Exploring the Success Factors of eCRM Strategies in Practice by Qimei Chen and Hong-Mei Chen - Article Example

College Name Customer Relationship Management Article Analysis Student Name 8/16/2009 table of Contents table of Contents 1 Executive Summary 2 Introduction 3 Literature Analysis 3 Various defnitions of eCRM 3 Classification of eCRM 3 Various Channels and Applications of eCRM 4 Article Analysis 4 Research Objectives 4 Research Methodology 5 Key Findings 5 Case Examples 6 Reflections 7 Do I agree to the article by Chen and Chen? 7 My Opinion about the article 7 Advantages and Disadvantages about the article 8 References 8 Executive Summary Most of the companies have an online presence. Whenever a customer clicks on an ad or views a product specification, web site operators make a note of this and record his digital trail. They would like an answer to the following questions: Why did the visitor viewed this product but did not buy it? What was the source of this visitor? Did he found an attractive scheme at some other website? They would also like to know his demographic profile and his key personality traits and interests. eCRM enables marketers to answer these questions. eCRM is a new initiative that is the new ‘buzz word’ in relationship marketing circles. This report makes a critical analysis of an article “Exploring the success factors of eCRM strategies in practice” by Qimei Chen and Hong-Mei Chen. The primary objective of their study is to understand the benefits of implementing eCRM, and determining the key success factors for a beneficial eCRM implementation. They make ant attempt to understand the strategic objectives of the companies to implement an eCRM package. The authors then present an eCRM survival model that shall guide companies for their eCRM implementation. The rest of this report is organized as following: The first section is the Introduction which lays the ground for further analysis. This is followed by a review of the available literature on the same field. The article by Chen and Chen is then analyzed with respect to their objectives, methodology and findings. This is followed by a study of 2 case examples: Compaq, and Amazon. The last section is the Reflections which present my outlook of the report. Introduction Customer Relationship Management which is deeply based on the concept of relationship marketing focuses on finding the best customers for a company, maximising the value for them and retaining them. This enables the company to maintain long term profitability instead of spending on acquiring new customers. The advent of internet technology and e-business has opened new avenues in ways CRM can be done. This new concept eCRM consolidates the traditional CRM with e-business activities. In light of these developments, it is necessary to explore the status of eCRM in industry and determine the Critical Success Factors that enable eCRM to be succeed. The paper by Chen and Chen analyzes this with the help of a primary research undertaken by them. The authors analyzed the benefits and the Critical Success Factors. The authors then develop a survival model for helping companies with their eCRM strategy. Literature Analysis Various defnitions of eCRM eCRM is seen as an amalgamation of two significant strategies: The e-Business market and shift to customer-centric strategies (Bradway & Purchia, 2000). Forrester Research (2001) defines eCRM as a ‘web centric approach to synchronizing customer relationships across communication channels, business functions and audiences’. Classification of eCRM Figure 1: Types of eCRM (PCMAG) Various Channels and Applications of eCRM eCRM includes various technologies: Internet, e-mail, mobile telephony, customer call centers, and voice response systems. Anon (2002) argues that these technologies have reduced the level of human interaction on the supplier side. These new technologies and mobile commerce have given us new methods of selling products, new learning curves in the field of customer relationship management (Wright et al. 2002). eCRM finds its applications in various industries. Mobile technologies like WAP and SMS is widely used by many financial organizations to create a long term mutually beneficial relationship with new as well as existing customers (Rilvari, 2005). In a study, Ragins and Greco (2003) found that companies that are ready for eCRM are more competitive and seeking differentiation. They also found that such companies have distinct contact points with customers. Article Analysis Research Objectives The authors make an attempt to answer the following three questions: 1. What, if any, are the strategic objectives of the company in implementing eCRM? 2. What are the ‘net benefits’ realized by companies? 3. What are the major critical Success Factors? The authors make an attempt to classify all the results according to the industry. Research Methodology In order to understand the factors critical to success of eCRM applications, the authors have made use of the ‘Net Benefit’ construct developed by DeLone and McLean (2002) to measure the success of an Information System. This model is suitable for measuring e-commerce system success. While choosing companies to study, the authors took 15 companies from each of the industries that had the most widespread applications of eCRM. The companies were arbitrarily chosen in all the three sizes: small-mid and large sized companies. The selection of the companies was followed by conducting the survey and in-depth interviews. The authors then derived the analysis according to the results and present an eCRM survival model from the findings. The research methodology followed by the authors is consistent with the research intentions. Key Findings The companies surveyed had a wide degree of eCRM practices ranging from purely informational, to complete operational, analytical, or personalization. All the managers that were surveyed regarded eCRM as an important strategy for achieving business success. Most of the industries had the intention of understanding what the customer needs and wants. Other reasons for implementing eCRM were to keep customers informed, to provide better services, expand customer base, and increase loyalty. The eCRM benefits given by the authors are: Tangibles Intangibles Increased Revenues, Profitability Customer Satisfaction Quicker turnaround Positive word-of-mouth Reduced internal Costs Improved Customer service Higher employee Productivity Acute Targeting and Profiling of Customer base Higher Customer Loyalty