The ultimate objective of technology consists in its applicability in targeting to right customers and catering efficiently to their needs. In this perspective CRM cannot be treated merely as a technology; it also has implications in the strategy formulation for companies. The focus of the paper is to study the impact of CRM as a process which is enhancing the efficiency of the Indian financial sector. With companies pumping huge amounts of money in IT solutions to upgrade their processes, CRM has acquired functional as well as strategic implications.
What must be realized is that no software can promise to improve the capability of he organization’s processes unless the strategic and tactical decisions are in place. The paper examines the implications of CRM as a process and then makes an attempt to study how it is applied in the financial sector for improving the performance of organizations. The benefits of adopting a relationship management approach are numerous, as it enables organizations to develop not only better understanding of the customer but also helps it in streamlining its activities.
The paper can be divided into the following heads: Relationship marketing in creating customer loyalty; CRM as a process management issue; CRM driving Indian financial sector; Challenges for the future. 1. Relationship marketing in creating customer loyalty It is not only technology that has revolutionized the organizations but also the growing realization that battles have to be fought over efficient service delivery alternatives. Relationship management not only looks on building relationships with customers but also with suppliers and partners.
The redesigning of processes in the organizations is being done on the forethought that product delivery can only be improved if organizations are able to change their value chains according to market needs. The dynamic nature of markets and ever evolving technology perspectives are forcing companies to become flexible in their approach towards their customers. The traditional marketing strategies no longer provide any guarantee of success as the very nature of customer has changed. Access to information has opened new vistas of knowledge and their susceptibility to new products and services has increased manifold.
Earlier it was not important to know the customer, or to really understand his/her mindset. These challenges call for adapting strategies that would enable companies to foster better relationships with the customers. Moving from the ‘product-centric approach’ to relationship marketing has meant finding the right techniques to reach the customers. NO advertising and personal selling budgets promise to give increased customer revenues as relationship marketing does. “Customers are lifeblood of any organization. Like many clicks, this one happens to be true.
Without customers, a firm has no revenues, no profits, and therefore no market value” (Guppy ; Lehmann, 2005, p. 2). The customers are looking for value in all their transactions and are willing to pay for that value. In a way technology has brought the customers closer o the marketer. Knowledge about markets, segments and product usage can be easily available to the organizations. Many companies are thriving on this knowledge as it enables them in designing the right kind of marketing and promotional strategies to capture the attention of the customers.
Even capturing the attention of the customer has become challenging as media proliferation has led to increase in competition. A better equipped customer with knowledge about various alternatives available in the market is difficult to convince. Companies have to be alert in their approach to understand the customers definition of ‘value’ and accordingly position themselves on quality, service, performance, and efficiency perspective. It becomes imperative to create value for their customers; a value that is able to bind them to the company and stop them from switching to another company’s product.
Advertising and promotions can be instrumental in influencing the purchase decision concerning the product launched in the market; but if the company has built a long-term relationship with its customers, advertising and promotion can become more effective in delivering returns. Reducing costs, aggressive promotion and advertising necessarily did not bring revenues and loyal customers. The whole idea is to develop business models that would enhance the quality and improve interaction with their customers leading to more satisfied customers.
Relationship marketing has always existed in companies; the only change that has come is in its applicability to deliver results. It has always been understood that customer needs are important for companies in designing product and service offerings for the markets. Increased customer satisfaction would lead to increased customer loyalty. Customers are thus perceived as assets for companies and creating customer value essentially loud lead to long-term growth for the company.
The companies unable to retain their customers are not likely to survive in the competitive environment. The thrust of strategy has shifted to maximizing customer value and involving customers in the companies’ value creating processes. In the manufacturing sector companies are creating greater information visibility so that the customers have a better idea about the company where they buy products. These interactive efforts are primarily designed to bring about greater participation between the company and its customers and create a sense of partnership.
