Technology solutions for e-CRM

Database technology is at the heart of delivering CRM applications. Often the database is accessible through an intranet web site accessed by employees, or an extranet accessed by customers or partners provides an interface with the entire customer relationship manage­ment system. Today, on-demand web services such as Siebel CRM On Demand (www.crmondemand.com) and Salesforce.com (www.salesforce.com) are becoming increasingly popular.

E-mail is used to manage many of the inbound, outbound and internal communications managed by the e-CRM system. Using e-mail for communications is a service provided by e-CRM systems such as Salesforce (www.salesforce.com) or Siebel (www.siebel.com), or smaller businesses can use an e-mail marketing ASP service such as EmailReaction (www.emailreaction).

A workflow system is often used for automating CRM processes. For example, a workflow system can remind sales representatives about customer contacts or can be used to manage service delivery such as the many stages of arranging a mortgage. The three main types of customer data held as tables in customer databases for CRM are typically:

  1. Personal and profile data. These include contact details and characteristics for profiling customers such as age and sex (B2C) and business size, industry sector and individual’s role in the buying decision (B2B).
  2. Transaction data. A record of each purchase transaction including specific product purchased, quantities, category, location, date and time, and channel where purchased.
  3. Communications data. A record of which customers have been targeted by campaigns, and their response to them (outbound communications). Also includes a record of inbound enquiries and sales representative visits and reports (B2B).

The behavioural data available through 2 and 3 are very important for targeting customers to more closely meet their needs.

Research completed by Stone et al. (2001) illustrates how customer data collected through CRM applications can be used for marketing. The types of data that are held, together with the frequency of their usage, are:

Basic customer information                         75%

Campaign history                                        62.5%

Purchase patterns (sales histories)             50%

Market information                                       42.5%

Competitor information                                42.5%

Forecasts                                                     25%

The data within CRM systems that were reported to be used for marketing applications were as follows:

Targeted marketing                                      80%

Segmentation                                              65%

Keeping the right customers                       47.5%

Trend analysis                                            45%

Increased loyalty                                        42.5%

Customized offers                                      32.5%

Increase share of customer                       27.5%

The Hewson Consulting Group (www.hewson.co.uk) identifies the following benefits of CRM systems to customers:

  • Improved response times to customer requests for information;
  • Delivered product meets customer requirements;
  • Reduced costs of buying and using a product or service;
  • Immediate access to order status and more responsive technical support.

It is apparent that while many of these benefits could be achieved by phoning customer sup­port staff who then access a CRM system, it may increase customer convenience, and reduce costs to the company, if they can access this information through a web interface. This approach is referred to as ‘customer self-service’.

Despite the benefits of CRM described in this chapter, it must be stressed that failure rates are high. Research conducted independently in 2000 by analysts Gartner and the Butler Group suggested that around 60 to 70 per cent of CRM projects fail (Mello, 2001). This is not necessarily indicative of weaknesses in the CRM concept, rather it indicates the difficulty of implementing a complex information system that requires substantial changes to organ­izations’ processes and has major impacts on the staff. Such failure rates occur in many other information systems projects. In addition to the change management issues, discussed in Chapter 10, key technical issues for managers selecting e-CRM systems are:

  • Type of applications
  • Integration with back-office systems
  • The choice of single-vendor solutions or a more fragmented choice
  • Data quality.

1. Types of CRM applications

Figure 9.22 is intended to convey the complexity of providing CRM solutions. The aim of CRM technology is to provide an interface between the customer and the employee that replaces or facilitates direct interaction. From both customer and employee perspectives, the ultimate aim of CRM systems is to enable contact regardless of the communications channel that the customer wants to use, whether this is traditional methods such as phone or fax or newer digital technologies. Thus the ideal CRM system will support multi-channel com­munication or the customer-preferred channel. Regardless of channel, the customer will have different needs depending on their stage in the buying process (see section on Differ­ences in buyer behaviour in target markets). In the figure, we identify three core needs for the customer – to find out more information about a product, to place an order and to receive post-sales support. Applications must be provided to support each of these needs. Likewise, the employee will have applications requirements to support the customer and the sales and marketing objectives of the organization; in the figure these are sales force automation, to place an order received by phone, by fax or in person and to answer customers’ questions via a support system and knowledge base. At the heart of the system is the database storage needed to support these applications. The IT infrastructure described in Chapter 3 such as servers, middleware and networking is not shown in the figure.

2. Integration with back-office systems

When introducing a CRM system to an organization, a company will have previously invested in systems for other key business functions such as sales order processing or cus­tomer support. These existing, legacy systems appear at both the applications and database levels in Figure 9.22. It will not be financially viable to discard these applications, but inte­gration with them is vital to give visibility of the customer information to everyone in the organization and provide excellent customer support. Thus integration of legacy systems is a vital part of deciding on and implementing CRM systems.

3. The choice of single-vendor solutions or a more fragmented choice

Figure 9.22 highlights the key issues in deciding on and designing a system to support CRM. Think about the ideal situation; it would be:

  • A single customer-facing and employee-facing application that supports all the com­munications channels;
  • A single integrated database such that any employee has total visibility about a customer – they can access all visit, sales and support histories;
  • From a single vendor for ease of implementation and support.

Now think about the reality in organizations you are familiar with: in all probability the system will have different applications for different communications channels, separate databases in different functional areas and multiple vendors. E-commerce systems are often separate from traditional systems. Such fragmentation makes implementation and maintenance of such sys­tems a headache for managers and will often result in poor levels of service for the customer. The solution that many companies are looking to move to is close to the situation above. This need has been the reason for the growth in importance of enterprise resource planning systems from companies such as SAP and Oracle. However, the difficulty is that no single company can provide best-of-breed applications in all areas. To gain competitive edge, companies may need to turn to solutions from innovators who, for example, support new channels such as WAP, and provide knowledge management solutions or sales management solutions. Thus managers are faced with a precarious balancing act between selecting standardized products or integrat­ing more leading systems for each CRM capability.

4. Data quality

All CRM systems are critically dependent on the currency, completeness and accuracy of their databases. One of the biggest challenges after installation is maintaining data quality. The importance of this was recognized in a survey of CRM and marketing managers in 120 medium-large UK B2C organizations (QAS, 2002). Of these, 86 per cent rated accurate data as ‘crucial’ to their CRM system. However, the majority rated their data quality as falling short of their objectives. It can be suggested that for data quality to be managed successfully, the following are important:

  • Establish a business owner. This issue is too important to be managed solely by technologists and it requires management at customer contact points, which are part of the responsibility of marketing. All staff involved with managing customer data should be made clear about their responsibilities.
  • Optimize quality on capture. Validation checks can be built in at data entry to check that fields such as postcode are complete and accurate.
  • Continuously improve quality. Customer contact details constantly change. Changes of e-mail address are even more difficult to manage than changes of physical address. As a consequence, all contact points, whether with the web site, contact-centre staff, or sales staff should be used to help maintain data quality.
  • Work towards a single view of customer. Many errors result because different data are stored in different databases. Unifying the data in a single database is the aim for many organizations, but it is arguably more difficult the older and larger the organization is.
  • Adopt a data quality policy. Of the sample in the QAS (2002) survey 40 per cent had no data quality policy, but this is essential to help achieve the four steps above.

As a conclusion to this chapter, read Case Study 9.1 as an example of how Tesco has used CRM technology to improve their customers’ ‘share of wallet’ It is estimated that for every £8 spent on groceries in the UK £1 is spent at Tesco, which is now seeking its share of all retail category sales.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).

One thought on “Technology solutions for e-CRM

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