and Retention Better Understanding of customer requirements Reduced Marketing Costs Closer Contact Management Table 1: Benefits of eCRM As can be seen from the table, a correct implementation of eCRM provides the company with a host of tangible and intangible benefits. Critical Success Factors In order to understand the critical success factors, the authors employed a critical incidence technique. The authors determined 6 categories of critical success factors and their sub-categories from the in-depth interview conducted by them. They are: first class leadership, organizational perceived usefulness, knowledge management, business–IT alignment, system integration, and culture/structure change. Conceptual eCRM Survival Model Based on their analysis the authors present an eCRM success framework. The authors propose that the eCRM success is a function of the various critical success factors over time. The authors conclude that champion leadership; Internal Marketing and Structural Changes are needed from the very beginning will the very end of the eCRM implementation. This is in coherence with any other IS implementation. It was also found that other factors like Knowledge Management; System Integration and business-IT alignment Factors are relatively more important during the adaptation phase. It was also found that the there is no standard way of implementing an eCRM and eCRM implementation depends upon various factors such as the size, the industry category, usage rate, project investment, and scope. Case Examples Compaq Computer industry has been amongst the first users of eCRM ideology. Dell had pioneered the concept which gave it a source for a competitive advantage for a long time. Compaq learnt from this, and developed its own eCRM system. It developed and deployed various electronic channels to have a direct interaction with the customers through its reseller partners. Any enquiry is now directed to the reseller’s website and the reseller can have all the information about the status of the lead and enquiry and then can take appropriate action. This has led to an increase in the customer satisfaction as it facilitates faster service. Amazon Another company in the same industry that has a very good implementation of eCRM is Amazon. Amazon provides every customer of it with customized personal recommendations for books. This customization is done on the basis of the digital trail of the customer: the links clicked, the pages viewed and so on. Reflections Being a new area of development, research in eCRM is still very rare. This study makes a very significant to the developing literature on the topic. The study can act as the basis for further studies in the same topics. Further studies can be made to understand the overall success rates of eCRM packages. Besides, the importance of various critical factors can be ranked not on the basis of time, but on an objective basis. The research done by Chen and Chen has far reaching implications for 2 sets of industries: Companies that look for implementing eCRM and Companies that provide eCRM services to others. Companies that want to implement eCRM packages should try to have a strategic interest in mind while doing so. Do I agree to the article by Chen and Chen? I completely agree with the findings of Chen and Chen. It is necessary to have strong leadership intent for the project, and teach the employees about the advantages, and engage the employees in the project. It is also necessary to make necessary changes to the policies, practices and structures to achieve full benefits of the initiative. A company while implementing an eCRM package shall try to analyse any previous success eCRM implementation in the same industry. Depending upon the implementation methodology and other factors, eCRM can be both beneficial as well as harmful to the companies. eCRM provides companies with various advantages like the improved customer relationship, options of customization, and may act as a source of competitive advantage. But, it also raises few challenges such as a huge IT infrastructure maintenance, and data management and integrating issues. My Opinion about the article The study also helped me gain a better understanding of eCRM as a source of competitive advantage. This study has given me new insights of how to use modern internet technologies in managing and having better relationships with my customers. eCRM can be used as a strategic initiative to have better relationship with all stakeholders of the company: customers., employees, partners, and suppliers. Chen and Chen have made use of the best possible research techniques and their findings are coherent with the previous research in the implementation of IT projects in an organization. Advantages and Disadvantages about the article One of the advantages of the articles is the thorough qualitative research done by Chen and Chen. At the same time, a more quantitative technique to measure the success and the weightage of factors is missing. The area of eCRM is new and the article provides a very good basic ground for starting further research in the same area. References Anon (2001), 'A short guide to e-business; getting close to customers: leapfrogging with eCRM', [Online] Enterprise Ireland access via http://www.enterprise-ireland.com/ebusiness. Last Accessed on 15th August 2009. Bradway, B. and R. Purchia (2000), 'Top 10 strategic IT initiatives in e-CRM for the new millennium'. [Online]. Available At http://www.appliedprofit.com/Downloads/top10eCRM.pdf. Last Accessed on 15th August 2009. DeLone, W. H. and McLean E. R. (2002) ‘Information Systems Success Revisited’, Proceedings of the Thirty-Five Annual Hawaii International Conference on System Sciences, Vol. 8, pp. 238. PCMAG (2009). Know Who I Am. [Online]. Available at: http://www.pcmag.com/article2/0,2817,8099,00.asp. Last Accessed on 15th August 2009. Forrester Research (2001), '(Glossary') [Online]. Available at: http://www.forrester.com. Last Accessed on 16th August 2009. Ragins, E.J. and A.J. Greco (2003), 'Customer relationship management and e-business: more than a software solution Review of Business, Winter, pp. 25-30. Rilvari, J. (2005), 'Mobile banking: a powerful new marketing and CRM tool for financial services companies all over Europe’, Journal of Financial Services Marketing, vol. 10, no. I, pp. 11-20. Wright, L.T., M. Stone and J. Abbott (2002), 'The CRM imperative: practice vs. theory in the telecommunications industry', Journal of Database Marketing, vol. 9, no. 4, pp. 339-49 Read More