Exploring, selecting, implementing and using a customer relationship management system. A case study of theory applied in practice.

Transcription

1 Exploring, selecting, implementing and using a customer relationship management system. A case study of theory applied in practice. V. Sparks, ECCO Oxford/Oxford Brookes University, KTP associate. vsparks@brookes.ac.uk A. French, Oxford Brookes University, Senior lecturer. acfrench@brookes.ac.uk Oxford Brookes University, Business School, Wheatley. Oxon, OX331HX Abstract The KTP project is to identify the requirements of the business, any current issues and strong points and to formalise their long term plans and goals. This element of the 2 year project is to find the best possible Customer Relationship Management system and to implement and monitor that so as to best enable the organisation to achieve and exceed those goals. Relevant CRM literature is useful, but only suggests questions to ask, no ready answers are to be found. This paper presents a case study which is looking at one aspect of a two-year project. It is the identification, in the context of a family owned, high street and online specialist shoe retail business, of the need for, and thus the benefits of, a CRM system, and the processes of assessing the organisation's needs, finding and evaluating potential CRM systems which might or might not fulfil those needs, and the selection of relevant systems or elements of existing systems and then the monitoring of the success of the system once implemented as well as the benefits to the organisation. Key words: SME, retail, CRM system: selection, compatibility, implementation, integration, testing. Context The knowledge base partner, despite being a university lecturer and consultant to small businesses with broad knowledge of Customer Relationship Management, (CRM), systems, their usefulness and also their difficulties, had really only a theoretical understanding of how to identify the best system for this business. Therefore a key element of the two-year KTP project was to organise customer data, and in organising that develop an understanding of the businesses customer relationship management needs. Gartner says more than 50% of CRM implementations are considered to be a failure from the customer's point of view (Petty, 2008). This report indicates that poor planning, lack of clear objectives and not recognizing the need for business change are the key reasons for failures (Foss et al 2008). Neither the knowledge base supervisor, the business, nor the KTP associate were prepared to accept the possibility of failure in the context of their project. This case study is taking some of the principles which have been learned from previous studies and applying them in the specific content of an ongoing, Oxford-based, KTP project. The case study is intended to be descriptive, exploratory, evaluative and useful from a teaching point of view in that it is looking at the application and the evaluation of core, theoretical principles in practice. The case study is structured in that it firstly presents some fundamental, underpinning principles, broadly describing the theoretical constructs, and then explaining how this understanding was applied in the context of the knowledge transfer partnership, by the KTP associate.

2 What is CRM? What is a CRM system? There is a lack of consensus on a clear definition and in fact a clear explanation of what a CRM system is. CRM, Customer Relationship Management, is not database marketing, it is not just an IT concept, it isn't loyalty schemes alone, nor is it just marketing processes. It is the core business strategy integrating internal processors and functions in an organisation with their organisations and external networks, so as to enable the organisation to create, deliver and sustain value to the specific targeted customers at mutual profit. It is grounded on high quality customer related data and enabled by information technology. (Buttle,2010). It is a technology-based business management tool, which enables an organisation to achieve specific customer focussed goals. Straightaway, this challenges the compartmentalised approaches to CRM that many individuals and organisations may hold, and it is through the exploration of what an organisation wishes to achieve through their CRM that the factors which can lead to the successful purchase, implementation, and monitoring of such a system can be established. What benefits might a CRM system bring to an organisation, why bother? A CRM system is only one part of the organisation's overall strategy. The CRM system emphasises the creation of shareholder value through the development of knowledge and understanding of the customer's and how they can be described and categorised, or segmented. (Payne & Frow, 2006) It is appropriate for all organisations that wish to have relationships with their customers, and in fact can access customer intelligence to enable them to establish, develop and maintain good and viable mutually beneficial relationships. It enables organisations to determine who are profitable customers or customer groups, and it enables efficiencies to occur in the organisation as they can customise their marketing mix, and position themselves in a very competitive marketplace as an intelligent organisation which utilises the data that it has to best effect. That is to say it provides satisfaction in commercial and non-commercial exchanges, and enables efficiencies and intelligent and focused communication. Who would not want to work for and equally to do business with such an organisation? However, CRM systems are not for all organisations, nor are they for all customer groups. Not everybody wants a relationship with their suppliers, but increasingly, this concept which developed in the business to business market now is being applied in the business to consumer context as customers are becoming more demanding, more critical of what we perceive as value and good customer service. What are the core concepts behind the selection of an appropriate CRM system? Firstly the organisation needs to have a very clear strategic understanding in respect of who it is, (what business it is in and what its value proposition is),what position it has in the marketplace and who are its target customer groups. It is therefore needs also to know what it wishes to achieve with these customer groups and it needs to be able to access information on these customer groups. It needs commitment and readiness to accept the necessary hard work and the ability to implement change within the organisation, as well as a readiness to train the organisation to work towards relationship approaches with clients. It also needs time, energy, and a flexible approach in respect of the commitment of resources, both money and manpower. (Foss et al, 2008). It is also ideal, as in the instance of this project, if there is a dedicated champion for evaluating appropriate schemes, and matching the capabilities of off-the-shelf and bespoke products with their understanding of the organisation and the organisation's requirements and capabilities

