ADVANCED TOPIC OF INFORMATION SYSTEM
CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
06 PBM
Faiza Nur Hanifah (1501180382)
Universitas Bina Nusantara
2014
2
CRM
Abstract
The customer relationship has become more impersonal with the rapid growth of the
internet, the world wide web (WWW), and the growth of science and technology. Customer
Relationship Management (CRM) return to personal marketing. CRM is not a process or a
technology, it is a way of thinking and acting in a customer-centric fashion. CRM builds
sustainable long-term customer relationships that create value for the company as well as for the
customer. A CRM system in an organization contains two major components : operational CRM
and analytical. The operational CRM includes the systematic use of analytical CRM filtered
customer knowledge within the operational processes. Analytical CRM comprises the analysis of
customer data for strategic or tactical purposes to enhance both customer and firm value.
Keywords
CRM, CRM Process, Customer Touch Points, Data consolidation, Operational CRM, Sales Force
Automation, On-Demand CRM, Mobile CRM, Open-Source CRM, Social CRM.
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Chapter I
Introduction
The customer relationship has become more impersonal with the rapid growth of the
internet, the world wide web (WWW), and the growth of science and technology. In today’s
hypercompetitive marketplace, customers are increasingly powerful. If they are not satisfied with
a product or a service from one organization, the competitor is often to steal them away. Then, as
more and more customers shop on the web, a company does not even have the opportunity to
make a good first impression.
Customer Relationship Management (CRM) return to personal marketing. Rather than
market to a mass of people or companies, businesses market, it’s better to reach each customer
individually. With this approach, businesses can use information about each customer (for
example, previous purchases, needs, and wants) to create offers that customers are more likely to
accept. That is, the CRM approach is designed to achieve customer intimacy and gain more
customer value. The CRM approach need to enabled by information technology.
CRM is not a process or a technology, it is a way of thinking and acting in a customercentric fashion. The focus of organization today has changed from conducting business
transaction to managing customer relationship in order to gain customer intimacy. In general,
organizations recognize that customers are the core of a successful enterprise, and the success of
the enterprise depends on effectively managing relationships with them.
CRM builds sustainable long-term customer relationships that create value for the
company as well as for the customer. That is, CRM helps companies acquire new customers,
retain existing profitable customers, and growth the relationships with existing customers. CRM
is basically a simple idea : Treat different customers differently, because their needs are different
and their value to the company also may different. Successful CRM implementations not only
have improved customer satisfaction, and customer loyalty, but they have made the company’s
sales and service employees more productive, which in turn has led to increased profits. In fact,
researchers at the National Quality Research Center at the University of Michigan found that a 1
percent increase in customer satisfaction can lead to as a 300 percent increase in a company’s
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market capitalization (the number of shares of the company’s stock outstanding multiplied by the
price per share of the stock).
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Chapter II
Theoritical Framework
2.1 CRM
According to Rainer and Cegielski (2011: 307) Customer Relationship
Management (CRM) is an organizational strategy that is customer-focused and customerdriven. That is, organization concentrate on satisfying customers by assessing their
requirement for products and services, and then providing high-quality, responsive
service.
Then based on Abdul-muhmin, A (2012) Customer Relationship Management
(CRM) is a marketing paradigm whose the central theme is the idea that the organizations
need to shift their thinking away from the short term, transactional exchanges with all
customers to building long – term collaborative relationship with key customers. It has
been defined as a strategic approach that is concerned with creating improved shareholder
value through development of appropriate relationship with customers and other key
stakeholders.
Based on two theories above we can conclude that CRM is an organizational
strategy that focusing on customer requirements for products or services in order to build
a long term collaborative relationship with them.
