Customer Relationship Management Systems

Abstract:

Customer relationship management systems are used in the contemporary business environment to facilitate relationship marketing and other practices, which help firms enhance relationships between themselves, their customers, suppliers, employees, and other partners in their business processes. CRM systems provide all parties with vital information which helps make operations more efficient and enhances profitability. However, CRM systems also have drawbacks. This paper discusses the advantages and disadvantages of CRM systems and illustrates the mentioned concepts through a case study upon Dell.

Introduction:

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A few decades ago, customers would personally go to supermarkets or other stores where they had previously purchased products or availed a service in order to either register complaints, to inquire about other products and services, or in order to purchase the product or book the service again. Likewise, businesses would attempt to observe and manually record which items left their shelves sooner and which items were less popular with customers amongst other data such as sales figures, regular purchasing patterns of customers, and how many customers were satisfied/dissatisfied with a product/service (Reinartz, Kraft, & Hoyer, 2004). While it previously took weeks or months for businesses to attempt to gather this information, such information is now available to businesses within seconds. However, the benefit of convenience is not only limited to businesses as customers also enjoy the facility of lodging complaints, asking questions, placing orders, and getting a fully personalized customer service based upon their interests and preferences. While some customers enjoy the fact that businesses are aware of everything about them including their birthdays and the number of members in their family, some customers are not as enthusiastic about this sphere of customer relationship management software systems. Accordingly, customer relationship management software systems have their respective advantages and disadvantages (Chen & Popovich, 2003).
This paper will discuss the manner in which customer relationship management systems have revolutionized e-business practices and integrated people, processes, and technology both within and across organizational contexts followed by a discussion of the best practices of firms using customer relationship management systems. The paper will then continue to discuss the challenges posed by the customer relationship management system and the social implications of its use with specific emphasis upon privacy issues. A case study of Dell will be provided further in the paper in order to illustrate the applicable concepts mentioned. The paper will conclude with a summary of the main points emphasized in the paper and recommendations for improvements in the use of customer relationship management systems.

Customer Relationship Management Systems and Their Effect on E-business:

“E-business is an overall strategy which enables the proper management of business functions including time cycle, speed, globalization, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage” says Lou Gerstner, CEO IBM (Lecture 2). Previously, businesses were not properly aware of what their customers needed and attempted to fulfil those needs and wants through guesswork or by asking a few customers what they preferred over what they did not desire in a product. Thus, managers recorded customer complaints in registers and attempted to resolve them eventually, while this process often resulted in delays over months. However, the implementation of e-business systems and the widespread use of e-commerce have enabled the introduction of customer relationship management systems, which include the “methodologies, software, and communication capabilities, that help organizations to structure and manage their customer relationships and interactions with the objective to increase customer satisfaction with the organisation’s products or services” (Lecture 3). Therefore, customers are now able to access reliable, accurate, and vital information regarding the products and services that they have used with the click of a mouse (Bose, 2002).

Customer relationship management systems have benefitted firms by integrating people, processes, and technology to increase the level of efficiency in organizations and enabling firms to use customer information to their advantage. The system enables the production of a customer database recording all customer details and creating a customer profile, which provides the company with details regarding the customer’s needs and frequent purchases. While previously companies would attempt to sell the same product to every customer in the same manner, customer relationship management systems allow the information regarding customer preferences to be used to differentiate and specifically target the firm’s products to a customer (Payne & Frow, 2005).

Customer relationship management systems are not only used to remain in communication with customers, but are used as a tool to connect a firm’s customers, distribution channel members, suppliers, and other similar parties within the same platform and maximising all of these relationships to increase profitability in the business. This is done through the various features of the customer relationship management systems which provide vital information for all of the parties involved in the business, thus making the conduction of business more convenient, information easily accessible, and operations efficient and cost-effective (Payne & Frow, 2005). For example, the sales force automation function of customer relationship management systems provides information on customers, previous deals, and competitors to support the sales force of the team.

Thus, the system helps the sales force of the firm perform their job more effectively and also provides the suppliers of the business information regarding customer preferences and the products in highest demand amongst different target groups. Other functions of the system include customer service and support systems, which enable customers to track their orders, monitor their requests, and enables managers to reply to customer queries promptly thus aiding both customer service personnel and customers to fulfil their functions with ease. Field service is a function that allows remote staff to quickly and effectively communicate with the customer service personnel to meet individual needs. Thus, the customer relationship management system provides information to remote staff regarding customer needs in order to enable them to meet them more adequately (Jayachandran et al, 2005). The marketing automation function of the system allows up-to-date information on customers’ buying habits to enable the construction of effective marketing campaigns. Accordingly, the system also facilitates the marketing team of an organization to construct and design specifically targeted and effective marketing campaigns which may help increase the profitability of a firm (Bose, 2002).

