IMPROVING BOTTOM-LINE BY IMPLEMENTING SHARPER CUSTOMER RELATIONSHIP MANAGEMENT IN MANUFACTURING INDUSTRIES - MEDIUM & SMALL ENTERPRISE SECTOR IN INDIA

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1 IMPROVING BOTTOM-LINE BY IMPLEMENTING SHARPER CUSTOMER RELATIONSHIP MANAGEMENT IN MANUFACTURING INDUSTRIES - MEDIUM & SMALL ENTERPRISE SECTOR IN INDIA PROF. PRAKASH A. RESEARCH SCHOLAR CMJ UNIVERSITY SHILLONG MEGHALAYA ABSTRACT This article aims to: i) Provide insights about the challenges inherent in Customer Relationship Management (CRM) ii) Offer robust strategies in implementing CRM solutions to Indian manufacturing Industries. Such an approach would empower industry to achieve multiple objectives: a) A sharper insight into operational issues b) Deterrents in the path of CRM implementation c) Various CRM program factors that help achieve success, for example assessment of preparedness for CRM implementation d) Transformation management: - CRM as employee initiatives and engagement - CRM as project management Manufacturing Industries in India have divergent priorities. Their responses to CRM and the budget amounts they invest in it are similarly diverse. Some of the programmes used by them earlier are Inventory Management (IM), Sales Order Processing (SOP), Invoicing, Accounting application software packages, later moved on to Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Vendor Management Systems (VMS), Transport Management Systems (TMS) and also few companies developed their own customized solutions. The primary reasons which compelled companies to invest in CRM solutions are: i) Cutting the cost of managing customers; ii) Enable faster entry of the company into new product lines; iii) Adopt innovative marketing Companies in the automobile and consumer electronics industries adopted a less-more approach reduction of customer defection as a critical target, using up-selling and cross-selling to increase customer value. Introduction: Indian Manufacturing industries have different priorities and budget amount to invest in Customer Relationship Management (CRM). Manufacturing companies used Inventory Management (IM), Sales Order Processing(SOP), Invoicing, Accounting application software packages, later moved on to Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Vendor Management Systems (VMS), Transport Management Systems (TMS) and also few companies developed their own systems. These companies were moving or had already moved from managing customers mainly in the sales/service branch or direct mail, to managing them in the contact centre and over the internet. 185

2 The primary reason for the investment in Customer Relationship Management solutions was to cut the cost of managing customers, and to enable the company to move into new product markets very quickly and adopt innovative marketing. At the same time, some companies particularly in automobile and consumer electronics industries look at reducing the customer defection as a critical target, while increasing customer value by up-selling and cross-selling. Many of these companies have sustained their CRM systems focus over time, although these investments may or may not be considered part of a long-term CRM strategy. Automobile industries appear to have invested more cautiously. They have usually sustained this over a long period to achieve substantial effect. Industries with tighter margins such as Electronic Home appliances, with limited funds, found that far greater focus on challenging markets and also strong management process for reinvesting early savings and moving towards cloud computing approach. This approach is increasingly used within the SMB (Small and Medium Business) sector. Here, lean initiatives can generate savings that can be immediately reinvested for additional productivity gains. Some recent few CRM programmes in Automobiles and consumer electronics industries have clearly benefited from previous CRM systems and experience of suppliers. These included considerably reduced implementation times and lower risk levels for programmes of comparable size. These companies had different levels of success, which was determined based on the association between the complexity of the system and the speed of implementation Customer Relationship Management Objectives: The CRM goals are to be clearly laid out after meticulous planning. During the implementation of CRM solutions companies were under the impression that Customer Relationship Management is marketing and sales function. Some of the respondents defined CRM as a business strategy while others viewed it as something to do with technology. About thirty percent in other functional departments experienced a lot of confusion about the attributes of CRM and what it really stood for. Initially the costs of technology were a matter of concern. It was perceived that huge investment was required to maintain customer database, additional investments such as computer hardware, software and annual maintenance with skilled manpower resources. The companies need to use right metrics for CRM implementation and adopt proper methods for assessing operational activities. Apart from this CRM solutions need to be: a) simple to use, b) users should be able to enter or retrieve information and data easily. This enables the different functional departments to collaborate, understand and meet the customer requirements and market demand. 186

3 CRM Implementation: The successful implementation of a CRM programme depends upon few critical factors: i) Readiness for CRM implementation, ii) Transformation management iii) CRM as project management and iv) Employee engagement and initiatives. Readiness for CRM implementation is an overview. This helps managers to: assess the overall position in terms of readiness to progress with CRM implementations; identify how well it is developed in their company, compared to other companies. Transformation management involves strategic Organization change and cultural change. It includes, as a routine, the involvement, understanding, leadership and collaboration of cross-functional activities by senior managers. This is critical for implementation of CRM. CRM needs to be viewed and implemented as a project, by forming cross-functional teams of stakeholders. This should include those who manage the CRM implementation, enterprise of the company and be drawn from marketing, sales, service, production and IT. Successful CRM projects deliver CRM objectives derived from the Company s Objectives and support the overall business strategy. Employee initiative and engagement to support, obtain commitment of the employees for CRM project. Companies need to recognize the value their employees contribute to the business, fulfilling in addition to basic duties. Companies need to develop and operate customer-focused CRM system and processes by motivated and trained employees. The reason for the investment in CRM was to cut the cost of managing customers, and to enable the company to move into new product markets very quickly. CRM systems enable the companies to identify and manage customers and up-sell and cross-sell much better; analyzing customer is critical as the managers need to identify the customers who are profitable or not profitable to the company. Increasing customer value to up-sell and cross-sell is the core of Customer Relationship Management. Industries with tighter margins eg. Automobile, Garments, appear to have invested more cautiously but have usually sustained this over a long period to achieve substantial effect. With limited funds, found greater focus on challenging CRM as pilot projects. The management looked for investing to create a pay as you use cloud computing approach. This approach is increasingly used within the Small and Medium Business (SMB) sector, where lean initiatives can generate savings that can be immediately reinvested for additional productivity gains. Keys to CRM Implementation Success An Enterprise becoming Customer centric: 187