2.1 CRM Process
CRM Process according to Kim, H. (2012) journal, The basic of CRM process
could be found in the process of relationship development consisting of awareness,
exploration, commitment and dissolutions. Several academics effort to define CRM
process have been based on this theory. Blattberg and Deighton presented customer
acquisition and customer retention as the customer equity process. Johnson and Selnes
categorized a company’s CRM strategies into three different stages, ‘from strangers to
acquaintances’, ‘from acquaintances to friends’, and ‘from friends to partners’, and
insisted that companies should adopt an appropriate strategy depending on market
situations. From the first stage company must success to deliver a good first impression to
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the customers, so they interested or at least know company’s products or services. Then
continue to second stage, company have to be able to make their customer feels
comfortable and make the customers feel comfortable with the company’s products or
services, and also company have to be able to make their customers as the regulars of
their products or services. Last stage, if the company wants to make their customers as
partners, they have to make their customers feel like their products or services are part of
their customers live.
Figure 2.1 : summary of core CRM process
Source : (ec4u, 2012)
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From the figure above we can see the core process of CRM, including the
activities what company have to do to improve their customer relationship management.
By following those activities, company can improve their CRM process in order to gain
customer values.
2.2 Customer Touch Points
Customer touch points is one of an important things for company. Because this
customer touch points helps company to win customers attention, that can lead to a better
relationship with customers.
Based on Rainer and Cegielski (2011: 310) organizations must recognize the
numerous and diverse interactions that they have with their customers, these various types
of interactions are reffered to as customer touch points. Traditional customer touch points
include telephone contact, direct mailings, and actual physical interactions with customers
during visit to a store. However, organizational CRM must manage many additional
customer touch points that occur through the use of popular personal technologies. These
touch points include e-mail, web sites, and communications via smart phones.
2.3 Data consolidation
Data consolidation is another important things to company’s CRM. In the past,
customer data were located in separated system across the business. Now, there’s an
interconnected systems that built around a data warehouse and make all customer related
data can be accessed by every unit of the business this process are called data
consolidation. Data consolidation create a complete data set on each customer that called
by customer’s 360 degree view. By accessing this 360 degree view, a company can
improve their relationship with the customers and make more productive and profitable
decision. Data consolidation and the 360 degree view enable company’s functional area
to readily share information about customers. This sharing of customer information leads
to collaborative CRM.
Based on Rainer and Cegielski (2011: 310) collaborative CRM systems provide
effective and efficient interactive communication with the customer throughout the entire
organization. Collaborative CRM integrates communications between the organization
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and its customers in all aspects of marketing, sales, and customer support process.
Collaborative CRM also enables customers to provide direct feedback to the organization.
Figure 2.3 : CRM areas
Source : (tour de force crm, 2001-2014)
Based on figure above we can see the CRM areas which allows employees to
sharing information throughout the organization. By allowing information sharing, CRM
can improve business productivity. Sales people and customer service representatives able
to perform their job more effectively and efficiently.
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Chapter III
Result and Discussion
A CRM system in an organization contains two major components : operational CRM and
analytical CRM. We discuss these components.
3.1 Operational CRM
The operational CRM includes the systematic use of analytical CRM filtered
customer knowledge within the operational processes. This knowledge is used, for
example, for the assessment and classification of customers, sales work or campaign
management. The operational CRM provides the functions to do this, so that customer
groups are specifically approached and customer loyalty is strengthened (crm, 2014).
Operational CRM helps company to do their operational in order to strengthen the
customer relationship, includes the using of analytical CRM to give an analysis of their
business, for example, CRM give analysis of company’s customer buying pattern. By
looking at this pattern company will know which customers are they regulars and
customers who haven’t bought or using company’s products or services. Then, company
will know what they have to do to improve their relationship with customer.
The two major components of operational CRM are customer facing applications
and customer touching applications. Customer facing applications are those applications
where an organization’s sales, field service, and customer center representatives actually
interact with the customer. Customer touching applications is where customers interact
directly with company’s technologies and applications (web, internet, email, point of sales
teminals) rather than interact with a company representative. Such applications are called
electronic CRM (e-CRM) applications. Using these applications, customers typically are
able to help themselves.
