Customer Relationship Management (CRM) | Deloitte Global SAP Alliance
Our study delineates the different perspectives of CRM that have contributed to the diversification of the discipline so far, discusses the different problems that. ,  and the broader issue of customer-focused management. CRM From an operations perspective, Bose  pointed out that CRM is an integration. Purpose – The focus of customer relationship management (CRM) literature has been Issues and perspectives in global customer relationship management.
This review sets the context for clarifying the dis- tinctions between three relational concepts: Deinitions are proposed for these three terms. Second, we comment on relevant research on CRM initiatives and outline why it is critical to explore CRM from a strategic perspective, given the wide incidence of failure in CRM initiatives.
Third, we highlight how the key strategic issues confronting different organizations vary sub- stantially and discuss how this impacts on the choice of their CRM strategy. We outline a CRM strategy matrix that illustrates how organizations can develop CRM strategies that are appropriate to their industry context, degree of competitive intensity and stage of CRM sophistication.
Finally, we discuss some implications for CRM implementation and outline related future research opportunities. We begin by redeining these concepts and then providing theoretical and managerial justiication for our choice. Deining Relationship Marketing Kotler has outlined the importance of adopting a relationship approach to stake- holders: This broader multiple stakeholder perspective is now increasingly supported in the rela- tionship marketing literature e.
Each of these three concepts addresses the domain of managing relationships, but is different in scope. We propose adoption of the following deinition of relationship marketing: Relationship marketing is the strategic management of relationships with all rel- evant stakeholders in order to achieve long term shareholder value. Critical tasks include the identiication of relevant relational forms for different stakeholders and the segments and sub-groups within them and the optimal management of inter- actions within these stakeholder networks.
This deinition identiies the overall aim, the scope and the primary activities involved in RM. Relationship marketing may be a highly explicit strategy or may be more implicit and emergent e.
An or- ganization may not necessarily wish to strategically manage all stakeholder relationships but will focus on those relationships that are the most relevant at a speciic point in time. The context of the organization will help determine the strategic relevance of a stake- holder group and the emphasis necessary for managing each stakeholder relationship. Our recent understanding of relationship marketing stems from work in the s in industrial markets e.
The modern use of the term relationship marketing can 10 jbm vol. Strategic management of relationships with all relevant stakeholders CRM: Implementation and tactical management of customer interactions Figure 1 Relationship Marketing, CRM and Customer Management be traced to a paper by Berry who deined relationship marketing as attract- ing, maintaining, and enhancing customer relationships. However, the origins of rela- tionship marketing extend to the early stages of commerce.
Over the last two decades, relationship marketing has become a topic of substan- tial interest to both academics and practitioners.
Relationships and relationship market- ing have been increasingly emphasized by scholars over this period e. By the mid s, several alternative perspectives on relationship marketing had developed. At the Emory Research Conference on Relationship Marketing, Coote identiied three broad approaches to relationship marketing, each of which developed different emphases and scope. Our chosen deinition of RM draws together these three perspectives, identifying RM as a broad, strategic approach to managing stakeholder relationships.
Recently authors have pointed to an increased clarity in the deinition of CRM. In a recent review jbm vol. We propose the following deinition, drawing on Boulding et al.
CRM is a cross-functional strategic approach concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments.
It typically involves identifying appropriate busi- ness and customer strategies, the acquisition and diffusion of customer knowledge, deciding appropriate segment granularity, managing the co-creation of customer value, developing integrated channel strategies and the intelligent use of data and technology solutions to create superior customer experiences.
We also propose deinition of an associated term, customer management, as fol- lows: Customer management is concerned with tactical aspects of CRM implementation that relate to the management of customer interactions, including the use of tools such as campaign management, sales force automation, web-enabled personaliza- tion and call centre management. Zablah, Bellenger, and Johnston have noted that the academic and managerial literatures have failed to produce a consensus deinition for CRM and that the huge number of CRM deinitions have caused confusion.
Adopting an appropriate deinition of CRM is important and, as Sheth and Parvatiyar have argued, is needed in order to focus understanding and on growth of knowledge in the discipline. There are a number of reviews of CRM deinitions. For example, Zablah, Bellen- ger and Johnston identify 45 deinitions of CRM and characterize them into ive perspectives based on: Payne and Frow review over 30 deinitions and list twelve representative ones. They categorize them into three broad perspectives: They propose that CRM, in any organization, should be positioned in the latter strategic, customer- centric context.
One of the earliest uses of the term appears to be in an article by Stone, Woodcock and Wilson Dowling suggests the origins of the term CRM lie in two places: Throughout the s there was a singular lack of discussion on the nature of CRM, its underpinnings and how the concept differed from relationship marketing.
