11-05-2013, 12:54 PM
CUSTOMER RELATIONSHIP MANAGEMENT FROM THEORY TO PRACTICE: IMPLEMENTATION STEPS
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Abstract
In today’s highly competitive world, an increasing number of organizations have realized the
importance of becoming more customer-centric and invested a large amount of time and resources in
a Customer Relationship Management (CRM) system with the aim of better managing their customers.
A large number of CRM projects, however, end up failing or struggling. While many studies have
been conducted about methodologies, tools, and theoretical conceptualizations of CRM, there is little,
if any, emphasizing the critical steps and key challenges to its successful implementation. This paper
picks up on that challenge. The emphasis of the discussion is not on the introduction of previously
developed tools or theoretical conceptualizations, but on issues relating to CRM project management.
The road map which this paper develops owes its origin to this author’s extensive experience as a
marketing and CRM consultant for large and medium enterprises in Thailand and Australia for more
than ten years. It aims to compiles the critical steps and provides a conceptual framework for the
implementation of CRM that will lead to better preparation for consultants and organizations alike
that want to make CRM an operational tool.
Introduction
With the world currently in the midst of
deepening economic woes, consumer confidence
is at a low and markets are shrinking as the
economy keeps contracting, customer loyalty is
becoming even more critical to companies’
bottom lines. One way for an organization to
retain its client base and ensure repeat purchases
is to develop a data-based, customer-focused
management strategy that aims to increase
customer satisfaction by cultivating long-term
relationships. This strategy, known as Customer
Relationship Management (CRM), is widely
recognized as a key ingredient in the creation of
market value (Chen and Popovich, 2003
CRM Benefits
The extent of CRM benefits to an
organization will vary depending on the nature
of the business concerned. They are likely to be
more substantial in the case of any organization
that has some or all of the following
characteristics: frequent customer interactions
and purchases, high cross-selling potential,
perceived risks and involvement, and
profitability (Kumar 2006; Buttle, 2004;
Hansotia, 2002). Commentators have grouped
CRM benefits under two main paradigms:
operational and strategic benefits (Arnett and
Badrinarayananm 2005; Buttle, 2004; Croteau
and Li, 2003; Iacovou, Benbasat, and Dexter,
1995).
Operational benefits refer to the operational
savings of an organization resulting from its
improved internal efficiency (Iacovou, Benbasat,
and Dexter, 1995). CRM enables a company to
redesign its processes to improve its operational
efficiency, such as marketing and customer
support, front-office efficiency, and productivity
in sales, which in turn decrease customer-related
costs (Reichheld, 1996a).
STRATEGY DESIGN &
ORGANIZATIONAL READINESS
Readiness refers to the necessity for an
organization to develop a deep understanding of
CRM so as to ensure full organizational support
throughout the whole implementation process
once the decision has been made by that
organization to go ahead with the CRM project.
Thus, in addition to requiring senior
management’s full cooperation, CRM strategy
design and development also necessitates every
department’s commitment to CRM acquisition.
Creating Organizational Readiness
First and foremost, CRM is about designing
and re-engineering customer interaction
processes. Guided by marketing science, it aims
to make customers’ interaction mutually
rewarding (Hansotia, 2002).
Equally important is the fact that CRM
implementation does not merely amount to just
plugging in technology. Even though there are
many technologies available to assist CRM,
technology is only a means to an end (Johnson,
2004). As repeatedly emphasized by CRM
scholars, CRM cannot be successfully
implemented without executives’ and employees’
readiness to invest a great amount of time and
resources to make CRM a reality (Nguyen,
Sherif and Newby, 2007; Bentum and Stone,
2005; Croteau and Li, 2003; Meyer and Goes,
1988; Kimberly and Evanisko, 1981). In short,
CRM requires people’s commitment to the
project.
Setting up a Steering Committee
Once a formal meeting or a seminar has been
held and the main goals and constraints clearly
outlined, a steering committee in charge of
implementing the CRM system must be put
together.
This committee needs to be cross functional
and include one to three, but preferably more
than one, representatives from each department
directly concerned with CRM (Buttle 2004;
Nairn, 2002), such as the IT, sales, marketing,
finance, production, and/or human resources
(HR) departments. One of the reasons for having
more than one person from each department is
that, since it is common for steering committee
members to have limited time to devote to the
committee, assigning at least two persons from
each department concerned will overcome issues
of work overload or absences from meetings. At
this juncture, it is important to stress that having
limited time to devote to the CRM project does
not run counter to the premise that all those
involved be committed.
Business Needs Analysis
Another one of the tasks of the steering
committee is to articulate business problems and
needs in terms of information and determine
which data are available and which ones are not
and should be made available. As an enterprisewide,
customer-centric business model, CRM
should be thought out from a customers'
perspective and involve customers' feedback
(Chen and Popovich, 2003). Thus the business
analysis contemplated hinges on customers’
information and on understanding a company’s
customers from a variety of perspectives.
Information Analysis
Once the organization’s business problems
have been identified, their solutions formulated
and, where possible, applied right away, the
findings may call for the existing database
system to be enhanced to support
implementation of the solutions mapped out. In
other words, after the business analysis is
completed, one should be able to evaluate the
current database system and point out which
crucial information is missing and should be
collected for the future CRM database. At this
stage, the focus of the project will be to figure
out what additional information will be
necessary and beneficial for each department.
The consultant or, for example, the marketing
department, may have to prepare an
“information request” form for the
representatives from each department involved
to fill in.
Process Evaluation and Re-engineering
As part of the process evaluation and reengineering,
the steering committee is required
to examine the organization’s current processes
and determine what can be done to re-engineer
or improve them in order to: (i) increase the
value perceived by its customers; (ii) identify the
point of contact and the information that should
be collected and dispersed within the
organization so as to have a better understanding
of customers and be able to serve them better;
and (iii) provide information as requested and
authorized by the ad hoc committee. Their
findings should be compared with the work done
earlier (at the Business and Needs Analysis stage)
so as to determine if some of the problems found
were due to the processes or if the crucial data
that were missing could be collected by reengineering
some of these processes.
Operating CRM: Making the Most of IT
Using the data mining technique, analysts can
automatically retrieve relevant information from
data warehouses containing giga or even terra
data (Brachnann and Anand, 1996) and
transform stored transactional data into insights
on customer needs. Data mining will allow them
to leverage customers’ data that have been
pulled from all customers’ touch points to create
a complete view of the company’s target
customers so as to respond to and communicate
with them more effectively. It also makes it
possible for that organization to create
homogeneous customer groups from a
heterogeneous mass (Nairn, 2002) and
concentrate its marketing efforts on the groups
which it can serve most profitably. Thus,
through converting CRM information into
knowledge, CRM arms an organization with
knowledge that will enable it to better position
itself with regard to its target customers.
Conclusion
CRM focuses on segmenting customers on
the basis of needs or profitability and on
designing and implementing programs to
allocate the appropriated resources to each
customer efficiently and effectively (Srivastava,
Shervanie, and Fahey, 1999). Appropriate
resource allocation enables benefits to flow to
both the firm and its customers (Ramsey 2003).
Correctly implementing CRM systems can
enhance an organization’s ability to improve
customer service.