Customer relationship management (CRM) influences the overall success of a marketing or service organization and its profitability. CRM influences the exchange of information with customers which can also differ markedly depending on whether the firm is a product or service business. Promotion of services can follow traditional lines. CRM is commonplace for all types of services while point-of-sale publicity (hairdressers suggesting alternative styling, auto mechanics who offer discounted rates to customers who have come to them for preventive maintenance, temptingly displayed desserts at your favorite restaurant, etc.) also often follows a parallel track to retailers’ efforts, with which most of us are familiar, to encourage impulse buying. In the fourth aspect of value communication, direct two-way information transfer between customer and firm, service businesses enjoy an edge, because the customer is in the system. The likelihood of a firm being able to match customer needs exactly is correspondingly higher, provided the firm can customize its services. An interactive relationship with customers often develops in many service arenas while the service is being rendered.
The customer could explain his/her needs–air travel routing with a stopover, variations on a dinner order, advice from a securities analyst–and often receive service in real-time. Bergeron (2002) defines customer relationship management as “the dynamic process of managing a customer-company relationship such that customers elect to continue mutually beneficial commercial exchanges and are dissuaded from participating in exchanges that are unprofitable to the company”. Again feedback could also be instant, resulting in high communicated value, provided responsiveness, flexibility, and learning ability are incorporated into the system. Firms that have staked their success on standardized services must offer customers enough to replace personalized attention. Lower prices as in the case of routinized legal counsel, a combination of prices and quality/cleanliness provided by fast-food firms like McDonald’s, and speed of service offered by quick oil change specialists are some of the compensatory benefits customers are often willing to settle for. if a more effective and convenient method of joining metals together were to be invented, arc welding would likely become an anachronism.
The role of CRM is to establish positive relations with customers and investigate their unique needs and preferences, Customer needs must be discovered and fulfilled. After all, that has been the entire refrain of our tune of value. But firms that try to deliver value in different countries with little or no attempt to build on value capabilities previously accumulated elsewhere are, in effect, like conglomerates whose different products have no conscious value relationship to one another. And just as conglomerates, so to speak, devalue a firm’s mission to its customers, multi-domestic firms do not take advantage of potentially significant sources of value. Sharing and thus multiplying value are ignored in both types of organizations. The emergence of the global firm is a recent phenomenon and one that is consistent with the notion of value exchange and maximization. Whether the value emphasis be in conceptualization, construction, or communication, endowing all foreign operations with the same attributes could prove to be a decisive factor in repeating the success enjoyed at home.
Elements of CRM model and its impact on Value Chain
In QCi Corporation, measures of CRM model outcomes can be ordered sequentially as if moving along a chain – starting at the individual level and moving towards the organizational level. At each stage of the chain, CRM success is evaluated from a different perspective. At the beginning of the chain are investigated using measures based on individual beliefs or attitudes towards communication technology. For this purpose, qualitative measures are mainly used, yet since the measures are at the beginning of the chain, it is difficult to distinguish between factors determining and those indicating performance. A typical measure would be user satisfaction. Moving along the chain, communication technology use becomes an important measure of success. This is an individual, behavioral measure. Use should, however, eventually translate into individual productivity gains, which, when accumulated, transform into organizational impacts, first behavioral and eventually organizational. A measure that reflects the organizational impact of communication technology usage is decision accuracy. Moving further along the chain, communication technology investment areas are a basis for evaluations. Examples of measures are the ability of the organization to develop intangible resources based on the employment of communication technology. The advantage of using communication technology investment areas lies in the ability to track each measure separately as various areas of the organization are scrutinized. By evaluating the extent to which several elements are present within an organization, managers can make more explicit and refined judgments about the usefulness of communication technology. For QCi Corporation, using cognitive measures such as user satisfaction as criteria for evaluation allows changes to be made to the usage pattern within the organization, while economic measures such as return on assets provide an indication regarding the bottom-line impact of CRM. While user satisfaction is a measure based on the user’s perspective, return on assets is mainly a measure upon which top management relies since they are ultimately held accountable by external stakeholders. From the user perspective, CRM should be adapted to the type of job performed. For this purpose, user participation in the implementation process is an important criterion for success. From the designer’s perspective, understanding the usage pattern is important, since it allows them to make more informed implementation decisions. From a top management perspective, CRM should be implemented to translate into improved bottom-line results. This demonstrates the importance of user representation in explaining user satisfaction, and would therefore suggest that managing the relationship between the end-user and CRM system designers is an essential element of success in communication technology implementation.
