are temporary service intensifiers, apparent service options, customer self-perceived service, projected service and situational facets (Olli, 2007). The following figure will depict the expectations of customers in B2B: Figure 2: Customer Expectations in B2B Marketing Source: (Olli, 2007) 2.3 CRM Standards in Aviation With the advent of internet, customers are becoming more aware about aviation organisations’ products and services. The aviation business has become quite commoditised and it becomes challenging for airline organisations to gain higher revenue (Wessels, 2006). Due to the positive influence of CRM on business performance, several airline companies have accepted ranges of technologies, procedures and organisational initiatives in order to develop the CRM capabilities. Although there is no “one-to-one” association between customer satisfaction and effectiveness of aviation organisations, still customer satisfaction is a key aspect of operational and monetary performance of aviation industry. It can be observed that the overall experience of customers is significant for gaining customer satisfaction in aviation business. In this context, the CRM can help to improve this overall experience of customers through developing tailored services, custom-made marketing, targeted promotions and ideal pricing. However, as a matter of fact, the CRM packages are complex with inconsistent purposes, instructions and technology selections which can impact on the aviation organisations’ capability to determine a successful CRM standard. Visions of CRM provided by the dealers, specialists and other professionals at times fail to provide practical paces to accomplish success. In order to gain success, aviation organisations should recognise the drivers of customer loyalty (Chu, 2002). Drivers of Customer Loyalty In B2B, there are certain universal aspects which are significant for customers such as reliability, cost and faith among others. As products and services in B2B are complex and dissimilar compared to B2C marketing, the driver of customer loyalty can also vary in these two business types. In B2B aviation business, the drivers which can impact on customer loyalty can be divided into three aspects which are reliability, products/services and business features (Arefi & et. al., 2010). The following figure will show the drivers of customer loyalty in B2B aviation organisations: Figure 3: Drivers of Customer Loyalty in B2B Marketing Source: (Arefi & et. al., 2010) Operational Guidelines The customer relationship is a complex matter as there are a lot of individuals who are involved in the selling choice. Developing customer loyalty is a significant part of CRM. CRM serves as knowledge for customers who contribute to the understanding of the aspects which drive loyalty. It is a strategic alignment which concentrates on holding present customers and improving their loyalty levels. The fundamental purpose of CRM is to entice those customers who have the potential and possibility of starting loyal association with the business in the long-run. For the customers of B2B, the major reason for becoming convoluted and remain in commercial relationship with any aviation organisation is to minimise the business risk and to streamline the product or service varieties. Loyal customers know what to expect from a brand and thus make the business operations much smoother than other usual customers (CBS Library, n.d.). 2.4 Possible CRM Process Overview Due to the above objectives and advantages, CRM has enticed expanded consideration in the aviation organisation. Therefore, more and more aviation organisations are accepting customer oriented approaches, packages, tools and technologies for well-organised and effective CRM. They have realised the requirement for thorough and combined customer understanding for constructing close supportive and partnering associations with the customers. The arrival of new mediums and equipments is considerably changing the method in which organisations interface with the customers. CRM signifies an enterprise method to develop comprehensive information regarding customer activities and preferences to create programs and approaches which inspire customers to incessantly improve the business relationship with the organisation. Framework for CRM Process There are four processes of a fruitful CRM in aviation organisations. The processes are further classified into sub-processes. The following figure will show the possible overview of CRM processes in aviation organisations: Figure 4: Overview of CRM Processes Source: (Parvatiyar & Sheth, 2002) Formation: The first phase of CRM is the formation which denotes to the decisions about commencement of interpersonal functions of an organisation concerning certain groups of clients or individual clients with whom they (organisations) desire to involve in supportive or collective business relationship. This phase is characterised by three significant decisions which are, outlining the objective for implementing CRM, choosing parties for proper CRM packages, and creating packages or interactive action arrangements for involving in business relationships with the customers. The overall purpose of CRM is to increase productivity of the organisation and enhance shared worth of the parties involved in the business. Similarly, the selection of parties of CRM is the other significant decision in the CRM process. In B2B aviation business, there are certain essential resources and promises towards customers which must be established in the CRM program. Thus, aviation organisations need to decide the type of customers on which CRM will be concentrated (Parvatiyar & Sheth, 2002). Management and Governance: The second process of CRM is management and governance where tasks are individualistically or mutually commenced through relational associates. In this phase, several issues should be considered comprising role description, communication, mutual connections, the planning procedure, CRM process placement, employee inspiration, and observation process. Role description describes defining the role of business associates in satisfying the CRM responsibilities along with the role of precise persons or groups in managing the customer relationship and associated functions. Communication is an essential process in CRM which assists in relationship improvement, promotes faith and offers the data and the facts required to undertake the supportive and collective functions of relationship marketing. Through proper communication medium, aviation organisations can enhance the customer relationship. The other significant aspect of relationship governance is the procedure of planning and defining the level to which customers’ requirements are considered in the CRM planning procedure. Considering the requirements of customers in CRM planning procedure can certify their support in CRM