Implementing CRM systems

Table of Contents

Executive Summary

List of abbreviations

List of figures

1 Introduction

2 Background
2.1 Customer Relationship Management (CRM)
2.2 Objectives and Benefits of CRM
2.3 CRM Process

3 An Inherent Problem of Strategy Implementation

4 The Implementation Phases of CRM Systems
4.1 Strategic CRM versus Functional CRM
4.2 Developing a CRM Strategy
4.3 Operational CRM Projects
4.4 Analytical CRM Projects
4.5 Deploying Operational and Analytical Outputs

5 Conclusion

Bibliography

ITM Checklist – 360° Analysis

Declaration

Executive Summary

Many organisations today have discovered it is a mistake to think about Customer Relationship Management (CRM) systems exclusively in technological terms. A customer focus without accurate information is similar to attempting to circumnavigate the planet without a map.^[1] Investing in information technology without relevant questions or a plan for application can lead to the development of a very expensive toy that offers no return on investment. While the planning and implementation of the CRM projects are examined in this work, potential organisational problems and barriers in the attitude of involved employees are analyzed for each implementation phase. The foundation of an accurate CRM implementation is the adoption of a firm’s strategy that should be designed to optimize both profitability and customer satisfaction.

To realize CRM, organisations must foster behaviours and implement processes and technologies which support coordinated customer interactions throughout all customer channels. In order to achieve this, organisations must develop the strategic and functional components of the CRM projects. The implementation of a CRM strategy is a series of small projects. These projects are all identified when the strategy is defined, and they normally fall into the categories: developing a strategy, implementing operational and analytical projects. If this is not done accurately and/or there is lack of management understanding and commitment, the organisation can be exposed to problems such as retention of employees or data quality problems. The organisation is thus not in a position to initiate the desired customer relationship and to increase revenues while at the same time reducing costs.

List of abbreviations

illustration not visible in this excerpt

List of figures

Figure 1: Potential Costs and Benefits of CRM Sytems

Figure 2: The CRM Process as a Hub of Applied Learning

1 Introduction

From the business and international catastrophes of the past two years, a new information technology initiative has arisen. It is called customer relationship management (CRM) and it is dedicated to improving through automated, especially Internet-driven, means the entire arena of customer service and interaction.^[2] It is important that the CRM starts with an organisation vision and mission, which should become part of the mind-set of employees. The objective of CRM is to give customers satisfactory and pleasant experiences in doing business with an organisation. Such experiences will result in more profitable business. In the application of CRM technology, techniques used by successful sales and marketing people become available to all employees. A phased implementation process with careful planning may minimize many of the nightmares of adopting CRM systems, but the road to implementation will include barriers and problems.^[3] These challenges have been stressed in different ways throughout this work.

2 Background

2.1 Customer Relationship Management (CRM)

Customer Relationship Management (CRM) has become one of the most dynamic technology topics of the new millennium. According to Chen and Popovich^[4], CRM is not a concept that is really new but rather due to current development and benefits in information and organisation software technology, it has assumed practical importance. The root of Customer Relationship Management is relationship marketing, which aims on improving the long term profitability of customers by moving away from product- centric marketing. Bose noted that CRM was invented because customers differ in their preferences and purchasing habits.^[5] Understanding customer drivers and customer profitability, firms can better tailor their offerings to maximise the overall value of their customer portfolio.^[6]

Graham is viewing CRM in its simplest form as an attitude, a mindset, a value that you place on your business and its relationship with its customers.^[7] It is a methodology, a way of creating and evolving the organisation in the marketplace and at the same time in the mind of each individual customer. It must look at the whole process of what the firm is involved in, whether this is a product or a service drive organisation. It looks at ways to treat customers more as individuals and to exercise their choice positively towards the organisation.

2.2 Objectives and Benefits of CRM

From a business strategy perspective, the aim of CRM will be to gain long-term competitive advantage by optimally delivering value and satisfaction to the customer and extracting business value from the exchange.^[8] The goal of a CRM strategic process is to optimize the current and future value of the customers for the company.

The satisfaction of consumers’ needs and wants is the justification for an organisation’s existence. An effective CRM system is a way for the organisation to develop a customer focus that has impact, that allows the organisation to hear customer’s voice.^[9] If organisations can learn enough about individual customers, then the organisation’s wonderful approach – the systems should enable the organisation to retain regular customers as it acquires new ones. Retaining customers and establishing customer loyalty are major objectives of CRM approaches. Higher customer’s retention rates will generally increase revenues and, in most cases, reduce costs.

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^[1] Zikmund, McLeaod, Gilbert (2003), p. 5

^[2] Shah (2002)

^[3] Zikmund, McLeaod, Gilbert (2003), p. 167

^[4] Chen, Popovich (2003)

^[5] Bose (2002)

^[6] Chen, Popovich (2003)

^[7] Graham (2001), p. 2

^[8] Kumar, Reinartz (2006), p. 6

^[9] Zikmund, McLeod, Gilbert (2003), p. 6