Changes in Customer Relationship Management and the Role of New Technology in These Changes - Example

Customer Relationship Management Name of Student Lecturer Date Table of Contents Table of Contents 1 1.0 Introduction 1 2.0 Changes in Customer Relationship Management 2 3.0 The Role of New Technology in these Changes 3 4.0 The Key Customer Relationship Management Frameworks 6 5.0 Discussion of Survey Process and Outcomes 7 6.0 Analysis and Integration 8 7.0 Potential Applications and Future Implications 9 6.1 Potential Applications 9 7.2 Future Implications 10 8.0 Conclusions 11 9.0 References 13 1.0 Introduction Companies focus on managing customers relationships across the world. Customer relationship management (CRM) primarily recognizes the value of both potential and current customers in the long run. It aims at increasing profits, revenues and shareholders value through particular marketing activities meant to develop, maintain, and promote flourishing relationship between the company and customers (Bolton & Tarasi. 2007). These activities need a better understanding of inspirational sources of value the company delivers to them and gets from customers. Thus, CRM is defined as a strategic approach used to create improved value for shareholder by developing and maintaining suitable relationships with major customers as well as customer segments (Bolton & Tarasi. 2007). CRM unites the capability of information technology and relationship marketing strategies to generate gainful, long-term relationships with customers. Establishing profitable relationships with customers needs a cross-functional combination of people, processes, operations as well as marketing capabilities. This integration is enhanced through information, technology as well as applications (Bolton & Tarasi. 2007). Based on learning experiences concerning CRM, the report seeks to provide an analysis and discussion on changes in CRM over time, the role of technology in the change and the key CRM framework. The report will also identify the potential applications and future implications of CRM in the modern marketing environment. 2.0 Changes in Customer Relationship Management Relationship marketing practices can be traced back during the pre-industrial era. However, the introduction of mass production due to improvement in technology, the separation between the producer and consumer, and the emergence of middlemen in the Industrial era led to evolution of CRM. As the concept of marketing acquired momentum, and grew in the twentieth century, businesses began to concentrate on transactions and exchanges for goods and services (Parvatiyar & Sheth, 2001). Eventually, marketing as a field of study experienced a shift from transactions to relationships marketing. Indeed, the orientation of marketing from transactions to relationships is characterized with direct marketing where marketers not only operate in business-to-business markets but also in business-to-consumer markets. Unlike during the pre-industrial period when marketing was characterized by direct marketing practices, more so of artifact and agricultural producers, it still exists but alongside relationship marketing (Parvatiyar & Sheth, 2001). When production and consumption is linked, there is prospective for bonding that surpasses economic exchange. This made producers and consumers understand each other’s needs and limitations better, and developed the need to cooperate with one another. Such cooperation made marketing more relationship oriented unlike in the exchange orientation of sellers and buyers (intermediaries) where the economics of transactions are of great importance (Parvatiyar & Sheth, 2001). Mass production in the industrial era encouraged selling of products through intermediaries and creation of specialist purchasing departments as well as professional buyers. This eventually led to the separation of producers from consumers. In addition, advancements in technology also enabled producers to interact directly with many consumers. Different organizational processes like total quality programs and empowerment has returned in industrial and consumer markets, enhancing more relational orientation marketing (Parvatiyar & Sheth, 2001). 3.0 The Role of New Technology in these Changes New technology has contributed to these changes. As such, new technology helps in gathering customer information swiftly. It has not only provided technical tools for gathering information but also reduces time of gathering the information. Using the internet, electronic devices and mail services it has helped CRM to great extent. Additionally, new technology has helped in identifying the most valuable customer needs and software, (Jayachandran et al. 2005). This helps an organization to manage their customers. Notably, new technology has helped the changes in CRM by helping in keeping records and sorting of customer data. This helps organisations to provide customized services and consequently customer loyalty. Specifically, as (Xu et al. 2002) asserts, new technology has helped the above changes in CRM in three different ways, that is, in applications, customer touch points and data stores. Customer touch points provide interface with the customers and forms the beginning of sales process. It aids in communication between sales persons and customers and inputting information in to CRM