In both the academic and business communities, the terms relationship marketing and CRM are often used interchangeably Parvatiyar and Sheth As Nevin points out, these two terms are used to relect a range of themes and perspectives.
Some of these themes offer a narrow functional marketing perspective related to database market- ing while others offer a perspective that is broad and more paradigmatic in approach and orientation Parvatiyar and Sheth CRM has developed into an area of undeniable signiicance in less than two decades.
Estimates of the size of the CRM market depend on how it is deined. This market com- prises: The huge scale and scope of the inter- and intra-organizational changes involved in CRM led Kotorov to assert that CRM was the third most signiicant revolution in the organization of business after the invention of the factory in and the introduction of the assembly line into the factory production process in A study by Payne and Frow found a wide range of views about what CRM means amongst practitioners: They concluded that the lack of a widely accepted and appropriate deinition of CRM can contribute to the failure of a CRM project when an organization views CRM from a limited technology perspective or addresses CRM in a fragmented manner.
Given the scale and importance of CRM and the widely diverse and often restricted views of CRM, the lack of a clear deinition has impacted negatively on its successful implementation. Sheth and Parvatiyar point out that, for an emerging management discipline, it is important to develop an acceptable deinition that encompasses all facets so as to allow focused understanding and growth of knowledge in the discipline.
Gummesson b is one of the few authors, to date, to distinguish between relation- ship marketing and CRM. He deines these terms as follows: The terms CRM and customer management were used by these managers more in connection with the management of relationships with customers, as opposed to a broader range of stakeholders.
When describing CRM, these executives used phrases relecting the development of marketing strategies over the customer lifetime such as understanding the customer base in total, understanding needs, attitudes, life-stage, prof- itability and lifetime value. By contrast, the term customer management was seen by the many respondents as being more concerned with the tactical implementation of CRM, in particular using speciic tools such as direct mail programs, and campaign management and call centre activities, hence our deinition stated above.
Our ongoing, longitudinal, ield-based research with mangers supported these distinctions. The deinitions of relationship marketing, CRM and customer management proposed in this paper are developed from both the academic literature and ield-base research with executives. Adoption of the deinitions proposed here will help clarify the distinction between these terms and should help academic research in the relationship domain de- velop in a more focused and coherent manner.
Following out ield-based research and an extensive literature review, we conclude that the adoption of a strategic deinition of CRM including distinguishing it from its incorrect association as a CRM technology solution is a priority for both practitioner and academic communities.
Failure, or restricted success, in CRM may occur for cus- tomer-based reasons or irm-based reasons. For example, as Palmatier et al. These authors point to various studies which suggest that, in certain circumstances, CRM can undermine customer relationships e. In a recent survey of reasons for CRM success and 14 jbm vol.
Repeatedly, researchers have found that an appropriate cultural foundation is re- quired for successful CRM e.
Customer relationship management (CRM)
Much recent evidence suggests repeated failure in the adoption and implementa- tion of CRM programs, and in connection with their technology solutions e.
Thakur, Summey and Balasubramanian note that the absence of a strategic orientation is the chief reason for CRM failure, something that many irms have yet to realize: A study by Accenture found CRM projects often focused on mechanics, speciic tools, and technologies to the detriment of the strategic goal Freeland, Eisenfeld, and Gresh- man Addressing CRM primarily in technological terms without having a clear strategy, a perspective evident in many deinitions of CRM, appears to be a common mistake.
Whilst the logic of adopting a strategic approach might appear obvious, evidence suggests otherwise. Before embarking on CRM, an organization should analyze the growth opportunities available within the business environment and make decisions about the nature of customer re- lationships that are appropriate for chosen customer segments. Here the primacy of the customer has to be recognized and signaled throughout the irm.
For success in CRM, it is clear that organizations need to consider their current position within their industry and the future role they can realistically play within it.
However, the primacy of the customer must remain amid other strategic considerations. The business strategy is determined by a situation analysis, setting out how the in- dustry and competitive environment is changing, identifying opportunities for growth and determining realistic inancial objectives for the business. This analysis ensures that an organization invests appropriately, balancing developing new opportunities, retaining existing business and exiting unproitable ones.
In order to set such objectives, an organization needs to identify the key strategic issues that relate to its proposed CRM initiatives.
Customer Relationship Management: A Strategic Perspective | Pennie Frow - avesisland.info
Based on the interviews conducted as part of our interaction ield-based research we identiied a range of strategic issues, shown in Figure 2, that were considered important by companies. These include the nature of customer relationships, issues relating to the industry, the nature of the competitive environment, channels to market, and the technol- ogy requirements need to achieve the business objectives.
