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Figure 1.1 transactional and relationship marketing Mutual independence Relationship marketing Completion and Conflict Transactional marketing Independence and choice 2.2 Focus areas of relationship marketing 2.2.1 Individual Customer Approach Key aspect of RM is to focus on individual customers, in terms of the definition of RM- CRM recognises the key role individual customers have and the most profitable customers have to be indentified so that the business can focus on customers appropriate to its strategy 21st century companies are different. In the old economy companies focus was to standardise production, products and business processes, invested in large buildings and was run like machines. In the new economy- the business is supported by information, which has the ability to differentiate, customise and personalise, and which enables it to gather information about individual customers and business partners such as suppliers. They are more flexible and have the ability to individualise the market offering, messages and media. Different customers should be treated differently, its key to know who the best customers are and to treat them as such. For larger companies with many customers one-to-one marketing is an impossible task, customers should rather 3|Page mutual co-operation
Processes Process management involves all the procedures, tasks, schedules, mechanisms, activities and routines by which a product or service is delivered to customers. In traditional functional approach, all business functions operated as silos- i.e. they restricted processes strictly to functional areas, with no interaction with or dependency on other functions of the organisation. A company wishing to implement CRM needs to manage and link all work processes. High performance companies focus on the need to manage core business processes such as new product development, customer attraction and retention and order fulfilment. They re-engineer work flows and building crossfunctional teams responsible for each process. Processes should be engineered around the customer requires changes to existing process- every process should integrate with the customer silos are eliminated. Management should focus on building customers into the main processes and customers should collaborate with management in all processes that are geared to create value e.g. communications processes may currently be developed to broadcast a market segment, when interactive or narrowcast communications may be used instead. When the company is focused on creating value for its existing customers, bring new customers n board has less merit than having the relationship managed in an integrated way by tying together the various processes, people and technologies to which the customer can relate. Excellent customer service Excellent customer service is an integral part of CRM it can only be achieved by training ALL employees e.g. the accounts department, the receptionist, the switch board operator, salesperson etc including back office staff who have no direct contact with the customer. Employees must understand their job satisfaction rests on the success of the organisation. Employees must be supported by technologies and processes to make them more effective. in CRM , the people in the front line should have the ability to communicate with customers in a way that recognises them, remembers their contact history, understands current customer issues, predicts anticipated behaviour and suggests appropriate responses or solutions. The 8|Page
Rules of engagement when interacting with customers Do not initiate an interaction with a customer without a clear objective Do not ask a customer the same thing more than once Interact in the medium of the customers choice When engaging in an interaction, start with the customer, not the product Make the interaction personal and personalized Ensure that your interactions with the customers are always welcomed Protect the customers privacy Invite dialogue by printing toll-free numbers and website URLs on everything Ensure that the customer can see the value of each interaction Be sensitive to the customers time, do not try to learn everything about a customer all at once. 12 | P a g e
Assessment Question: 1. Demonstrate the ways in which a learning relationship can be enhanced? 2. Explain to a grocery store the limitations of implementing relationship marketing and highlight the areas where relationship marketing could be implemented.?
