PRINCIPLES OF COOPERATION FOR SUCCESSFUL USE OF CUSTOMER RELATIONSHIP MANAGEMENT IN BUSINESS PRAXIS

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1 Journal of Information, Control and Management Systems, Vol. 8, (2010), No PRINCIPLES OF COOPERATION FOR SUCCESSFUL USE OF CUSTOMER RELATIONSHIP MANAGEMENT IN BUSINESS PRAXIS Milan KUBINA University of Žilina, Faculty of Management Science and Informatics, Slovak Republic milan.kubina@fri.uniza.sk Abstract This article is related to problems of Customer Relationship Management (CRM) and its building in business. It aims mainly on problems of effective cooperation of businesses in field of customer relationship management, therefore in the use of cooperation principles in the field of communication with customers. Principles of cooperation represent a form of managed collaboration of various organizations, which by appropriate management may lead to gaining of major competitive advantage for joined subjects. This article deals with analysis of the CRM theme and usage of cooperation principles in this field. Collective CRM is a solution which can create collective competitive advantage. Keywords: CRM, cooperation principles, cooperation, customer, management 1 INTRODUCTION In present conditions of global economic crisis there is very important for every business team or unit to have knowledge about customers, to know their needs and motivations of their buying behavior. In hard economic times there is comprehensible that businesses doesn t have needed accounting data and confidence for big investment decisions for time and capital demanding CRM implementations. Therefore is necessary to offer customers CRM applications that will be based on their own requests and will reflect their real needs. Essential preparation and CRM implementation in business is needed hereto. Designed methodology will give business managers intelligible view about all activities for successful CRM building in their business. With the emphasis on the most frequent problems rising in this process will managers have valuable tool, which will help them to gain view of needs and effects of this solution. CRM cooperation will allow them to choose collective actions in the field of relations management with their customers.

2 32 Principles of Cooperation for Successful Use of Customer Relationship Management in Business Praxis Gaining new customers in times of economic decrease is big challenge. CRM represents solution that provides quick view on market and will bring value into business for a long term for the businesses, which goal is to be successful and not only to survive. Present crisis is about relations crisis, trust crisis. Business can t allow bringing down its reputation. It has to manage relations with customers effectively and communicate with them. Business can hold them with everlasting improving customer service and active communication. Principles of cooperation represent a form of managed collaboration of various organizations, which by appropriate management may lead to gaining of major competitive advantage for joined subjects [12]. Cooperation also may reduce actual crisis impacts on worldwide economic progress. Actual economy conditions reflect on ability of businesses acquiring new customers, evolving new technologies and so. CRM represents solution for businesses, which gives quick view on market and brings value into business for a long term. 2 CUSTOMER RELATIONSHIP MANAGEMENT CRM has a lot of definitions. CRM is everything what it is related to satisfaction of customer s needs. Dick Lee (2001) states that CRM is perceived as chain reaction, which is caused by new strategic initiatives of communication with a customer when high level of information technologies development and constant customer s need to get better quality of service are achieved. Interesting view on the term CRM has been brought by Payne (2005). He understands customer relationship management as a strategic approach concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments. In his opinion CRM unites the potential of information technologies and relationship marketing strategies to deliver profitable, long-term relationships. CRM provides enhanced opportunities to use data and information both to understand customers and implement relationship marketing strategies better. This requires a cross-functional integration of people, operations, processes and marketing capabilities that is enabled through information technology and applications. In the aspect of information technologies CRM is understood as the complex of software and technologies automating and performing business processes in the following areas: sales, marketing, service and customer support. The software helps to coordinate the activity of departments interacting with customers, as well as to coordinate different channels of communication with customers. Wide explanation variability of the term CRM may be documented also by these theses. Smith (2001) understands customer relationship management as business strategy combined with technology to effectively manage the complete customer lifecycle. In opinion of Stone and Woodcock (2001), the CRM represents a term for

