7.0 CRM SUCCESS FACTORS

The success of CRM practices depends on a company’s capability to leverage customer information in B2B and B2C channel relationships. Companies can customize these channel in two ways- Relation/Transactional and High-Tech/Low-Touch-to improve the relationship between customers and suppliers. Relation channel provide emotional appeal to customers via the 4 marketing Ps (price, place, promotion, and placement). In contrast, the transactional relationship downplays the emotional aspects and emphasizes the IT capability to streamline a transactional process. For both channel building approaches, human and technology emphasis can have different degrees of involvement. Although IT supports are indispensable for the success of CRM, too much reliance on IT applications can bring diminishing returns to sales performance. The ultimate goal of IT usage is to optimize the performance of marketing tasks in achieving a mass customization strategy. How to effectively use IT to support a CRM strategy is both a talent and a art

6.0 USING ANALYTICAL CRM TO ENHANCE DECISIONS

CRM applications were developed to cope with the challenge of integrating information that has been scattered throughout the entire organization or across the supply chain. Customer interactions take place anytime and anywhere. Information collected at each customer interaction point has limited value unless integrated into the total system. CRM application is added to enterprise systems to address marketing opportunities in downstream supply chains.

A comprehensive CRM system includes three major components: (1) Operational CRM, (2) Analytical CRM, and (3) Collaborative CRM. Operational CRM can resolve problems related to sales force automation, customer service and support, and enterprise marketing automation. Analytical CRM systems provide intelligence based on the data collected and accumulated from all customer interaction points over time. Collaborative CRM systems assist the communication process between customers and organizational functions. Customers can choose any channel to communicate with service representatives via their preference channels, such as face to face, Internet, telephone, fax, mobile phone, and instant messaging (Richard, 2010).

Personalization occurs when a Web site can know enough about person’s likes and dislike that it can fashion offers that are more likely to appeal to that person. Many organization are now utilizing CRM to create customer rules and templates that marketers can use to personalize customer messages (Paige, 2009).

5.0 CRM EXPLOSIVE GROWTH

The primary benefit of a CRM program is increased customer retention. Winer reports on a study by McKinsey demonstrating that customer retention has greater value than customer acquisition. Business should expect to see improved financial results from their CRM program.

In addition to the tangible benefits, there are intangible benefits. The relationships with customers should be more open and effective. Hopefully, things will go smoothly; however, if there are incidents, the closer relationship should help in their resolution.

Internally, the need to develop cross-functional program should increase the collaboration among internal functions. Even without considering the operations functions such as purchasing, production, distribution, and inventory management, there is a need to get sales, marketing, and Information Technology (IT) people more comfortable with one another. Nairn highlights the difficulty in communication between the “emotions-driven sales forces and the clinical binary-driven IT expert” as difficult unless intelligently managed (Richard, 2010).

CRM Business Driven:

1. Automation/productivity/efficiency

2. Competitive advantage

3. Customer demands/requirements

4. Increase revenues

5. Decrease costs

6. Customer support

7. Inventory control

8. Accessibilit

4.0 WHY CRM NOW IMPORTANT THAN BEFORE?

CRM research supports the conclusion that it is a management “fashion” and not a “fad”. It should have a great appeal in service industries, such as banks, public accounting, and insurance. Electronic CRM has great promise. Shah and Mirza provide, in great depth, the use of Web services to achieve effective CRM.

However, CRM is long way from achieving its potential. Some companies will get it all together and reap the benefits by assimilating the principles of CRM into their normal business practices. Others will go through the motions, stall, and move into a newer program that promises to be easier to implement and provide even greater benefits. Still others will never know that CRM was available (Richard, 2010)

3.0 EVOLUTION OF CRM

As one of the key business processes, CRM focuses on developing and managing relationships with internal and external customers. A CRM business process consists of strategic and operational sub-processes as follows.

1. The strategic sub-processes

- Review corporate and marketing strategy

-Identify criteria for categorizing customers

-Provide guidelines for the degree of differentiation in the Product/Service Agreement (PSA)

- Develop a framework of metrics

-Develop guidelines for sharing process improvement benefits with customers

2. The operational sub-processes

- Differentiate customers

- Prepare the account/segment management team

-Internally review the accounts

- Identify opportunities with the accounts

- Develop the PSA

- Implement the PSA

v Measure performance and generate profitability reports

CRM is part of a demand chain solution to address challenges in attracting potential customers and creating customer loyalty. Demand chains address issues related to customer demand, including product information, the product itself, services related to the purchased products, the product’s ease of use and performance, the purchasing experience, and after-sales support (Richard, 2010).

Three (3) phases in the evolution of CRM is reporting, analyzing, and predicting. CRM reporting technologies help organizations identify their customers across other applications. CRM analysis technologies help organizations segment their customers into categories such as best and worst customers. CRM predicting technologies help organizations make predictions regarding customer behavior such as which customers are at risk of leaving (Paige, 2009).

2.0 RECENCY, FREQUENCY AND MONETARY VALUE

This is useful formula to find most valuable customers. It is called RFM- Recency, Frequency, and Monetary value.

· Recency: How recently a customer purchased items.

· Frequency: How frequently a customer purchases items.

· Monetary value: How much a customer spends on each purchase?

For example, if Mrs. Zara always buys software but never computers, then the company should offer him free software with the purchase of a new computer. CRM technologies an organization can use to strengthen its customer relationships and increase revenues (Paige, 2009)

1.0 CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

One of the key activities that marketers should understand is how to effectively manage positive relationships with customers. Firms focus on CRM to have quality relationships with customers. CRM consists of the firm’s activities to build, retain, and sustain long-term relationships with customers, whereby it tries to improve profitability in the long run. To have an effective CRM system, the first task for the firm is to maximize the collection of customer information. Internet and information technology enable the firm to easily target specific customers, learn about their unique needs, analyze their behavior, and provide the best value to them. An effective CRM mainly depends on technologies based on advanced databases and analytical tools to analyze customer data and provide better products or services. For example, data mining, which is involved in specialized statistical software programs, allows a firm to uncover and predict customer behavior and purchase patterns. The firm can then tailor its marketing strategies to meet the customers’ specific needs. Web sites or call centers are also example of CRM systems that are used to support customer services, whereby the firm manages positive relationships with customers.

Although sophisticated statistical analytic software and information technologies play a critical role in the success of CRM implementation, it is not just the software or technologies that drive the building, maintaining, and sustaining of customer relationships. CRM means more than harnessing a technology based customer database. CRM is the overall firm commitment to the development of proactive customer relationship strategies that are combined with other business strategies. The purpose of CRM is to provide satisfaction for customers. CRM is more than the simple reduction of marketing costs and more efficient interactions with customers; it is the building of a long-lasting customer centric orientation within the firm (Cheryl, 2007).

Customer relationship management (CRM) refers to business processes executed by a company and with its business partners to service customers and sustain relationships with them.