Commitment-Trust Theory: Relationships exist through the retention of Trust & Commitment Trust: (Definition) Willingness to rely on an exchange partner in whom one has confidence Commitment: (Definition) Enduring desire to maintain a valued relationship
*NB: The purpose of retaining customers is to create loyalty. 4.2)Relationship loyalty Aspects of Relationship Loyalty: (4 Aspects) 14 | P a g e
Customer loyalty: Customers are committed to a specific organization. Customer Retention: Result of satisfied customers. Long-term effect on profits. Focus should be on existing customers & not only new business. Customer Migration: Focus on customer migration. Upward migration-means customers spend more. Downward migration-means customers spend less. Customer Lifetime Value:(CLV) Value of customers over their purchasing lifetimes. OR The present value of the stream of future profits expected over the customers lifetime purchases. Strategic value: the additional value a customer could yield if you had a strategy to get it. CLV of a Supermarket customer Customers expenditure per week R 800 Thus she spends R 3,200 She spends per year R 38,400 Remains loyal for 20 years x 20 R Lifetime value 768,000
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Platinum
Gold
Iron
Lead
25% CLV. Most loyal customers. Not concerned with price/place but more on customer service. 25% lower CLV. Price sensitive. Not as loyal as Platinum customers. Do not deserve special attention due to their modest CLV Lowest segment and often demand much attention but do not buy much. Cost the organization money
4.3) Financial Benefits of relationships A common assumption is that an improvement in customer perceived quality will increase customer satisfaction, loyalty and profitability. The following customer relationship lifecycles with virtuous circles or profit chains have been suggested: Good internal quality-------Satisfied employees-------Employees stay------Good external quality-------Satisfied customers-------Customers stay------High profitability Customer satisfaction is a good predictor of future profits; however, it is not enough to ascertain that 73% or even 94% of the customers are satisfied. Volvo, who started a long-term comprehensive relationship marketing programme, had previously considered satisfied customers to be loyal. There was considerable leakage though. In the Volvo relationship marketing programme the next step has been taken actively to provide incentives for satisfied customers to remain loyal. We can also say that there is a sizeable difference in retention rate between those customers who are just satisfied, and those who are very satisfied. In a study it was shown that very satisfied customers who said they would remain loyal in the future were 78%, while only 21% of satisfied customers said they would remain. 16 | P a g e
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Partner
Advocate
Supporter
Client Purchaser
Prospect
*NB: You should be able to apply the relationship marketing ladder of loyalty to any business by indicating what can be done by the organization at each stage. Assessment questions INGREDIENTS OF A RELATIONSHIP 1. Explain to a company the important aspects of developing relationship loyalty. 2. Comment on the suggested financial benefits of relationships. 3. How should a firm of attorneys use the stages of relationship development to attract & keep more clients?
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Introduction In SA poor customer service is particularly practiced in the food and retail industry. Most customers return to the stores and restaurants that provided bad service because of value for money and convenience. High quality customer service is the key to improving relationships with customers. Enhanced relationship with ones customer can lead to greater customer retention, customer loyalty and most importantly, profitability. Customer satisfactions is hard to win but easy to lose. If customers are not satisfied, they will simply move to other companies. 5.1 The nature of Customer Service Customer service ties in with the marketing concept. An organisation wishing to improve its customer service should focus on customer value, quality, customer service and customer satisfaction. When you study this section in the prescribed book, note the following: . Customer value implies that the higher the perceived benefit and/or the lower the price of a product or service, the higher the customer value and the greater the chance that the customer will choose and keep on choosing (ie becoming loyal) the product or service in future. . Quality is the ability of the organisation to meet or exceed customer expectations. . In terms of CRM, everybody in the organisation is expected to offer excellent customer service -from the frontline personnel to the back office personnel. Thus it is not just the person who comes into contact with the customer, such as the salesperson, who should render good service. . Customer satisfaction is necessary before a customer will become loyal to a product or a company - thus resulting in a long-term relationship.
What is Customer Service? It is the provision of service to customers before, during and after a purchase. Customer service is any back up service that the company provides to customers to maintain their loyalty and secure a sale. Service and customer service are becoming more important to consumers and organizations as they impact on the way in which relationships are built. Let us consider the following arguments: *Changing customer expectations *The increased importance of customer service 19 | P a g e
5.3 Service Quality Def: Service quality can be defined as the ability of an organization to determine customer expectations correctly and to deliver the service at a quality level that will atleast equal these customer expectations. Evaluating Service Quality One way of evaluating service quality is by considering two factors: the technical quality of the outcome of service delivery the functional quality of the service delivery process Dimensions used for Evaluating Service Quality (See table 3.1 T/B) Reliability Responsiveness Assurance Empathy Tangibles 5.4 Quality service and customer loyalty Reasons why customer service fails 20 | P a g e
II.
III.
o o o
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Servicescapes o Is the actual physical facility where the service is performed, delivered and consumed o Elements of the servicescape that affect service include both exterior and interior o Not all factors are controlled by the company eg. Parking at a mall, if a customer struggles to find parking outside the shop, this will still fall under the overall service cycle.
