Information Technology has made a huge impact on how a business operates; thereby it is being seen as an important area of commerce which needs to be tapped. Despite the large scale investments in trying to automate a business entity, many businesses have failed to attract customers. The factors such as time frame of response, understanding customer needs and new ways to attract customers are making it difficult for the businesses to cope up with. Customers pose a key role in success of an e-business and it has called for extensive research in understanding the key areas of Customer Relationship Management (CRM) in the field of Information technology. Customer Relationship Management from the Information Technology perspective is called as Electronic Customer Relationship Management (eCRM).
What is Customer Relationship Management (CRM)?
In today’s market trend, customers are more educated, better informed, more technology aware and hence demanding more in the service they buy. So, the task becomes more challenging for business managers in attracting the profitable customers. Hence, small as well as big Information technology companies are working hard for maintaining good customer relationships and reaching customer satisfaction. To improve business strategy and plans, firstly, companies need to emphasis more on customers needs and behaviors in order to develop stronger customer relationships. The very first approach comes in this methodology is CRM. CRM stands for the customer relationship management. It is the process or methodology used to interact with customers, which will help bring together lots of information about customers, sales, marketing effectiveness, and customer responses and market trends. It helps businesses use available technology and resources to gain behavior and value of the customer. It broadly covers concepts used by companies to manage their customer relationships very effectively by capturing, storing and analyzing customer information. For example by having such database created with customers need, matching customer needs and product plans and offerings, knowing what other products customer had purchased, etc. can improve product quality, indirectly improving customer relationships. Thus, CRM is the one of the important aspect in the business industries.
Evolution of Customer Relationship Management (CRM)
CRM must start with an industry business strategy, which will offer positive changes in organization and work processes, which are then enabled by Information technology. In 1960s, academic researchers found that the 4Ps marketing framework i.e. product, price, place and promotion was less valuable than ongoing business relationships. By 1980s, marketing teams used to describe his new focus on understanding customer segment and achieving high customer satisfaction. In 1990s, CRM became the umbrella term; computer systems were deployed to support sales and service processes. By late 1990s, the real impact of these systems was outside the corporate world. Explosive growth in the internet usage broadened the concept as Electronic Customer Relationship Management (eCRM) to manage online customers. Now, multi-channel systems are available to support direct, internet and partner channels to allow user to use whatever mode of communication, they pleased.
These systems could typically answer many of the questions such as:
- How can oneself improve sales activities to have better idea of business improvement.
- How one can improve capability for leading the generation, account management and opportunities.
- How to make meaningful decisions on measuring the results from marketing campaign.
- How to resolve customer service troubles, make queue time shorter, make customer happy by offerings.
- All in all, how one can improve customer relationship.
To answer these questions, CRM was developed to provide best operating practices in sales, marketing and customer services. This is where, companies started using CRM to store customer history, real time activities accumulation, which each department could bring up a record and see all customer interactions.
Why is Customer Relationship Management (CRM) important?
Everyone faces with the products and services at every single turn. But in realty, many of the product and service providers do actually not know the persons those using them. Major corporations failed to realize that it is the customer who is their biggest ally. Several millions of dollars are lost yearly because they failed to make profit, beat their competitors and stay ahead in this race. They wasted their money in marketing and endeavoring to gain the customers. They all are prone to make same mistake at some point of time. The main reason behind this failure was the attitude of companies towards their customers. The customer is the real king, who makes decision on failure and success of any service or product company. Many of the companies are not open to customer’s suggestions and more often that they do not provide the customer with a proper avenue and expel their ideas. This often leads to customer’s unhappiness and eventually their loss. Here comes the real need of the CRM.
CRM take into consideration the customer’s need and behavior towards services and products provided by companies. Companies can define their business strategy that primarily focuses on the customer, their ideas and suggestions. Benefits of CRM are listed below as business perspective:
- Increased sales through better timing by analyzing needs based on historic databases.
- Identifying improvement areas by understanding specific customer requirements.
- Increasing business, by highlighting and suggesting alternatives or enhancements.
- Identifying profit making customers.
- Better marketing of products.
- Enhanced customer satisfaction and retention.
- Enhanced customer loyalty.
- Improved quality communication and networking.
- Increased overall efficiency with reduction of total cost of sales.
- Better stand against global competition.
Once business starts to look after existing customers effectively, effort can be made to gain new customer thus expanding market value.
Electronic Customer Relationship Management (eCRM)
Electronic Customer Relationship Management (eCRM) is the current trend with most business organizations be it small or large. The companies are hesitant in using the traditional strategies for running its businesses. The customers are treated as the most important part of the implementation of a business strategy. That is the reason why Electronic Customer Relationship Management has gained a lot of importance in the past decade. Electronic Customer Relationship Management (eCRM) is concerned with attracting and keeping economically valuable customers and eliminating less profitable ones.
This aspect of the CRM which deals with the customers over its online business portals helps to identify the key customers and by spending more resources on them to make the business run better. The solutions offered to these businesses are of wide range and they are often sold as a package at very high prices. The nature of a business plays a vital role as adopting these CRM packages is not only waste of money but also huge waste of time. This could even lead to loosing customer base which are absolutely essential for running business.
