Executive Summary
The report is mainly focussed on information, knowledge and strategy of Customer Relationship Management (CRM). CRM is implemented in the organizations for having a good relationship with the customers and attaining profits from them.
Introduction
The present world is so competitive for survival, since they have to fight GAIN THE COMPETATIVE ADVANTAGE WITH IN THE INDUSTRY AND TO KEEP UPDATE with the global market irrespective of their market share. According to customer desires and needs the firms has to deliver the best technology and methods in best ways, which led to the usage of an analytical tool called CRM (Customer Relationship Management), where a database is created for the different type of customer information which helps to have a competitive advantage with other firms (Raab et al, 2008). Retaining the old customers to the company is a difficult task in the present world. The firm has to know the customer’s taste and know what they buy (Raab et al, 2008). Goals and aims of customer relationship management is took at the customer in four stages are durable, to attract new customers, having good and healthy relationship with profitable customers (Raab et al, 2008).
According to Band (1991), Strategy and Customer relationship Management goes hand in hand because it produces efficiency and other operational gains which give a firm a competitive edge over other firms. The report is focussed on the impact of CRM as an application which is related to information, information use and business strategy. CRM can be treated as an application which focuses on customer relationship and other technologies by collecting and storing the information given by the customer. CRM as a technology can be subdivided into Information Technology (IT), Information Systems (IS) and Information Communication Technology (ICT), from these the data are obtained and stored for information use (Mutch, 2008). CRM is not only technology for solving problems; they have kept the customers in the centre as they are the main target of business organisations (Raab et al, 2008).
Some might consider CRM as a mere technology to store data where others might view CRM as an idea to being customer focussed (Payne and Frow, 2005 cited in Mutch, 2008). The importances of information flow in an organisation, knowledge and business strategy are explained in detail within the report.
CUSTOMER RELATIONSHIP MANAGEMENT
According to Buttle (2006, p.34) CRM is “The core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer data and enabled by IT”. CRM can be categorized in different sectors where CRM is applied, IT firms view CRM as an application that can stimulate the business process in terms of marketing, maintenance and software development. CRM has three levels; they are Strategic, Operational and Analytical where CRM application is implemented in many organisations (Buttle, 2004). CRM is a software application used by the firms to be in touch with their current customers and their future customers. Information Technology has helped CRM where it has accelerated and enabled a better coordination of business process (Raab et al, 2008). Using CRM retaining the old customers is five times more profitable than finding a new one (Buchanan and Gilles 1990; Reichheld 1996 cited in Becker, Ribbert and Dreiling, 2002). According to Peppers, Rogers and Dorf (1999) excessively large number of firms were not appropriately prepared to implement CRM, because of this significant number of IT projects failed.
INFORMATION
KNOWLEDGE AND KNOWLEDGE MANAGEMENT
In recent Years, Customer Relationship Management (CRM) and Knowledge management (KM) have been integrated by the firms since they have realized that KM plays an important role in CRM success (Dous et al., 2005). The CRM discipline’s relationship with Knowledge Management (KM) approaches and technologies has extensively been recognized as a relevant field of research (Roman and Fjermestad, 2003; Fahey, 2001; Romano, 2000; Winer, 2001; Massey et al, 2001). Knowledge management can be defined as “the process of critically managing knowledge to meet existing needs, to identify and exploit existing and acquired knowledge assets and to develop new opportunities” (Quintas, Lefrere and Jones, 1997 cited in Dous et al., 2005). The important role being played by KM systems in the current customer centric business environment, Particularly in the context of marketing decisions there is lack of a easy and overall framework to integrate the traditional CRM functionalities with the management and application of the customer related knowledge.KM systems manage the firm’s knowledge through the process of structuring, creating, disseminating and applying knowledge to enhance firm’s performance and create value, traditional CRM have focussed on the transactional exchanges to manage customer interactions( Bose, Sugumaran, 2003).
