Customer Relationship Management Implementation - Assignment Example

Table of content S. No. Topic Page 1 Question One 1 2 Question Two 4 2.1. Phase 1: Multiple dysfunction 5 2.2. Phase 2: Semi functional enterprise 6 2.3. Phase 3: Integrated Enterprise 6 2.4. Phase 4: Extended Enterprise 7 3 References 10 Question One Customer is king. This statement is no myth. By virtue of variety in their choices and more importantly their increased access to knowledge and information, customers are becoming more demanding with passing time. Considering the ever-growing competition it is becoming more prominent that enterprise need not treat a transaction per se rather should build genuine relationships in a way that would benefit the customers. Customer Relationship Management (CRM) endeavours is intended to meet the goal of customer outlook and expectations. CRM helps in accomplishing maximum Customer lifetime value and hence higher returns to any organisation over a period of time. Looking critically, it is evident that Relationship Marketing which is based on societal concept of marketing has paved ways for CRM. This can be inferred from the definition by Light (2003, p.5) who said that CRM is developed from business practices like relationship marketing and the enhanced prominence on prolonged customer retention by means of efficient administration of customer relationships. CRM can be viewed as a system which is interconnected with enterprise wide information system. It includes all possible business processes which include direct or indirect contact with customers e.g. sales, marketing and post-sale service. Levine (2000, p.34) highlighted that Customer Relationship Management system uses knowledge or information related to the organisation’s customers in order to deliver pertinent products or services to them. One of the most prominent explanations of CRM has been rendered by Davenport et al. (2001, p.63-75). According to him CRM can be defined as “all the tools, technologies and procedures to manage, improve or facilitate sales, support and related interactions with customers, prospects, and business partners throughout the enterprise”. On the same league, Parvatiyar & Sheth (2002, p.2) describes CRM as “a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer. It involves the integration of marketing, sales, customer service, and the supply-chain functions of the organization to achieve greater efficiencies and effectiveness in delivering customer value.” CRM engages a multifaceted amalgamation of lot many business and technological factors. This state of affairs calls for the planning and implementation of desired strategies for the espousal and execution of Customer Relationship Management within a company (Bull, 2003, p.5). I would like to highlight an example related to CRM from the organisation I last worked for. My company use to get repeated order but over period of times. But to process them, the company need to follow the complete procedure as if the client were new to my company. This was because every transaction was supposed to be closed once it was over. This more often resulted in delays even if same order was repeated. To overcome this, company decided to purchase CRM software. The software was installed and the records were uploaded. But the vital component of alignment of strategic and marketing decisions in tune with CRM was missing. This led to even worse performance by the company towards its customers. Then the need of process reengineering was felt to establish CRM in the company. CRM was then made as a strategic part of integrated business process of the company. Record keeping and Customer relationship was given top priority of all functions. This helped company to achieve better financial target that too in reduced lead times. CRM has recently come into limelight and has taken the centre stage. The development and stress on societal concept of marketing has in fact paved ways for relationship marketing and hence CRM. Proper implementation of CRM though needs effective marketing and strategic decision-making. It is because the concept of CRM is not limited to a simple software solution and its implementation. Considering the aim of CRM to make and retain long-lasting relationships with customers, it has to be supported by an adequate and technologically sound information system. Question Two Consumers today are no longer loyal to specific brands, instead preferring to follow the latest trends and best values. As a result, the life cycles of many products have grown so short that traditional forecasting methods—which require extensive product history—are no longer viable, and the statistically based, best-fit solutions on the market don’t have a chance to deliver reliable forecasts. Today’s retailers have not yet demonstrated a willingness to allow suppliers access to information of customers through direct data links into replenishment systems, but it’s likely that time will come. In an effort to address these challenges, the introduction of CRM concepts attempts to bring a degree of supply chain “planability” between suppliers and their customers, the retailers. Paving the way for an improved relationship via effective information sharing does this. This relatively new willingness to share what not too long ago was considered confidential offers an opportunity for significantly enhanced demand and supply planning. CRM is a technology driven customer centric philosophy. Technology enables the CRM to collect information regarding customers, segregate and filter it in a usable form and then utilize it for mutual value creation and enhancement. Technology acts as an integrative catalyst for the complete supply chain and hence brings the all supply chain stakeholders in coordination vis-à-vis customers and consumers. The advantage of developing integrated supply chains is that it achieves the collaboration and communication capabilities of vertically integrated firms (i.e. hierarchies) while maintaining the flexibility and responsiveness capabilities of market-oriented governance structures. This allows firms with CRM capabilities to compete in new ways that help them, and their partner firms, achieve superior performance. Growing evidence suggests that the higher the degree of CRM capabilities achieved, the greater the potential benefits. Some studies show that CRM capabilities result in cost reductions, improvements in inventory, customer service, new product development, information and material flows, and financial performance for the focal firm. The technology will lead to a progressive development and integration of CRM and overall supply chain. It cannot be a one-day affair. Rather it will be an evolution which needs to be steady and continuous. I would like to visualize