The customer relationship management refers to the branch of management that deals with supervising the organizations relations with the customers. The aim of customer relationship management is to retain the customers and enhance the revenues by building a strong customer base. The customer relationship management has occupied an important place in business now days (Buttle and Maklan, 2015). The competition in the market is so stiff that it has become necessary for the firms to build strong relationship with the customers to retain them. In order to build strong relationship with the customers, it is necessary to have in place a strong mechanism to collect information in regards to customers. The customer relationship management system is designed to collect information in regards to customer needs. Further, this information is used by the management in designing strategies of various kinds to help it retain the customers (Buttle and Maklan, 2015).
The information assimilated by the customer relationship management system helps the firm to identify the best customers and their needs. The firms employ changes in the products and processes according to the needs of the customers, which is necessary to survive in the long term and create value for the stakeholders (Mohammed and Rashid, 2012). However, building a customer relationship management system in an organization requires various aspects to be considered by the management. For instance, the aspects such as reaching consensus, managing change, planning for information system development, evaluating in house Vs outsourcing alternatives etc. are required to be considered (Mohammed and Rashid, 2012).
In this context, a report has been prepared here that provides discussion on implementation of the customer relationship management system in an Amazon, which is engaged in online retail sales business. The report elaborates various aspects and issues encountered while implementing the customer relationship management as the information system.
In order to survive in the competitive environment, it is necessary to employ a stringent mechanism through which the information about customer needs could be assimilated. The customer relationship management would assist in assimilating that important information about the customer needs (Taleghani, Nasiriziba, and Mozhdehi, 2012). This vital information about customer needs and preferences would help the management in formulating strategies to beat the competitors. It is expected that the customer relationship management system would increase the customer loyalty and retention which will increase the organization’s revenues. Therefore, to increase revenues of the organization, its profitability, and create value for the stakeholders, it is pertinent to implement the customer relationship management (Taleghani, Nasiriziba, and Mozhdehi, 2012).
As stated above the importance of customer relationship management has increased significantly in the present business scenario. The use of customer relationship management system is very wide (SCN Education, 2013). An organization can use the customer relationship management in gathering essential market information such as customer needs and preferences and competitors strategies. Further, the analysis of the collected information is taken up which is also a part of customer relationship management. The firms can customize the customer relationship management as per their needs for the type of information to be collected. The customized software is used to prepare an integrated customer relationship program that helps the management in decision making (SCN Education, 2013).
The customized CRM software is used to collect information that may be related to sales, marketing, production, distribution, or other related processes. However, the aim of the information to be collected through the CRM software is to enable the management to formulate the strategies to satisfy the customer needs in a better way (Smith, Dixon, and Sherratt, 2012). Thus, the deployment of CRM system in the organization may affect bigger part of operations including sales, marketing, distribution, and production. The adoption of CRM would require changes in the data collection and accounting processes. It becomes compulsory to automate the sales, production, and marketing processes after adoption of customer relationship management (Smith, Dixon, and Sherratt, 2012).
The implementation of the customer relationship management system requires changes in the activities and processes of the firm. It is argued that the success of implementation of the customer relationship management depends upon the effectiveness of the management of change that would take place due to implementation of customer relationship management system. Thus, the management of change is crucial. The change in the organization’s process and activities would depend upon the model adopted for customer relationship management (Rababah, Mohd, and Ibrahim, 2011). A typical model of customer relationship management is presented below:
It could be observed from the model presented above that the activities in the areas such as development of customer strategy, assessing the customer satisfaction, building customer data, analysis of the customer data, and alignment of CRM with the accounting and integrated information system of the organization would change (Baran and Galka, 2013). The sales, marketing, and distribution department would be greatly affected by the implementation of CRM system within the organization. The management would change the marketing and sales strategies as per feedback received from the customers. The sales, marketing, and advertisement strategies of the company would change to make them effective to retain the customers and grave new opportunities in the market. The change in the process and activities would also necessitate the change in role of personnel in the sales and marketing department (Baran and Galka, 2013).
The roles and responsibilities of personnel change due to implementation of CRM system in the organization. It is normal human tendency to resist the change. Thus, the top management would face difficulties in implementing the CRM due to resistance from the employees for adoption of changes in the existing system (Browning and Thomas, 2005). The behavioral changes in the personnel caused due to implementation of CRM system are required to be handled tactfully. It is notable that the behavioral change in the humans takes place through six steps as entailed in the stages of behavior change model. These six steps are pre-contemplative, contemplative, preparing, action, maintaining, and termination. These six steps are also known as transition phase of behavioral change (Browning and Thomas, 2005).
At the pre-contemplative stage, the reasons for change are not known to the people and thus, they are not interested in the change process (Browning and Thomas, 2005). At the next stage, the people get the reasons for change and they start of thinking that the change might be necessary to achieve the objectives. At the preparation stage, the change is about to occur and thus, the people prepare themselves to adopt it. At the next stage which is called “Action”, the change is implemented and the people now start actually working on adopting the change through their actions. At the next stage, the people continue to maintain the change and at the last stage, the people terminate the old behavior to completely switch to the new behavior (Browning and Thomas, 2005).