CRM META MODEL AND ONTOLOGY
A model describes a real world object itself, which is usually referred as a model of a language that describes the real world object (Holten 2000; Nissesn, Jeusfeld and Jarke 1996; Strahringer 1996). The Meta model is closely related to Ontology where it explains “Consists of a representational vocabulary with precise definitions of the meanings of the terms of this vocabulary plus a set of formal axioms that constrain the interpretation and well formed use of these firms” (Campbell and Shapiro 1995; cited in Becker, Ribbert and Dreiling, 2002). According to Bunge (1977; cited in Becker, Ribbert and Dreiling, 2002) ontological theory is an answer to an ontological question with a tremendously broad scope.
The CRM Meta model is explained with an example of an airline company, For the airline company to penetrate the global market and get their precious customers, the airline firm brought the “earn points for a mile” on business class flights where the customers can redeem when they reach 5000 miles for a free intercontinental business class upgrade (Becker, Ribbert and Dreiling, 2002).
Based from the Meta model figure, the facts are built from customer reference objects, where they would have given the complete details about them such as their interest, type of diet, etc. Master data stores the complete data of the customer’s name, address, date of birth, nationality, credit card information, mobile number, etc. Customer knowledge is reinterpreted of customer relationship campaign and customer category value. Further Customer Knowledge is reinterpreted of customer’s fact, customer’s preference and customer master data. Ratios don’t contain any business information but they store quantitative information such as revenues, costs, miles flown (Becker, Ribbert and Dreiling, 2002).
In the Year 2002 the airline firm decided to consider all the customers and segmentation in two groups for the customer reference. One group to focus on the country of residence and the group to focus on customer’s who have flown more than 5000 miles. For the customer preference, the customers are divided in two groups; the first group is fulfilling all the conditions and others in the other group. Customer relationship campaign can have properties such as products, promotion, means of promotion and advertisement. Customer relationship campaign target group defines customer knowledge, customer value category and customer relationship campaign (Becker, Ribbert and Dreiling, 2002).
BUSINESS STRATEGY
Business strategy is a study of formulating, put into practice and evaluating cross functional result that will enable a company to achieve it’s long term and short term goals, developing policies and plan so that the objectives can be easily achieved (Morden, 1993). Strategy is necessary for the growth of the business. According to Wallace (1992) Business strategy are carried out in technology for creating competitive benefit, differentiating products and services from other customers in cost, quality, customer relationship and delivery on time.
BUSINESS STRATEGIES RELATED TO CRM
The unique of strategy is to do something different with the competitors. CRM is used by the firm for segmentation of customers to concentrate on retaining profitable and valuable customers (Hamid and Kassim, 2004). CRM is implemented in a firm to focus on attracting and maintaining customers is one way of business strategies (Smith (1999), cited in Coate, 2006). The three roles of CRM are to understand customer decision making process, information about customers and information processing capabilities (Stringfellow et al, 2004).
The main focus of business strategies of a firm must be on customer satisfaction, which insists on availability, quality, presentation, image, value for money, fulfilment of expectations which are monitored by CRM (Wellington, 1995). Databases and having human resource are integrated to work with technology which will be useful for the firm’s strategy as it decides the trend of the customer’s actions.
CRM will store all the details of the customers what they buy and from where they buy, so later they reorganize about the customer details according to their firm. One of the UK’s largest supermarket chains Tesco have a very phenomenal CRM strategy, where they analyze their customer’s database and started rewarding vouchers and discount coupons to their customers according to their spending habits with their Tesco vouchers program (Buttle, 2006).
CRM will be a failure when the business strategy are not properly monitored because of misunderstanding customer preference, decision making, lack of accuracy in information and it’s use, improper data mining and integration and the best way to understand CRM strategically is by learning from past failures (Coate, 2006).
THE PORTER’S COMPETITIVE MODEL
According to Buttle (2006), to build a good relationship with customers, Customer Relationship Management (CRM) strategies must concentrate on Porter’s five forces because customers would like to be in a profitable market and they are more stable in these markets, thus it helps to create strong and good relationship (Buttle, 2006). The Porter’s five forces consists threat of new entrants, threat of substitute products, rivalry, bargaining power of buyers, bargaining power of suppliers and services (Porter, 2008). The above diagram shows that the main market is in the center and the other firm fight for its market share. According to Porter (1979) if all the five factors of five forces are favorable the market would be profitable.
