Customer Relationship Management for Business-to-Business Markets - Case Study Example

 Business to Business Marketing Abstract Among the fast food restaurants across the globe, McDonald’s and Kentucky Fried Chicken (KFC) are well known. Since early 90’s these fast food chain restaurant have grown regularly. At present, the two fast food chains are located in about 110 countries, and serve millions of customers each day. Thus, it would be interesting to study the Customer Relationship Management (CRM) strategy of the two biggest fast food chains in the world. Since early 90’s both KFC’s CRM strategies and McDonald’s CRM strategies have evolved considerably. The two food chain restaurants has evolved from being a basic fast-food restaurants to a fast-food restaurant chains and are also provide plenty of add-ons as well. This research paper has used McDonald and KFC as examples of restaurants that have good Customer Relationship Management (CRM) strategies. In the past, both KFC and McDonald’s business strategy was to have least relationship with its customers, but currently the two restaurants want to retain their customers as long as they can in their fast-food chains. In this research we will explain the most important factors and aspects which affect Customer Relationship Management (CRM) for business-to-business (B2B) markets, according to their complicated network of relationships. Furthermore some aspect such as competition environment, cross functionality, customer adoption, failure legitimacy and failure learning organization, and continuous improvement procedures have also been considered in order to give a more completed assessment. Finally, the report will analyze the findings and make recommendations on how to improve the CRM function within the organization. Introduction CRM is a strategy that deals with the management of an organization’s interactions with clients and actions, customers and prospects. Contrary to a popular belief, this software is not designed to keep clients or customer database (Peppers, Rogers, and Dorf, 1999b). Instead, Customer Relationship Management (CRM) integrate all of the data or information an organization has about a client, whether it be from marketing, customer service, sales or any other company department. This kind of data will allow the organization to gain access to all the information required to take advantage of cross-selling and up-selling, provide superior service and sales and fine-tune marketing strategies. Contrary to popular belief, this software is not designed to manage a customer database (Peppers, Rogers, and Dorf, 1999b). Instead, CRM assimilates all of the information a company has about a customer, whether it is from sales, marketing, customer service or any other company department. This kind of information pooling allows anybody in an organization to gain access to all of the information required to provide superior service, take advantage of up-selling and cross-selling opportunities and fine-tune marketing and sales strategies (Peppers, Rogers, and Dorf, 1999b). Currently many fast food restaurants have identified the need to become more customer-facing with increased global competition. Hence, CRM have become an essential for many restaurants strategies. B2B e-commerce can be defined as a network that support marketing, selling, buying, marketing and supporting of products/services by businesses (Chen and Popovich, 2003). Most businesses have shifted from product focus to customer focus; the changes that have been experienced in marketing environment have forced companies to find strategies that enhanced existing customer relations at same time to bring the benefit of profitable and sustainable revenue growth. Customer Relationship Management (CRM) Strategies Businesses that want to maximize profitability and retain customer loyalty need to employ four Customer Relationship Management (CRM) strategies: 1) build a client growth strategy; 2) don’t buy into the technology silver bullet; 3) avoid the CRM whipsaw effect; and 4) measure satisfaction with CRM. These strategies will ensure that Customer Relationship Management (CRM) programs can be successfully be implemented to the pending changes in the business environment (Chen and Popovich, 2003). Build a Customer Growth Strategy Companies must be able to build a top-line growth strategy upon the platform of their Customer Relationship Management (CRM) programs and this can be through ensuring that the business cost management and strategic intent are institutionalized. Many companies have not focused clear metrics or strategies intents to measure performance. Yet many of these companies have implemented cost cutting measures within customer-facing departments or have lowered their cost-to-serve customers. But instead of implementing cost cutting measures companies should invest in the field of Customer Relationship Management (CRM) so that their business growth strategies gain some early wins, no matter what state of the economy the business is in. Because as the business environment improves, the winners of CRM are