Information technology has been instrumental in giving more power to a customer as now he/she not only demands greater information about the various products and services but also views him/herself as a change agent in the transaction process. In India the influx of new products has led to change in the expectations of the customers. Companies are no longer targeting to uninformed confused customers, who were earlier dependent on the companies’ to cater to their needs; but to customers who believe that selecting the best product is their prerogative.
Relationship marketing looks not only towards alluding relationships but also focuses on managing and defining these relationships in the long term. It’s not only about having clarity about customer needs but also the capability to keep evolving the relationship so that the customer feels enriched by being served by the company. In this perspective if sustaining relationships is important for companies, the management should develop systems that lead to building these relationships.
The traditional organizational structures have to be redefined to cater efficiently to Customer needs and also to make marketing Cost effective. 2. CRM as a process management issue The role of organizational structure is to partition the organization into functional silos, so that each function independently enables the organization to attain the objectives. The primary goal is to enhance value creation process and bring about increased coordination across organizational hierarchy.
More and more companies are moving towards the process approach as it has become imperative to revisit the organization’s traditional processes and identify their relevance and output against customer satisfaction. This requires analyzing the relevance Of the process from customers perspective. There has been a growing emphasis on improving the productivity of the organization by focusing on aligning the processes of the organization to the organizational goals. In 1980-asses the organizations were much taken up by the Reengineering philosophy propounded by Hammer (1990).
Reengineering represents a move towards increased organization simplicity, and the rationale herein lies in the fact that organizations can be restructured along value delivery lines. Reengineering propagated a change in the philosophy of doing business. To improve performance cost reductions and service delivery standards had to be evaluated. Focus on quality and reducing inventory levels are one part of the effort. Hammer (1990) and Davenport (1993) laid stress on the idea of analyzing whether they were doing business in the right way.
What may have been appropriate two to three decades earlier may not be viable in today’s business environment. “Stressing the comprehensive nature of business processes, BPR theorists urged companies to define all of their major processes and then focus on processes that offered the most return on improvement efforts” (Harmon, 2003, p. 24). The very genesis of transformation was corporate renewal; changing their way of doing business and covering new capabilities. “In the mid asses, British Airways decided to differentiate itself by focusing on marketing and Customer service.
The employees had extensive training to change the way they performed their jobs” (Seth ; King, 2003, p. 43). Competition has made organizations realize that to retain customers they must have the processes in place so that the customer is satisfied by the transaction. Transformation cannot be attained merely by deploying technology. To get substantial benefits from technology, the top management must develop right approach towards its important processes which add value to the Meany’s product or service. CRM appeared on the heels of big ticket Enterprise Resource planning (ERP) initiatives as a big ticket item itself. But by the late 1 sass, ERP was notable for problems that befit its size and its lack of identifiable ROI” (Greenberg, 2005, p. 6). The customer relationship management process provides the structure for how the relationship with the customer is developed and maintained. Management identifies key customers and customer groups to be targeted and then devises strategies to improve processes and remove non-value added activities.
At the heart of reengineering is to start thinking away room the traditional approach, look at the old assumptions of doing things and change it according to customer requirements. Reengineering has forced organizations to start looking at their processes according to the customer’s requirements. It is important to identify the core processes a company happens to be good at and then improve them, redefine their relationship with the output the company expects. “The central concept in CRM is customer value creation. The aim is not to maximize the revenue from single transactions but rather to build a lasting relationship with the customer.
The development of customer relationships demands a thorough familiarity with the process by which customers create value for themselves. When considering the entire process, the single transaction diminishes” (Storybook ; Letting, 2001, p. 5). The role of process management in customer relationship building cannot be underestimated. If we consider the ability of a particular process to deliver value and help the company in improving its performance, it would certainly have to relate ultimately to the customer.
The whole endeavor of reengineering was to help companies perform in the markets. Cost is fast becoming less important for a customer as compared to quality and service. If the time taken by a company to process a customer’s order and delivery of the product is reduced, the satisfaction level of customer improves considerably. Most organizations were caught in the web of improving their productivity by cutting costs. Now the emphasis is on innovation and technology, in restructuring processes to keep pace with changes in technology.
