Customer relationship management (CRM)

Posted by hecto on September 2, 2011 under Customer Relationship Management | Be the First to Comment

Introduction to CRM
CRM (Customer relationship management) is a strategy for maintaining and optimizing the relationship between a company and its customers. As customers are essential to prolonging the existence of the company, much time is invested in this scheme in the form of taking steps to find/ attract new clients, reward loyal customers to retain them and to persuade former clients to rejoin. Additionally, other benefits are that costs are reduced and profits are increased from an economical point of view, the company personnel’s stress levels are reduced due to improved services and positive reactions from customers from a psychological perspective and feedback from customers can be used to make better informed decisions on future product development and services as a result of these endeavours.

Types of CRM
The types of CRM are sales force automaton, marketing, customer service and support, appointment and analytics. Sales force automaton is a software used to minimize the time sales representatives spend on each phase of the sales process as well as minimizing the number of sales representatives required to manage clients, marketing helps businesses identify and target potential clients as well as to generate ways of finding new clients, Appointment is a software used to create and schedule appointments with customers via email and Analytics is a software used to understand client’s actions and preferences by looking at sales forecasting.

Context of CRM
To put CRM into perspective, it is necessary to mention that prior to CRM being conceptualised and put into action, the relationship between a customer and the company was rather simplistic and distant in that the company was represented by a single person that would trade with the customer. In contrast, the current view of the relationship between the customer and the company involves a much deeper understanding and greater appreciation of the complex needs of the customer i.e. the needs of the customer are unique to that customer so customers are to be treated differently, the needs of the customer are to be determined before any trade begins, the needs of the customer are to be kept in mind while communication is being conducted between the company and the customer in order for the company to illicit positive reactions from the customer and as mentioned before the needs of the customer have to be kept in mind when the company aims to maintain a long term relationship with the customer
The consequences of not being able to implement good CRM are that costs to the company increase as more funds are required to gain new customers compared to retaining current customers, customers are frustrated with having to wait for their problems to be solved as well as having to talk to an automated, unsympathetic voice while utilising their customer services.
Effective implementation of CRM will cause the company to change fundamentally in its attitude such as viewing the customer to be of greater significance, the service to customers not being viewed as a burden and interaction with the customer being important.

Basic concept of the relationship between customer and the company in the context of CRM
Like any other type of relationship, the relatioship between the customer and the company (henceforth referred to as the two parties) are to enter an unwritten agreement that is mutually beneficial in that the needs and wants between the two parties involved must be satisfactorily slaked. The needs and wants of the company being that it requires profit derived from the customer to prolong its existence and for the customer’s needs and wants being that he/ she requires a good service or product at a fair price.

Factors and tasks required for using CRM effectively
In order for CRM to be successfully implemented, three key factors are required to be modified or adopted which are: company personnel, company processes and the technology employed by the company.
Company personnel from the CEO to the lowest ranked employee have to fully embrace and believe in CRM and the benefits it will bring, the employees have to always anticipate the customer’s action and habits e.g. customer call centre agents are to be instructed to give consistent answers to commonly asked questions, all call centre agents should have universal, immediate knowledge of the customer’s history and past dealings with the company to quickly and efficiently deal with the customer’s needs and finally call centre agents must undergo rigorous training to refine their performance for the future.

The company’s systems and ideas have to fundamentally change in order to accommodate and augment the use of CRM i.e. customer issues aren’t only dealt with customer services but also other branches of the company being involved as well, call centre agents are to be given the authority to make decisions they think would be appropriate to solve the problems they face and execute those decisions and call centre managers should utilize a software system which integrates all data across different departments of the company to give an overall view as well an overall view of the performance of the company

The last factor is that the technology has to be carefully selected to help the company in maximizing its use of CRM e.g. technology such as “intelligent routing systems” that shares the workload equally between call centre agents to minimize wasting the customer’s time (note that the waiting time of customers mustn’t only be equally distributed to staff members but must also be distributed according to the customer’s needs), the queuing and routing engine used to make an estimate of when peak times occur due to statistical data should be used in conjunction with resource management tools to determine the appropriate number of staff to be deployed during peak and idle times.