likely to be those companies which have not only stabilized their sales costs and customer services, but those companies which have improved the effectiveness of loyalty and customer retention programs, Additionally, service strategies should be tailored in downturns and expanded in upswings, but in order for CRM program to be successful it should remain a long-term goal. Avoid the Whipsaw Effect Commitment among the senior managers in the company is critical to the success of any program. Customer Relationship Management (CRM) is certainly no exception. According to the CRM magazine survey results state that executive sponsorship have been found to be an important factor for maximizing he return on their Customer Relationship Management (CRM) investments (Peppers and Rogers Group, 2003). If Customer Relationship Management (CRM) initiative is not in the senior managers’ agenda, then investment in CRM have a lower probability of success. Additionally, because Customer Relationship Management (CRM) is a fundamental shift in the way an organization do business with the customers, rather than just a one-time e-commerce initiative (Peppers and Rogers Group, 2003). It needs continuous leadership from senior management over a period of time. The time frame for CRM program should have built-in contingencies for the ups and downs of the business cycle. Without flexible strategy, organizations have been caught in a Customer Relationship Management (CRM) whipsaw: using more money in one year and then reduced the amount of money spent in the second year. The results will be squandered opportunities, unrealized investments, and a loss of employment for Customer Relationship Management (CRM) champion. The CRM whipsaw affects customers as well (Peppers and Rogers Group, 2003). Measure satisfaction with CRM Measuring CRM success is not easy, but it is possible to measure customer satisfaction with CRM. Organizations have often measured success either by changes in customer satisfaction or by ROI to justify CRM benefits (Peppers and Rogers Group, 2003). Although the use of ROI to capture customer satisfaction and reducing CRM budget is important, the CRM magazine study has found that 60 per cent of organization stated that CRM initiatives met or exceeded the company’s expectations. Meanwhile 25 per cent remaining companies did not set any expectations (Peppers and Rogers Group, 2003). Most companies have been found to embark on expensive CRM programs without understanding their customer’s retention, satisfaction, and resulting profitability. In either scenario, organizations shortchange themselves by placing their long-term success of those relationships at risk and reducing the value of their customer relationships. Given the level of investment and complexity in CRM, organizations need to understand the value of their customers before they implement any CRM initiatives, as well as build robust business cases for internal measures of CRM success (Peppers and Rogers Group, 2003). Plan for Growth Up to 60 per cent of companies have not put in place a strategic plan, although many of these companies are planning to implement CRM initiatives. Those companies that have not implemented the CRM are not able to reap the benefits of CRM initiative. Although, the benefits from CRM may take long to be realized, CRM program should be pursued by the company no matter which way the economic pendulum is swinging. Organizations that don’t have proper CRM strategy should begin developing their strategy to include both long-term and short-term scenario with ranges of ROI for different CRM initiatives. It is this advanced planning together with building customer growth strategy, avoiding the technology silver bullet, avoiding whipsaw effect, and measuring satisfaction with CRM that will increase customer retentions and customer loyalty and maximize customer profitability. Sources of Customer Information Companies should synchronize their sales, service and marketing across all client interaction channels (Kotler, 2002). Companies also need to link their customer information with back office systems such as human resources, accounting, inventory and manufacturing for a complete view of the clients. Customer data in many companies is maintained by different departments (Kotler, 2002). By not sharing customer information, companies have been found to lose their efficiency. In addition, customer information updates will not be transferred to the relevant departments (Kotler, 2002). For example, marketing has lists, prospects and data on markets. Sometimes this information is supported by third party. But marketing in any company needs to drive generated leads to sales for follow up. The department that deal with marketing will also use the relevant service and feedback about what campaigns initiatives are working for the company. If customer service in any company has excellent customer feedback, but if this information is not looped back into marketing department it will not be helpful to the company. Any information from customer can act as the foundation for marketing campaigns (Kotler, 2002). Additionally, customer service department can be used for up sell and cross sell opportunities for the company. The key here is to integrate all customer service information. This will provide all departments in the company will a 360-degree view of the company’s customer, and also it will ensure that customer information is current and complete. CRM a initiatives that will be employed must also enable companies to interact with customers in many channels including the fax, web, phone, e-mail, direct mail, in person or through partners (Kotler, 2002). Recommendations The company should open specific fast food shop for their business. For example, Apple was being troubled by their customers who were ill-informed about the company’s products (Bull, 2003). This particular problem made Apple to set its very different products apart from the customers who were computer literate (Bull, 2003). Similar to Apple, the restaurants should create stores which are strictly devoted to their products or foods, the two companies will not only eliminated this problem but will be in a position to make an excellent customer-loyalty move (Bull, 2003). By creating such spaces, KFC and McDonald will encourage both new and current customers to get excited about what the two companies have to offer. Too much focus on the CRM technology and vendor. At times companies get caught up in wanting to implement the best possible CRM strategy (Avlonitis and Panagopoulos, 2005). Such companies may want an entire call-centers, Web-based, Demand CRM, and Blackberry technology which will allow their customer service department to enter customer information wirelessly (Avlonitis and Panagopoulos, 2005). Although these technologies might be helpful to the company, too much emphasis on these technologies may lead a company to go astray. Therefore, KFC and McDonald should concentrate on few CRM technology that will add value to these companies since the best technology does not always means flashiest (Avlonitis and Panagopoulos, 2005). Companies can put much emphasis on strategy and technology, and not enough on the core of CRM. Therefore KFC and McDonald should put their customers first when thinking about implementing any CRM strategy. For example, a call center can be a wonderful initiative if it is friendly to customers. However, some call centers are complex and isolate the customers from the company. The real ROI of Customer Relationship Management (CRM) is found in customer acquisition and retention of new customers. Therefore, in order for both MacDonald and KFC to have success with CRM, they must work towards building a strong relationship with their customers. Customer Relationship Management (CRM) is the only platform in which the company and customer can understand each other. Rushing into CRM is a recipe for disaster. Before implementing any CRM initiative employees at the company need to first understand the concept of CRM (Campbell, 2003). An employee who understands the importance of CRM will be better placed to deal with customers and reach the company’s goals concerning CRM (Campbell, 2003). Therefore, both KFC and McDonald should take their ample time and educated their customer on the need of understanding CRM (Campbell, 2003). Conclusion Customer Relationship Management (CRM) strategies give companies complete insight of their customers across the entire network of the company. When a company CRM strategy is implemented properly, companies are able to reap large gains from efficiencies that have been created through offering better service and developing deeper relationships with clients. Technology selection is also another important factor in the success of CRM initiative. A company should select a package approach, rather than putting together existing individual components. Lastly, implementing CRM strategy should not be left to IT department alone but must directly involve other departments as well. References Avlonitis G. J., Panagopoulos N. G. (2005). "Antecedents and consequences of CRM technology acceptance in the sales force", Industrial Marketing Management, 34, pp. 355– 368 Bull C. (2003). "Strategic issues in customer relationship management (CRM) implementation", Business Process Management Journal, Vol. 9 No. 5, pp. 592-602. Campbell A. J. (2003). “Creating customer knowledge competence: managing customer relationship management programs strategically", Industrial Marketing Management 32 375– 383 Chen I. J., Popovich K. (2003). "Understanding customer relationship management (CRM): People, process and technology", Business Process Management Journal, Vol. 9 No. 5, pp. 672-688 Kotler, P. (2002). When to use CRM and When to forget it! Paper presented at the Academy of MarketingScience, Sanibel Harbour Resort and Spa, 30 May. Peppers & Rogers Group. (2003). Peppers & Rogers Group white paper. CRM in a Down Economy… Revisited.Weathering the Economic Storm through Customer Relationship Strategies. Peppers, D, Rogers, M & Dorf, B. (1999b). Is Your Company Ready For One-To-One Marketing? Harvard Business Review, Jan-Feb. Read More