Encouraging employees to recognize the Cash Value of each customer o The CLV is based on the combination of factors eg the customer purchased a large amount (volume) once (frequent) two years ago (ecency), CLV will be low since both frequency and recency are law o Other factors that should be taken into account : 1) The period of time over which CLV should be measured 2) The interest rate to be used to determine the present value of customer 3) All costs related the customer that should be taken into account eg cost of merchandise sold, service provided and maintained
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Provide a performance guarantee o A guarantee removes much of risk from purchasing a new product or a product that a customer has purchased before but which has failed o There are a number of situations in which providing a guarantee can different a company from its a company from its competitors when you have a new product, new product is complex or technical, when the product is not sold face to face, after service failure and when the risk of loss is high Give customer service people a career path o By providing customer service people with a career path, the benefits to accompany will be two fold 1) The company will be able to attract the best candidate for the job 2) The company will benefit from a lower staff turnover. The career path needs to have value to service, the company example after two years in customer service, the company could after to further their studies and promise them management positions after certain targets are met Make sure somethings in it for the employees o Good service employees understand that building a long-term relationship with a client will benefit them because they know if the client comes back into store, they will likely be there again and will have lead with that client Customer service process model o Manufacturing industries put a lot of effort into in-depth design of process models, however, most practioners in the service industry do not give this match thought o Implementing process model is another way by which service orientation and an interest in customers are the most important norms within the organization
Assessment Questions 1. Discuss the benefits of customer satisfaction surveys for an organization implementing CRM. 2. Explain what is meant by a moment of truth, as well as the various types of service encounter in which these could take place. 3. Explain the implications of servicescapes for a company of your choice. 4. Discuss the various sins of service that should never be committed in your service organization. 5. Identify and discuss the key success factors of service management. 6. What are the requirements for achieving a service culture?
Staff commitment must be channeled into the issues of problem solving and opportunity seeking within the marketing efforts in order to improve customer service. Employees must be encouraged to show initiative and develop new methods of improving customer care. Staff must be motivated so that they are willing and able to implement all the strategies of the company by providing performance-based rewards systems, training and other techniques such as linking staff bonuses to the success of retaining profitable customers for the company Create a relationship between management, employees and all the functions within the organisation through formal contact but also through informal contacts such as social events and get-togethers. The aim of internal marketing efforts is to create an efficient unit, where functions are all focused on achieving a common goal.
Key aspects of internal marketing: no CRM strategy can be successfully implemented without the support of the staff attitudes and motivation of staff have a direct impact on the service offered to customers organisations seek to have motivated employees who are able to deliver superior levels of performance staff do not work in isolation but all functions are required to work together to maximise the benefits of the CRM strategy
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MARKETING-LIKE APPROACH TO THE COMPONENTS - use marketing communication and other promotional activities within the company to inform the employees about the actions and decisions of the organisation regarding marketing activities
IMPLEMENTATION OF SPECIFIC CORPORATE AND FUNCTIONAL STRATEGIE Communication and co-operation are key to CRM strategy. Internal marketing can be used to assist in strategy implementation
3. Interfunctional co-ordination and integration In terms of CRM the functions in the company must be co-ordinated and integrated in order attain the goal and mission of the organisation. The functions include the following: FINANCIAL FUNCTION: the financial function is mainly concerned with the costs that are associated with a CRM programme (cost of new technology and training costs) and how profitability is affected. wants the following questions answered: What are the costs associated with any CRM strategy? (cost of technology and training) What are the time costs that will be associated with implementing CRM? What will the additional income be as a result of the implementation of a CRM strategy by the organisation?(has long term effect rather that short term benefits money may be invested without a direct return at present moment) o Will a CRM strategy create value for the shareholders share value will be affected as current customers can be made more profitable, and
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INBOUND LOGISTICS (PURCHASING) Has function of acquiring right product at the right price in the right quantities at the right time Must build relationships with suppliers which will become more important as CRM principles are applied that may require different levels of supply or change in the reorder quantities of the various stock items. 4. Managerial implications of Internal Marketing the implementation of CRM within the organisation will have a profound effect on the management styles and decisions made CRM requires empowerment of employees which will need a specific style of management Will require changes in the corporate culture, levels of responsibility, requires that management trust their employees and show this trust (must be mutual trust) 5. Roles of employees in Internal Marketing CONTRACTORS - employees involved in the traditional marketing activities of the company. Selling and client service positions. Customer- orientated persons who can deal with situations presented to them as it is basis of their remuneration (commission) MODIFIERS- indirect contact with customer. Not involved in traditional marketing activities. Accounting staff, security personnel, receptionists INFLUENCERS -Involved with traditional elements of the marketing mix, but no customer contact. Market researchers and product development specialists ISOLATEDS - Have little or no client contact, and are not involved in marketing activities. Tasks include purchasing, warehousing, information- processing activities.
