A Difference in the Development of a Customer Management Strategy and Its Implementation - Term Paper Example

Customer Relationship Management Executive Summary There are various definitions of CRM and the term means different things to individual persons. Some take CRM to be a technological device while others feel that it is a prerequisite for business. In general, CRM refers to obtaining clients, finding about them and their requirements and offering them the needed facilities. CRM is very often present at the top of company programme. All kinds of organisations are now implementing CRM. Through CRM the organisations are able to seek to form, expand and improve on the relations with the useful clients which enables them to enhance customer value plus corporate profitability. It is a known fact that organisations find it more expensive to acquire customers rather than to retain the current ones. When considering this fact CRM becomes all the more important. However, CRM is not all that easy. The challenge being faced in this aspect is the understanding of how global CRM solutions can be implemented. Thus, there is a requirement of understanding this area and finding solutions to it in order to make CRM implementation successful, and ultimately lead to a successful organisation. Table of Contents Page no. 1. Introduction 4 2. Need for CRM 4 3. CRM and Organisations 5 i. Technological Aspect 5 ii. Business Aspect 6 iii. Customer Aspect 7 4. Challenges in CRM 8 i. Successful implementation of CRM Strategies 8 ii. Implementation of CRM Strategies in Global Environments 9 5. Conclusion 10 Customer Relationship Management Introduction Firms’ business strategies are becoming further customer-oriented because of mass customization and personalized facilities. The result is that information technologies (IT) are employed for serving different areas of an organisation as well as for serving the end-users of the items and facilities of the organisation. Through employing IT there is an original element included in relationship marketing and this is called customer relationship marketing (CRM). Mainly, CRM refers to obtaining clients, finding about them and their requirements and offering them the needed facilities (Teo, Devadoss, & Pan, 2006). Sun, Li, and Zhou (2006: 81) describe CRM as being about providing the “right product to the right customer at the right time through the right channel” so as to be able to fulfil the requirements of the client. Need for CRM Now the power that a seller has is being transferred to the buyer and this scenario is making the organisations aware of the fact that they are required to work on customer relationships rather than simply provide low cost goods that are differentiated. Simultaneously, it is seen that the switching costs are lower than ever which allows the customers to switch to another brand of some item. Other than this there has been a rise in the expectations of the customers and thus there is an essential requirement of CRM in “today’s customer-driven business environment” (Teo, Devadoss, & Pan, 2006: 1614). Today there are tools and technologies of data warehousing, data mining and similar such CRM practices available that offer more opportunities than could be obtained formerly (Sun, Li, & Zhou, 2006). Through these the firms can set up and maintain enduring relations with their clients. Through implementing CRM systems a firm would have to undergo alterations in its management and functions and the result is an enhancement in performance (Chalmeta, 2006). Former researches have established the fact that acquiring new customers is more expensive than retaining the current ones owing to expenses related to advertising and marketing. Due to this the organisations are required to differentiate their customers rather than their products while concentrating more on acquiring customer share rather than market share. It is known that if a firm wishes to stay in business it has to satisfy its customers rather than sell products (Boulding et al., 2005). Further findings of researches are that organisations should retain their customers as well as “expand the useful lifespan of customers with the organisation by means of IT” (Teo, Devadoss, & Pan, 2006: 1614). Due to such kinds of technologies the possibility of there being one-to-one relationships, “cost containment, customer value analysis, and product and website customization” (Teo, Devadoss, & Pan, 2006: 1614) has become real. The 80/20 rule says that 80% of the sales of an organisation are due to just 20% of its customers. This rule places an emphasis on the requirement on the part of the organisations of retaining and getting involved in sustained relations with useful clients for maximisation of profits. CRM and Organisations Technological Aspect When considering the technological viewpoint it is said that IT benefits an organisation through fostering closer relations with their clients, analysing their data and providing a logical analysis of the client. Therefore there is a requirement on the part of the organisations to offer pertinent and precise data to each of the workers of the organisation. Such kind of incorporated data system normally needs an incorporation of the advertising sales and facility operations that take place in the organisation. When such a viewpoint is considered, CRM is the fundamental infrastructure having each of the vital applications for comprehending and effectively getting involved with the clients (Teo, Devadoss, & Pan, 2006). For incorporating information in an organisation there is normally a requirement of “a centralized database, data warehouse or data marts” (Teo, Devadoss, & Pan, 2006: 1615) for storing every pertinent data concerning the client along with functional data in an organisation. Through the incorporated mechanism there is an update of the organisation’s business procedures for the purpose of providing highly effective work processes. This allows the organisation to respond more to any alterations taking place in the environment and altering the requirements of the customer. Business Aspect According to the business aspect CRM is an organisational tactic “relating to customer demographics, understanding and predicting consumer behaviour, segmenting customers into customer groups, one-to-one marketing, analyzing purchasing patterns of customers, and basically knowing who the customers are, where they are and what they need” (Teo, Devadoss, & Pan, 2006: 1615). There is an essential requirement of this kind of analysis in decision making regarding the suitable tactics for satisfying the clients. Through CRM there is also the surety that the workers can access the suitable data while they are interacting with clients. In this way the employees are in a better position of making the suitable decisions as a reaction to the requirements of the customer. Following the identification of useful customers, organisations can commence building sustainable relations with customers. This can be done by means of getting involved in a two-way dialogue. Through this there is a creation of a continuous relation while the organisation and the customer are interacting together. Customers can be made more profitable through personalization and customization of products and facilities and also through cross-selling. If such procedures are undertaken there is marketing efficiency due to the targeting of suitable