systems. The applications, a software interface, come between customer touch points and organisational database. The data stores are the knowledge management systems and information/data stored in the databases. They interpret information and help in mapping out the buying habits of customers and buying behaviour patterns as (Tapp et al. 2004) suggest. With information, technology continues to emerge, the manner in which companies conduct business also change. Various technologies have led to the advancement of CRM making business easier across the world. First, there are CRM-Enabling technologies that facilitate indirect channels. Many industries, more so high tech, consider indirect channels as critical as their partners mainly handle and account for over 50% of the total sales. Applications that support partner sales have emerged boosting CRM (Anderson & Stang, 2000). Second, Self-Service Knowledge bases have improved CRM. Knowledge bases enable consumers to independently Access Company’s Web site and get solutions to problems without the service personnel intervening. The service personnel can freely log into and track customer Wed site interactions to view what customers require and assist them further. This helps improve producer-consumer relationship, which is key to CRM (Anderson & Stang, 2000). The third is Web-Based and E-Commerce CRM-Enabling technologies. Customers of such technologies choose products that bring together many customer-service functions like call center, help desk, and order entry using one Web interface. Through workflow, the company can link processes across different applications. Web sites are made available on a daily basis allowing relational marketing to take place. Consumers using the web are allowed to access knowledge bases, check their records through the internet, chat with service representatives, and even ask questions. Apart from customers signing up for new products and services and making orders on the company’s Web site, companies have been able to minimize administrative error due to accuracy of such applications (Anderson & Stang, 2000). Fourth, Intelligent Agents (AI) and Rules-Based applications support CRM and companies have adopted the technology. AI technologies allow organizations to interact at a one-on-one basis while reducing reliance on human resources. IA and Rules-based applications are used to respond to customer e-mail queries sent during off-hours. In addition, companies use these search engines to notify automatically customers to issues arising concerning their products and orders. Companies can freely monitor prospect customers through the Web site who can later become real customers (Anderson & Stang, 2000). New technology has played the biggest role in aiding the changes in CRM; it is the backbone of customer relationship management. Its role in CRM is eminent and imperative. It helps in realizing vibrant CRM strategies because of the presence of innovative software. 4.0 The Key Customer Relationship Management Frameworks According to Grabner-Kraeuter and Moedritscher (2002), companies develop a strategic framework for CRM for which to define success. There are various CRM frameworks companies use to develop and maintain relationships with their customers. Process is one of the frameworks for CRM. An important aspect of CRM requires identifying all processes that occurs between the company and its customers. CRM processes should address tasks significant to the realization of company’s goals and every process should facilitate the process of value creation. In addition, every process should exist at a macro or strategic level and has to manifest clear interrelationships (Payne & Frow, 2005). Another CRM framework is Value creation, which transforms strategy development process outputs into programs that extract and bring value. Value creation requires determining the value the company can provide to customers, the value customers bring to the company, and effectively managing the value creation initiatives. Technology is another CRM framework adopted in marketing. Use of CRM technological systems has positive impacts on customer satisfaction, directly and through developed customer knowledge (Bolton & Tarasi. 2007). Due to various issues that arise during CRM technology adoption like implementation challenges, organizations must be kin to ensure the implementation process is customer-driven to allow more user involvement. Use of high level of technology increases customer relationship performance through organizational information processes (Bolton & Tarasi. 2007). Information management is another key framework for CRM. Information management involves the collection, collation, as well as use of data and information from customers’ points of contact to enhance customer insight and relevant marketing responses. The most important aspects of information management process include data repository, IT systems, and back office and front office applications. These, support various activities that involve direct interface with customers as well as managing internal administration, operations, and supplier relationships (Payne & Frow, 2005). 5.0 Discussion of Survey Process and Outcomes Many of the respondents (58.40%) are members of between one and five loyalty programs. This indicates that the respondents prefer to have many loyalty programs. 