"Customer Relationship Management is a comprehensive approach for creating, maintaining and expanding customer relationships". (Kristin Anderson & Carol Kerr, Customer Relationship Management, Pg.No 16) Kristin Anderson & Carol Kerr define CRM as a comprehensive way of treating or dealing with your customers with a clear plan. CRM is emphasised in two different ways, most of the organizations refer it as customer relationship management and others as customer relationship marketing. The interpretation may differ but the bottom-line remains the same; i.e. CRM is a business practice that mainly focuses on the customer relations.
Francis Buttle highlights the importance of CRM in business for building a loyal client base. He defines CRM as "the core business strategy that integrates internal processes and functions and external networks to create and deliver value to the targeted customers at a profit. It is grounded on high quality customer data and enabled by IT". (Francis Buttle, Customer relationship management: concepts and tools, Vol. 13).
Francis Buttle`s definition for CRM consists of three essential elements: Customer Satisfaction, Customer Loyalty and Business Performance. A Strategic combination of these three elements leads to a successful CRM system.
Figure 2 Diagram showing the essential elements of CRM
Levels of CRM
CRM can be described at three levels, each of which operates on different business environments:
Figure 3 Diagram showing three distinct levels of CRM
Strategic CRM: Mainly focuses on developing a customer centric business culture. A superior strategy when compared to the competitors in the Market gives an upper hand to any business. This would help in winning and keeping new customers.
For example "Tesco "one among the successful supermarket chains in the UK offers customers with a "Club card" on subscribing this, the customers are rewarded on every purchase they make at Tesco outlets. This unique strategy of Tesco gives an upper hand in the market.
Product oriented businesses ignores the true customer requirements and makes assumptions about what they need. In contrast a customer or market oriented company does significant research on consumer requirements and evolves as per the same requirements. Production oriented businesses believe that customers want good quality but low priced products. Therefore they strive to keep production, operation and marketing costs low. Sales oriented businesses too have low production costs; however they invest heavily on marketing these products to attract consumers.
Operational CRM: This focuses on automation of marketing, selling and servicing of business functions.
Marketing Automation (MA): This makes use of technology to marketing processes. Examples of this could include user website information tracking to get to know what customers are looking for and predicting the offers and services they might be interested in. Another version of this is event based marketing where an event by the user triggers a response (related or unrelated to the customer query) which may be of interest to the customer.
Sales Force Automation (SFA): Applies technology systems to the company`s selling activities. SFA comprises of Opportunity management and Contact management. Opportunity management tracks eligible business leads and directs it appropriately for sales operations. It also includes sales forecasting to future sales estimation. Contact management is all about managing customer information and customising responses to customers based on the information about the customer.
Analytical CRM: Focuses on utilization of customer data to boost both customer and organization value. Examples for this include 3 Mobile - a mobile phone service company uses the contact details of their customer base to keep them informed about the company`s new range of products by emails or sending them a short message on their mobile phones.
Why CRM?
The primary goal of every organization is to generate revenue. It costs six times more for a company to sell its product to a new customer than it costs to sell the same product to an existing customer - the old bird in hand concept has motivated the emerging corporations to squeeze every drop of value from their existing customer database. (Jill Dyche, The CRM Handbook, Pg.No.4)
This is possible by creating, maintaining and expanding customer relationships. This could be achieved by building a loyal client base. A loyal client base could exist if the organization is successful in delivering total customer satisfaction and identify the customer interest and values.
CRM contributes towards the company`s operation to deliver the specific consumer requirement. It also simplifies sales and marketing processes of any organization thus retaining customers as well as bringing in new business. Thus CRM is a necessity to any successful organization.
Mashkin Group and CRM
Mashkin Group Inc. One of those medium-size asset management companies based in USA, wholly owned subsidiary of a British financial corporation named Amir Inc., Mashkin group of companies operated in three different sectors (mutual fund company, asset management company and financial services company) but were closely affiliated to one another, as they shared the same consumer database and other software applications to manage their internal operations.
The technology systems used within the company merely supported the generic sales operations and none of them were custom made to address the specific needs of their financial sectors. These technology systems had issues with interoperability and lacked analytic functionality within the Mashkin group. This limitation of the software programs compelled the employees to spend an excessive amount of time physically jumping between applications to create new reports, import and export information from systems that were not integrated together.
Even though there existed a lot of technology issues within the company, it was possible for the employees to manage the company's operations as they had limited clientele and the sales volume was considerably small. Company`s condition gradually became unacceptable due to expansion. This resulted in a rapid increase in the number of clients and sales volume to deal with.