3.1.1 Components of Customer Facing Applications :
3.1.1.1 Sales Force Automation
Sales force automation is the process of maximizing the efficiency of the
repeatable processes a sales person performs. This is including the use of software
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to automate and streamline the business tasks, including account management,
contact management, opportunity management, sales funnel or sales pipeline
management, sales activity management, sales forecasting analysis, and sales team
performance evaluation (tour de force crm, 2001-2014).
Sales force automation implementation helps companies to perform sales
quickly and provide company’s sales person with ability to interact with their
customer and serve them efficiently and effectively. Sales force automation also
facilitate company’s sales person to connect with each other to share information.
Example of sales force automation software is sales cloud. Sales cloud provides a
platform where it turns your mobile device into portable sales office. You can log
calls, respond to hot leads, work opportunities, or check dashboard no matter
where you are and collaborate across team anywhere.
3.1.1.2 Customer Service and Support
Customer service and support refers to systems that automate service
requests, complaints, product returns, and requests for information. Today,
organizations have implemented customer interaction centers (CIC), where
company representatives use multiple communication media such as the web,
telephone, fax, and face to face interactions to support the communication in order
to give details to the customers. Organizations use the CIC to create a call list for
the sales team, and whose members are a sales prospects. Customers can
communicate directly with the CIC if they want to initiate a sales order, inquire
about products and service before placing an order, or obtain information and
details about a transaction that they want make or already made. The CIC also
provide the Information Help Desk. The help desk assists customers with their
questions concerning products or services and also process customer complaints.
New technologies are extending the functionality of the traditional CIC to include
e-mail and web interaction. CIC helps company representative to do their job
easily and efficiently rather than have to meet the customer in person. Also CIC
helps customer to get fast feedback or responds about the information they seek.
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3.1.1.3 Marketing
CRM has many important applications for an organization’s including
marketing department as well. CRM marketing applications provide opportunities
to sift through volumes of customer data, a process known as data mining and
develop purchasing profiles. Data mining is a computational process for
discovering patterns in large data set while purchasing profile is a snapshot of a
consumer’s buying habits that may lead to additional sales through cross selling,
up selling, and bundling. Cross selling is the practice of marketing related
products to customers based on a previous purchase. Up selling is a sales strategy
to make customers purchase higher value related products or services than the
customer’s initial product or service that they want to buy. Finally, bundling is
which a business sells a set of products or services together at a price which is
lower than combined individual prices of the products.
3.1.2 Components of Customer Touching Applications :
3.1.2.1 Search and Comparison Capabilities
With the vast array of products and services available on the web, it is
often for customers to find what they want. To assist customers, many online
stores and malls offer search and comparison capabilities. This search and
comparison capabilities helps customer to make decision faster in buying a
products or services. Then this capabilities build an opportunity to the company’s,
such as what is the strength point of products or services that they offer, so the
customer will attracted to the products or services, and end up buying them.
3.1.2.2 Personalized Web Pages
Many organizations permit their customers to create their own
personalized web pages. Customers use these pages to record purchases and
preferences, as well as problems and requests. With these feature, it will make
customers more comfortable and satisfy in using company’s service or product.
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3.1.2.3 FAQs
Frequently asked question are a simple tool for answering repetitive
customer queries. Customers do not need to communicate with an actual person to
find the information. They just have to read in the FAQs section to find answer of
their questions.
3.1.2.4 Customized Products and Services
Another customer touching service that may online vendors use is mass
customization, a process in which customers can configure their own products. For
example, www.nike.com, the website enabled customers to design their own shoes
with different color and design then, nike will create customer own designed
shoes. Even the web allowed customer to make their own mark on their own
designed shoes. And of course in using these feature will cost customers more
money than buying the shoes in the physical store. If the customers think the price
is worth with the money they expend, the personalized feature will create a
valuable value and income for the company.