4 CRM is challenging because it is an enterprise-wide initiative. CRM is not a technology initiative. Many companies wrongly identified CRM as a technology initiative and assign the CRM implementation project to their Information Systems or IT group. Technology is needed in order to implement CRM, particularly the customization part. However, technology is not the driver of CRM. It is just an enabler CRM is not exclusively a marketing, sales, service or technology initiative. It involves all of those along with other inter-functional tasks of the Organization. Probably the most important requirement is the acknowledgement that the organization becomes customer focused and conducts its operations from the point of view of all the customers CRM products are ideally implemented in phases. Choose the first business process to be automated in the CRM system. In most CRM implementations this involves implementing the Customer Support function. What are your long-term objectives? List one or more long-term objectives in the order you wish to accomplish them. These will be the later stages of the implementation. What risks and constraints are you facing? You should list those items that constitute a risk to the success of the operation and additionally identify actions that can be taken to minimise the risk. Also list the constraints that may guide your decision-making. Typical constraints include the expected go-live date, the project budget and the availability of resources. The constraint consists of Time-Resources-Capability. The reason it is defined as constraint is that in any project Time-Resources-Capability cannot be fixed. If one changes, it is most likely that the others would also change. If you set the end date and the capability, features in writing, then resources will need to be flexible to deal with unexpected delays or complexity. If the resources and end date are fixed, then the capability will need to be flexible and hence changed. CRM system includes numerous sample reports for managing your business. You should make a list of the critical reports that you need to run your business. Next, examine the reports that are already available in the CRM system and see if any are an exact or near match. For new reports examine whether the data necessary for the report is already in the database or whether additional data needs to be input in order for the data to appear in reports. Deterrents of CRM implementation: The reason for CRM project failure is the lack of strategic planning prior to the implementation of CRM. The reasons for failure of CRM initiatives could be various factors such as technological implementation problems to lack of organizational interfunctional integration and customer orientation. Such failures are attributed to poor design, planning and measurement of CRM projects. It could be due to capturing the wrong customer information, ambiguous goals, inappropriate selection and use of technology, inability to integrate people, processes and improper measurement approaches are the major barriers in 188

5 implementing and managing CRM projects. Few reasons for unsatisfactory CRM implementation are: a) Lack of customer-centric vision, b) Lack of assessing customer lifetime value, c) Inadequate support from top management, d) Viewing the CRM initiative as a technology initiative, e) Underestimating the importance of transformation or change management and f) No support for re-engineering the business process. The CRM Success Inhibitors, Enablers and Enhancers The goal of CRM is to attract and retain profitable customers. In competitive markets customers have other choices and some defect to competitive offerings. Companies planning to minimize, if not completely eliminate customer defections, can learn from customers who chose to defect. This learning can be used to develop retention plans. The company s chief operations person/s focus needs to be on learning from customer defections, developing customer retention plans and evaluate customer retention programs. Customer Relationship Management is a discipline as well as a set of discrete software technologies. This will focus on automating and improving the business processes associated with managing customer relationship in the areas of sales, marketing, customer service and support. The company aim to achieve the end goal of one-to-one marketing. The CRM software applications would facilitate the coordination of multiple business functions. It also coordinates multiple channels of communication with customer such as: face-to-face, call centre, ATM, Web, Telephone, retail branch, sales partners and franchisees. This would enable the company to carry out Cradle-to-Grave customer management more efficiently. It should allow the company to engage in one-to-one marketing by tracking complete customer life-cycle history. To begin with, it would automate process-flow tracking in the product sales processes, and be able to generate customized reports and promote cross-selling and up-selling. It also enables efficient campaign management by providing a software interface for definition, tracking, execution and analysis of campaigns. From an architecture perspective, the enterprise-wide 189

6 CRM solution should seamlessly integrate non-transactional related customer information stored in the front office with transactional information stored in the back-office. Implementation of customer relationship management strategies are possibilities-a look ahead. References: CRM at the Speed of Light - Management Essential Customer Strategies for the 21st Century Paul Greenberg; Tata McGraw Hill Customer Relationship Management A Strategic Perspective G Shainesh and Jagdish N Sheth Case study, After the Sale is over. Theodore Levitt, Harvard Business Review, Sept- Oct 1983 Customer Relationship Management - Ed Peelen; Pearson Education. 190