According to Buttle (2006), to build a good relationship with customers, Customer Relationship Management (CRM) strategies must concentrate on Porter’s five forces because customers would like to be in a profitable market and they are more stable in these markets, thus it helps to create strong and good relationship (Buttle, 2006). The Porter’s five forces consists threat of new entrants, threat of substitute products, rivalry, bargaining power of buyers, bargaining power of suppliers and services (Porter, 2008). The above diagram shows that the main market is in the center and the other firm fight for its market share. According to Porter (1979) if all the five factors of five forces are favorable the market would be profitable.
New entrants will take a long time to capture the market since they don’t have any information about the customers where as the other firms will possess CRM, where they store the complete history of their customers. Some customers have the tendency to bargain for their products. The bargaining power of suppliers tends to be producers or wholesalers, to bring out the best products and good service with an increased profit for their worth and to maintain a long lasting relationship with customers (Porter, 2008).
ISSUES AND BARRIERS TO CRM
According to Myron (2003) there are 6 barriers for CRM they are Lack of guidance, Integration woes, No long- term Strategy, Dirty Data, Lack of Employee Buy- in and No accountability. Failure can be in communication and assistance between the cross departments if proper incentives are not provided, When this is the case the employees will not put their 100 percent effort, so this would lead to a failure of information flow and because of this CRM will be affected (Bland, 2004). Leadership can also be termed as a barrier, since the leader has the complete responsible for the firm’s decision and if any poor decision will affect CRM (Zemke, 2002).
A Strategic head with much experience in CRM will be of not much assistance in the successful execution of CRM. The firm has to focus on their business needs than the technical needs. The firms have a huge investment, the leaders must cautiously analyze their decision making, and if it is not a proper decision then it results in the failure of CRM (Bull, 2003; Nguyen, Sheriff and Newby, 2007). Bull (2003) points out that most of the firm’s outsource their CRM systems since there are lack of in house CRM and failure in in-house CRM systems, this affects the firm’s CRM because of not proper business planning.
CRM can be successful if all the barriers are overcome, which leads to a Successful CRM for the firm to achieve their goals.
RECCOMENDATION
The employees should be properly trained to use the CRM system. They have to be updated according to the changing business process. They should be given lot of motivation and encouragement and proper incentives and rewards for effectively working. Firms should not concentrate on external source of information; they should have their own research. The Customers always don’t rely loyal to a brand; if some other brand comes out with a cheap price then the customer will go for that product. Some incentives should be given to the customers so that they can share their like and dislikes of the products to the firm. The complete customer details should be viewed by all the divisions in the firm, so that all the divisions will be updated to get the complete view of the customer’s details.
The firm’s leader should be an experienced person. He must also be trained well to use the CRM, so that he would have some knowledge about CRM. Since Leaders has to take proper decision which gives positive results to the firm.
The firm has to study how CRM suits their business, according to that they have to come up with the plan and execute to achieve their objectives. The firm has to reinvest for updating their CRM. Since day by day customer tastes changes, so according to that the firm has update their product.
All the above details can be properly utilized to give better services to the customer and the firm can try to retain their valuable customers.
CONCLUSION
CRM is a very good tool which has brought lot of success for many firms. CRM helps the firm to build a very good relation with the customers. All the customers are not the same; CRM helps the firm to treat different customers differently.
CRM should be implemented properly. Proper usage of CRM increases the market share of the firm. If CRM is not properly used in the firm, then the firm will go on a big loss. CRM should be maintained and updated properly. A wrong entry in the CRM makes a complete different approach to the customer.
CRM is successful of their plan where they achieve their targets by getting proper information, technology and knowledge. For the firms, it is easier to keep the existing customers than to search for new customers. CRM focuses on retaining most valuable customers. The customers are segmented as profitable and non profitable customers, much preference is given to the profitable customers and better services will be given to them.
By using Meta model, the complete customer knowledge and customer reference is known, which leads to a better relationship between the firms and the customers. Maintaining a good relationship with the customers helps the firm to increase their business.
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