3.69% have more than 15 loyalty programmes. The most preferred and liked retail loyalty programs are the fly buys Coles, Woolworths and Myers/one. This is because, they are the retail loyalty programs that that the respondents prefer to keep, and they would not want to get rid of them. Priceline had the least number of respondents who would want to keep them. In addition, many of the respondents (24.69%) use the loyalty program at least once a week. Those who use the loyalty program twice a month and once a month at 19.14% and 15.02% follow this closely. Considering the retail loyalty programs, this is good use of the programs. Many respondents (29.07%) have been part of the loyalty programs for between 1 to 2 years. Many of the respondents (45.06%) were introduced to the loyalty programs when having transactions with the company of the loyalty programs they have; their friends, sales persons and online programs introduced others. On spending patterns, many of the respondents (52.06) asserted to spending more than $500 on products and services of the company of their loyalty programs. This means that they are regular use of the company's products. Moreover, they feel that the spending pattern have not changed over the previous twelve months (41.15%). Importantly, the respondent’s incomes are fairly distributed. Most of them earn less than $75,000 annually. Only 16.7% earn over $75,000 annually. 6.0 Analysis and Integration With improvement in technology mass production has been enhanced which has facilitated cost effectiveness in production of goods and services thus making it possible to charge customers affordable prices. Over time, there has also been development in the chain of distribution. This has facilitated the availability of goods to customers. The chain has also allowed breaking of bulk, sorting and packaging of goods making it possible to satisfy their customer needs. Advancement in information technology has made CRM easier. This is because reaching customers across the world is possible without any strain, through media and other communication channels. This has eventually led to increase in sales and revenue in various industries. Creation of different business related web sites has also enhanced the development of CRM since customers are able to get information about products and services through these sites. This has promoted customer satisfaction, since customers go for goods and services they have information. To enhance relationships with their customers various businesses have developed frameworks that have facilitated successful customer relationships. The frameworks are facilitated by various strategies adopted in marketing of products. This has made the organization be in a position to intensify their marketing strategies, such strategies that enhance CRM framework is technology. The frameworks also facilitate value creation in the organization that plays a major role in ensuring that customer’s needs are fully met. Enhancement of communication between the organization and their customers make it possible for the organization to enhance its CRM, this is facilitated by the use of information management strategies as one of the CRM frameworks. 7.0 Potential Applications and Future Implications 6.1 Potential Applications CRM is used for better customer data yields benefits; they provide a good marketing strategy especially for hotels and resorts with good data strategy. A well-grounded CRM plan ought to be erected on producing high value consumer information. This is meant for designing promotional activities. Using data and information collected by CRM, managers and organisational heads can translate information on their customer’s background and customer’s requirements to improve customer’s experience, Mithas et al. (2005). Essentially, CRM is used to improve customer experience. In hospitality industry, CRM helps to provide discounts to frequent customers. By strategic focus, CRM provides empirical evidence by demonstration of positive effects to loyalty programs as Adebanjo (2003) asserts. It does not only provide measurable outcomes but also results to increase spending by customers to a certain loyalty program company or an organization. In essence, CRM his used to enhance executive decision-making and to enhance services and products. Moreover, CRM is used in financial initiatives to leverage investments and reduce costs. This is by resource optimization and minimizing costs. Notably, CRM is used to reach to customers, it helps customers to be loyal and remain in a business. In the increasingly competitive world, customer relationship management can be used to by businesses and enterprises to increase client margin, to increase the number of clients and to increase client loyalty (client life cycle). As indicated above, the new technologies provides an organization or a business with better client information and thus a business knows its clientele well and also it gains their loyalty by using pertinent information to gauge the client’s needs and respond in the best way possible. As revealed by the various researches on customer relationship management, it has been found that making clients loyal to a business costs up to five times less than finding new clients. This underpins the importance of customer relationship management. as such, business can use CRM to design and make strategies around the services and preference of their customers and clients. With the advanced development of the social media, CRM offers a very good platform for which a business can market itself to many potential customers at different regions. Since CRM is not only used for customer data collection, it is very important for organisations and business enterprises to use the collected information to manage their customers well. This is very important in retaining customers rather than marketing to new customers it is cost efficient. 