It is highly important to retain customers for a business as a recent study by McKinsey & Co. revealed that if there is gain of 10% repeat customers then it will add about a profit of 10% to the company. It is highly obvious that a successful business should try and retain customers even though it is at a cost of their own terms. It is important to understand the three requirements that a CRM must address to be successful from IT point of view.
1.Front-end Systems
The front-end systems constitute the key aspects of the business such as sales force & market automation, customer service automation and application software. In case of online business or retailer, sales force and market automation is totally dependent on how the website looks and what features does it provide in order to attract and retain customers. Tracking all the customers and identify the potential customers will help the managers to take important decisions and capture the market. Customer service automation is a must as it the only place for a customer to reach out if they need any help. It includes setting up of call centers, communication technology infrastructure and websites. As these represent the face of a business it is important to automate these technologies.
2. Data-Handling technologies
The number of customers who shop increase day by day and it is impossible to keep track of them. As a result it has become obvious that one has to employ software tools which can manage the customer information and also be able to provide a proper links between them to help serve the customers. The techniques of data warehousing, data mining and knowledge management helps by making the CRM a better choice.
Data warehousing manages the company’s data which is stored on a backend system and maintains the records regarding the data such as extracting, loading data in the repository and also managing the metadata. Data warehouses consists of business intelligence tools, tools to retrieve and manage data. Data mining as a tool that automates the detection of relevant patterns within a database. The term explains how much a tool like this would help a business prosper; it gives the business, time to focus on the long term customers of the company and address various other issues. It helps in building strategy close to how the patterns reflect. Knowledge management uses the data warehouse and works as an intelligence tool by trying to establish new links within the data. For example, if a person searches for an item and if it is not found on the database then a tool like this could help the business by recording the information and possibly the customer. This improves the efficiency of business and customer satisfaction. These technologies are evidently a mark of the high standards a business can establish in order to survive their competitors within the global market.
3. Back-end Systems
It is the backbone of the business without which everything else goes in utter vain. The data integrity is often considered a major player in getting all the acts together i.e. by bringing together the front-end systems and data handling technologies. It is important to integrate technologies into CRM as it forms a good strategy to work along with all the applications within the system.
The hierarchy present at the back-end systems depicts the non-sales departments such as application software, enterprise wide applications, and ERP and supply chain management. In first stage, organization starts to analyze the Information systems available in place to suit their needs. The application software is deployed across the platforms they feel necessary and then it is important to establish a link between these applications which are called Enterprise Wide Applications (EWA). These help in interchanging the data between the application software and the systems. This could help the business establish all important background work as it highly important to maintain synergy between them and also update them whenever necessary to increase the speed with which they work. ERP forms the next stage of hierarchy wherein it integrates the EWA with the supply chain management which is a part of the front end and also data handling technologies.
The technology is considered to be the key player for any organizational success. IT infrastructure generally has been described as a set of IT services, including communications management, standard management, security, IT education, service management, application management, data management and IT research and development.
Electronic Customer Relationship Management (eCRM) is in short, the customer relationship management which is implemented electronically across the organizations. As CRM is mostly implemented as web based applications, the systems mentioned above play a crucial role in the management of CRM from small and medium businesses to very large scale organizations. Proceeding further, we will see various approaches in the implementation of Electronic Customer Relationship Management (eCRM).
Approaches to eCRM implementation
There are different approaches to CRM implementation and it is presented in different packages focusing on different aspects. In general Customer Service, Sales Force Automation (SFA) and Campaign Management are considered as core aspects of the CRM system.
1. Customer Service
Customer service is the provision for the customers before, during and after the purchase. Customer service is a series of activities designed to enhance the level of customer satisfaction that is, the feeling that a product or service has met the customer expectation.
Its importance depends on the product, industry and customer. Customer service provided by a person or by automated mean as self-service (for example, Internet service). In book “Rules are to break and Laws are to Follow”, Don Peppers and Martha Rogers, Ph.D. wrote that “customers have memories. They will remember you, whether you remember them or not.” Further, customer trust can be destroyed at once by a major service problem, or it can be undermined one day at a time, with a thousand small demonstrations of incompetence.
From the point of organization view, customer service plays important role in generation of income and revenue. From this perspective, customer service must be included as part of the overall approach to the systematic improvement.
2. Campaign Management
It may happen that company may not always require all the details pertaining to particular customer’s history. In such cases to avoid large sending of data and insecurity, many of the organizations prefer campaign management. Enterprise campaign management solutions allow customer to provide centralized databases to send one or multiple dialers. Rather than sending down all the record, part of the record will be send as and when required. This simplifies the management of the complex dialing campaigns.
3. Sales Force Automation
These are the information systems, which automatically records all the stages in a sale process. Such systems keep track of the all contacts that has been made with the customer, purpose of the contact, and any follow up that might be required. This ensures that sales efforts will not be duplicated, reducing the business risks. It also lists potential customers of related products. It might happen that different department may contact same customer number of times for same purpose. To avoid such a risk, SFA must be fully integrated in all the departments that deal with customer service management.