6. Tools in implementing Internal Marketing Use the marketing mix to communicate with employees as to the exact nature of the marketing activities, as well as their contribution making sure employees are aware of the marketing activities of the company Use internal communication techniques to make sure that employees are motivated Give training to make employees familiar with aspects associated with their jobs, making them more efficient and productive and increasing their motivation. 37 | P a g e
Below are some examples of rewards that are softer in nature. Rewards that do not involve money Sprint PCS rewards strong sales performance with rotating assignments to coveted special projects. Intel augments its stock options, profit-sharing and performance bonuses with various achievement awards and eight-week paid sabbaticals for employees who spend seven years with the company. Charles Schwab pays customer teams salaries as well as bonuses-based on customers' service experience and overall asset growth rather than commissions.
ACTIVITY 8.1
What role do employees play in the moments of truth dealt with in study unit 6?
FEEDBACK
You could have mentioned any facet of excellent customer service. For example, if an employee is contacted by the customer (moment of truth) he or she should have an integrated view of the customer. That means that, at the press of a button, the customer's history should be displayed on the computer screen. In this way the customer's query may be answered immediately. What other situations can you mention to illustrate the role employees play in moments of truth
Assessment Questions 1. Bank X is planning to implement CRM and has asked you to advise it on how to build relationships with its employees. In a presentation to the CEO, explain the principles involved in building relationships with employees & indicate how Bank X should apply these principles.
Mass customisation
Def : the process of providing and supporting profitability individually tailored goods and services, according to each customers preferences with regard to form, time, place and price. Def 2: the use of flexible processes and organisational structures to produce varied and often customised products and services at the low cost of a standardised, mass production system.
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Competitors o A very important part of relationship management. o If organisation takes on competitor in the marketplace, no long-term benefit for anyone. o Could result in price-wars, reputation-loss, wasting of resources & even liquidation. o Conflict undermines entire industry & customer confidence o In unregulated industries, cut-throat price wars end up in many bankruptcies o Collect information to establish competitor profile o This will help in determining how competitor will react Co-venture Partners & Strategic Alliances o Alliance defined: an arrangement for organised & agreed relations between parties o Co-operation takes place between parties o Opportunity to exploit situation without carrying all risks o Exploit synergies between partners o Access can be obtained to other groups of customers o Economy of scale can be achieved o What makes a successful alliance? Close working relationship Integrating points of contact Managing Relationships Relationship needs to be managed, as there is no point if not. As with any relationship, effort must be made to ensure it stays positive 4 requirements for effective management of relationship: o Awareness. Manager must be aware of problems & opportunities & expectations of other party o Assessment. Continual evaluation of resources o Accountability. Reporting procedures regarding state & performance of relationship o Actions. Evaluate action in terms of impact on relationship
10.2
10.3 e-Commerce as Tool in Managing Business Relationships Most widely used tool for managing business relationships is e-commerce & electronic sites Factors to be evaluated when examining a particular B2B exchange: o Target Market. Sites targeting large organisations dont have support services for smaller businesses o Focus. Vertical? focus on provision of credit risk management & bill payment. Horizontal? take place with service providers 46 | P a g e
Assessment questions: 1. Explain & illustrate the differences between final consumers & business consumers. 2. Explain the nature of CRM in B2B marketing by highlighting the appropriate conditions for relationships between organizations, & the types of relationship in B2B markets. 3. Discuss the relationship between an organization & its suppliers & illustrate the importance of this relationship. 4. Why is it necessary to have sound relationships with competitors in certain industries? 5. Discuss the nature of co-venture partners & strategic alliances & illustrate the importance of relationships with these stakeholders & illustrate how e-commerce can be used to develop relationships with other organizations.
1.2 DESIRABILITY/NECESSITY OF BUILDING UP RELATIONSHIPS WITH ENVIRONMENTAL STAKEHOLDERS Owing to environmentalism & global warming, protection of environment has become important issue for all organisations. Members of public are more aware than ever of importance of preserving limited resources of environment, places pressure on organisations to get involved in conservation efforts. Environmental stakeholders are not equally important to all organisations, their importance depends on nature of organisations activities. This makes the environmental stakeholders critical to manufacturing organisations & petrochemical & mining companies. The power of environmental stakeholders differs throughout the world. In more developed economies, power of stakeholders is higher than in developing countries. These stakeholders are beginning to exercise more power & influence over business activities. Members of public are aware of the importance of the environment & are being influenced by these groups. This has resulted in a greater degree of activism, which can cause damage to the organisations assets. e.g. the effect of poor environmental management can be felt on the bottom line of the organisation. Iscor (now Mittal Steel) was sued by residents of Vanderbiljpark for causing pollution in the area & the company settled out of court for 33million.
