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Handbook of CRM: Achieving Excellence in Customer Management
Delivery time required depends on your selected option. To confirm availability and pricing, please call the store directly. Conversely, taking too much value from the customer through reductions in product quality or customer service levels is likely to result in customer defections. Furthermore, the economic value of different customer segments will vary and this needs to be taken into account. Exploiting this trend, ISO offers customers the option of shopping using the Palm Computing platform.
Customers can create their electronic grocery lists by scanning the bar codes on products in their larder, refrigerator and medicine chest using their PalmPilot handheld device. Bar codes can also be accessed by printing them from the ISO web site. The electronically-generated order can then be transmitted to ISO directly from the PalmPilot or via uploading the order to a PC for transmission.
Picking, packing and home delivery within four hours can be arranged at a small additional charge. Alternatively, customers can collect their orders, all ready and waiting, from their local ISO store at a designated time and date.
The Comparison of CRM Model: a Baseline to Create Enterprise Architecture for Social CRM
ISO has benefited from this innovative practice in two ways. Their research suggests that ISO s e-shoppers are a highly profitable customer segment, buying larger orders, more frequently and with less price sensitivity than the average purchaser. In addition, ISO has captured detailed information on this highly lucrative market segment that can be used to manage customer relationships and future profitability more effectively.
In a sense, optimizing the value trade-off means marrying the aforementioned principles of relationship marketing with current marketing trends. For example, grocery shoppers are increasingly turning to the convenience of the Internet for their weekly shopping. More sophisticated e-shoppers are demanding online options that will allow them to compare prices among similar products, select items based on the nutritional information provided by manufacturers and check out new products. The experience of Danish food retailer, ISO, is testament to the value of exploring changes in the food shopping habits of customers.
Developing one-to-one marketing A key foundation of marketing strategy is the identification of appropriate target markets or segments. In consumer markets these segments may be determined by factors such as age, sex or lifestyle, while in business-to-business B2B markets segmentation criteria include industrial sector, size of company and so on.
As markets become increasingly competitive and consumers and organizations seek increasingly specific solutions to their needs, markets fragment into ever smaller segments. Don Peppers and Martha Rogers have. Many B2B organizations with large customers practise one-to-one marketing through key account management strategies.
Smaller customers may be dealt with in a more impersonal way through call centre or mail order strategies. In business-to-consumer B2C markets the cost of dealing with customers on a one-to-one basis is frequently prohibitive and other means of facilitating dialogue must be found.
Handbook of CRM : achieving excellence in customer management / Adrian Payne.
The Internet has proven to be a powerful tool for involving both B2C and B2B customers in the marketing process, enabling a one-toone dialogue rather than relying on mass communications. Here permission marketing, discussed in the next chapter, has a key role to play. The unique capabilities of the Internet allow marketers to capture the anonymous behaviour necessary to be able to answer the question, What does each customer want?
CRM has a key role to play in developing such one-to-one relationships.
CRM systems and processes enable a company to commit to memory each relevant customer encounter and to recall all past encounters with that customer at every future association. In effect, the capture of customer data, the interpretation of data analyses and the dissemination of resultant customer knowledge becomes a natural and automatic function of the organization. However, the problem faced by many organizations, both in deciding whether to adopt CRM and in proceeding to implement it, stems from the fact that there is still a great deal of confusion about what constitutes CRM.
To some it means direct mail, a loyalty card scheme or a database, while others envisage a help desk or a call centre. Still others see CRM as an e-commerce solution such as a personalization engine on the Internet or a relational database. This confusion surrounding CRM may be explained by: the lack of a widely accepted and clear definition of its role and operation within the organization an emphasis on information technology aspects rather than its benefits in terms of building relationships with customers the wide variety of tools and services being offered by information technology vendors, which are often sold as CRM.
Customer relationship management is often used interchangeably with the terms relationship marketing, customer relationship marketing, enterprise relationship marketing ERM , technology enabled relationship marketing TERM , customer managed relationships CMR or customer management CM. It is also used to refer to a specific IT solution such as a data warehouse or a specific application such as campaign management or sales force automation.
Moreover, the definitions and descriptions of CRM used by different authors and authorities vary greatly, as illustrated in the representative sample shown in Table In our experience of dealing with many companies we have found that the term CRM is used very differently across different industries and within specific vertical markets. In one large technology company, we found that the use of the term CRM even varied greatly within that organization.
These are portrayed as a continuum in Figure At one extreme, CRM is defined as a particular technology solution. In another organization CRM was. Afurther company used CRM to describe its initiatives for becoming more customer-centric, which had more to do with creating value.