Therefore, the customer relationship management system provides information for several parties involved in the business process and thus integrates the use of technology with people in order to improve and enhance business processes. This is one of the main reasons that customer relationship management systems are becoming highly popular amongst firms. The use of the system enables a firm to grow revenue, provide better customer service, introduce repeatable and consistent sales processes, create new value and increase customer loyalty (Campbell, 2003). It also allows firms to implement the three phases of customer relationship management systems, which enables the acquisition of new customers, enhancement of the profitability of existing customers, and the retention of profitable customers for life. It enables the implementation of core customer relationship management processes including cross-selling and up-selling, direct marketing, customer support, and sales force automation. Thus, the use of these processes brings substantial improvements in marketing campaigns, product development, sales, and field service (Lin, Chen, & Chiu, 2010).

The use of customer relationship management systems has enabled firms to communicate within their organization, with customers, and across their organization to other firms, who may be members of the distribution channel or the firm’s suppliers, by sharing and gathering vital information regarding customers and processing this information to make it useful in the business process. The best practices of customer relationship management systems include well-establishment of organizational needs, good inter-departmental communication, the integration of front-end and back-office data-mining procedures, and the establishment of an up-to-date central warehouse of data (Oztaysi, Sezgin, & Ozok, 2011).
Many firms currently apply customer relationship management strategies through the implementation of social customer relationship management and the use of social media to get their message across to customers effectively. Platforms, such as Facebook, Twitter, and LinkedIn, are used in order to communicate with customers and advertise products/services to them (Bose, 2003).

However, while the use of customer relationship management systems provides extensive advantages to a contemporary business, there are still challenges involved in the use of these systems. While many customers are now accustomed to buying products online, other customers are still highly wary of using such systems and exposing personal information on such websites. Moreover, while the people of some cultures prefer communicating via an electronic source, others are only satisfied with personal contact (Oztaysi, Sezgin, & Ozok, 2011).These challenges will be discussed in the next part of this paper.

Challenges of Customer Relationship Management Systems and Social Implications of their Use:

In order to gather all of the data needed to meet customer needs and provide information to suppliers, sales force, managers, and other parties in the business process, the business needs to use the aid of cookies to track customer surfing details and to record what types of products customers purchase from other websites. The problem is that some customers regard this as an invasion of privacy and refrain from shopping online because they are aware that firms are monitoring their actions. Statistics show that 51% of shoppers are highly concerned about privacy online and 48% refrain from shopping online because of privacy issues (Lecture 3). This can pose serious problems for firms who want to efficiently use their customer relationship management systems and prevent customers from using spyware protection software, making the use of these systems redundant (Fan & Ku, 2010).

Other challenges posed by the use of customer relationship management systems include the lack of appropriate executive support as some customers feel that they do not receive adequate service online while some business executives also feel that these systems are not satisfactory for use in organizations and refrain from using them. Additionally, many firms lack rationale when they decide to use customer relationship management systems (Ang, 2011). For example, a firm who has a highly personal relationship with customers and thrives upon the personal contact that it enjoys with its customers may not benefit from the adoption of a customer relationship management system as it may lose the element of being able to personally attend to customers. Other problems with the use of customer relationship management systems include an inappropriate network infrastructure, user resistance, and the lack of cultural preparation of these systems (Fan & Ku, 2010).

One of the major flaws of CRM systems includes their lack of adaptability to different cultures. Contemporary business research has found that customers belonging to different cultural backgrounds tend to act differently when interacting with businesses and have varying preferences regarding the type of contact that they find suitable in business settings. While consumers belonging to masculine cultures may prefer or be comfortable with using technological solutions and communicating with customer service personnel online, customers belonging to feministic cultures may prefer more personal contact. Moreover, customers belonging to certain cultures may consider the invasion of privacy that these systems encompass highly inappropriate while customers from other cultures may believe it to be useful in helping them find the right product (Chen & Popovich, 2003).

Customer relationship management systems may also be hard to use for the company’s existing management and employees and they may resist a change to the use of these systems as it may involve a change in organizational culture. The appropriate implementation of these systems requires communication, culture, and coordination which helps employees adapt to the systems more appropriately (Campbell, 2003).
It may be difficult to integrate the system with other departments in the organization, which will result in the adoption of the system to be expensive. The system may not coordinate well with other accounting and finance software which may cause the organization additional unnecessary expenditure in attempting to adjust the customer relationship management software with their existing technology, existing business processes, and the people associated with the business (Campbell, 2003).

It is evident that while the customer relationship management system offers numerous advantages to firms and customers, there are specific challenges that the implementation of the system faces, especially in the realms of resistance shown by customers in allowing an invasion of their privacy. The next section of this paper will outline the manner in which Dell Inc. used customer relationship management software to its advantage and how it incorporated the system within its firm.

