Enterprise Resource Planning

MODULE 13 : Customer Relationship Management (CRM) systems

Topics

• Meaning of CPM
• Goals of CRM
• Three phases of CRM
• CRM applications
• CRM architecture and integrated CRM architecture
• Functional modules of CRM

Meaning of CRM
Customer relationship management (CRM) is defined as an integrated sales, marketing, and
service strategy that precludes lone showmanship and depends on coordinated actions. CRM
involves all aspects of interaction of an organization with its customers.

CRM is an enterprise wide effort to acquire and retain profitable customers. CRM focuses on
building long-term and sustainable customer relationships that add value for both the customer
and the company. In general, CRM is an approach that recognizes that customers are the core of
the business and that the company’s success depends on effectively managing relationships with
them. In other words, CRM is a business strategy to select and manage customers to optimize
long-term value. CRM requires a customer-centric business philosophy and culture to support
effective marketing, sales, and services processes.

Goals of CRM
• Use existing relationships to grown revenue : Composite and comprehensive view of the
customer to maximize his or her relationship with the company through up-selling and
cross-selling. Enhance profitability by identifying, attracting, and retaining the best
customers.
• Use integrated information for excellent service : Use customer information to better
serve his or her needs. Customers should be surprised by how well you know them.
• Introduce more repeatable sales processes and procedures : With the proliferation of
customer contact channels, many more employees are involved in sales. In order to enjoy
continued success, companies must improve consistency in account management and
selling.
• Create new value and instill loyalty : The company should become known to prospects
and customers and respond to needs and accommodate requests and deserve the
patronage of customers and then the customers will become loyal to the company.
• Implement a more proactive solution strategy : Use a customer-focused business solution
that works across the entire enterprise. Move from reactive data collection to proactive
consumer relations that resolve problems on the first call.

Three phases of CRM

There are three significant phases in CRM to manage customer life cycle, that is, the length of
time the customer is with the enterprise by buying its products/service.

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• Acquisition - Acquiring new customers : 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.
By demonstrating the differentiation and innovativeness of the products/services of the
enterprise and the noting the convenience/preferences of the customers, customers can be
acquired. It needs marketing activities like contacting the customers physically or
through phone or internet and campaigning and promoting the products/services of the
enterprise.

• Enhancement - Enhancing the profitability of existing customers : By reducing prices or

improving customer service, the relationship with the existing customers can be
enhanced. Activities like encouraging excellence in cross-selling and up-selling will help
improve business. Cross-selling means offering a complementary item along with the
item enquired by the customer, whereas up-selling represents suggesting a similar
product of better quality. The value proposition to the customer is an offer of greater
convenience at low cost (one-stop shopping).
• Retention - Retaining profitable customers for life: Retention of customers focuses on
service adaptability – delivering not what the market wants, but what customers want.
The value proposition to the customer is an offer of a proactive relationship that works in
his or her best interest. Listening to the problems and feedback expressed by the
customers and introducing new products to match the requirements/needs/aspirations of
the customers, the companies can make the customers adaptable to their
products/services. Today, leading companies focus on retention much more than on
attracting new customers. From a survey, it was found that even a 5% increase in
customer retention can increase profits by as much as 85%.

All these three phases of CRM are interrelated. However, doing all three phases well is a difficult
proposition, even for the best of companies. Companies often have to choose which one of these
dimensions will be their primary focus.

CRM applications and e-CRM

CRM is an integration framework or a business strategy, not a product. Putting the CRM
business strategy into practice requires developing a set of integrated applications that address all
aspects of front-office needs, such as the need to automate customer service, field service, sales,
and marketing. To succeed, companies are looking to application software vendors to support
integration across the range of business functions.
Enterprises that don’t use application software to tie their customers on the outside with their
line-of-business systems on the inside will be at a competitive disadvantage. CRM applications
are also gaining a foothold in small and mid-sized companies. Technology enables these
organizations to enjoy the customer relationship capabilities that until a couple of years ago only
the largest enterprises with deep pockets could afford. Integrated applications that provide
complete views of customer information to such areas as sales, marketing, customer service, and
accounting are now within reach of organizations with fewer than 100 employees.