The importance of how CRM is defined is not merely semantics. Its definition has a significant impact on how CRM is accepted and practised by the entire organization. CRM is not simply an IT solution to the problem of getting the right customer base and growing it. CRM is much more. It involves a profound synthesis of strategic vision, a corporate understanding of the nature of customer value within a multi-channel environment, the utilization of the appropriate information management and CRM applications and high quality operations, fulfilment and service.
CRM emphasizes that managing customer relationships is a complex and ongoing process and a response to and reflection of a rapidly changing marketing environment. Thus we advocate positioning CRM in any organization in a broad strategic context, or to the far right in Figure 1. The dangers of not adopting this strategic perspective of CRM are made all too apparent by media coverage of CRM failures. Companies think that their CRM projects are significantly less successful than their consultants or suppliers.
CRM, viewed from a strategic perspective, is concerned with how the organization can create increased shareholder value through developing superior customer relationships. Rejecting CRM and the potential benefits that it can deliver in terms of shareholder value because of specific failures of IT implementation in other companies would seem short-sighted to say the least! At the same time, organizations should be aware of the risks of specific IT project failures and their associated cost, a point we will return to later in this book.
Use of CRM and its terminology As well as having a variety of definitions and meanings, CRM has attracted the interest of a wide range of company types and industry. RAC, Boots and Kwik-Fit , companies which have historically used call centres for their customer interactions, but are also now utilizing e-commerce e. First Direct and Direct Line Insurance , pure play internet companies e. This emphasizes the point that CRM strategies are by no means confined solely to companies that have a high dependence on Internet and technological innovation. Given the widespread use of CRM across different industries we were interested to find out what terminology companies used to describe the management of their relationships with customers.
We were especially interested in how the three most common terms: relationship marketing, CRM and customer management were actually being used by organizations.
Handbook of CRM: Achieving Excellence through Customer Management
To gain an understanding of how the terms were used, we undertook a study of the most advanced sector in terms of adoption of CRM the financial services sector. Research by Datamonitor had confirmed that the financial services vertical market was by far the most developed with approximately 36 per cent of global revenues being spent within it.
Our study 19 confirmed that while there were no firm distinctions made between CRM, relationship marketing and customer management, certain common patterns did exist in the way the terms were used. It was clear from the interviews with senior executives in this sector that relationship marketing was, for the most part, associated with high-level strategic thinking about relationships with all key stakeholders a view echoed in the description of relationship marketing above. The terms CRM and customer management were used more in connection with the management of relationships with customers.
When describing customer relationship management, managers used phrases reflecting the development of marketing strategies over the customer lifetime, such as understanding the customer base in total, understanding needs, attitudes, lifestage, profitability and lifetime value. By contrast, customer management was seen by the majority of respondents as being more concerned with the tactical.
Based on our discussions with respondents in our study we developed a hierarchy which helps explain the terms relationship marketing, customer relationship management and customer management Figure 1. A definition of CRM Atul Parvatiyar and Jagdish Sheth have pointed out that for an emerging management discipline it is important to develop an acceptable definition that encompasses all facets so as to allow focused understanding and growth of knowledge in the discipline.
Hopefully, over time clear definitions of CRM and associated terms will develop into common usage.
Until that time organizations need to be clear about what they mean when they discuss CRM or related terminology. Any organization will benefit from adopting a definition of what CRM means in strategic terms for their business and ensuring that this definition is used in a consistent manner throughout their organization. For the purposes of this book we define CRM as follows: CRM is a strategic approach concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments.
CRM unites the potential of IT and relationship marketing strategies to deliver profitable, long-term. Importantly, CRM provides enhanced opportunities to use data and information both to understand customers and implement relationship marketing strategies better. As to where CRM sits in relation to relationship marketing and customer management, we adopt the representation given in Figure 1.
- The Dynamics of Delight: Architecture and Aesthetics;
- CRM strategy: Managing a customer-focused business.
- Handbook of CRM: Achieving Excellence Through Customer Management by Adrian Payne (Hardback, 2005)!
The main point is that firms must describe their management of customer relationships using a terminology that is appropriate to them and ensure it is used in a consistent manner throughout the organization. As a veteran CRM expert, Ron Swift has observed: Ultimately, each company must decide what CRM means to the organization and to the future of its success in the marketplace. These areas include sales automation, marketing automation and customer service automation. Historically, operational CRM has been a major area of enterprise expenditure as companies develop call centres or adopt sales force automation systems.
Analytical CRM This involves the capture, storage, organization, analysis, interpretation and use of data created from the operational side for of the business. Collaborative CRM This involves the use of collaborative services and infrastructure to make interaction between a company and its multiple channels possible. This enables interaction between customers and the enterprise and its employees.
Related Handbook of CRM : achieving excellence in customer management
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