The foundation of CRM


Alexander Shubin, managing partner of consulting company "Partner Business Consulting"

The last few years, many companies from different industries talking about the need systems Customer Relationship Management (CRM), customer relationship management. Most experts agree on the positive impact of CRM on business performance, especially in time of crisis, when the problem of customer retention are of particular relevance. Following the general trend and in order to strengthen the "intimacy" of the relationship with its customers, many companies have initiated and implemented projects implementing CRM. But, as the results of research in practice, most of them have not received the expected benefits, and in some cases, the idea with CRM turn around the loss of customers and loss. This article offers a look at the challenge of implementing CRM as a strategic challenge and task of organizational change. Such a view will form a strong conceptual foundation for the implementation of CRM, defining a really critical goals, objectives and performance expectations.

CRM does not bring the expected results?

According to the report, Forrester Research (2005), the majority of large companies rather unhappy with the results of their CRM-projects. Of the 94 respondents, only 29% are satisfied with the integration of data and applications within the established CRM-systems. Less than 50% of respondents said that their expectations were not disappointed, and they are completely satisfied with the products that will improve their business processes. Most of the users of CRM-systems would accelerate the return on investment in CRM-system, and are interested in improving the support of the manufacturers CRM. Only 34% were satisfied with the current level of support from the vendor of CRM-systems.

Base_of_CRM_pic_1.jpg

The main reason for this - the perception of CRM as a technology and IT systems, and not as a strategy and vision of the company. This perception leads to the formation of unrealistic expectations that after installation, tinctures software CRM, and train employees how to use it, the company will immediately receive tangible results, such as in the case of the ERP. This perception also determines the approach to implementation of CRM, as a project, as in the case of ERP, rather than a program of organizational change, as in the case of the introduction of new concepts and management strategies. This obviously leads to a strong organizational resistances, often with a demonstration on the part of the client managers, "why it's not working," and that "kill" projects CRM. This cause of failures in CRM projects is conceptual in nature and leads to another functional issue. What business processes need to be automated in the first place, and what features CRM - systems are critical? The question that many projects have no clear answer. Even at the level of definitions, what is CRM, there are different points of view, not to mention the fact that under the CRM-systems, some understand the call center or contact center, help others - customer database with advanced analytical capabilities and management of marketing campaigns , and others - Internet technology or automation of the sales process and the integration of the front office to the back office. 

The value of a customer

The key concept in the definition of CRM is the "value" of the client. To start thinking in terms of customer value, you need quite a bit: take two axioms [4]. They are very simple and transparent, but their recognition is not easy. The first axiom states that the source of income of the company - not the products, and customers. Obviously, the money is not paid products, and buyers. Now look in the management accounting of the company. You'll find that the accounting system estimates the profit brought by specific products or activities of the company. Costs, direct costs, sales - all relates to the product portfolio of businesses, not customers or groups. The second axiom between purchases of the same client relationship exists. Clients usually guided by the experience of previous purchases - connection is obvious. The manifestation of the second axiom characterized by the retention, which in turn depends on loyalty and customer satisfaction.

 Base_of_CRM_pic_2.jpg

Figure 2 shows the relationship customer value and business value. Customer value has a direct impact on earnings and cash flow, based on which, usually determined by the value of the company. Turn, depends on the value of a customer retention rate, customer acquisition, and development (expansion) of the client, ie increase its share of the customer's budget. value of a customer, changes over time, so its evaluation is generally used, the corresponding formula that takes into account this factor [5].

Four components of the concept of CRM

 

Based on the definition, the following basic components of CRM [6]:
Knowledge about customers
Relations strategy
Communications
The unique offer

 


Knowledge about customers.
All long-term relationship can not develop without the knowledge of the customer. Without such knowledge is not possible to form a unique offering for individual customers or specific groups, which is a key factor in the success of the implementation of CRM.   
Relations strategy. Knowledge about individual customers must be used for developing the strategy of relations with the "right" customers. Companies with a strategy of relations, focused on building long-term relationships with the most valuable customers.

 

Base_of_CRM_pic_3.jpg

Communications.  Customer dissatisfaction, often caused by the inability to be contacted with the staff and get support in difficult situations. Any relationships are built on communication. Therefore, the system of multi-channel communications and integrated network of various communication channels (website, phone, email, personal meetings, social networks, etc.) is one of the important components of CRM.

The proposed value and customization.   Deep knowledge of individual customer needs, develop a strategy for relations with the most valuable customers, and established channels of communication allow us to offer exactly the value - the set of goods and services that address the benefits expected by the client, setting a "fair" price.

In determining the CRM implementation project is important to pay attention to all the four components that form the foundation of CRM. The construction of only one of the above elements can lead to a sharp drop in the application of CRM.

Business model, which determines the CRM strategy

 

The study of successful companies Treacy and Wiersema [7], most of the companies can be grouped into three groups according to their core value that defines their business model:
Operational Excellence
Leadership Product
Customer Orientation