tactics at only the useful customers. Along with this the business aspect of CRM includes the alteration which is needed in the business procedures, organisation framework and the culture of the organisation. There is not simply a requirement of there being an incorporated information system which can support CRM launches. There is also a requirement of change in mindsets in the organisations. Through this they can become customer-centric. The top management and workers are requirement to be ready in case there are alterations in job roles, business procedures and organisational culture for maximising the gains that can be attained by means of CRM. Customer Aspect In the customer aspect the focus of CRM is on the communication points among the customer and the organisation. Normally the customers are not interested about the inside business procedures of an organisation. Nevertheless, there is a great impact on the customers because of the interaction chances with the organisation. Such connections can be in the form of call centres, frontline sales personnel, the internet, wireless communication channels, email, fax and so on (Teo, Devadoss, & Pan, 2006). Through such interactions there is an inspiration of allegiance. Such relations also function as expressions of service effectiveness plus customer friendliness of the organisation. When the situation is really severe the customers even leave organisations due to reasons of bad facilities and relations. Organisations give more time toward employees for there to be interaction among them and the customers since they comprehend the fact that customers actually spend greater time in their interaction with the organisation rather than in actually buying the item. The organisations can provide every employee thorough and consistent information regarding the customers particularly to the ones who have more interaction with the customers. Through this the organisation can get together to provide first-rate customer service. It is by means of their interactions that customers pick up allegiance and judgements of an organisation and due to this fact the organisations have to use CRM for getting to know the requirements of the customers. Challenges in CRM Organisations have advanced and developed customer tactics and with this development have risen certain challenges in the implementation. Formerly, most of the CRM proposals had failed badly and only by chance had they actually lived up to the planned returns. A challenge being faced is to comprehend the major issues that can lead to a success in CRM implementation (Kumar, Lemon, & Parasuraman, 2006). Additionally, there are several organisations which wish for CRM implementation on a global level. Following this there are cultural, information and regulatory obstacles. This can be attributed to the fact that the requirements of a particular area can be very different. The challenge being faced is the understanding of how global CRM solutions can be implemented. Successful Implementation of CRM Strategies There is a difference in the development of a customer management strategy and its implementation. There are major problems encountered in the latter stage. Therefore, there is a requirement of an understanding to be present in regard to the successful implementation of a CRM strategy. Each of the operational realms of an organisation makes up the CRM strategy. For this there is a need of collaboration on an interdepartmental or inter-operational basis. There are issues concerning the “owner” of the customer and what is CRM responsible for in an organisation. Such are the organisational-structure related matters that require tackling with. Besides these the firms are required to deal with the challenges in implementation concerned with systems, policies, people, technology and programs. When there is being an implementation of a CRM strategy taking place there is a requirement of an understanding being present as to the major part that IT plays in the operationalization of the CRM strategy as well as the most recent developments of technology (such as CRM software, radio frequency identification tags [RFIDs], space for Smart Cards) which would have the responsibility of driving CRM in the later years (Kumar, Lemon, & Parasuraman, 2006). Implementation of CRM Strategies in Global Environments There has been a prediction made about the international economy according to which by the year 2050 nations such as China, India and Brazil would have become strong in an economic sense together with the United States and Japan (Kumar, Lemon, & Parasuraman, 2006). Following this there would be such a setting wherein there would be competition among international firms (U.S. as well as non-U.S.) in the various markets that employ international CRM. There are various differences in CRM practices around the globe. The differences lie in the areas of culture, politics, technology and information-use. Such differences have led to a major challenge for firms that wish for an implementation of an international CRM strategy. There should be further insights for tackling with the problems related to this matter. The issues which need to be addressed include the major problems that are faced in the management of am multinational customer and if there are individual troubles in the management of customers internationally. The other problems that need addressing are whether the former strategies used in customer management can be applied in the case when companies operate in various cultures and whether the former technological solutions for CRM can be applied to each of the markets. Such issues can be solved by merging the theories about customer management and international marketing. The solution would provide the companies with a comprehension about when the development of an international structure can be favourable and when there is a requirement of there being a customized region-specific structure. Conclusion CRM is a very important and powerful instrument for ensuring that customers become and stay loyal. If CRM is carried out appropriately it can be a strategy as well as an instrument. CRM implementation is no longer an option in today’s business setting. The customers of an organisation may be internal or external, consumers or businesses, they may have exchanges electronically or face to face, they could be international or national – in all such scenarios CRM is one tool that can lead to success for the organisation. References Boulding et al., (2005). A customer relationship management roadmap: What is known, potential pitfalls, and where to go. Journal of Marketing, 69(4): 266-272. Chalmeta, R. (2006). Methodology for customer relationship management. Journal of Systems and Software, 79(7): 1015 – 1024. Kumar, Lemon, & Parasuraman, (2006). Managing customers for value: An overview and research agenda. Journal of Service Research, 9(2): 87-94. Payne, A., & Frow, P. (2005). A strategic framework for customer relationship management. Journal of Marketing, 69(4): 167-176. Sun, Li, and Zhou (2006). “Adaptive” learning and “proactive” customer relationship management. Journal of Interactive Marketing, 20(3-4): 82-96. Teo, Devadoss, & Pan, (2006). Towards a holistic perspective of customer relationship management (CRM) implementation: A case study of the Housing and Development Board, Singapore. Decision Support Systems, 42(3): 1613 – 1627. Read More