operation and accomplishment of planned objectives (Parvatiyar & Sheth, 2002). In CRM process, the employees play a vital part in the implementation. Therefore, it is vital for aviation organisations to train them so that they can efficiently cooperate with the customers, perform as a team and fulfil the customers’ expectations. The human related issue in CRM process is to generate motivation among employees by providing proper inducements, rewards and compensation towards establishing stronger relationship assertion and customer assurance. Ultimately, proper observation processes are required to maintain CRM implementation against failure and management of complaints in customer relationship. The observation procedures in CRM comprise periodic assessment of objectives and outcomes, instigation of modifications in business relationship system and design & authority procedure when necessary. Good observation procedure helps to avoid relationship disruption and formation of irregular authorities. It also keeps CRM programs on a proper path in appropriate arrangement of objectives, outcomes and resources (Parvatiyar & Sheth, 2002). Performance: Periodic assessment of performance is required for assessing if the CRM programs are fulfilling the customers’ prospects or not. The measurement of performance of CRM determines if the program is viable in the long run business perspective. The performance assessment helps to take remedial measures with respect to relationship governance or in adjusting relationship marketing goals and program features (Parvatiyar & Sheth, 2002). 2.5 Possible Implementation 2.5.1 Modus Operandi The airlines based business organisations in relation to aviation industry generally focus upon developing the different potential steps and its adequate implementation through introducing well organised customer relationship management (CRM) procedure for accomplishing certain major business objectives. In this context, the crucial business goals for the aviation industry in order to make effective implementation steps of CRM techniques include increasing profitability as well as productivity by generating customer loyalty and delivering superior quality experience of the customers throughout all business channels. Furthermore, the other business goals in relation to aviation industry also include offering upgraded customer services, continuous business growth, attaining considerable market share, meeting as well as fulfilling the various desires along with necessary requirement of the customers and increasingly attaining customer satisfaction (Jiang, 2003). For the purpose of fulfilling the above discussed objectives, airlines industry must follow certain important steps. The vital steps include segmenting the customer base levels in terms of profitability, recognising the service or the product packages for each individual recognised customer segments, advancing as well as implementing the best procedure and measuring performance along with improving continuously. From the perspective of segmenting the customer base levels in terms of profitability, it has been recognised that most of the business related industries such as airlines fundamentally allocates its direct materials, overhead costs as well as labour to the customers by executing a single allocation criterion i.e. conducted through purchasing huge quantity of products at a definite period of time. But, recently, the business industries such as the airline industry are found to execute certain techniques that include activity-based costing or cost-to-serve model (CTS) in order to allocate the costs more accurately to the customers on the basis of the preferences as well as the requirement of the customers. In terms of identifying the service or the product towards each customer segment, the airline or the aviation industry mainly determines the increased value in the relationship of each customer segment with the supplier. This particular step is regarded as the most challenging actions particularly in the CRM procedure in relation to aviation industry. The challenge is regarding packaging of the value-adding products or services belonging to each customer segment (Buhalis, 2003). In case of aviation industry, the packaging is related to providing value-added services that it delivers to each customer segments. In order to mitigate this particular challenge, there may lay one possible solution i.e. to offer the parallel service or product towards every customer segment varying with the quality of the service or the product level. From the viewpoint of developing and executing the best procedural step, the customer expectations are determined and set. It is evident to the fact that the satisfaction of the customers is attained only when their expectations are met. This particular step ultimately focuses upon complying customer expectations along with fulfilling their requirements so that the business industries such as the aviation industry can develop as well as execute the best procedures while implementing the business functions. In terms of measuring performance, the chief goal of the aspect of CRM in relation to aviation industry is to serve better towards dissimilar customer segments of the supplier organisation along with enhancing the profitability of the supplier. In this particular step, once the program of CRM has been developed as well as executed, it should be assessed in order to determine certain important facets. The significant facets include satisfying different customer segments and improving the overall profitability of the supplier by a considerable level (Coyle & et. al., 2008). The efficient utilisation of Information Technology (IT) that embraces both software as well as hardware environments ultimately create fundamental transformations especially in the nature as well as the application of technology in any sort of businesses. The introduction of Information Communication Technologies (ICTs) that comprise both hardware as well as software components can provide strong as well as superior tactical tools for every business related industries such as the aviation industry. It has been recognised that numerous functional operations heavily rely upon the ICTs. In this context, the aviation industry initially introduced the medium of internet to perform their various operational functions. In order to perform one of the significant businesses operational functions i.e. maintaining Computer Reservation System (CRS), the airline industry particularly uses the medium of internet along with the execution of different programming software tools such as FoxPro, Linux or Oracle by a significant level. The other basic business operational functions in relation to aviation industry that include check-in, distribution of available seats, in-flight catering orders and ticketing among others are duly performed with different hardware and software equipments. In order to be successfully performing the above discussed operational functions, the different hardware and software components that are largely used by the aviation or airline industry include a personal computer with updated specifications along with latest technologies, medium of internet and software programming tools like Linux, Java and FoxPro among others. In this context, it can be concluded that the aviation industry should heavily invest upon the execution of ICTs for the purpose of smoother functioning of the various important operational functions of the industry. Additionally, the adequate execution of the different facets of ICTs that include both hardware as well as software equipments might ultimately place the industry to attain competitive position as compared with other related industry segment by a significant level (Buhalis, 2003). 