Who are the existing and potential customers? Which forms of segmentation are most appropriate, rather than easiest to undertake? What are the major segments? What are the opportunities for micro-segmentation, one-to-one marketing and mass customization?
What kinds of relationship does the company have or want to have with customers? How retainable are the customers? Is customer communication fed back into the business so it can relate to customers on a one-to-one basis?
Who constitutes the customer decision-making unit? How important are they to customers? Where does the company fit within the industry structure?
What is their strategic intent?
Stage of industry evolution: What are the current state and likely future changes in industry structure? What is the nature of competitors? How do they compete? How will new competitors evolve in the future? Are there new entrants on the horizon that are not hindered by the same legacy architecture? Are there new strategic alliances that may disrupt the market? What is the current and future role of different distribution channels? What are different opportunities that exist for disintermediation or reintermediation?
What opportunities exist for new forms of electronic distribution and delivery? What is the appropriate information technology platform and software to serve present and future customer and corporate needs? Figure 2 CRM Strategic Issues to Consider A consideration of these strategic issues will help the organization determine its busi- ness objectives, review its future growth potential and determine the form of CRM that is appropriate to achieving this goal.
In particular, the organization needs to assess the amount and quality of customer information required to build successful customer relationships.
CRM Strategy Matrix Researchers investigating reasons for success and failure of CRM identify that frequently a company has insuficient and inaccurate customer information on which to build a ro- bust CRM platform e. A customer strategy should address well deined segments, each evaluated in terms of current and future proit potential Roberts, Liu, and Hazard Decisions can then be taken on the extent to which a technological solution is suited to develop these desired relationships.
As Thakur, Summey and Balasubramanian observe: It is more useful to characterize CRM as a complex process that integrates information about 16 jbm vol. Working from that perspective, a strategic orientation to CRM that helps a businesses leverage technology and human resources to gain insight into customer behaviors is more likely to occur.
Figure 3, outlines a CRM strategy matrix which considers the appropriateness of different types of customer relationships, now and in the future based on the complete- ness of customer information and the degree of customer relationship individualization that is possible.
Importance of Customer Relationship Management (CRM)
This framework identiies four different types of customer relationship1. The vertical axis of the framework in this igure shows completeness of customer infor- mation.
This dimension includes determining how much information is held on custom- ers and the level of sophistication in the analysis of that information. The horizontal axis shows the degree of customer individualization — the extent to which the organization can use whatever information it has on customers to give them individualized or customized service.
The matrix shows four broad strategic positions and forms of CRM which may be appropriate for an organization. The matrix identiies four alternative strategic approaches towards customer relation- ships. Some organizations may consider that an optimal customer strategy involves im- mediately migrating customer relationships towards greater customer individualization using more complete customer information.
However, consideration of this step should be undertaken with caution. A decision about the migration strategy should only be taken after careful assessment of the trade-off of cost and beneits of developing these individu- alized relationships. Relationships that are tailored to a speciic customer require signii- cant knowledge about all aspects of customer buying behavior. Acquiring and maintain- ing accurate and complete data on a customer is time consuming and expensive and is only appropriate when customers or customer segments have suficient proit potential.
Equally important, is an assessment of the extent to which a customer wishes to engage in an individualized relationship with an organization, which usually includes intensive two-way interactions and dialogue Ballantyne and Varey The four strategic approaches in Figure 1 represent different forms of CRM, ranging from the less sophisticated product-based selling through to the more sophisticated in- dividualized CRM.
As such, each form of CRM is nested within the broader concept of relationship marketing. Different industry sectors are moving at varying rates towards individualized customer relationships. Some sectors that are suited to on-line channels have advanced very quickly and they have taken advantage of cost eficient data collection and data mining opportuni- ties.
Other industries that have been slower to adopt on-line channels face a greater challenge 1 Some parts of this discussion are based on Payne For example, the inancial services in- dustry has struggled with legacy systems, inaccurate customer data and product-focused processes, forming a signiicant barrier for developing individualized customer relation- ships.
An organization can use the CRM strategy matrix to help determine an appropriate strategy. Four strategy options suggested by the matrix are now examined. Product-based Selling Where there is little collection and use of customer information and a low level of cus- tomization to the speciic requirements of an individual customer, then marketing efforts tend to focus on products.
In such cases data analysis involves understanding proitability by product and channel, with little attention given to understanding the characteristics of customer segments.
