Wednesday, March 23, 2011

Customer Relationship Management (CRM) in Sales-Intensive Organizations

Over the last several decades technology has continued to change the way organizations manage, strategize, communicate, build relationships, procure vendors, create marketing campaigns, and track customer inquiries. According to (Tanner Jr, Ahearne, Leigh, Mason, & Moncrief, 2005) CRM currently ranks in the top five of most corporate strategies in over 60% of companies, as these systems allow leaders to manage processes, communicate more with their customers, while growing organizational marketing effectiveness and increasing customer and vendor retention rates. Additionally, Tanner Jr, et al., (2005) identified three important aspects of most CRM systems. The first is Strategic CRM, which is the organizational decision making process that helps define and/or build a customer-oriented business strategy with their business processes, and technology implementation. In other words, “the ability to define and implement a right customer → right strategy → right organization → right channel → right people → right rewards success model” (p. 169). The second is Analytical CRM, which are the processes used to analyze customer and industry information in order to provide information that is more accurate and will guide the company’s future marketing efforts. Finally, Operational CRM, which is the business process such as sales, marketing, service, support, etc. All of these important aspects of CRM and resource allocations across all channels accompany a firm’s relationship strategy and point to four issues at the strategic level (1) account management issues, (2) organizational or sales structure, (3) cultural issues, and (4) enterprise-level knowledge management.

(1) Account management issues- a strategic issue that involves how sales organizations use CRM to review the different way that accounts are managed (i.e. territory, key account management, and collaboration).
(2) Organizational and/or sales structure- CRM has allowed more organizations to place more emphasis on selling based on customer needs across many different organizational departments (i.e. field and divisional sales, electronic and team selling, call centers, supply-chain personal and vendors, partners, etc).
(3) Cultural issues- the degree to which an organizations culture may or may not be more inclined towards a CRM implementation (i.e. sales organizations commission based tend to be non-supportive of CRM versus those organizations that offer base plus commissions).
(4) Enterprise-level knowledge management- CRM systems allow leaders the ability to access vast amounts of information in order to predict, develop, and market new products and/or services. This enabling can create a general view of an organizations customer, which in turn can create even more sales and marketing campaigns that are effective.

As more and more organizations gain a better understanding of CRM, these systems will require more researchers to look at the specific benefits that CRM technology can provide a company throughout the entire organization. Therefore, Tanner Jr, et al., (2005) framework, and research for use in analyzing systems such as CRM and Sales Force Automation (SFA) could enable more organizations to achieve even higher levels of performance, procure more vendors, ROI, sales, satisfaction, and enhanced business relationships. Since these five variables are also some of the same drivers in my research analysis this study just like the others analyzed over the last several weeks should allow me the opportunity to determine if the proposed framework in this study will be the best way to determine if a CRM technology is the most important change initiative in SCM. Over the next two weeks, I will make my determination and of course report my findings for additional feedback or comment. Otherwise, if I do deem CRM to be the most important you can expect a more thorough analysis and discussion of this system in the weeks and months ahead as I apply other scholarly pieces into a real world dissertation that will be published in late 2012. Until next time, keep smiling, as it really does look good on you! Cheers

Wednesday, March 16, 2011

Leveraging your Organizational Capabilities through CRM for Increased Sales

Often discussed amongst organizational leaders and sales managers are some of the issues, impacts, and activities of sales forces, which are responsible for a company’s overall bottom line results. In fact, activities such as sales calls, sale's success stories, and long-term relationship building are continuing to change the way these issues, impacts, and activities are used to manage customer information, which in turn are helping to increase sales volume, identify additional customer buying habits and requirements, thus increasing customer satisfaction, organizational profitability, and competitive actions. (Raman, Wittmann, & Rauseo, 2006) identified CRM as a technological tool that can help an organizations sales force minimize some of these challenges while helping to increase returns on a sales person’s time invested in exchange for higher sales, revenues, profitability.

However, in spite of the tremendous amount of growth in CRM implementations, many people are quick to point out the high failure rates that these systems have also experienced. (Raman, et al., 2006) reported that in a survey conducted by CSO Insights consisting of 1,337 international companies who have implemented some form of a CRM system, that only 25% actually reported a significant benefit in a sales team’s performance. The most common citing found in the survey was that most of the time organizations lacked proper strategic planning that is required prior to any major system implementation such as that of CRM. Therefore, if an organization carefully plans for a CRM implementation (operational^1 or analytical^2 ) then they will be more likely to segment customers, and market more efficiently while identifying those customers that are more and/or less profitable.

Using some of the strengths and weaknesses found within the literature on a CRM implementation (Raman, et al., 2006) conducted their own qualitative study and developed a grounded theoretical model in order show organizational leaders why they should continue to focus on the CRM technology implementations. Four capabilities are discussed (1) organizational learning, (2) business process orientation, (3) customer centric orientation, and (4) Task-Technology Fit (TTF).

