Wednesday, March 2, 2011

Why you Should Develop a Customer Relationship Management (CRM) Strategy at your Company?

With changing global trends like outsourcing, consolidation, mergers, and acquisitions many organizations are looking for new ways to manage collected data in order to identify new clients, potential disruptions, and other selling opportunities. One such process that offers a company different analyses tools is through the implementation of a system such as Customer Relationship Management (CRM). (Lassar, Lassar, & Rauseo, 2008) explain that those leaders that develop a better understanding of CRM systems now, along with some of the things CRM systems can and cannot do will be the ones to build a “strategic vision that integrates people and processes with technology to maximize a firm’s investment” (p. 68). It is this type of strategic thinking that will then allow for more employee buy-in, and value within and outside the organization.

CRM has been around since the 90s in various forms and has continued to change with the introduction of new technology; however, its main focus has not changed too much and that is to help managers collect, share, and analyze customer data in order to make better strategic decisions on pricing, customer needs, and new services. Alternatively, a simpler definition is that CRM allows managers and employees a way to view data from multiple sources, in different angles, throughout the company. According to (Lassar, et al., 2008) CRM technology has four distinct features (1) contact data, (2) demographic data, (3) transactional data, and (4) relationship data.

(1) Contact data- often referred to as the simplest form of data, contact data includes items such as name, address, position, etc, which help employees build better relationships with their clients while providing a better way to identify anticipate their needs or concerns
(2) Demographic data- this feature is often described as a clients attributes or characteristics (i.e. entity, geography, size, requirements, etc), which help managers profile and predict a current or potential clients profitability
(3) Transactional data- this CRM feature helps outline historical event such as outcome of a meeting, interaction, and account history, which can help managers effectively manage client relationships, personalities, motivations, and expectations
(4) Relationship data- this feature allows managers to identify potential client problems or concerns, in order to generate more referrals and higher retention

If an organization uses a CRM system correctly, they will be able to recognize the importance of their client demographics and become more equipped to uncover problems faster, build better relationships, obtain new referrals, and gain a competitive edge over their competition as a result. However, often this strategy is easier said, than done, as a major challenge with any CRM implementation is employee participation and adoption. Therefore, much like any technological implementation encouraging employee buy-in or by designing the business strategy first, an organization will be more equipped to train its employees on the technology value, which will ultimately enhance the business processes (Lassar, et al., 2008).

As highlighted by (Lassar, et al., 2008) and others in my previous posts, CRM implementation can help an organization develop a deeper understanding of the industries they serve, their markets, and their clients needs, which can result in a major competitive advantage in a very competitive and global market. Although some CRM implementations require extra time, energy, and effort those companies that embrace CRM as a true business strategy will be the ones to use such a technological system as a true solution in order to identify additional opportunities, while continuing to grow. Regardless of the decision or process used, a company must continue to look for the best way to analyze customer data, in order to find new ways to satisfy its current and potential customers, which CRM clearly does. In addition, and as I again have mentioned in multiple other posts, CRM is a hot topic that offers many businesses the opportunity to collect and analyze customer data for future sales, marketing, and business development campaigns. If CRM implementation is taken seriously and is done correctly this system process can yield many positive effects throughout an organization, while continuing to increase sales, enhance a business’s performance, all while creating more return on investment. Over the last several weeks, my research has continued to allow me to continue analyzing this one niche in order to understand what effects CRM is truly having on a company’s long-term strategic plans. As they say research doesn’t lie and so far…so good… on the quest of discovering the best technological systems for SMEs and MNCs to implement alike!!!

Of course, I am always open for comments and would love to hear your thoughts on CRM, ERP, etc., or any other business processes that are continuing to change the landscape of your organizational development. Until next time, keep smiling—Cheers!!!

Lassar, W., Lassar, S., & Rauseo, N. (2008). Developing a CRM strategy in your firm. Journal of Accountancy, 206(2), 68.

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