Kotter provides eight steps model for change management. The first step of the model calls for creating a sense of urgency that helps to develop a positive environment for change adoption (Bucciarelli, 2015). The next step demands for building a guiding coalition, which assists in establishing better co-ordination. The third step calls for forming a strategic vision which helps in making it clear to the people the advantages of change. At the fourth step, the top management is required to list out the people who will be accountable for the implementation of the change. The fifth step asks the management to remove the obstacles from the path so that smooth implementations can take place (Bucciarelli, 2015).
At the sixth step, the long term vision is broken down into small objectives and the next step, the model demands to accelerate the initial success. At the last step, the models call finally for institution of the change (Bucciarelli, 2015).
The deployment of an integrated customer relationship management system requires extensive planning in advance. The customer relationship management counters various areas such as operation, analysis, and collaboration (Fjermestad and Robertson, 2015). The management needs to prepare plans as to the areas to which the customer relationship management will be deployed. The operational CRM covers automation of the sales, marketing, and service operations. Further, the alignment of these three critical operations is also covered in the operational CRM. The primary aim of CRM with respect to sales operations is to assimilate information that helps in analyzing the customer needs on a continual basis. The market process automation is aimed at finding out the best ways of reaching to the customers. Further, the service automation is aimed at collecting and analyzing the customer feedbacks about services of the firm (Fjermestad and Robertson, 2015).
The analytical CRM application is focused on providing the tools and techniques to analyze the data (Fjermestad and Robertson, 2015). The top management in the departments such as sales, marketing, and service uses the analytical CRM to make decisions. Further, the third type of CRM is the collaborative CRM, which is used to co-ordinate and share the information between different departments. The interface applications are deployed in the collaborative CRM, which enables the information being shared among various departments (Fjermestad and Robertson, 2015).
The emergence of CRM has changed the way the firms operate in the market. The firms started adopting CRM to bring differentiation in their products and services so that they can fight with the competitors. Now it has become compulsory part of operations for all firms to have a strong CRM system in place (Brink and Berndt, 2008). The CRM implementation has brought out innovations in the process and ways the customers are served. After implementation of CRM, the customers are given more importance than ever before. The firms are engaged in finding out innovative ways to meet the customer expectations. In a way, the customer relationship management has benefited the customers in the form of better quality products or services at relatively lower costs (Brink and Berndt, 2008).
Further, the CRM implementation has added to the customer confidence. The customers, particularly in the online business, now feel more confident with regards to quality and delivery of services on time. Apart from the customers, the employees within the organization have also been benefited due to implementation of CRM. The information system have been integrated which enables employee to share information for decision making purposes. The processes for employee have now become less time consuming and require fewer efforts to be made (Brink and Berndt, 2008).
The development of the integrated customer relationship management system could be undertaken in-house or it could be outsourced to an outside service provider. In order develop the system in-house the firm would be required to arrange resources such as IT infrastructure, capital, and personnel support (Guenzi and Geiger, 2011). However, in an outsourcing arrangement, the firm can enter into a contract with the service provider to develop the CRM as per firm’s specifications for an agreed consideration. The management should consider the fact that it is not always beneficial to develop the CRM system in-house. In case of small CRM project or a CRM that requires high expertise, the management may resort to outsourcing the CRM development and maintenance (Guenzi and Geiger, 2011). While outsourcing the CRM development, the management should consider the following issues:
In case the development of CRM system is outsourced, it becomes important for the management to properly supervise and coordinate the activities of the contractors. For this purpose, the management should formulate internal controls. For instance, a project manager can be appointed with the authority to control and supervise the activities of the contractors (Al-Khouri, 2012). Further, the contractors must be asked to prepare and present the progress reports on regulator intervals to the project manager. The project manager should ensure that the specifications provided by the firm are being adhered by the contactor in developing CRM system. The deviations in the CRM system development from the firm’s specifications should be brought to the notice of the top management immediately (Al-Khouri, 2012).
Human resource management is an important aspect in the project development. At the first place, a suitable communication policy should be formulated by the top management. The time of communication, authority with which communication is to be made, and form of communication should be specified in the communication policy. There must be a proper coordination between the activities of department personnel and they should support each other in the achievement of the objectives (Chemuturi, 2013).
The CRM system is designed to collect vast amount of data. The data collected through CRM system could contain personal details of the customer. Thus, the management should make efforts to keep the sensitive personal information of the customers as well as employee confidential (Khan, 2015). For this purpose, it is recommended to the management to use DPA principles. The eight principles enunciated in the data protection act 1998 are given as under:
The management of the firm is responsible to use the personal data of customers and employees collected through CRM responsibly and maintain highest degree of confidentiality. Maintaining privacy of the data collected is a major concern for the management. The customers also fear the misuse of their personal information and this is the reason that the customers sometimes are not willing to share personal information with the firms. If the customers do not share personal information with the firm, the very purpose of the CRM system will be lost (Baran and Galka, 2016).