(1) Organizational learning- “organizational characteristics such as size, formalization, centralization, complexity, and interconnectedness on adoption and implementation of innovations” (p. 42)
(2) Business process orientation- an attempt to clarify technological innovations that an organization is considering adapting to match their existing processes (i.e. CRM, ERP, etc)
(3) Customer-centric orientation- an organization’s ability to focus on its customers wants and needs versus that of its internal structure or processes
(4) Task-Technology Fit (TTF)- the degree that technology (i.e. CRM) helps individuals position his/her tasks with that of the organizations desires in order to meet/exceed company needs

The results of (Raman, et al., 2006) study showed that most successful CRM technological implementations occurred when an organization incorporated both operational and analytical characteristics combined with the four main capabilities previous mentioned in order to help guide additional strategic long-term decision making (i.e. sales, marketing, customer service, segmentation, properly identifying profitable, non-profitable, and cross-selling customers, etc). Furthermore, the results of the study opened new doors for research opportunities for those curious to draw on the discussed model or those who want to see if different variations of these characteristics and capabilities would help or slow a CRM implementation.

Although CRM is viewed by many as a technological solution to sales and customer service (Raman, et al., 2006) also identified some of the drawbacks of a CRM implementation. One thing is certain from this review and my analysis of CRM over the last few weeks is that CRM can provide many strategic benefits to those people and organizations that understand and utilize all the tools by properly leveraging this resource to produce higher sales, returns, satisfaction, and profitability. Everyone else who does not fully understand how to build CRM into the strategic long-term plans of the organization should be cautious with an implementation of this type.

Like many of the other articles on CRM that I have analyzed over the last few weeks, (Raman, et al., 2006) proposed yet another model, along with some very interesting follow-up (qualitative and quantitative research) for others to consider who are interested in CRM. Therefore, those people like me who are interested in researching this type system additionally could use this study and model to draw their own conclusions of these type systems. It is one thing to say something about CRM or anything for that matter but actually backing up your statements with actual data is a more effective way to get people to listen. Hence, why I will continue to research and report my findings for those who are interested in this niche technological innovation and all others looking for answers that are credible.

Of course and like usual, I am always open to other opinions of the research that I report, so if you got a thought or want to chime in with some additional insight(s) please drop me a line; otherwise and until next time… Keep Smiling

1 Operational CRM involves functions such as sales, service, support, and marketing.
2 Analytical CRM technologies involve customer information that is used by all organizational departments to analyze data in order to improve business decisions and/or future actions.

Raman, P., Wittmann, C. M., & Rauseo, N. A. (2006). Leveraging CRM for sales: The role of organizational capabilities in successful CRM implementation. Journal of Personal Selling & Sales Management, 26(1), 39-53.

Friday, March 11, 2011

Measuring Customer Relationship Management (CRM) Effectiveness in Order to Reduce Costs and Increase Sales

There are a number of applications or systems that an organization can use evaluate their current market share, profit margins, customer relationships, loyalty, and satisfaction. One such application or technological system most commonly used to analyze these trends is referred to as Customer Relationship Management (CRM). According to (Ja-Shen, Yen, Li, & Ching, 2009) CRM systems are a major marketing and/or services tool that can help an organization take full advantage of its customers by identifying trends in their customers buying behaviors, needs, and future expectations in order to maintain and grow relationships. Although a number of studies have researched and proven that a CRM implementation can enhance an organizations performance with increases in sales, few have focused on how these same systems can further develop more customer relationships, while increasing a company’s market share. As a result of these findings (Ja-Shen, et al., 2009) recent study examined three other factors (marketing, operations, and human resources) of CRM, which they believed could help organizations improve or grow their customer relationships, thus creating more organizational profitability and market share.

When an organization improves its relationship between marketing, operations, and human resources, they become better equipped to disseminate CRM data, which can then lead the organization to make additional innovations, while taking responsive actions. (Ja-Shen, et al., 2009) refer to this dimension of CRM as the Information Technology (IT) or Customer-Focused Information Technology (CFIT) segment, which is the first of three dimensions of interest in their analysis that supports the operations of a company’s CRM processes. The second dimension of interest in (Ja-Shen, et al., 2009) study was referred to as Relationship Marketing (RM), which was identified as the root efforts of a CRM process that can help an organization manage and improve its new and existing relationships with its customers in order to increase customer satisfaction, all while creating additional long-term profitability. Finally, (Ja-Shen, et al., 2009) referred to the third dimension of interest in their study as Customer-Focused Organizational Climate (CFOC) or the human resource side, which deals with an organizations culture to accept, use, and build upon any CRM system in order to help the organization develop, maintain, and grow customer relationships.