Importance of Customer Relationship Management (CRM)
Often there is insuficient data to analyze individual customer buying behavior. Product-based selling, represented on the lower left quadrant of the CRM Strategy framework, dominates much of the fast moving consumer goods FMCG industry. Only recently have more sophisticated FMCG companies started gathering data on individual consumers. Typically, companies in this sector have organized themselves around products and brands, measuring brand performance and relying on intermediaries to develop relationships with customers.
However, in recent years, there has been re- newed attention on engaging consumers. Packages display a telephone help line number and customers are invited to call with their comments. This information helps the company to identify the needs of speciic customers and their buying behavior.
Such information helps to provide a platform for developing closer relationships with speciic end customer segments, rather than relying on information mainly supplied by intermediaries.
Even with a relatively unsophisticated data base, overlaying data from external sources can improve the depth of market analysis. For example, operational data can be combined with purchased mailing lists to give a more detailed picture of customers. Customer pro- iling tools such as Mosaic, a geo-demographic analytical tool, can be used in this way. Product-based selling may be entirely appropriate to certain industries and organizations. For example, a small retailer may have excellent information about the sales and proit- ability for speciic products, but may have little information that links individual pur- chases to a customer.
Customers make frequent purchases in such stores and the personal contact between store owner and customer maintains a strong relationship. However, larger retailers and supermarkets recognize the value of developing detailed proiles of their customers and have used methods such as loyalty cards to gather vast amounts of data on their customers.
Using this data, they can develop customized approaches and enhance customer loyalty. Managed Service and Support On the lower right-hand position of the CRM strategy matrix is managed service and sup- port. This quadrant represents business situations where there is limited amount of cus- tomer data but relatively high levels of customer individualization. From our interviews, we identiied that most companies tend to move from product-based selling to managed service and support as the irst development of their CRM capabilities, often by setting up call centers and help desks.
An in-bound call centre may provide excellent customer service and assistance as a means of retaining and building customer relationships, yet collection and use of customer data is not extensive.
This form of CRM often utilizes a limited amount of customer information as the interaction is typically between a customer and the customer service staff who respond directly to customer queries. In some cases, relevant information is captured. When such data is available and readily accessible to customer service staff, customer relationships can become more individualized.
Personal- ized customer service is important as a source of differentiation and keeping customers loyal in industrial markets Bennion Technology can be very useful in managing customer service with this form of CRM. For example, a sales force automation system can link a salesperson in the ield to their ofice base via a modem or mobile phone.
The system allows rapid order processing and order status enquiring which is beneicial during the sales process. This form of CRM has led to substantial improvements in the productivity of ield-based sales forces. The incor- poration of forecasting and reporting tools ensures that customer information is accurate and up-to-date, which enhances sales forecasting. This has changed the role of customer feedback, and made it much more important; after all, customer feedback over social media has been known to make or break businesses.
As a result, business entities are increasingly growing aware of the power of social media as a method for engaging customers and potential customers.
Mobility is also creating technology and marketing trends thanks to the emergence of smartphones and tablets. So what's on the horizon for CRM? Here are a few key trends experts expect will become increasingly important. According to Peter Coffee, Salesforce. Unlike before, on-site resources no longer need to scout for leads to input into a system for future sales calls; sources of customer data are already available. Cloud-based CRM will gain momentum as cloud-based applications continue to progress.
Read more about cloud computing in Cloud Computing: Social media marketing remains on an uptrend and companies are paying attention.
Consumers are empowered by social networking sites to influence product or brand image and perception. Negative feedback no longer simply routes a call to customer service; businesses can expect feedback to reach potential markets before they do. Software vendors are now responding to social CRM needs. Social media optimization and gamification are gaining traction as marketing strategies, keeping customers engaged with the brand and company. Learn more about the role of social media in business in Jedi Strategies for Social Media Management.
Mobility Forrester vice president and analyst William Band observes how mobility has turned into a critical corporate component. Customers are no longer bound to PCs and are constantly accessing data on the go. Frontline employees and customer service resources will increasingly be empowered by mobile devices for support. On the other side of the coin, customer perception will also be shaped not only by real-world involvement, but also by online and mobile experiences. Clint Oram, company co-founder and VP for product strategy, contends that flexibility for CRM users is key because it allows them to customize the software to meet their needs.
Ease of integration and multichannel publishing are key corporate considerations. As a result, a flexible and accessible CRM platform is becoming increasingly important for users. Crowdsourcing With customers gaining voice through social media, enterprises are increasingly able take advantage of crowdsourcing for business improvements.
Tapping current customers for fresh ideas, solutions and expectations can help employees across an organization provide the innovation and interactive relationship that a growing number of customers now expect. This means that CRM will no longer be just for lead generation and marketing, it will also provide a source for new innovation.