3 Journal of Information, Control and Management Systems, Vol. 8, (2010), No methodologies, Technologies and e-commerce capabilities used by companies to manage customer relationships. In opinion of Buttle (2000), customer relationship management is about the development and maintenance of long-term mutually beneficial relationships with strategically significant customers. Hobby (1999) perceives customer relationship management as a management approach that enables organizations to identify, attract and increase retention of profitable customers by managing relationship with them. Couldwell (1999) emphasizes meaning of information about costumers and work with them, by the thesis, that CRM involves using existing customer information to improve company profitability and customer service. Glazer (1997) believes CRM as integrating element. In his opinion the customer relationship management provides strategic bridge between information technology and marketing strategies aimed at building long-term relationship and profitability. This requires information-intensive strategies. 3 COLLECTIVE CRM Collective CRM allows businesses to coordinate their marketing activities aimed on building relations with customers with effective use of business resources. Idea of collective CRM is newer and courageous in our conditions, but abroad is more frequent. There are many examples of successful cooperation in the world, even in the field of tourism. Some airlines cooperate together (e.g. group SkyTeam, Star Alliance, Oneworld...), transport companies (e.g. National Express Group), hotels and hotel networks (groups Accor, InterContinental Hotels Group, Marco Polo Hotels, A la Carte...), restaurants and restaurant networks (group Hillstone, PLC, Portillo...) car hire companies, motor car companies (Ford, Peugeot a Citroen cooperate in the field of R&D)... In some cases there is international cooperation, in other there is cooperation within one country. But it s always about cooperation between companies, which are in competing status. They decided to solve the rival fight with cooperation and therefore increase profits. Cooperation in Slovakia and Czech Republic is not popular. Every company protects its know-how as the way to resist the strength of competition. In most cases it is due to poor knowledge between businesses about potentialities and effects, which can this cooperation in the CRM field, bring to them. Many projects based on cooperation principles were realized during times of economic growth in the area of Czech Republic (mainly building and support of working clusters). Collective CRM solution is thought to be one system shared by more companies. This shared system will permit to different companies to gain from easier obtained competitive advantage. Collective CRM is a solution developed especially for enterprises acting in tourism sector, but is applicable also for other kind of enterprises not only for this sector. In practice there are many facets to the opportunities for creating value in the context of comprehensive customer management. If they are conceived in terms of a long-term collaboration, they can be referred to as strategic network, strategic

4 34 Principles of Cooperation for Successful Use of Customer Relationship Management in Business Praxis alliances, or strategic coalitions. In opinion of Kracklauer, Mills and Seifert (2004), the adjective strategic emphasizes in another way the new quality of corporate collaboration. Internal resources are seldom sufficient to meet the challenges of the developing marketplace. Cooperation appears sensible insofar as it improves responsiveness to continually changing markets, technologies, and consumer needs. Above all, it appears that the consumer, in the face of a broader palette of goods and services (through e-business, etc.), is growing more sophisticated and correspondingly coming to demand more value. The consolidation of resources for the satisfaction of consumer desires appears thereby to be a logical move. The new techniques of collective CRM are composed of strategic and operational elements. They entail a consistent orientation to customer needs as well as the elimination or reduction of all activities that do not add value with the objective of generating enduring competitive advantages. A joint assessment of the current situation is first step in strategic section. An important parts of this the strategic analysis, in which a systematic search for occasions and necessities of strategic decisions, as well as a precise diagnosis of the roots of suspected strategic problems takes place. The primary purpose of the strategic analysis is the investigation and preparation of strategic decision-relevant information. Familiar instruments of strategic analysis are for example, gap and portfolio analysis, life-cycle analysis and the SWOT analysis. For instance, it can be determined that a company s marketing efforts are a weakness, which hinders its success. Here one could find a way to incorporate the expertise of a partner whose strength lies in this area. [1] The complexity of cooperating in value creation requires a structured approach in order to guarantee the success of a partnership. The following matrix (Figure 1) shows a corresponding structure for levels of cooperation in customer management. Costs Quality of realization Cooperative Logistics Synchronization of Structures, Processes, Technologies Collective CRM Status Analysis Cooperative Marketing Turnover Market Share Figure 1 Strategic Matrix of Collective CRM [1]