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New technologies have enabled firms to implement CRM by:

• providing greater individual customer insight
• allowing firms to effectively respond to individual requirements
• integrating the business processes of the firm around individual customers3

CRM applications fall under three major categories – Customer-facing, Customer-touching, and
Customer-centric intelligence applications.
(i) Customer-facing applications: These include all of the areas where customers interact
with the company: call centers, including help desks; sales force automation; and
field service automation. Such CRM applications basically automate the information
flow or support employees in these areas.
(ii) Customer-touching applications: In this category, customers interact directly with the
applications. Notable are self-service, campaign management (for promotions and
advertisements), and general-purpose e-commerce applications.
(iii) Customer-centric intelligence applications: These are applications that are intended
to analyze the results of operational processing and use the results of the analysis to
improve CRM applications. Data reporting and warehousing and data mining are the
prime components here.

e-CRM: e-CRM covers a broad range of topics, tools, and methods, ranging from the proper
design of digital products and services to pricing and to loyalty programs. The use of e-CRM
technologies has made customer service, as well as service to partners, much more effective and
efficient. Through Internet technologies, data generated about customers can be easily fed into
marketing, sales, and customer service applications for analysis. Electronic CRM also includes
online applications that lead to segmentation and personalization.

The CRM architecture and integrated CRM architecture

A CRM architecture consists of:

• Operational CRM, also known as front-office, involving the areas where direct customer
contact occurs (call center, email, direct sales, etc.) The majority of CRM products fall
into this category; and
• Analytical CRM, also known as back-office or strategic CRM, involves in understanding
the customer activities that occurred in the front office. Products in this category include
data warehouses and business intelligence applications.

Integrated CRM: Several CRM applications or modules can support every important activity
involved in customer life cycle (acquiring new customers, enhancing business with the existing
ones and retaining potential customers) to improve relationship with the customers. When all
such CRM applications are integrated together, the enterprise can achieve integrated CRM. The
following figure represents such integrated CRM:

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Functional Modules of CRM

Customer Relationship Management or CRM software supports a broad set of activities for
acquiring, enhancing or retaining customers. The functionality of CRM software varies from
vendor to vendor. There're a few modules common to most of packaged CRM software.

Direct Marketing Module: Direct marketing is a set of promotional activities in which direct
contact is made with the target customer. Direct marketing software allows companies to identify
target customers for particular promotional criteria, generate direct mails, analyze response from
target customers. Common techniques include direct mail, telemarketing, and etc. Direct
marketing module can automate and streamline many of those marketing efforts.

CRM Sales Module: Revenues from sales are live blood for commercial organizations. Sales
module implements functions of pre-sales support, order placement, order scheduling, shipping
and invoicing. Sales module is closely integrated with organizations' ecommerce websites. Many
sales modules from CRM vendors offer online storefront as part of CRM system.

Call Center Module: A call center is a sophisticated voice operations center that provides a full
range of high-volume, inbound or outbound call-handling services, typically including customer
support, operator services and directory assistance. It generally refers to reservations centers,
help desks, information lines or customer service centers. A call center consists of a complex
telecommunication infrastructures, sophisticated computer systems and skilled service
representatives organized to effectively manage the incoming and outgoing telephone calls.
CRM call center module captures the vast amount of data in call center operation, prioritize call
center service, and direct incoming calls to the appropriate service representatives.

Help desk Module: Help desk software can improve customer satisfaction and productivity by
automating customer support processes. Basic features of help desk software includes requests
submission, email notification, searching Knowledge Base and administration interfaces. Web-
based helpdesk software allows users to search support knowledge base so that users can either

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find the answer online without calling a support representative or ask more specific questions
when they do need to talk to a live person for support.

Service Management: The Microsoft CRM Service Management module includes an extensive
set of features designed to increase the efficiency of service. This module provide tools that help
create a multi- level customer assistance policy, providing an interactive, interpersonal service
that includes call routing and assignment, queue management, call tracking, entitlement
processing, problem resolution, logging, monitoring, and performance management.

Case Management is the primary function of the Service module. While working on a case,
customer service representatives (CSRs) can create activities from the case form. These activities
are tracked, which enables you to determine the total amount of time spent on a case at any given
time, as well as see a break down of how the time was spent. Report can also be created to
measure statistics such as call lengths, resolutions, and average length of cases.

The Service Activities calendar enables your customer service team to manage service activities
for your business. In the calendar you can:
• View service activities
• Create new service activities
• Edit existing service activities
• View resource schedules

Marketing Automation: Marketing Automation module of Microsoft CRM enables marketing

departments to create, analyse, and segment targeted customer lists as well as plan and execute
campaigns for the customers your company wants to target. It allows you to collect and analyse
the results of campaigns, which your marketing team can use to make future marketing
decisions, making the most of your marketing dollars. Marketing Automation is tied directly to
the Sales module, which enables your sales staff to get the leads that generated from every
marketing campaign.

Marketing automation includes all the tasks associated with marketing activities, which includes:
• Marketing planning and budgeting
• Creating and managing lists
• Planning and creating campaigns
• Executing and managing campaigns
• Tracking marketing information

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