Monday, February 28, 2011

Are e-Technologies such as Customer Relationship Management (CRM) changing how Organizations Market, Sell, and Provide Customer Service for their Products and/or Services?

Are e-Technologies such as Customer Relationship Management (CRM) continuing to change the ways that organizations market, sell, and provide customer service for their products and services? According to (Ross, 2005) Yes! In fact, (Ross, 2005) describes and provides some of the main functions of most CRM programs. CRM has three essential responsibilities (1) Marketing; (2) Sales, and (3) Service and collectively these three functions can help an organization improve on the best ways to provide its customers with better and/or expanded relationships, which in turn usually result in additional company profits. CRM has been around for quite some time but over the last several years, CRM programs have continued to be one of the hottest segments, as they continue to evolve due to the growing popularity of the internet and new computerized toolsets. As a result of these advances organizations are continuing to use new CRM programs to create even more visibility of their products and services, while attracting, retaining, and enhancing new and/or existing customer bases.

It can be argued that sales is the most important function of a CRM program but how can this be when the program is not the one who actually makes the sale? Thus, (Ross, 2005) suggests that a salesperson’s role should become even more important than before, as CRM programs advance and more sales professionals develop more defined and mutually supportive relationships between their companies, with suppliers, and customers. This now changing sales force paradigm, assisted by CRM programs will more than likely continue to broaden both selling and buying habits of all small to large organizations in the years ahead. For that reason (Ross, 2005) further defines the major components and functionalities of CRM and Sales Force Automation (SFA)

(1) Contact Management- one of the first components of CRM, which enables a company to manage prospect information, while providing follow-up and tracking information
(2) Account Management- this segment allows employees and managers useful ways to effectively market products to that of customer wants
(3) Sales Management- this tool was designed to help employees keep track of a set of sales activities in order to promote sales, while providing reminders and greater productivity
(4) Opportunity Management- this segment is often referred to as the pipeline of potential customers that highlights a new opportunity, those involved, potential revenue, and proposed closing date for a product or service
(5) Quotation Management- this component assists individuals in the configuration of pricing, inventory, and process availability for a prospective customer
(6) Knowledge Management- tools that assist in the standardizing and automation of the sales process where information such as policies, presentation materials, contracts, etc. can be stored and used for further analysis and reporting

Once a company understands some if not all of these segments, which are important to their continued long-term growth they will be more equipped to handle any problems that may occur after a sale. Once considered a drain on profitability of a company’s revenues, customer service through investments in programs such as CRM has now become a necessity that creates growth, hence a vital link between an organization and other supply chain processes. (Ross, 2005) leaves readers with six metrics developed by (Giffler, 1998; Pechi, 2000):
• On average a company will lose half its customers over a 5-year timeframe
• If a company reduces defections by 5%, then they could boost profits from 25-85%
• An organization typically spends 5x more on customer acquisition than on retention
• 65-85% percent of customers who defect do so without being dissatisfied with their former supplier
• A completely satisfied customer is 6x more likely to make an additional purchase than a satisfied customer
• Happy customers tend to tell five people about their experience versus a dissatisfied customer who will tell at least 9

Over the last few weeks, I have continued my examination of CRM, which is an important element of SCM, enhanced business performance, and long-term growth. Much like the previous works examined (Ross, 2005) does an excellent job at defining some of the main reasons that leaders need to consider and develop this element when constructing a long-term strategic plan. In the changing landscape of business and supply chain processes technology that assists employees with buying, selling, etc. will do nothing but improve organizational efficiency and effectiveness, while providing additional resources that allow more interaction with customers and the marketplace. Therefore, CRM has and will continue to be my emphasis of analysis over the next several weeks, as I continue to develop a niche subject for business leaders to consider in finding a better way to manage and utilize collected data to their advantage, which is part of the larger part of my Doctoral research.

Of course any opinions, suggestions, or thoughts as to the importance of this or other supply chain concepts is also appreciated, as I continue to look for the most effective ways to build sales, increase awareness, and create additional long-term growth for SMEs and MNCs alike!

Ross, D. F. (2005). E-CRM from a supply chain management perspective. Information Systems Management, 22(1), 37.

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