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Managing costs and value of relationships Technology can help the company manage the costs of securing, serving and retaining customers by allowing marketers to understand, in real time, the revenues and costs associated with each other. This could obviously help the CRM manager to control and focus the relationship. Technology can also intercede and help to manage the costs and value of the relationship, drawing upon previously developed business rules. Business rules incorporate the decisions management makes to guide the administration of its business and interaction with customers. (Read the examples on page 67 Study guide) Performing a control function- Technology performs a control function to ensure that value is created for customers and for the company, and that bills are sent and payment received on time. Technology assists by providing a tactical and strategic control function. Tactical controles are those that ensure that the business processes actually perform as planned. Strategic controls, on the other hand, trach not only product profitability but also all costs associated with the product and the customer(eg account management, servicing, support, communications).This assessment can help with the management of the customer mix. EXAMPLE: If there is a customer retention problem, technology could be operating in the background, gathering and evaluating data, and providing the relationship marketer with exception reports. Customising products- Technology can help customers to work together with their suppliers so that there is a joint effort to continuously create and improve value. Technology allows the customer to become integrated into the processes of a business so that customization is reasonable. This means that the business collaborates with the customer to design a product the customer wants. Customers, in effect, can order exactly what they want as to meet their needs most effectively. Customising communication and interaction- If technology is used appropriately, customers may be served as individuals. A data-driven approach enables companies to assess each customers needs and their potential profitability and to tailor sales offer and service. This involves using multiple channels, including the internet, direct mail, telesales and field sales, as a menas of improving effectiveness and efficiency. The challenge for the marketer is to work information technology managers to design processes and incorporate technologies to engage the customer 56 | P a g e
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To successfully implement CRM, there should be 1st of all be commitment from top/SNR management. Factors: A) Customer-centricity: focus on central role of customer. Main implementation barriers to CRM arent raised by customers, but Snr staff members. CRM managers can experience additional challenges: Finding best CRM examples to benchmark their project against Envisioning end state of CRM, and investments and actions needed to achieve it Focusing on working with core customers to develop transition plan Determining how to really add value to customers, and faster than competitors Demonstrating feasibility and effectiveness of proposed CRM system prior to rolling it out SNR management has vital role to play here. CRM has organisation-wide implications. Main reason for failing to deliver on promises is not CRM, but lack of planning, absence of clear goals and strategies. If CRM implemented correctly, it can offer benefits in less than 3 months. Employees should have optimum mix of skills, knowledge & personal traits, to implement CRM. B) System Resources: CRM is heavily dependent upon alignment & integration of all related business processes. Integration of different departments within organisation can make difference between successes or failure of CRM.CRM will only succeed after organisation and processes have been restructured, to better meet customer needs. C) Information Resources: Customer Information & Knowledge: Info on existing customers will form core of customer data. Info held, may vary from type of market. Invaluable aid in decision making. Must be future-oriented, to drive future marketing programmes. CRM Technology: Success of CRM depends largely on most appropriate facilitator to CRM technology selected, to utilise CRM successfully. System must be flexible & easy to customise, available for individual / concurrent users, permit future functionality, and require low level of expertise to maintain. 59 | P a g e
Role of customer retention in developing CRM strategies Critical 1) Pre-Planning Stage: Before process begins. Providing management with justification for expenditure of time & effort, outlining components necessary to ensure initiative delivers to managements expectations. CRM has long term benefits, but short-term benefits = providing immediate cheap growth to re-allocate sales resources from customers whos less likely to buy, to those more likely to buy. CRM vision & goals must have champions at all levels of organisation. Also reconcile magnitude of coming change with organisations readiness. 2) Co-ordination the CRM Initiative: Best is to treat transition as a project. NB to appoint project manager more SNR and respected person is better. He/she will assemble a multidiscipline implementation team, incl. representatives from each dept. involved. A detailed, precise project plan & time line is req., & an overall road map, illustrating how cycle fits in overall plan, should be created. Step-by-step, phased approach, establishing tangible milestones & metrics, must be followed. Each project/dept. should have measurable short-term goals & longterm vision for whole organisation. 3) Customer Assessment: Looks at where organisation is now with re to customers & relationship marketing. Profitability of customers needs to be established. Customer profitability is largely dependent on customer satisfaction, customer retention & customer loyalty. Customer Satisfaction, retention & Loyalty Customer satisfaction measured by rate @ which customers are kept = customer retention rate expressed as % of customers at beginning of year, and still remain at end of year. As retention rate goes up so does profitability. Measuring the profitability of customers Decide which customers it wants to build closer relationships with in future. As they move towards one-to-one marketing, they need to develop a longer-term view of the value of their customers. 60 | P a g e