As well as these factors, there are additional tasks for the company to do, one of these being the practice of a set number of virtues appropriate within the context of business. These set of characteristics are to be ideally acquired or cultivated if lacking in order to promote good relations with the customer, these characteristics or virtues being: polite, thoughtful, trustworthy, supportive, competent, effusive, receptive etc.
The expectations of the customer must also be determined, constantly monitored and satisfied otherwise this will have adverse effects on the company. An example to highlight the consequences of failing to do these tasks was when a fatal elevator accident in Japan occurred involving the death of a 16 year old boy in June 2006. The incident was due to faulty elevator design. Because the Japanese people expected services of a higher standard as well demanding a swift apology from the CEO of the Swiss company responsible for the faulty elevator, Schindler Group’s Escalator and Elevator division (to which the CEO Richard Hess didn’t do due to wanting to collect facts and evidence before taking any action), Hess’ company lost complete trust in the Japanese public and consequently suffered loss in profits as well as future business prospects in Japan.

Good customers and bad customers
Customers not only can be differentiated by their needs and expectations but also their stance towards the company. Customers who are pleased with the services they have received from your company could be considered as key allies in being able to persuade other newcomers to purchase your services, encouraging further growth for you company. Therefore, these key allies should be treated well and given special benefits to retain them. On the other hand, customers who haven’t or perceive to not have been treated well by your company are to be considered potential enemies who can hamper and damage your company’s prosperity and reputation such as boycotting your products, vandalism etc. As the saying goes, “keep your friends close, your enemies closer”, so too you must attempt to minimize the possible damage they can cause to you by either renewing the former relationship you had with them to sway them in your favour or failing that, end the business relationship with them in the most amiable and civil way possible.

The factors hindering effective use of CRM
Problems with not implementing CRM well are due to a number of factors such as bad management, the difficulty of balancing customer satisfaction, efficiency and cost reduction and the faults within the CRM systems as well.

One of the most ancient and simplest moral rules being the rule of reciprocality that is succintly expressed in the phrase “never impose on others what you would not choose for yourself” by Chinese sage Confucius is hardly ever followed even in this day and age whether in business, public or academic life. This especially applies in the case of company CEOs and their inability to implement excellent CRM. Bad CEOs and managers don’t treat their customers and staff as fellow human beings like themselves, only tools or objects to further their goals, uncaring of their welfare. It isn’t just the way they treat their staff and customers that is a problem but also the way they prefer to remain distant and far removed with their customers as well as their overinflated sense of self-worth that prevents them from accepting criticism and good advice from their customers and staff, all this arising from their insecurities and inadequacies. The solution to this particular problem would be for the CEO to treat their employees in a much more humane way and in doing so customers will be treated well so as to observe the benefits. Another solution would be for managers to face up to reality and place themselves in the position of their maltreated customers by sampling their own services.

The next problem is the difficulty in having to balance customer satisfaction and efficiency while also reducing costs. Initially it was thought that by automating customer services it would be a cost effective solution as extra staff wouldn’t be required to man the telephones as well as reducing the time allocated to each customer to solve their issues. However it was found that the observed results were found to be different from what the companies expected from these cost reduction techniques, these observed results being a decrease in customer satisfaction and profits. As mentioned beforehand in this article, this problem has been solved due to implementing methods belonging to one of the three factors required for CRM to be implemented effectively.

The last problem lies within the CRM systems themselves. Due to the large amount of data to be analysed when utilizing CRM systems, the user is required to be well trained in its use or else it will prove to be unwieldy and time consuming process. This in turn will cause companies to use CRM systems selectively. Thus companies have to consider carefully the software developed for these systems. Another problem is that customers tend to be quickly dissatisfied with a CRM interface that is prone to malfunctioning as well as being complicated because the developers of such CRM systems are people who are very knowledgeable with computers, hence they assume that other users of their programs would have a similar high level of expertise. The solution to this problem would be for CRM software designers to bear in mind the less knowledgeable users and in doing so design CRM software that is easy to use as well as intuitive. Finally, the problem of having a user friendly and accessible CRM system is that it is vulnerable to attacks by malicious internet users who would employ a number of methods to undermine the CRM system i.e. denial of service (DOS) which would block customer access to the affected CRM system, illegally acquiring customer information for use in fraud and use of viruses, Trojan programs etc.

Conclusion
To conclude, the field of CRM is a relatively new concept that requires improvement as it is still fraught with imperfections from management to its design.