CRM- the reality

CRM – the reality

In recent years, businesses have concentrated on saving money and, therefore,
increasing profits by redefining internal processes and procedures. Companies in the twenty-first century are, therefore, lean and mean. Analysts and pundits alike are focusing on ‘up-selling’, ‘cross-selling’ and ‘organic growth’. The fact of the matter is that it costs a company dramatically less to retain and grow an existing client, than it does to court new ones. As with any other business decision, there are many aspects to bee taken into consideration to make your solution a profitable one. A badly implemented solution might as well not be implemented at all. The time taken to establish the exact parameters of your project is time well spent and saves a worthy principle from becoming a worthless investment.

Over the last eighteen months, the concept of customer relationship management (CRM) has taken centre stage in the business world. Where as customer service was once low-ranking incorporate priorities, organisations are now being haarried to place their clients at the heart of all of their activities and to rethink their entire sales and marketing strategies. Organisations which are looking to improve their customer-focused activities face a difficult task. There is widespread confusion about th

he terminology employed by both management consultants and IT suppliers. There is disagreement about the approaches which organisations should take to build a CRM strategy. There is a lack of consensus about what CRM really means and a growing uncertainty about how e-business fits into the customer management vision.

In the late 1960s, in his seminal article on marketing, management guru Ted Levitt suggested that the purpose of a business was to “create and keep a customer”. He advocated that the modern firm should view “the entire business process as consisting of a tightly integrated effort to discover, create, arouse, and satisfy customer needs”. Over two generations later, businesses are beginning to wake up to this reality.
Customer relationship management (CRM) is noow being actively considered by organisations across the globe, parading itself in the open market disguised as new technology and software applications. Recent market analyses suggest that the CRM software market is set to grow by 700% over the next three years and estimated to generate total revenues of approximately $3 billion by 2004. However behind this camouflage of expensive technology and fancy software packages sits the deeply embedded business concept that suggests that knowing, understanding and serving the customer should be at th

he core of what organisations do best. Building sustainable and successful relationships with a large customer base is not the easiest thing to do and will have a direct impact on many core operational processes from product development to debt recovery.

Over the past twelve months there have been multiple definitions of CRM including suggestions that it is a sales strategy, a software product and even a new method of data collection. Customer Relationship Management is the establishment, development, maintenance and optimisation of long term mutually valuable relationships between consumers and organisations. Successful CRM focuses on understanding the needs and desires of the consumer and is achieved by placing these needs at the heart of the business by integrating them with the organisation’s strategy, people, technology and business processes. At its most basic CRM involves customers, organisations and relationships, and the combination creates the need for management. It is not simply a buzzword, a new software package or a breakthrough in sociological research methodologies. It is the renaissance of a belief that at the heart of all transactions is the creation of mutual value for all parties.

CRM is about creating a competitive advantage by being the best at understanding, communicating, de

elivering and developing existing customer relationships in addition to creating and keeping new customers. The concept of product life cycle is giving way to the customer life cycle, focussing on developing products that anticipate the future needs of existing customers and creating services that extend existing customer relationships beyond the merely transactional. The customer life cycle will focus on lengthening the life span of the customer with the organisation rather than the endurance of a particular product. Customers have changing needs as their lifestyles alter – the development and provision of products or services that continuously seek to satisfy those needs is good CRM. Mission statements will focus greater attention on how to deliver customer satisfaction and organisations will begin to structure themselves around customer segments and not product lines. A good CRM strategy will take the business vision and apply it to the customer base by asking the questions:

What products and services are we offering now and in the future?

In what markets?
What customer groups will these products and services appeal to?
Which of these are of most value to the organisation? In terms of spend? In terms of reliability? In terms of profitability? In terms of growth potential?
What additional needs do th
he most valuable customer groups have? Additional products?Additional services?
What different ways can we be doing business to deliver to our
customers better?
A successful customer relationship management strategy will address four key areas of the business: Strategy, People, Technology and Processes.
The handle of the process is the “driver” of the corporate strategy that gives the “direction” to the company. In turn, the strategic direction moves the two “enablers”: people and technology. The “interaction” of those elements is the business processes that sit behind successful customer relationship management.
The D4 Company Analysis™
In order to ensure that the four aspects of strategy, people, technology and processes are taken into consideration in the design of a CRM strategy, CRM (UK) Ltd has developed the D4 Company Analysis™. The D4 Company Analysis™ is an audit tool that takes an iterative approach to strategy design and has four main steps:
Step 1 Define the existing customer relationship management
processes within the company.
Step 2 Determine the perceptions of how the company manages
their customer relationships both internally and externally.
Step 3 Design the ideal customer relationship management
solutions relative to the company or industry.
Step 4 Deliver a strategy for the implementation of the
recommendations based on the findings.
The principal outcome of the D4 Company Analysis™ is the development of a tailored and specific strategy that builds on the organisation’s existing CRM practices and position in the marketplace. It allows the organisation to prioritise the actions to be taken for placing customer relationship management activities at the heart of the business. One of the significant outcomes of the D4 Company Analysis™ is to reveal who or what is driving the organisation’s current strategy or, in this case, holding the handle. In a company that is placing CRM at the heart of their business the handle of strategy should be in the hands of the customer. The objective of the audit is to direct the organisation towards successfully managing integrated processes that lead to the establishment of an
‘ongoing dialogue’ with their customers that delivers ‘mutual value’ to both the customers and the company.
A clear understanding of the business and its operations is critical to the success of a CRM strategy. Even after accepting that CRM is wider than sales, many organisations are still unaware of its full impact across the organisation or to know where improvements can be made. The following processes are an integral part of any CRM strategy:
Product development
Channel management
Marketing planning
Sales
Customer acquisition
Customer fulfilment
Inventory management
Customer service
Customer billing and invoicing
Payment management
Credit management & fraud
Customer retention
As illustrated in the customer value management model, the organisational processes create the building blocks from successfully extending the customer’s lifetime with an organisation, inherently and directly increasing their value and profitability.

