Understanding customer relationship management (CRM) People, process and technology Injazz J. Chen and Karen Popovich Department of Operations Management and Business Statistics, College of Business Administration, Cleveland State University, Cleveland, Ohio, USA

Keywords Customer relations, Business process re-engineering, Relationship marketing, Integration

Abstract Customer relationship management (CRM) is a combination of people, processes and technology that seeks to understand a companys customers. It is an integrated approach to managing relationships by focusing on customer retention and relationship development. CRM has evolved from advances in information technology and organizational changes in customer-centric processes. Companies that successfully implement CRM will reap the rewards in customer loyalty and long run profitability. However, successful implementation is elusive to many companies, mostly because they do not understand that CRM requires company-wide, cross-functional, customer-focused business process re-engineering. Although a large portion of CRM is technology, viewing CRM as a technology-only solution is likely to fail. Managing a successful CRM implementation requires an integrated and balanced approach to technology, process, and people.

1. Introduction In the mid-twentieth century, mass production techniques and mass marketing changed the competitive landscape by increasing product availability for consumers. However, the purchasing process that allowed the shopkeeper and customer to spend quality time getting to know each other was also fundamentally changed. Customers lost their uniqueness, as they became an account number and shopkeepers lost track of their customers individual needs as the market became full of product and service options. Many companies today are racing to re-establish their connections to new as well as existing customers to boost long-term customer loyalty. Some companies are competing effectively and winning this race through the implementation of relationship marketing principles using strategic and technology-based customer relationship management (CRM) applications. CRM technology applications link front office (e.g. sales, marketing and customer service) and back office (e.g. financial, operations, logistics and human resources) functions with the companys customer touch points (Fickel, 1999). A companys touch points can include the Internet, e-mail, sales, direct mail, telemarketing operations, call centers, advertising, fax, pagers, The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/researchregister http://www.emeraldinsight.com/1463-7154.htm BPMJ 9,5 672 Business Process Management Journal Vol. 9 No. 5, 2003 pp. 672-688 q MCB UP Limited 1463-7154 DOI 10.1108/14637150310496758 stores, and kiosks. Often, these touch points are controlled by separate information systems. CRM integrates touch points around a common view of the customer (Eckerson and Watson, 2000). Figure 1 demonstrates the relationship between customer touch points with front and back office operations. In some organizations, CRM is simply a technology solution that extends separate databases and sales force automation tools to bridge sales and marketing functions in order to improve targeting efforts. Other organizations consider CRM as a tool specifically designed for one-to-one (Peppers and Rogers, 1999) customer communications, a sole responsibility of sales/service, call centers, or marketing departments. We believe that CRM is not merely technology applications for marketing, sales and service, but rather, when fully and successfully implemented, a cross-functional, customer-driven, technology-integrated business process management strategy that maximizes relationships and encompasses the entire organization (Goldenberg, 2000). A CRM business strategy leverages marketing, operations, sales, customer service, human resources, R&D and finance, as well as information technology and the Internet to maximize profitability of customer interactions. For customers, CRM offers customization, simplicity, and convenience for completing transactions, regardless of the channel used for interaction (Gulati and Garino, 2000). CRM initiatives have resulted in increased competitiveness for many companies as witnessed by higher revenues and lower operational costs. Managing customer relationships effectively and efficiently boosts customer satisfaction and retention rates (Reichheld, 1996a, b; Jackson, 1994; Levine, 1993). CRM applications help organizations assess customer loyalty and profitability on measures such as repeat purchases, dollars spent, and longevity. CRM applications help answer questions such as What products or services are important to our customers? How should we communicate with our customers? What are my customers favorite colors or what is my customers size? In particular, customers benefit from the belief that they are saving time and money as well as receiving better information and special treatment (Kassanoff, 2000). Furthermore, regardless of the channel or method used to contact the company, whether it is the Internet, call centers, sales representatives, or resellers, customers receive the same consistent and efficient service (Creighton, 2000). Table I provides a brief overview of some of the benefits that CRM offers by sharing customer data throughout the organization and implementing innovative technology. With much success, software vendors such as Oracle, SAP, PeopleSoft, Clarify, SAS, and Siebel are racing to bring off-the-shelf CRM applications to organizations. Many of these are the vendors responsible for developing enterprise resource planning (ERP) systems. AMR Research estimates that the CRM market will top $16.8 billion by 2003 (Tiazkun, 1999). Understanding CRM 673 Figure 1. CRM applications, supported by ERP/data warehouse, link front and back office functions BPMJ 9,5 674 While there are many compelling reasons to consider a CRM strategy, caution and careful analysis is prudent. Hackney (2000) warns that although CRM software vendors may entice organizations with promises of all-powerful applications, to date there is no 100 percent solution. Possible risks such as project failure, inadequate return on investment, unplanned project budget revisions, unhappy customers, loss of employee confidence, and diversion of key management time and resources must be well thought out (Schweigert, 2000). In one example, a large telecommunications company rolled out a major CRM application to more than 1,000 sales reps in late 1999, at a cost of $10,000 per user, only to find a year later that fewer than 100 were using the system (Patton, 2001). Recent surveys further reveal that the average investment in CRM applications is $2.2 million dollars (CIO Research Reports, 2002), and that CRM implementation failure rate is as high as 65 percent (Apicella et al., 1999). It is becoming increasingly clear that stalled or failed CRM projects are often the result of companies lacking a thorough understanding of what CRM initiatives entail. Thus, this paper first presents the evolution of CRM to facilitate the comprehension of the implementation issues. It then sets out to explore the underlying critical components that can enable (or hinder) the successful implementation of CRM initiatives. A CRM implementation model that integrates the three key dimensions of people, process, and technology within the context of an enterprise-wide customer-driven, technology-integrated, cross-functional organization is proposed in Figure 2. The essential roles of these three dimensions are further elaborated in the subsequent sections following the evolution of CRM.