The data privacy laws such as data privacy act 1998 and Health Insurance Portability and Accountability Act of 1996 put constraints on the companies in regards to use of CRM data. The companies are required to ensure that adequate measures are in place to maintain high confidentiality of the personal data (Sullivan, 2004).
The firms deploy CRM system with the primary aim of improving their products and services as per the customer needs so that the existing customers could be retained and potential customers could be explored. The improvement in the products and services with the use of CRM provides an edge to the firm over the others which do not have such a system in place (Salesforce, 2017). The customer loyalty towards the firms having CRM system is increased. Thus, CRM helps creating new opportunities for the firm by enabling it to survive in the competitive market. The customers ate more attracted to the firms having CRM system in place because it increases the confidence of the customers in regards to quality and timeliness of the services. Further, the companies operating at the multinational level are equipped with CRM and hence it is essential for a local firm to deploy CRM to compete at the international level (Salesforce, 2017).
As has been iterated many times that the main purpose of CRM is to collect information on the needs and preferences of the customers and consider changes in the products and services to fulfill customer expectations (Alipour and Mohammadi, 2011). Thus, deployment of CRM automatically means that the product quality and effectiveness of services of the firm will be improved. The CRM system automates various processes which previously were done manually. Further, it also helps to align various functions and allows sharing of crucial information for decision making purposes. This makes the decision making process less time consuming and enhances its effectiveness (Alipour and Mohammadi, 2011).
The customer relationship management system involves collection and use of personal information of the customers and employees, which is a big concern for law makers all around the world. The data protection act 1998 of UK and HIPPA 1996 of the US provides for legal provisions in regards to use of personal information (Sullivan, 2004). The acts contain rules on protection and confidentiality of the personal data of the customers and employees. Thus, the deployment of CRM is affected by the internal laws and directives that deal with data protection and security.
The firms deploy CRM system to collect critical information that reveals the tastes and preferences of the customers. The CRM system developed with a combination of various applications which helps to capture personal information about the customers. The information collected by the CRM system normally includes sales and purchase data, accounting information, service and support records, demographic data, and shipping details (Jelonek, 2015). The integrated CRM system aligns different departments of the firm such as sales, marketing, and production. Thus, the data collected in an integrated CRM system would not only be related to customers but it will also cover the production and internal processes. Further, the CRM system is also used in collecting information related to the employees which includes sales targets, commission, and performance measurement reports (Jelonek, 2015).
The information collected through CRM system is immensely useful for the business. The management uses such information in formulating various strategies in regards to sales and marketing. The analysis of information collected through CRM system provides insight into the customer needs and market characteristics, which is necessary information for formulating sales and marketing strategies (Milovic, 2012). Based on the change on the customer needs, the management decides change in the product quality and services. The change in product quality and services necessitates change in the production process and internal service activities of the firm. Thus, the production and sales strategies of the firm are aligned with the firm’s objectives, which are important for the achievement of the vision of the firm (Milovic, 2012).
In today’s business environment, the importance of CRM is such that the very success of the business is dependent upon its effectiveness (Borek et al., 2013). The firms not having an effective CRM system in place are doomed to failure. Thus, the data collected by the CRM system is critical and of immense value for the long run survival of the firm. The information collected by the CRM system is a valuable asset for the firm. Using the information collected through CRM system, a firm can get a competitive edge. The firm can boost its revenues and profitability by using the information collected through CRM system (Borek et al., 2013).
The importance, use and different dimensions of customer relationship management system have been discussed in the report presented in this document. It is clear from the discussion that the CRM deployment is imperative for the firms to survive in the competitive market. Amazon engages in the online retail business which is the most competitive market in the world today. The firms are required to have in place an integrated CRM system that helps it to capture all required critical information. The deployment of the CRM system would lead to changes in the internal processes of the firm. The work responsibilities of the employees would also be affected by deployment of the CRM system. The management would be required to manage such changes adequately to help CRM deployed successfully.
In order to deploy the CRM system perfectly, it is crucial to undertake extensive planning before starting the deployment activities. The management needs to be strategic in choosing the type of CRM application required for the business. Further, the management needs to decide as to whether the CRM development is to be outsourced or it is to be undertaken in-house. In case CRM development is outsourced, the management should be aware of the issues encountered in the outsourcing arrangements. Further, the most crucial aspect of CRM deployment is maintaining data privacy. The management should bear in mind that the CRM deployment would expose the firm to liabilities under the data privacy laws. The management should ensure adequate measures for data privacy and confidentiality of the personal information of the customers and the employees.
The big scale CRM systems are developed in phases, which require the management to consider the supervision and controlling aspects more seriously. The top management of the firm should be reported on the project development progress on a regular basis. Further, the top management should issue directions from time to time to the project development team so as to keep the activities in alignment with the management’s objectives. The benefits of CRM deployment are enormous, but at the same time it also results in addition of job responsibilities on the personnel. The top management needs to take care of human resource management while considering deployment of the CRM system.
References
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