Increased competition, globalization, the growing cost of customer acquisition, and high customer turnover are major issues in organizations today. CRM is a combination of business process and technology that seeks understands a company’s customers from a multi faceted perspective: who are they, what they do and what they like?
Research shows that effective management of customer relationships is an important source of competitive differentiation. In today’s world, the only way for an organization to succeed is to focus diligently focus on the needs of the customer. To keep the best customers, management must concentrate its energies on quickly and efficiently creating new delivery channels, capturing massive amounts of customer data, and tying it all together to create an unique experience.
Customer life cycle: The three phases of CRM
There are three phases of CRM: Acquisition, Enhancement and Retention. Each has a different impact on the customer relationship and each can more closely tie a firm to its customers. The three phases of CRM have been explained below:
1. Acquiring New Customers
You acquire new customers by promoting product/service leadership that pushes performance boundaries with respect to convenience and innovation. The value proposition to the customer is the offer of a superior product backed by excellent service.
2. Enhancing the Profitability of Existing Customers
You enhance the relationship by encouraging excellence in cross-selling and up-selling. This deepens the relationship. The value proposition to the customer is an offer of greater convenience at lower cost.
3. Retaining profitable customers for life
Retention focuses on service adaptability – delivering not what the market wants, but what the customer wants. The value proposition to the customer is an offer of a proactive relationship that works in his or her best interest. Today, leading companies focus on retention much more than on attracting new customers, this because the cost of attracting a new customer is higher than the cost of retaining an existing customer.
This architecture consists of a group of applications that are organized around the customer, rather than marketing sales or any other internal function. Measurements and feedback from the customer drive the drive improvements in the CRM process. The customer’s viewpoint becomes an integral part of the process, allowing it change with the customers needs. However, before aggressively deploying CRM applications, managers might have to restructure customer-interaction processes. Functional and organizational structures tend to compartmentalize the various activities that go into serving the customer. Such fragmentation prevents customer information from being dispersed far enough within the organization to be useful. In fact it often stands in the way of efforts to build a relationship. As a result, customized service is difficult and consequently organizations tend to treat all customers the same. To counter fragmentation, leading edge companies strive to take a more customer centered approach to CRM. There is a growing trend towards managing all the activities that identify, attract, and retain customers in an integrated fashion that is, managing them as a process that cuts across functional departments. By addressing these activities as a set of CRM processes, organizations can create end-to-end communications and performance accountability for entire sets of activities.
Portfolio of CRM process competencies
The core CRM process competencies are cross selling and up selling, direct marketing and fulfillment, customer service and support, store front and field service and retention management. Identifying these process competencies is important because one must understand that a company cannot manage and develop its CRM infrastructure if its managers don’t share the same view of what the core CRM competencies are. An brief description of each of these modules are given below – Cross-selling and Up-selling
This application has the capability to qualify prospects, track contact or the “moments of truth “ and refer them to sales persons when appropriate. By implementing a cross-sell strategy, complete with the applications necessary to track customer contacts, triggers can be established to identify prospects for additional sales. For example, in a bank an event would be a large deposit, which would then trigger a sales person to call the customer and ask if she or he would be interested in investment options. Cross-sell and up-sell application may be used to schedule sales calls, keep detailed records of sales activities, and check on the status of the customer orders.
Cross-selling and up-selling depend on identifying life-path needs. For instance, in the finance industry, banks are attempting to build lasting relationships with customers by matching their life-path needs to complementary products and services. As customers approach retirement, banks could recommend assets such as money markets, bonds and annuities. If customers with young children can be identified, then banks could cross-sell education savings plans or even loan consolidation plans.
Direct Marketing and Fulfillment
This includes pre-sale interaction such as advertising that either influences or provides potential customers with the necessary information to make a purchase decision. Marketing automation is critical, as organizations grow larger. This is because, it become more difficult to manage multiple simultaneous programs and track costs across multiple channels. Campaign management, a direct marketing process, allows companies to manage, integrate and leverage marketing programs by automating such tasks as managing responses, qualifying leads, and arranging logistical aspects of events.
Another critical core competency is fulfillment. Marketing departments today are being deluged with requests for information via the Web and other channels. The goal of effective fulfillment is to provide a myriad of information to customers and prospects quickly, easily and efficiently. Whether it is product or service inquiries, direct mail responses, pricing or billing issues, or requests for literature, responding to requests in a timely manner is critical. This creates a need for fulfillment capabilities that can get product information, literature, collateral packages, or other correspondence into the hands of the customers and prospects when they are most receptive. Effective fulfillment is not trivial; it requires a sophisticated interface with campaign management, sales force automation, and posting systems.
Customer Service and Support
Customer support provides customer care and other services. The applications include support for service request management, account management, contact and activity management, customer surveys, return material authorizations, and detailed service agreements. These discrete applications work together to ensure that customer service representatives can quickly assign, create and manage service requests, as well as look up detailed information about customer service contracts, contacts and activities.
Customer support capabilities are used to manage customers who are having problems with a product or service and to resolve those problems. Help-desk software automates the management and resolution of support calls and improves efficiency and effectiveness. These applications typically include capabilities to verify customer status (e.g., what level of support they are entitled to) track specific tasks needed to resolve problems across multiple workgroups, monitor service-level agreements, maintain permanent incident histories, and capture support costs for charge backs. Armed with this complete customer and product information, service professional can resolve customer issues efficiently and effectively.
Field Service Operations
There is nothing like the hands-on approach to instill faith in your customers about your company. Field service is the hands- on extension of external customer support, activated when a problem can be solved over the phone and requires sending a repair person to the customer site to perform maintenance or repair. Field service and dispatch applications have become mission critical tools that affect a company’s ability to deliver effective customer service and contain costs. The field service application provides the organization with features for scheduling and dispatching repair personnel, managing inventory and logistics, and handling contracts and accounting.
Effective CRM must be based on differentiating customers based on account and transaction histories. Today, very few organizations are able to make these distinctions. The ability to effectively segment customers depends on the decision support technology, which most executives see as a powerful enabler of CRM.
Effective decision support depends on the ability to gather customer information at great levels of detail. Detailed knowledge about customers allows companies to treat all customers individually and, in many cases, disengage from customers are high maintenance, low-margin prospects