5 Journal of Information, Control and Management Systems, Vol. 8, (2010), No After the strategic analysis comes the fixing of objectives (costs, market share, sales and the quality of the realization respectively), decisions about cooperative logistics, cooperative marketing, and synchronization of structures, processes, and technologies [1]. If an organization significantly changes its strategy, it needs to make appropriate changes in its overall structural design [11]. The communication in collective CRM can be realized through different ICT. Their selection only depends on decision of collaborating enterprises. This decision regards on financial capacities and usefulness of ICT adoption. The set of ICT which can be chosen consist of some of these types: [10] 1. Fixed or mobile phone for internal and external communication between employees themselves or between group of enterprises and its clients, 2. Local phone network for communication inside of one enterprise, 3. Videoconference necessary only in case when enterprises do not limit their collaboration on physical meetings, 4. Instant messaging suitable especially for internal communication because of its capacity to reduce the strength of hierarchical barrier very strong in Slovakia, but can be also used for external communication, 5. E-notice board also able to reduce the strength of hierarchical barrier can serve for all employees to publish different information which can become a theme of internal communication, 6. can replace (partially or completely) exchange of documents and serves to send/receive information from/to customers or inside of group of enterprises. Collective CRM facilitates communication between customers, suppliers and partner by using new information system such , link and data bank. For successful use of collective CRM are very important the following elements: people, processes, technologies, strategy, organizational structure and management. For collective CRM to be truly effective, an organization must convince its staff that change is good and that CRM will benefit them. Then it must analyze its business processes to decide which need to be reengineered. [13] 4 CONCLUSION Also authorities of European Union are conscious of importance of cooperation principles for decreasing global financial crisis impacts. As an example we can name activities of the Liptov cluster in Slovakia, which in times of fall of tourism will unify central reservation system, allowing customers to simplify selection and reservation of accommodation in Liptov region. There is proposed an institution of regional card in the frame of precautions for present tourism crisis elimination. It is an example of building relations with customers using cooperation management. There are more examples to notice. Joint characteristic is deal on collective process in the field of

6 36 Principles of Cooperation for Successful Use of Customer Relationship Management in Business Praxis marketing and communication with customer. There is needed to unite information systems of joined parts. Cooperation principles may be exerted not only by branches, but to bring into the position of building relations with customers. REFERENCES [1] KRACKLAUER, A. H. MILLS, D. Q. SEIFERT, D Collaborative Customer Relationship Management Taking CRM to the Next Level. Springer - Verlag. Berlin Heidelberg ISBN [2] BUTTLE, F The CRM Value Chain. Macquarie University. Sydney. April Available on Internet: FButtle_CRMvalchain.pdf [3] COULDWELL, C Loyalty bonuses. Marketing Week, Feb 18. [4] GLAZER, R Strategy and structure in information intensive markets: the relationship between marketing and IT. In: Journal of Market Focused Management, 1997, Vol. 2, No. 1, s [5] HOBBY, J Looking after the one who matters. Accountancy Age, 28 October, s [6] LEE, D Why climb the CRM mountain? The Customer Relationship Primer, 2 nd ed., Available on Internet: [7] PAYNE A Handbook of CRM: Achieving Excellence in Customer Management. Butterworth-Heinemann ISBN [8] SMITH, K Getting payback from CRM. Webcast on CRMGuru.com, November. [9] STONE, M. WOODCOCK, N Defining CRM and assessing its quality. In Successful Customer Relationship Marketing. London: Kogan Page, s [10] MAKYŠOVÁ, J Collective CRM Organization of Communication Inside of Accommodation Enterprises. In: Zborník z medzinárodnej vedeckej konferencie CRM Univerzita Pardubice ISBN [11] HITTMÁR, Š. - JANKAL, R The strategic management process. In: ICSC 2003: First international conference on soft computing applied in computer and economic environments. Kunovice: EPI s ISBN [12] SOVIAR, J Klastre v regionálnom manažmente - koncepcia klastrov v Žilinskom kraji. In Mezinárodní konference 2008 Vysoká škola jako facilitátor rozvoje společnosti a regionu. Kunovice ISBN [13] LENDEL, V The CRM Value Chain Model of Development and Implementation of CRM Strategy. In: TRANSCOM Section 2. Žilina: Žilinská univerzita ISBN