3.1.2.5 E-mail and Automated response
The most popular tool for customer service is e-mail. It is used to answer
inquiries from customers, send alert and product information, and conduct
correspondence regarding any topic. It’s become popular because nowadays
almost everyone that working have an email.
3.2 Analytical CRM
Analytical CRM comprises the analysis of customer data for strategic or tactical
purposes to enhance both customer and firm value. The analysis should enable insight
into customer behavior, and meet the objective of the CRM initiatives, for the purpose of
the business performance management and improvement. Prediction of consumer
behavior and identification of customer segments will aid organizational decision making.
Alavi, S., Ahuja,V., & Medury,Y. (2012) .
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Analytical CRM systems analyze customer behavior and perceptions in order to
provide actionable business intelligence. Important technologies in analytical CRM
systems include data warehouses, data mining, decision support, and other business
intelligence technologies. Analytical CRM analyze data for a variety of purposes,
including :
-
Designing and executing targeted marketing campaigns
-
Providing financial forecasting and customer profitability analysis
-
Increasing customer acquisition, cross selling and up selling
-
Providing input into decisions relating to products and services (pricing, and product
development). (Rainer and Cegielski 2011 : 319)
Figure 3.2 : how operational CRM and analytical CRM work together
Source : (Cegielski)
Figure above explains how operational CRM and analytical CRM work together.
In customer-facing applications and customer-touching applications produce raw
information about business, those information stored in customer data warehouse then
analytically processed and summarized and produced results such as customer behavior
and buying pattern that could be used as actionable business intelligence.
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3.3 Other Types of CRM :
3.3.1 On – Demand CRM
Customer relationship management systems may be implemented as either
on premise or on demand. Based on Rainer and Cegielski (2011: 320) on demand
CRM is a CRM system that is hosted by an external vendor in the vendor’s data
center. This arrangement spares the organization the costs associated with
purchasing the system. In addition, because the vendor creates and maintains the
system, the organization’s employees need to know only how to access and utilize
it.
On – demand CRM have potential problems. First, the vendor could prove
to be unreliable, unreliable vendor could possible to steal or sell company’s data
and leak or sell it to the competitor. Second, hosted software is difficult or
impossible to modify, and only the vendor can upgrade it, beside the company
have to train their employees again so they understand how to use the system.
Third, it may be difficult to integrate vendor hosted CRM software with the
organization’s existing software, because there will be an opportunity for
incompatibility between new system and company’s existing software. Finally,
giving strategic customer data to vendors carries risk, it creates opportunity for
data stealing, data leaking, and possibility fraud.
3.3.2 Mobile CRM
Mobile CRM involves interacting directly with customers through their
own mobile device such as smart phone. Many companies believe mobile CRM
holds promising future as an avenue to create a personalized customer relationship
that may be accessed anywhere and at any time. In fact, the potential opportunities
provided through mobile marketing appear so rich that a host of companies have
already identified mobile CRM as a cornerstone of their future marketing
activities.
Mobile CRM application that used today :

Sugar mobile
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
Box.net mobile

Salesforce chatter

Batch book

Resco mobile CRM

Oracle mobile sales assistant and oracle mobile sales forecast

Rightnow mobile

CWR mobile CRM

Sybase mobile sales for SAP CRM
Figure 3.3.2 : how mobile CRM making The difference
Source : (webmasters)
By looking at figure above we can see what makes mobile CRM different. Mobile
CRM increase conversions, it makes customers to use their mobile device to
increase conversions. It responds to leads than 5 minutes so the customer won’t
have to wait for long respond for a service. It gives customer a right person for
giving details and satisfied their needs of products or services. The interaction
between company and customer can be track easily and managed professionally.
Then customer will receive immediate and automated feedback, so there will be
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no longer waiting for the customer. Next having customer’s details will be a
competitive advantage for the company.