2. CRM evolution

3. The technology factor

4. Business process changes

5. people changes

6. Conclusion Somewhere along the turn of the twentieth century, buyers and sellers lost their intimate relationships. Prior to the Industrial Revolution, sellers knew their customers, many times by name, and generally understood their needs. Mass production built a wall between buyers and sellers where the main concept was to find customers for standardized products. Customers are more empowered today than ever before and the Internet is accelerating the trend toward greater customer empowerment. CRM applications attempt to focus on the customer first, specifically one customer at a time, to build a long-lasting mutually beneficial relationship. Customer relationship management is a comprehensive approach that promises to maximize relationships with all customers, including Internet or Understanding CRM 685 e-customers, distribution channel members, and suppliers. Getting to know each customer through data mining techniques and a customer-centric business strategy helps the organization to proactively and consistently offer (and sell) more products and services for improved customer retention and loyalty over longer periods of time. Peppers and Rogers (1999) refer to this as maximizing lifetime customer share, resulting in customer retention and customer profitability. On the other hand, advanced customer data analysis also allows a company to identify the customers it does not want to serve. Beside the technological advances, CRM initiatives represent a fundamental shift in emphasis from managing product portfolios to managing portfolios of customers, necessitating changes to business process and people. As companies start to re-engineer themselves around customers, individual employees must also come to terms with changing business process, organizational culture and, thus, the ways they view their customers and how they treat them. Organizations today must focus on delivering the highest value to customers through better communication, faster delivery, and personalized products and services. Since a large percentage of customer interactions will occur on the Internet rather than with employees (Bultema, 2000), technology must adapt to the changing and unpredictable market. Organizations that implement CRM and e-business applications will have the greatest gains (Lange, 1999). The future of CRM is e-relationship management or eRM that will synchronize cross-channel relationships (Saunders, 1999). It is also envisioned as an e-partnering ecosystem with a complex network of partners that operate as an interconnected whole, spanning entire markets and industries (Creighton, 2000; Siebel, 2001). CRM implementations and the changing effect of the Internet offer abundant research opportunities. The identification of some implementation issues in this study raises several important research questions. In particular, what are the roles of suppliers and supply chain partners in CRM? How does e-CRM strategies affect brick and mortar companies? What business processes, integration challenges, and organization structures are common throughout successful CRM implementations? Research in these areas will contribute to building thriving customer relationships and long-term corporate survival. Years of academically researched topics of relationship marketing and customer retention are now practical and cost-effective to implement due to emerging technology. It is time to put academic theories to practice.

questions:

1- Please read the article and explain the relation between 'Title', 'Abstract', 'Metholody' and 'Conclusion" according to the information in this case