Curtis, Barrere and Griffin mention that, this was stage when the Management decided to implement a comprehensive CRM strategy by integrating technology specific to their financial needs for mutual fund and the asset management sectors.
All the three subsidiary companies of Mashkin had the same objectives regarding their new CRM approach, the main objectives included:
Figure 4 Diagram showing Mashkin`s objectives of new CRM strategy
Budgetary constraints within the company restricted Mashkin from purchasing a fully integrated customized system. The task force came up with an idea of hiring third party CRM consultant to assist them choose an off-the-shelf, integrated system which can be used throughout the firm. Under the guidance of consultant, Mashkin selected a technology system that was successfully used by a similar company but slightly larger than the Mashkin group. The software licenses were purchased and their in-house IT department started installing the newly purchased technology. The existing data was transferred to new system, being cautious about minimizing the risk of losing data the old systems; they retained the old systems and ran parallel along with the new system.
Mashkin faced a lot of major challenges while implementing the new system, the cost of new CRM system was nowhere near to the budgeted amount. While transferring the customer data from the old system, the data was transferred without regard to their chronology due to software failures, which made the users to scroll through years of data to locate the required detail. Amongst this the long-time customer details were the most affected. These long-time clients had lengthy transactions over the years with Mashkin, made the situation worse as these files proved bulky to navigate within the system. Another major problem faced was the user training. The users were given an online training about the new system, but the training system was not structured well to ensure that employees completed the training. Also while the old employees left and the new ones replaced them, an associate would spend few minutes demonstrating the system and ultimately the new employee had to learn the system on their own.
Due to all these issues, the employees opted to use the old technology which they were familiar with instead of using the newly installed CRM system. Curtis, Barrere and Griffin conclude," the outcome of the CRM implementation at Mashkin was completely the opposite of what management envisioned with end results of employee confusion, wasted money and lost time"
Failures and Recommendations
Mashkin went wrong choosing the wrong technology, which failed on both the sectors i.e. hardware and CRM software, which affected the CRM budget severely, not only it affected the budget but it restricted Mashkin from upgrading or replacing the incompatible equipment and major impact was on de-motivating the users. "Functionally similar packages can differ substantially in their technical quality and, thus, in their ability to be integrated within a company's information system" says Enzo Colombo and Chiara Francalanci (Enzo Colombo and Chiara Francalanci, Selecting CRM packages based on architectural, functional and cost requirements: Empirical validation of a hierarchical ranking model)
Recommendation: Selecting a CRM system based on Functional and Technical Quality
The above shown is a software selection process as a sequence of steps through which the companies can make decisions on implementing right packages. Enzo Colombo and Chiara Francalanci suggested the above model which comprises of three iterative stages:
Pre-selection stage helps in short listing the software applications. The focus is mainly about reducing the number of software alternatives to be considered.
Analysis stage, this stage gives an opportunity for the organization to obtain detailed understating about the functional and technical characteristics of the previously selected package in the pre-selection stage and to evaluate their suitability.
Negotiation stage, this stage mainly aims at gathering ample of information to the organization regarding the pre and post implementation partners and their support.
This model is congenial to Mashkin as the organization can judge whether to implement the CRM package or not at any stage.
Mashkin's budgetary constraints and inefficient budget analysis for CRM implementation is one of the main reasons for the failure. The CRM task force and the CRM consultant completely failed in rising cost analysis for the implementation process.
Recommendation: Any CRM project is at risk of failure. The team which is responsible in planning the implementation should always equate the risk expense and develop a realistic CRM budget making sure the company can sustain it. Says Dick Lee (Dick Lee: The Customer Relationship Management Survival). Thus Mashkin should make sure it develops a realistic CRM budget considering the following areas like CRM Return on Investment and Risk estimation.
Poor and unstructured user training, on-line training is never a best practice when a complete new system is implemented.
Recommendation: Develop effective training policies where it should be mandatory to all the employees to complete the training process and make sure the quality of training is superior.
Outcomes:
On a successful implementation of CRM at Mashkin would result in the following outcomes:
The newly implemented CRM system would provide a faster and easy access to client records resulting in a significant increase in productivity.
The newly implemented CRM system will help in addressing variety customer needs faster than before.
Enhanced reporting and analytical capabilities would be possible with the new system.
Reduces duplication of efforts and saves a lot of time.
The new system would offer superior data manoeuvring capabilities reducing the employee efforts.
Benefits
On achieving the above stated outcomes Mashkin would significantly benefited by the following:
Mashkin would definitely provide superior services to the customers.
Mashkin would be successful in identifying and retaining key customers.
Mashkin would have better customer profiling and develop a powerful database.
Mashkin would have improved the managerial decision making capabilities.