Dell case study:

Dell is a globally renowned company offering customers leading global systems and services and the company required the aid of a customer relationship management system to integrate its customers and other global sales teams with the business. Previously, the company used multiple systems, internally designed by the company, which were used in each of the regions that the company operated in. However, the company wished for a flexible and convenient system which was globally accepted and used widely. While the company aimed to find a solution themselves, it was proving to be highly expensive. Thus, the company implemented the use of SalesForce CRM, which is a software allowing the company to integrate with technological partners, customers, employees, and other agents in their business processes. The company required a solution to gather feedback from its 80,000 employees worldwide and also wanted to begin a global partner program in the near future for which it required an appropriate communication platform enabling it to efficiently and effectively communicate with potential technological partners. Thus, the use of SalesForce CRM integrated various departments within the organisation and also allowed the organization to communicate with other organizations using the same interface (Dell Case Study, 2011).

The company solved several of its problems using the customer relationship management system which included communicating with approximately 3 million customers everyday and also collaborating with 80,000 employees worldwide. The use of the system enabled the company to extract the top ideas for innovation and better understand what customers were looking forward to by gathering and processing customer feedback on the system. Moreover, employees were also required to give innovative ideas for future technological solutions and business processes and this information was also automatically sorted by the system in order to show Dell’s business executives the most popular opinions. Top ideas were generated through comments and voting upon the posting of various opinions on the system (Dell Case Study, 2011).

The company greatly benefitted from the implementation of this system as it generated over 2,500 ideas on innovation in the first week and approximately 700 ideas related to employee feedback regarding business processes. The company has been able to use vital customer feedback in order to design desktops and consumer notebooks and also left Windows XP as a pre-installed operating system in the computers because of customer demand. The technology implemented in the customer relationship management systems enabled the company to track main technological trends and develop products accordingly (Dell Case Study, 2011).

Using the Salesforce CRM system enabled the company to integrate various players in its business processes via one platform and also enabled the company to design some its own software solutions which allowed the company to enhance its relationship marketing strategies. However, one of the problems that the company faced with the implementation and use of the Salesforce CRM system was user adaptation of the system. Teaching users worldwide how to operate the various functions that the system offered was an obstacle that the company overcame through offering training sessions on the use of the system and teaching employees and other users worldwide how to use the system within fourteen days.

Thus, because Salesforce CRM is an easy-to-use system, users were able to adapt to the new technology easily and within a short period of time.
Dell significantly benefitted from the use of the system and the system proved to be cost-effective, efficient, and highly beneficial in increasing the revenue of the company. Obstacles such as adaptation were overcome through the provision of training sessions and through company focus upon implementing and using the system. While the initial installation and provision of training for the system was expensive, the system aided Dell in collaborating with both employees and customers and enabled the company to devise its own technology. Moreover, the company did not use the system to “spy” on customers or invade their privacy which proved to be an added advantage. The system was used in various manners by the company to solve its current problems and can be used in other ways in the future. Thus, customer relationship management systems can prove to be an addition of value for a company and an important tool used to integrate processes, people, and technology to enhance relationships within the organisation and outside the realms of the organisation as well.
The next section of this paper will discuss the main points emphasized in the paper and provide recommendations regarding the use of customer relationship systems and for Dell Inc.

Conclusion and recommendations:

There are various advantages associated with the use of customer relationship management systems which include the functions such as sales force automation, direct marketing, customer service, field service automation, and others. Hence, the use of such systems promotes convenience, access to information and information-processing, and enhances the efficiency of business operations. Moreover, it also allows the integration of people, processes, and technology. This has been illustrated in the case of Dell who use SalesForce CRM to integrate inter-department functions with other organizations that it wishes to partner with. However, the drawbacks of using customer relationship management systems include the issue of customer privacy, user resistance, lack of adaptability, and the inability to prepare the software for use by different cultures.

Accordingly, it is recommended that customer relationship management software not be used in place of personal contact but can be used as an additional resource helping keep customers and businesses connected. However, businesses should frequently encourage personal and face-to-face contact with their customers and ask customers for feedback regarding products/services or their personal preferences instead of tracking customers’ surfing data through the use of cookies. If the business deems it necessary to track customer information through cookies, the company must aim to ask customers for permission and inform them that this will enable the business to serve them better through products customized and tailored to suit their needs. Additionally, customers must attempt to adapt the system to suit people of different cultures and nationalities in order to make the system suitable for use by all.
In the case of Dell Inc. it is recommended that the company use its CRM system to freely communicate with clients, enable them to customize their computers, provide feedback, and can also use it to motivate employees. This can be done by using it as a portal to provide hard-working employees with recognition for their contribution to the organisation. The company can also use it as a marketing tool in order to inform customers of new products based upon their recent purchases. Thus, the company can use the CRM system for multiple purposes.

References

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