The age of CRM and the role of IT in CRM
on March 8th, 2010 3 WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT ?
Customer Relationship Management (CRM) is a concept that caught up with the business world in the 1990’s with the promise of forever changing the way small and large businesses interacted with their customer bases. Also sometimes knows as Customer Service Management, this tool includes: processes that help form relationships with customers by providing highest levels of customer service, processes that provide employees with the information they need to know their customers’ wants and needs, and build relationships between the company and its customers and finally software and browser-based applications that collect and organize information about customers. CRM is a systematic approach towards using information and on going dialogue to built long lasting mutually beneficial customer relationship. It is the pivotal role played by this INFORMATION which has triggered the use of Information Technology in CRM initiatives of all companies across the globe. Real Customer Relationship Management as it’s thought of today really began in earnest in the early years of this century. As software companies began releasing newer, more advanced solutions that were customizable across industries, it became feasible to really use the information in a dynamic way.
HOW IT BASED CRM INITIATIVES WORK?DESCRIBE SOME OF THE WAYS USING SPECIFIC EXAMPLES
So how does an IT based CRM initiative work? Instead of feeding information into a database for future reference, CRM became a way to continuously update understanding of customer needs and behaviour. Branching of information, sub-folders, and custom tailored features enabled companies to break down information into smaller subsets so that they could evaluate not only concrete statistics, but information on the reactions of customers. Today, CRM is utilized most frequently by companies that rely heavily on two distinct features: customer service and technology. The three sectors of business that rely most heavily on CRM — and use it to great advantage — are financial services, a variety of high tech corporations and the telecommunications industry. About 50% of the CRM market is currently divided between five major players in the industry: PeopleSoft, Oracle, SAP and the relatively new Microsoft.
IBM has developed a pragmatic approach to planning and deploying CRM initiatives. CRM programs have impacted their bottom line and deliver a return on their time, effort and investment. Successful CRM has transformed the company, helping them grow more profitable by serving customers more intelligently. It is the he largest Siebel implementation in the world and contributes greatly to the expertise they could apply to the solutions built for their clients. They integrated all the parts of their business that touch their clients and have already seen a 30 percent improvement in client satisfaction ratings. A U.S. insurance institution wanted to transform its organization into a customer-centric business model. For this purpose IBM provided CRM services that
1) Adopted an industry standard data model and performed data quality assessment
2) Built an operational data store to support the customer-centric environment.
3) Built a data warehouse and data marts to support customer-centric marketing efforts.
4) Built a common front-end for customer-facing interactions.
SAP R/3 as an Enterprise Resource Planning (ERP) software which in turn comes under CRM has much to offer to its clients. NASA which is among numerous companies to have successfully implemented SAP R/3 used a computer-based training (CBT) program to train many employees on various tasks that did not require large amounts of hands-on training. This method is very cost- effective and gives all users consistency among training. CBT programs also provide training that can be accomplished anywhere at any time, and allows the users to learn how to navigate through SAP. With NASA being such a large organization, CBT was very useful in providing training with minimum cost. Other steps require gaining familiarity with the system. After the implementation of SAP R/3, NASA conducted group meetings to discuss lessons learned. This provided a way to disseminate information across functional areas, and give others a heads-up on problems they may encounter along with the solutions needed.
Vodafone decided to introduce a streamlined approach to maintain call logs and registering subscribers’ complaints and addressing them. The other key aim was to deploy a campaign management system that would help Vodafone to increase its customer retention level. To do so, Vodafone chose the eSiebel Communications solution to provide a powerful CRM system with functionalities that included; Customer value, Handling of his/her requests, status of the requests, handling new connections and Using the e-mail response module wherein all incoming faxes/e-mails from the customers are converted to a service request which depending on the type of request is forwarded to the appropriate department. The main and overall result has been that the new CRM solution has helped Vodafone to reduce annual customer churn by 6.7 percent and retaining a large percentage of Subscribers.
All these companies and countless others have adopted IT based ERP approach through the CRMs and reaped tremendous rewards.
WHAT COULD GO WRONG WITH SUCH IT BASED INITIATIVES?GIVE EXAMPLES
Technology always has presented itself with a flip side. Businesses fail on their CRM initiatives or get marginal value out of this venture for some widely acknowledged reasons, some of which also depends on the size of the company which wants to implement it.
1) The current crop of CRM systems are very useful for large companies with thousands of customers that want to “count” them in interesting ways. But most small businesses, only have tens or hundreds of customers — their main problem is finding new customers and efficiently growing existing customers, not counting customers in its literal sense.
2) CRM systems are essentially databases with customer oriented forms built on top. They are very good at capturing and organizing structured information, but are inept at capturing and organizing unstructured information.
3) Today CRM is more useful for transactional i.e. call centre types of companies than it is for small businesses who have client relationships that are more solution oriented in nature.
4) Although CRM initiatives can prove to be revolutionary, they are cumbersome
to learn and maintain and require a specialized and dedicated IT service team.
Several of these reasons were responsible for the failure of CRM initiatives at AT&T Bell Laboratories.
Moreover CRM implementations fail every day, often due to unrealistic expectations. Hoping that all problems will go away by installing a CRM system is a little foolhardy.
Some of the common misconceptions that give rise to undelivered expectations are thinking that CRM will improve the production of underperforming sales representatives and hoping that CRM will insure that marketing programs are effective and will stay so. Another common pitfall of a CRM initiative is the fact that it is viewed as a technical and not a business problem and driven from top to bottom of an organizational hierarchy. Analysis of CRM failure at a UK based Media Company revealed that there were two fundamental issues: One, related to the complexity of the system itself, and another to the time it took for the salespeople to move from one record to the next. Given the fast-paced nature of the salespeople’s’ work, the system was simply not able to keep up with their minute by minute requirements. This led to frustration and an inevitable decline in usage.
Adopting IT based CRM in the corporate structure and adapting to its various manifestations is not only a technical debate but also a managerial question. Something which forces a company’s top brass to ponder a lot upon. But with rapid technological advancements and the ever increasing competition owing to newer and newer players joining the market, things should definitely look positive.
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Raju, great job..!! I wish you could add something about the newer CRM models to this wonderful post. SaaS has evolved to a great extent in the last 4 yrs and CRM products as a service have helped the SME to manage their customer relationships in a efficient manner yet not having to shell out millions.
To me it’s common sense to have a system in place where you can contact that customer in the future and if they contact you, you have all their details already.
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