3.3.3 Open Source CRM
Open source CRM is CRM software which source code is available for
developers and users that can be edited by them to fit company needs. Open
source CRM does not provide more or less features or functions than other CRM
software, and it may be implemented either on premise or on demand. The
benefits of open source CRM include the favorable pricing and a wide variety of
applications, that can be choose depends on the organization needs. Open source
CRM is very easy to customize, it has an attractive feature for organizations which
is CRM software designed for their specific needs. Updates and bug (software
error) fixes occur rapidly, and extensive support information is available free of
charge. Open source risk is quality control, because open source CRM is created
by a large community of unpaid developers, there may be a lack of control that is
responsible for overseeing the quality of the product. For best result, companies
must have the same information technology platform in place as the platform
which the open source CRM was developed. Although some of open source CRM
are free, the implementation, developments, training, data migration, any
consultancy or project management and the hosting could cost a lot of money.
3.3.4 Social CRM
Social CRM is a CRM that use social media service, technique and
technology for company to reach their customers. Usually company use social
media such as facebook, linkedin, twitter and other social media to mention their
products, brands, or services. Even when company have special event or offer of
products or services, they’ll post it to the social media so the customers keep
updated by the information, this method could increase company’s prospect.
Social CRM can be a different meaning or a different things for companies, it
depends on how companies able to understand the values that will produced by
social media and the business challenge that they try to solve. The challenge for
company is to adapting and evolving to meet the social customers needs and
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demands. Once company able to overcome the challenge, the followers and fans in
social media from all over the countries could be company’s customers and also
by having social CRM it could be a competitive advantage for the company.
Social CRM could lead to electronic marketing (e-marketing), since social CRM
use social media to promote or mention their brand, products, or services.
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Chapter IV
Conclusion and Recommendation
4.1 Conclusion
CRM is not a process or a technology, it is a way of thinking and acting in a
customer-centric fashion. , CRM helps companies acquire new customers, retain existing
profitable customers, and growth the relationships with existing customers. CRM is
basically a simple idea : Treat different customers differently, because their needs are
different and their value to the company also may different. Successful CRM
implementations not only have improved customer satisfaction, but they have made the
company’s sales and service employees more productive, which in turn has led to
increased profits. The basic of CRM process could be found in the process of relationship
development consisting of awareness, exploration, commitment and dissolutions. Data
consolidation and the 360- degree view of the customer enable organization’s functional
areas to readily share information about customers. Collaborative CRM integrates
communications between the organization and its customers in all aspects of marketing,
sales, and customer support process. A CRM system in an organization contains two
major components : operational CRM and analytical CRM. In operational CRM there are
two components which is customer facing applications and customer touching
applications. Customer facing applications are those applications where an organization’s
sales, field service, and customer center representatives actually interact with the
customer. Customer touching applications is where customers interact directly with
company’s technologies and applications (web, internet, email, point of sales teminals)
rather than interact with a company representative. While in Analytical CRM contains
several components such as data warehouses, data mining, decision support, and other
business intelligence technologies.
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4.2 Recommendation
My recommendation is I think company have to play more in mobile CRM and
social CRM since nowadays, everyone using smart phone that will support the company
to reach the customers easily. Besides mobile CRM provide company with various way
and creative way to deliver CRM to the customers. To successfully implement this mobile
CRM, company have to do some research first, to find out the customer’s respond about
this mobile CRM, is the customer willing to use the technology or not so the
implementation won’t turn out to be a waste. Next company can use an existing mobile
CRM such as coretalk or just develop their own mobile CRM, to implement this mobile
CRM. Then add it with social CRM and company will have a very competitive advantage
to win the marketplace. Combine this two CRM will take a lot of time to do research
because marketplace have a dynamic changes, if company can’t adapt to those changes
they will lose the competition. Once the company succeed in combine this two, they will
rule the marketplace.
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