Delivering on a CRM strategy is a dynamic activity. As one piece is completed, the next begins, preferably enhancing the first and usually with points of overlap. Just where an organisation starts in a CRM roll-out often depends on the enterprise pain threshold, but, in broad terms, the main building blocks within a CRM strategy consist of:
_ technology-assisted selling
_ technology-driven support
_ product configuration
_ database marketing
_ marketing automation
_ e-marketing

TAS( technology – assisted selling) is frequently seen as providing a quick win for organisations, as it allows management to bring together different sales forces which would otherwise act independently. Many enterprises use the call centre as the first line of communication for incident handling.
TDS(technology-driven support )- .a good support product will integrate interactions from the following sources:
_ letter
_ telephone
_ fax
_ e-mail
_ Internet
Product configuration: A key part of the customer management armoury is product information. The key to effective field service systems is resource allocation, tied to customer history and profiles. From a product perspective, the statistical analysis tools are important, but none of this is possible until the marketing data have been consolidated into a single marketing database. Marketing automation should allow the user to establish, monitor and modify marketing campaigns across multiple channels.
Database marketing: Marketing automation requires the collection and dissemination of considerable amounts of data. From an internal perspective, this requires the creation of dedicated marketing databases which can be interrogated and mined for nuggets of information which allow the marketing professional to achieve a fine level of analysis. The idea is to create as close a match as possible between the marketing offer and the target customer. Database marketing builds on the functionality of core marketing automation, to allow the use of techniques such as predictive modelling, visualisation and regression analysis. These are highly sophisticated statistical techniques, usually used by marketing managers with a deep understanding about the marketing processes applicable to their company’s activities. From a product perspective, the statistical analysis tools are important, but none of this is possible until the marketing data have been consolidated into a single marketing database.
Marketing automation: In broad terms, marketing automation has its roots in database marketing. Today, marketing has become a broader science, but all marketing systems share the same baseline characteristics with the same ideal: understanding customers on an individual basis. Achieving this is extraordinarily difficult, but software can go a long way towards assisting in the process. Basic marketing automation software should provide a means to segment the customer base according to geography and demographic characteristics and then set that information against sales data. This allows the user to profile customers according to their preferences, set against the background of the market as a whole. From here, marketing automation should allow the user to establish, monitor and modify marketing campaigns across multiple channels. The user should be able to distinguish among the different marketing channels helping it to establish the most effective way to approach customers with new products and services. The software should support different types of campaign, including single, multi step and event-triggered, allowing the user to move from one to another as circumstances dictate. As part of campaign-building, the software should also allow the user to build return-on investment models, so that potential campaign outcomes can be calculated and acted on. Once a campaign has been established, the user should be able to determine the best match between communications methods and customers’ requirements.
E – marketing – a new marketing management category. Monitoring the way in which customers behave when interacting with commercial Web sites provides a far deeper level of understanding than is possible in traditional marketing activities. Using ‘click stream’ analysis tools, organisations can track visitors’ progress through their site and deduce aggregate information about the most popular products and services. By tracing the paths which users take and where they exit, it is also possible to build a better understanding of the effectiveness of the site. This is crucial in the e-commerce environment, in which there is an extremely high level of shopping-cart abandonment: a high proportion of visitors beginning a purchasing process, yet never completing it.

So, in conclusion I want to say, that:
_ CRM is fundamentally a business philosophy: technology is the tool which allows the business goals to be achieved. Unless an organisation understands the business drivers and the implications of embarking on a customer management strategy, no amount of IT expertise will bring success. IT developments must be closely aligned to business needs.
_ The key to successful customer management is to build a unified view of each client, drawing together data from a wide variety of sources, making it available in a relevant format to business managers and users. The IT implications are vast because, ultimately,
CRM will touch every system in the organisation, as well as the systems of suppliers and partners. As a result, integration is one of the biggest challenges which IT departments face in the CRM arena.
_ Implementing a CRM strategy does not affect just customer-facing employees. Because
of the need to transmit information both within the organisation itself and externally to customers and suppliers, every function is likely to be affected by a CRM project. This
means that every department should have a representative involved in planning and, where necessary, rolling out a major CRM project.
_ Ongoing training for users is essential and may eventually make the difference between success and failure.
_ The introduction of CRM systems is likely to have some degree of impact on every job in an organisation. At an individual level, the aim is to provide each person with better information, allowing him/her to operate more effectively. At a departmental level, by monitoring the effectiveness of different activities, organisations can better achieve their strategic goals.

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