6) Internal Assessment Look at itself to determine kinds of relationships most suited, and if CRM is appropriate for it. Is CRM appropriate?: should it focus on needs of individual customers or not? Some businesses is more profitable when focusing on mass production / mass service Business culture: NB that culture of business must emphasis selfrespect, respect 4 others, and a commitment to mutual & active listening. Top Management Support: supported by them Capable Staff: assessing if they possess necessary skills & knowledge for CRM Processes: tailored to the customer experience, via detailed customer touch map defining each interaction with company along customer life cycle allowing organisation to understand customers entire experience. Begin at looking at experiences of most valued customers, then those most likely to grow. Remove pain points in experiences, and then re-engineer any inefficient back-office processes. 7) Selecting a CRM technology If organisation is looking to select a CRM provider, its necessary to 1st look at own business processes, organisational culture, and at all customer facing management and staff. The greater part of CRM lies in people and processes once aligned, streamlined & optimised, will organisation begin to feel for its own hybrid technology requirements; and only then the right CRM vendor, service provider or application 62 | P a g e
8) Training People Train your people properly. Requires an organisation to plan ahead to allocate adequate time & funding to training. Company should plan to spend 5% of its total CRM investment on training. Also training in using the technology appropriately. 9) Implementation Begin implementation via distinct CRM development cycles. These cycles allow for a small, fast start, beginning with a controlled test/pilot group. Organisation should learn from the pilots, then refine the next implementation cycle and repeat process as necessary. 10) Measuring CRM Results NB to establish appropriate, realistic metrics for assessing the effectiveness of CRM. One of best ways to measure CRM transformation is with a balanced ROI scorecard. Scorecard is a management tool consisting of a set of integrated performance measures that link current customers, internal processes, employees & systems performance to long-term financial success includes financial measures that show results of actions already taken. Balanced scorecard incorporates both lag & lead indicators. Lag: could incl. revenue, market share, new product revenue & other classic financial factors. Lead: could incl. share of customers, revenue mix, customer satisfaction & time spent with customers / customer involvement in product planning cycles that show what is coming.
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Assessment questions: 1. Explain the factors determining the success of CRM in an organization. 2. A company wishing to implement CRM has approached you, a CRM consultant, to guide it through the CRM planning process. Explain how the company should apply each phase in the planning process.
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. The skills that are required to implement a CRM strategy place a great deal of pressure on the managers within the organisation, and where these skills are in short supply, this may cause additional stress and pressure on managers.
n.b: One of the challenges that can be used in the implementing strategy is the appointment of sponsors or influencers. These people are specifically selected for their ability to influence the perceptions of others in the organisation, while also being able to lead a team of people coming from divergent departments. They will then be able to appoint others (change agents) to assist in the implementation of specific aspects in the various departments within the organisation. This will make it possible to bring about the changes throughout the organisation that are required for the successful implementation of any strategy. THE DEVELOPMENT OF A CUSTOMER LEADER One of the key components to the implementation of any strategy is the person who will provide the inspiration and direction of its implementation. The leaders task is to take a group of people, mould them into a team and motivate them to achieve a number of objectives. CRM strategy affects all the parts of the organisation and hence requires this inspiration throughout its functions to facilitate the implementation process.
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This concept seeks to build a technological environment that attempts to integrate the marketing, sales, service and supply-chain functions to enable the staff to provide superior customised and personalised service to customers. It requires specific leadership skills to implement the CRM strategy in the organisation what can be known as customer relationship leadership (CRL).