The importance of CRM can be understood by realizing that if the value delivery processes are in place, there would be greater customer gratification. It means organizing important processes according o the customer; herein the company must identify the critical decision areas affecting its performance: Suitable and timely research or rather information flow would keep marketers well informed about the changing pattern of customer demographics. This would enable company to implement changes in its product and service offerings without any delay with accuracy.
Earlier market research techniques that were employed by companies may not prove to be appropriate in implementing changes fast enough. Decreasing product lifestyles are forcing companies to be focused towards deciphering market trends. Information technology is being used in a big way to map the customer behavior patterns and their purchase preferences. What earlier had proved difficult for companies has become relatively easy; data can be continuously analyzed and used in marketing decisions. Technology has enabled companies to target the right customers with right kind of alternatives.
Placing the order and tracking it across the various points in the supply chain have also become a reality for customers giving them greater accessibility to information. Building relationships with the customer increasingly means involving them in the value chain. Many automobile manufacturers like Ford and General Motors are having collaborative initiatives not only with their supply chain partners but also with their customers. Customers can actively participate in designing their vehicles and are also aware about the products’ delivery time status.
Nikkei has launched an internet service which enables them to design their own shoes. Federal Express allows the customers to track their shipments through the company’s website. Blue Dart Express Limited has been exploring web-based solutions to extend the range of services available to its customers and integrate hem into the core products it offers to customers. The basic tracking solution enables customers to track their shipments on-line. A mail-based solution allows the customers to make queries about the status of their shipments using e-mail.
These kinds of endeavors lead to greater satisfaction for the customer. Whereas earlier reducing the inventory levels had been the prime concern area of reducing operating costs, process management enables organizations to reduce inventory and optimize the stock levels of the product by concentrating on their core competencies. Outsourcing the routine processes has led to reduction in cost cross the value chain. Nortek Networks which specializes in manufacturing high performance Internet networks, in 1998 was facing a situation of high declining margins.
It sold 15 of its manufacturing plants to its suppliers like Shania, Selection and SIC and thus could focus upon more technical core competency. It reduced its cost of manufacturing and enabled the company to keep a better track of changing manufacturing technologies. Purchasing products from the suppliers reduced costs as the company could take advantage Of the bulk manufacturing capacities of its suppliers who also possessed the expertise. The company had only to coordinate across its various suppliers across the supply chain and was able to improve service levels by cutting down lead time.
The value in the transaction is assessed by the company’s capability to handle customer requests and complaints on a timely basis. Cisco System has build world class customer service model using Internet as a facilitator. The customers have access to information and solutions to customers are customized according to individual customer needs. The system is called “Cisco Connection Online” and has an open forum which answers queries of customers n networking, it also has troubleshooting engine which guides the customer to get an answer to his specific problem by helping him through the instructor system.
In the insurance sector in India, Life Insurance Company has introduced many customer driven IT initiatives. In HEAD India information technology forms the backbone and nervous system of the company. Through a host of IT initiatives all the customer support processes such as branch operations, ATM, telephone banking, Internet banking and mobile banking have been integrated in an online real time mode for customer convenience. The customer can make aments, purchase demand drafts and transfer funds without stepping into the bank.
The challenge for the company is to make the customers feel that they are well looked after and all their concerns regarding the product performance, installation and after sales support are taken care of. This requires possessing information regarding not only the different products but also the behavioral aspects of the customers. It also would require the sales force to have all the relevant information to provide to the customers regarding their product. This would involve integrating the different functional processes of the organization to make information available for the company personnel dealing with the front end operations.
CRM, as a process would deal with identifying the different aspects of business processes that are crucial for transferring value to the customer, making it possible to retrieve data easily regarding customers so as to take timely decisions. The use of CRM is relatively higher in the service sector as it offers direct contact points with the customers. Applicability of CRM consists in being able to help marketing managers take decisions faster and enable them to manage campaigns more efficiently. Companies are able to categorize customers according to the revenues they generate and their loyalty for the company.