Shareholder Value Creation
At QCi Corporation, different organizational tasks provide the basis for considering the functions of CRM utilization in an organizational context. From this perspective, the use of communication technology by individuals in a work context fulfills organizationally relevant functions such as decision-making, the coordinating of work, and so on. The results showed three main factors as determinants of CRM system use: decision support, work integration, and customer service. Decision support refers to the extent that CRM is used to identify problems and improve decision-making. Work integration refers to the extent that communication technology helps in horizontal and vertical coordination of work; and customer service is concerned with using communication technology to provide support to internal and external stakeholders. QCi multidimensional construct has the advantage of investigating communication technology use along organizationally relevant dimensions, independent of the required or voluntary nature of use. It is therefore probably better suited as a mediating variable to the success of communication technology. Use becomes a tool for assessing whether communication technology is being appropriated in new ways, which may in the long-term have an impact on the organization. Although usage and user satisfaction has been found to be significantly positively correlated, they are different, yet complementary. Particular communication technology may be the only alternative available to users, so the use of that specific communication technology is more frequent than it might have been if alternatives had been available. When the use of communication technology is mandatory, user satisfaction may be a good proxy measure for success. Yet, in the case of voluntary use, actual use is a more appropriate measure, since this reflects the degree to which CRM technology, in fact, meets a need within an organization. Productivity measures focus on the ability of individuals to increase their efficiency in performing tasks13. Communication technology was primarily used by managers to support and reinforce the informational role. This role was measured using such items as gathering market information, monitoring customer relationships, or informing other managers. Using communication technology, top management spent greater amounts of time reorientating middle managers. The study found support for the claim that communication technology usage depends on the organizational context in which it is deployed. Therefore, general predictions on increases in productivity across organizational contexts cannot be made. Individual-level productivity measures have, however, the problem that individual productivity increases are not always correlated with organizational improvements. Table 5.6 shows the factors explaining the perceived impact of CRM technology.
At QCi Corporation, meaningful messages between individuals at the micro level have little to do with the use of electronic mail and CRM effectiveness at the macro level, and the appropriateness of the resulting CRM network. Although individuals understand how to use communication technology, they might not use it, since social norms have been established within the organization that restrains individuals from fully exploiting its potential. As a result, it is not only the ability to use the technology but also the willingness to do so that determines behavior. Since the social context determines willingness, task requirements are only one imperative for media choice; social perceptions are another imperative that is equally important.
QCi customers may want to have their cake and eat it too (which they’re quite entitled to do). Designing the product so that variations can be incorporated to meet local needs is one of the keys to transnational functioning. The basic notion of determining and fulfilling customer needs, while seeking continuously to improve upon past CRM, is the bedrock upon which customer value rests. However, there are different paths to these desired ends. Products and services are therefore undoubtedly similar as far as the “bottom line” of need satisfaction is concerned. However, another essential distinction separates them further. Typically, customers do not use products in the presence of their vendors, unlike services in which the customer or user is an integral part of the operations. The mingling of value construction and communication that occurs in businesses in which the customer enters the system is worth striving toward in manufacturing firms as well. Since operations personnel are familiar with the caliber of product value built into the product/service, who better communicate value to customers and receive feedback than those who installed the value in the first place? While we do not advocate the abolition of Marketing Departments everywhere, the establishment of direct links between producers and buyers of a product facilitates not only quick, accurate feedback and responsiveness to market needs but also provides operations personnel a higher purpose (value enhancement) stimulated by direct contact with the beneficiary of this value, the customer. For example, if a firm’s promotional efforts result in an image that the product is unable to match–an electric shaver that is neither smooth nor comfortable in its performance or a portable cassette player with tinny reproduction–the firm would be well advised to scale back on its communication strategy and/or enhance conceptualized/constructed value to avoid abnormally high expectations and a collective customer turn-off. Flexibility as a means of delivering value can be achieved best through coordination between the concept and construction of value. The design affects the materials and process used (and vice versa) while the message of value conveyed to customers has to be tailored to the value constructed. Cost reduction efforts, therefore, should not focus exclusively on any one part of the value process. Attempts to slash manufacturing costs, for example, without considering the need to modify product design, outsourced material, quality standards, and promotional effort could well result in a poorly made product with a superior image!
CRM proposes great opportunities for marketers to improve their value chain and customer relations. The costs that concern us here are not just the obvious ones–direct materials and labor, and indirect/allocated costs, but also hidden costs such as those incurred in rework, warranty claims, redesign (of the product and/or process), tarnished reputation and lost orders, etc. If the product derives its value primarily from its low price, it may be immune to these hidden costs if customers expect little besides flexibility from the product. Customer expectations may be suitably lowered through communication: for example, the preceding costs may not apply in the case of disposables Similar value component-capability charts could be drawn up for each of the major competitors to provide an assessment of the firm’s value deficiencies and the nature of corrective action needed. While conflicts can undoubtedly arise, for instance, between customers’ needs and those of shareholders, in the long run, shareholders’ needs are best fulfilled by satisfying customers’ requirements.
Bergeron, B. Essentials of CRM, Wiley, 2002.
Freeland, J. The Ultimate CRM Handbook: Strategies and Concepts for Building Enduring Customer Loyalty and Profitability. McGraw-Hill1, 2002.
Gamble, P. R. et al. Up Close & Personal?: Customer Relationship Marketing at Work. Kogan Page; 3rd edition, 2006.
Greenberg, P. CRM at the Speed of light, 3e. McGraw-Hill, 2004l.
Harvard Business Review. Managing Value Chain. 2999, Harvard Business Review.
Reynolds, J. A Practical Guide to CRM. CMP Books, 2002.
QCi Corporation home Page. 2010. Web.