7.2 Future Implications CRM can be used to extend customer services in the future, it can be used to structure, make strategies drive processes and aid people in decision making in an organization. It targets retail customers, it makes easier for a business to manage sales processes and also in determining what strategies, approaches and techniques are working best for a business. CRM information can as well be used to customer’s software to segment customer bases by various factors such as demographic indicators of history of sales, Karakostas et al. (2005). Furthermore, it can be used I the future for capturing data. This is by helping develop new strategies for increasing business sales. It can be used to indicate which customers have the highest profit margins and in isolating some strategies which are not working. Particularly, customer relationship management can be used in future to maintain customer rapport and consequently in satisfying the customers through meeting their desires, wants and needs, Verhoef & Donkers (2001). On the other hand, it is not easy to maintain customer relationship management in an organization. This is because, a business has to make and generate enough profits and revenues respectively in order to grow and maintain the customers. In addition, customers and clients want quality products, good services and acceptable prices. Therefore, a business should not forget to meet these conditions, Xu & Walton (2005). Actually, to satisfy customers completely, a business or an organization should satisfy the above conditions. This is essential in making customer loyal to a business. 8.0 Conclusions This report has indentified that customer relationship management is a very important part of business hence, an organization should look to always progress on. Moreover, this report has discussed some of the changes as well as evolutions of CRM over time. Separation of producers and customers and modern ways of production, existence of intermediaries in marketing and development of internet marketing are some of the changes and evolutions that have been discussed in this report. Similarly, the role of new technologies in helping CRM to change and evolve has been discussed. It has been found that new technologies have played an essential role in changing customer relationship management. Necessarily, this report has discussed the key CRM frameworks and models that I have taken from this unit. This report have established that the survey process and outcomes are adequate in recommending on the best and preferred products from various companies as conducted in the survey. Many of the respondents have many loyalty programs meaning that they are loyal to a number of companies with different products. The respondents also use a good part of their income in buying their preferred products repeatedly. 9.0 References Adebanjo, D, (2003), classifying and selecting e-CRM applications: an analysis-based proposal, management decision, 41(6), 570-577. Anderson, B, & Stang, B, (2000), customer relationship management perspective, perspective. Bolton, N, & Tarasi, C, (2007), managing customer relationships, review of marketing research, 3, 3-38. Grabner-Kraeuter, S, & Moedritscher, G, (2002), alternative approaches toward measuring CRM performance, paper presented at the sixth research conference on relationship marketing and customer relationship management, Atlanta. Jayachandran, S., Sharma, S., Kaufman, P., & Raman, P. (2005). The role of relational information processes and technology use in customer relationship management. Journal of Marketing, 177-192. Karakostas, B, Kardaras, D, & Papathanassiou, E, (2005), the state of CRM adoption by the financial services in the UK: an empirical investigation, information & management, 42(6), 853-863. Mithas, S, Krishnan, M, S, & Fornell, C, (2005), why do customer relationship management applications affect customer satisfaction? Journal of marketing, 201-209. Parvatiyar, A, & Sheth, N, (2001), customer relationship management: emerging practice, process, and discipline, journal of economic and social research, 3(2), 1-34. Payne, A, & Frow, P, (2005), a strategic framework for customer relationship management, journal of marketing, 167-176. Tapp, A., & Hughes, T. (2004). New technology and the changing role of marketing. Marketing Intelligence & Planning, 22(3), 284-296. Verhoef, C, & Donkers, B, (2001), predicting customer potential value an application in the insurance industry, decision support systems, 32(2), 189-199. Xu, M, & Walton, J, (2005), gaining customer knowledge through analytical CRM, industrial management & data systems, 105(7), 955-971. Xu, Y., Yen, D. C., Lin, B., & Chou, D. C. (2002). Adopting customer relationship management technology. Industrial management & data systems,102(8), 442-452. Read More