2.5.2 Special Features In order to attract the aviation related business organisations, there must lay certain special features to be introduced in relation to CRM business strategy. It has been observed that the most imperative part that is played by the airlines is regarding the conception of airline’s fleet. The introduction of 3d configurator or visualiser based upon the visual information might pose significant effect upon the airlines or aviation industry. The introduction of 3d configurator that is mostly implemented in Java 3d which ultimately tends to deliver detailed information about a specific sound stream relating with the airlines. This particular special feature i.e. 3d configuration might enhance the different operational functions of the aviation industry by a large extent (Kubuta & et. al., 2008). Additionally, the other special feature can be introducing environment-friendly aircraft to the airline related business organisations in order to reduce considerable burden on the global environment due to the release of various harmful gases. Moreover, the special feature in relation to seat arrangements, introduction of enhanced ‘Super Seat Premium’ services might prove beneficial for both the suppliers as well as the airline related business organisations on the basis of business-to-business (B2B) services. The special characteristics of the Super Seat Premium services generally include well equipped seating places and arrangements, expansive seat layout and convenient among others (ANA, n.d.). Along with the introduction of 3D configurator or visualiser as well as quality facets of seating arrangements, the other special and quality characteristics might also include enhanced flight efficiency and safety, installation of Electronic Flight Bag (EFB), Vertical Situation Display and Electronic Checklist among others (ANA, n.d.). These particular special features might contribute towards generating improved and quality operational efficiencies along with attracting the aviation or airline based business organisations by a large level. 2.6 CRM Change Management Change management is considered as crucial aspect for success or failure of CRM implementation. CRM attempts to make the entire organisation as customer oriented and this new alignment commands logical changes throughout the operational structure of organisation. According to the report of Gartner Group the sales of CRM system had become almost three times more from US$ 23.2 billion in the year 2000 to US$ 76 billion in the year 2005. However, the report of Gartner also recommended that about 55% of big CRM projects fail as they are unable to comply with the expectations of customers. CRM involves essential change from old alignment, old working practices, and old organisational structure to new ones. Thus, broad effort is essential for organisations to facilitate employees to cope up with the changes. In simple words, change management in CRM environment is regarding employees to adopt new business procedures and activities. Change management is a key portion of CRM (Toolbox, n.d.). The change management in CRM has five widespread initiatives which are shown in the following figure: Figure 5: Relationship of CRM with Change Management Source: (Toolbox, n.d.) The change management cannot succeed without active participation of top level administration. Senior management must appreciate the change as an official expedition. Successful implementation of CRM plans requires synchronised effort of several persons in the organisation. Thus, it is obligatory to inaugurate an infrastructure which recognises key persons to drive changes and describes their roles in the change procedure. Change management includes a systematic appraisal of exiting organisational structure in order to define the changes required for ideal CRM (Toolbox, n.d.). 3. Conclusion CRM is not a new idea in business, because customer relationship has changed from historical importance of commerce which had concentrated mainly on either sales or manufacturing (Mack & et. al., 2005). In B2B aviation business, CRM has its influence in business alignment and service quality progress. In present days, the promise towards a customer is fascinating; however in practice those promises can be extremely challenging for aviation organisations (Rigby & et. al., 2006). Aviation organisations need to maintain ideal equilibrium between customer expectations as well as operational expenses of CRM. In order to sustain the level of satisfaction and the necessities of existing as well as potential customers, aviation organisations should be able to target particular customers and to determine added value by entailing distinguished schemes and delivery of services. It denotes that adopting analytical approach to value creation and knowledge regarding customers can help to gain success in CRM. Gradually, refined technologies deliver crucial assistance in developing and organising system for gaining competitive advantage. Aviation organisations can accomplish better organisational competency and market usefulness by automating the business procedures through CRM which can generate value to the customers. In aviation business, CRM can help to classify the profitable customers and thus increase the efficiency of marketing. CRM can help to develop trust which is significant for long-term profitability of business. The trust in business facilitates to generate loyal customers who make repeat purchases and positive references for the company to others, thus increasing the business reach. 4. References Arefi, M. & et. al., 2010. Drivers of Customer Satisfaction in an Industrial Company from Marketing Aspect. World Academy of Science, Engineering and Technology, Vol. 66, pp. 1653-1659. ANA, No Date. Special Feature. Corporate. [Online] Available at: http://www.ana.co.jp/eng/aboutana/corporate/ir/pdf/annual/07/07_09.pdf [Accessed May 21, 2012]. Boland, D. & et. al., 2002. 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