Consider this figure based on the relationship between CRM and CRL
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The components of the CRM strategy include customisation, after sales, service and the development of personal relationships with customers. The customers are the core of the model, as they are the reason for the existence of the organisation. CRL philosophy identifies technology, organisational environment and innovation as the key to implementation. In order to implement this concept, changes in a number of key areas are needed namely in the areas of technology, processes and people. CHANGES IN TECHNOLOGY For a leader in the organisation, it is important that changes be brought about in technology to make it possible to implement the CRM strategy. The technology will enable the organisation to not only stay up to date with its customers, but also to collect additional information with every transaction that takes place. The technologies that have been developed for specific CRM applications are known as information and communications technologies (ICT). These technologies enable the implementation of CRM within the organisation. There are two main aspects to these technologies, namely: the front-office applications and the customer contact and access channels. . Implementing new technology There will be a need to be great deal of care regarding this decision as to which software will most adequately satisfy the needs of the CRM strategy, as the new technology causes confusion in the minds of staff. Examples of technology that can be introduced are the Internet, as well as CRM software that is able to track and update the customer database. New software is continually being developed that can be used to collect and interpret customer data, as well as evaluate the customer behaviour being exhibited. The development of software specific for the organisation can also be considered, depending on its needs. 67 | P a g e
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Four type of corporate culture can be identified: -power culture: usually found in smaller organisations and is defined by central person, a power source. This person has the power, hence the organisation tends to be political in nature and employees tend to display a tendency to power, politics and risk taking. -person culture: the individual determine the culture, and the culture of the organisation is subordinate to the individual. Control mechanisms such as a budget, will only be successful if there is consensus regarding their use. -role culture: as a bureaucracy, there is a great emphasis placed on the role played by each person within the organisation. The power source is the position that individual holds. -job culture: this is linked to the implementation of a specific project, where a team is required to complete a specific task by co-operating with other people who are concerned.
. Implementing training programmes In order to implement a high customer focus strategy, like CRM strategy training is required among the staff so as to enable them not only to deal with the situations presented by the customers, but also to use the CRM technology efficiently. . Developing organisational structures that support the CRM strategy It is also necessary to adapt the structure of the organisation to reflect the change in strategy. The structure that is developed within the organisation is one that needs to support the strategy, and much has been written concerning the strategy-structure relationship, as well as the nature and type of structures, that can be used. Factors affect the selection of appropriate organisational structures: -internal factors: these are issues that are found within the organisation that can have an effect on the structure. -external factors: these factors refer to the environment of the area/city, region and country in which the organisation operates, as well as the international environment in which it operates. -market factors: these refers to the competitors that can be identified in the environment, the organisations customers, the product (or service) complexity and the technological changes that can be identified.
CHANGING THE WAY IN WHICH PEOPLE WORK One of the most important aspects in implementing any strategy is to bring about changes in people and the way in which they do their work. Reasons for resistance to change are diverse. Various reasons include: . Inertia: this implies that staff are content with the current way in which things are done, as they are reluctant to do things differently. 69 | P a g e
THE IMPORTANCE OF COMMUNICATION IN THE IMPLEMENTATION OF CRM Communication within the organisation is essential in the implementation of the CRM strategy. Without the communication of information to employees, there will be increased resistance to change, lower degrees of participation in the change process and a bad motivational effect on staff. The relationship with customers is managed through communication with them through a two way flow of information. This is done through organisation communicating with each customer telephone, email or SMS. The employees who deal with the customer need to record the communication and need to be trained in handling complaints and comments by the customer. CONTROL OF A CRM STRATEGY Any strategy will have key areas that will determine whether it was successful in achieving its goal. The CRM strategy is one that requires a great deal of investment on the part of the organisation, and it is necessary to determine if it has been successful. The success of any strategy is determined by the objectives that have been set for the strategy Indicators of the strategys success include: -revenue increases that occur as a result of the strategy, as well as the associated decline in costs -the acquisition of new customers -good retention rates of existing customers -high revenue and profitability for new customers in comparison to existing customers -acquiring competitors share of business -acquiring competitors share of core customers business THE SUMMARY In order to implement a CRM strategy, it is necessary to have the right technology, the right processes and the right people. The implementation process depends on first having these three key components in place, and then 70 | P a g e
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