(Ja-Shen, et al., 2009) empirical study found that together (marketing, operations, and human resources) with (CFIT, RM, and CFOC) the most common view of CRM as a marketing application or complement of a company’s information technology or CFIT should also include the other two dimensions (RM and CFOC). If an organization wants to excel in the global market it is imperative that more organizations focus not only on advancing their information technology through systems such as CRM but that they also need to use CRM system data to create additional programs that focus more on the retention of current customers (needs) and acquisition of new customers (expectations). Only then will more businesses develop deeper understandings of their customer bases, while being able to target and market more effectively, resulting in more value, satisfaction, and cross or up-selling possibilities.

While the concept of CRM is an increasingly popular and hot topic throughout the world, research into the systems effectiveness on increased market share, profitability, customer relationships, and satisfaction is rather limited. Therefore, (Ja-Shen, et al., 2009) analysis provide three important dimensions (1) RM, (2) CFIT, and (3) CFOC of Customer Relationship Management Effectiveness (CRME). In order to improve the understanding of CRM systems it is dimensions such as these that managers will need to consider as they are continuing to identify the strengths and weaknesses of these programs, so they can continue to retain, update, and analyze the mass amounts of data collected to develop a deeper understanding of customers needs and wants. More importantly, these factors are even more important for individuals that want to reduce costs, while finding new ways to increase sales, Return on Investments (ROI), or enhancing their business’s performance.

This analysis of CRM systems is yet another example of the type of benefits that this supply chain function can provide organizations that truly are looking to grow their business. Therefore, I will continue to provide additional updates into this niche market, as I continue to refine my research in hopes of finding the supply chain function that can contribute most to the additional growth of Small-to-Medium Enterprises (SMEs). Of course, your opinions are always welcome as I truly welcome any additional insights that you may be able to provide. Otherwise, keep smiling since it really does look good on you—Cheers!!!

Ja-Shen, C., Yen, H. J. R., Li, E. Y., & Ching, R. K. H. (2009). Measuring CRM effectiveness: Construct development, validation, and application of a process-oriented model. Total Quality Management & Business Excellence, 20(3), 283-299.

Thursday, March 3, 2011

Customer Relationship Management (CRM) Software, Applications, and Business Performance

Many different products, services, processes, and systems offered across the globe have had their own unique trials and tribulations throughout their existence. Customer Relationship Management (CRM) systems are one of those products that have had success along with failure in many of the world’s markets. As more companies continue to collect and access more customer data through programs such as CRM they will continue to increase their capabilities of using this data in order to fragment it into more sophisticated client messages through web based supply chains, mobile messaging, and ecommerce technologies. As a result of these new abilities and this newly constructed dependence through CRM implementation, those companies that encourage and promote the benefits to its employees will be the ones that create a cultural climate that fosters even more client centric innovations, while increasing organizational profitability. However, I found in (Ang & Buttle, 2006) literature review that many of these same CRM systems also tend to focus too much on the software itself or “a one-size fits all approach” versus the actual use or implementation, which is or has caused many CRM implementations to add to the increases in problems or in functionality and flexibility.

Considering both the negatives and positives of a CRM implementation, (Ang & Buttle, 2006) conducted a study throughout the Australian economy that focused on customer retention, customer acquisition, and customer development. The results of their study yielded three major insights

(1) First was that less than 40% of those companies surveyed throughout Australia were found to not use any type of CRM system (i.e. market analysis, lead generation, or customer profiling) to support the their operations or clients in any way
(2) Secondly, if an organization uses a CRM system as part of their overall strategic plan, they are more likely improve their retention, acquisition, and customer development rates significantly resulting in more return on investments and increases in company profitability
(3) Lastly, an organizations overall size seemed to determine the success rates with a CRM implementation (i.e. the larger the organization the more dissatisfied they were versus the smaller organizations who most of the time seemed more satisfied with CRM software)

From (Ang & Buttle, 2006) analysis and study of CRM systems in the Australia market there are still many organizations out there that are still undeveloped or lack a clear understanding of the real benefits that CRM can provide their company and long-term strategies. It is no secret that a company’s relationship with its customers cannot only strengthen the organization internally but also externally by providing its customers with superior service and added benefits. Additionally (Ang & Buttle, 2006) show readers that those organizations that want to achieve higher customer retention, customer acquisition, and customer development are the companies that want their customers to be more satisfied, thus increasing the organizations revenues and profitability. However, in order for these systems to gain more credibility manufacturers and vendors of these programs will have to build different systems for different companies based on size and location. This is exactly what I am looking for, as I continue to look for the key elements in the research that customers are demanding, which will allow me the ability to bridge any gaps in the literature in order to see more growth, enhanced business performance, and return on investments through CRM or other technological system implementation. Therefore, this article much like the others reviewed in previous posts are providing me with all the pieces that I will require to conduct a study, make recommendations, and contribute additionally to a niche market such as customer relationship management or enterprise resource planning.

Of course, I am always searching for other opinions, so if you got one let me hear it, as I continue upon in my research. Until next time-- Keep Smiling

Ang, L., & Buttle, F. (2006). CRM software applications and business performance. Journal of Database Marketing & Customer Strategy Management, 14(1), 4 - 16.

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.