development of CRM (moreover) the complete supply chain) through technological advancement, in four phases. The last phase will be the one that will be achieved in 2021. The logic of integrative development is based on the fact that technology cannot impact just CRM which is a part of complete supply chain. Rather technological adaption in every nuke and corner is needed for that. The phases discusses below are generalized for all geographical location on the globe. Moreover it is more justified for developing nation rather than developed nations. Phase 1: Multiple Dysfunction Figure 1: Phase one of CRM integration in an organisation (Adapted from Light, B. 2003. ‘CRM Packaged software: a study of organisational experiences’, Business Process Management Journal, 9(5)) The firm lacks clear internal definitions and goals and has no external links other than transactional ones. In such scenario the technological conditions does not allow the firm to exploit the information present with in raw form to create or enhance value for the customer. The degree of integration among the stakeholders Phase 2: Semi functional enterprise The firm takes initiatives to improve effectiveness, efficiency, and quality within functional areas. There will be little or no overlap in decision making from one department to another. Here the internal systems of the firm have integrated with CRM but the customer network is not. This will lead to time lag in CRM input and output. Moreover the suppliers will remain unaware of the customer requirements and hence will adopt speculative methods of forecasting. Figure 2: Phase two of CRM integration in an organisation (Adapted from Light, B. 2003. ‘CRM Packaged software: a study of organisational experiences’, Business Process Management Journal, 9(5)) Phase 3: Integrated enterprise The firm begins to focus on business processes rather than compartmentalized functions. Though conceptually it is independent of technology, practically IT plays an important role. The firm will incorporate one window system for CRM. The CRM will be centralized for all departments. This will aid specially big and diversified corporate houses. Figure 3: Phase three of CRM integration in an organisation (Adapted from Light, B. 2003. ‘CRM Packaged software: a study of organisational experiences’, Business Process Management Journal, 9(5)) Phase 4: Extended enterprise The firm decides to extend at least one business process beyond the boundary of the individual corporation. This ‘exploratory collaboration’ can extend further into fully networked relationships. IT has a crucial role to play. Now all the stakeholders are in direct contact with the customer as well as the ultimate consumer. Figure 4: Phase Four of CRM integration in an organisation (Adapted from Light, B. 2003. ‘CRM Packaged software: a study of organisational experiences’, Business Process Management Journal, 9(5)) The customer service becomes focus of all partners of the supply chain. The value creation is ultimate and this is the climax of CRM. The change in technology and hence the advancement in CRM integration is summarized in the table given below. Table 1: Summary of observable paaterns of CRM integration (Adapted from Light, B. 2003. ‘CRM Packaged software: a study of organisational experiences’, Business Process Management Journal, 9(5)) It is generally accepted that successful manufacturing firms no longer compete head-to-head with other firms, but instead, they compete supply chain-to- supply chain. This means that firms rely on the complementation between their own internal competencies and those of their supply chain partners to achieve competitive advantage. To achieve complementary competencies among independently owned firms, a relatively new form of organizational governance, is preferred over more traditional forms such as hierarchies or markets. This also helps in adopting state of an art CRM tools. Operations and supply chain managers must understand how to evolve from looking at activities within the boundaries of their company to managing a network of semi-independent network allies. Moving beyond the current focus, means identifying the strategic concepts and supply chain design issues that will be important for these managers. The table given below pinpoints the sea change in CRM that will be seen in 2021. Now Then Independent companies Network of collaborators Goal to sell products or services Goal to develop ongoing relationships with customers and suppliers Manage stable flows of individual products through internal processes Manage dynamics of highly flexible products and complementary products, provided by different organizations organized in networks. “Direct” control “Indirect control” ((trust, negotiations, incentives) Prevail through differentiation Jointly prosper through collaboration that results in a dominant standard Table 2: Comparison of CRM (Adapted from Bulding W, Staelin R, Ehret M, & Johnston W. J., 2005, “A Customer Relationship Management Roadmap:What Is Known, Potential Pitfalls, and Where to Go,” Journal of Marketing Vol. 69 (October 2005), 155–166) References Baohong s, shibo li, and catherine z, 2006, “Adaptive” learning and “proactive” customer relationship management, journal of interactive marketing volume 20 / number 3–4 /summer / autumn 2006 Bulding W, Staelin R, Ehret M, & Johnston W. J., 2005, “A Customer Relationship Management Roadmap:What Is Known, Potential Pitfalls, and Where to Go,” Journal of Marketing Vol. 69 (October 2005), 155–166 Bull, C. 2003. ‘Strategic issues in customer relationship management (CRM) implementation’. Business Process Management Journal, 9(5). Chalmeta R., 2005, “Methodology for customer relationship management,” The Journal of Systems and Software 79 (2006) 1015–1024 Davenport, T. H., J. G. Harris, et al. (2001). "How Do They Know Their Customers So Well?" Sloan Management Review 42(2). Kumar V., Lemon K.N. and Parasuraman A., 2006 “Managing Customers for Value: An Overview and Research Agenda,” Journal of Service Research 2006; 9; 87 Levine, S. 2000. ‘The rise of CRM’, America’s Network, 104(6). Light, B. 2003. ‘CRM Packaged software: a study of organisational experiences’, Business Process Management Journal, 9(5). Parvatiyar, A., Sheth, J.N. 2002. ‘Customer Relationship Management: emerging practice, process and discipline’. Journal of Economic and Social Research, 3(2). Payne A and Frow P, 2005, “A Strategic Framework for Customer Relationship Management,” Journal of Marketing Vol. 69 (October 2005), 167–176 Thompson S.H., Devadoss P.,Pan S.L., 2006, “Towards a holistic perspective of customer relationship management (CRM) implementation: A case study of the Housing and Development Board, Singapore,” Decision Support Systems 42 (2006) 1613–1627 Read More