3 . Figure 1. Potential Organisational CRM applications (Gartner 2008). How does the organisation know if the system is the right one? Ideally appropriate CRM partners should be identified and shortlisted, based on a preliminary proposal, and an interview with the providers should be undertaken, and then the CRM system itself should be designed, tested, modified and then applied. There are few organisations that have the luxury of allocating this amount of time and money to such a project, but at the very least, every system needs to be tested against the organisation s business goals, as well as the specifics of the CRM implementation itself. This case study demonstrates how this has been undertaken in practice. Method: The first, and maybe one of the most important parts of researching and finding the correct

4 CRM system was working in the business within the Marketing Function for 9 months before even starting to think about finding or buying it. Without having experienced the systems that were being used, looking at the processes that were involved in updating/using the database, and how it was being done there was no argument to have a new system or even understand what a new system could do to for the business. Once the problems that needed to be solved, and therefore what a CRM needed to and could do for the business, and importantly how it could enhance/improve the business were understood, the next process was to educate the business owners so that they understood what a CRM was and how it could change and improve their business. This was done by writing a document that explained the concept of Customer Relationship Management (CRM), what a CRM system could do and then, finally, using visuals (diagrams) to put the idea into the context of their businessillustrating the problems the CRM would solve, and therefore the objectives of the system: 1. To profile and mine our data to a level deeper than the current system- which is to 5 criteria so that we understand our customer better-for targeting and segmenting. 2. To collate our database into 1 central place for everyone to access 3. To use as an provider 4. To automate an extent of marketing- therefore saving time 5. To be able to store recipients of offline marketing and monitor success Finally, from here the key criteria of a system were detailed so that senior management understood exactly what its function would be within their business. The next step was to devise a shortlist of CRM systems that might be suitable for an SMEand importantly for B2C not B2B. This was done, mainly by using the network that the business had; It included local networking clubs that management attended on a biweekly basis, suppliers to the business, and finally a simple Google search on CRM systems for SME s. This gave a shortlist of 11 CRM systems to be explored initially for the 11 key features that the business required, including: 1. Ability to easily import data into the system (and de-duplication on entry) 2. Ability to generate customised reports and fields (either on the data/marketing activity) 3. Hold Marketing history data (Mailings/ customer received, type of info, preferred channel, refer a friend) After initial research on each systems websites, and forums/blogs, they were ranked as either You can definitely do this, you can do some- more investigating needed, you can t do this or not detailed. After looking through all systems and taking notes as well as summarising in a table, the 5 that fitted the initial requirements best were chosen to have free trials of and scrutinise their capabilities more closely. The 5 on the second shortlist the systems were, again, ranked on 11 more specific criteria and marked in the same way as above. The process here involved organising free trials with all systems, building relationships and organising meetings with sales reps and testing it in the business with a test group of data. Quite quickly, it became clear that only one of the 5 that made it to the shortlist was advanced enough to satisfy the businesses needs now and grow with it in the future. We had a free trial of this one for approximately 6 weeks, whilst we explored it as thoroughly as possible, spoke to a local supplier who was trained in the system and a local seller. After much exploring and many hours on Skype to the sales rep in the USA, the decision was made that this was, in fact, the most appropriate and well suited system for the business.

5 The system was purchased in August of 2011, and implementation has been on-going since then. This has involved testing the functionality- both automated and nonautomated on different low risk segments from the existing database, and gradually uploading and updating parts of the current database into Infusionsoft. Other areas that have gradually been implemented are web forms on all web sites to automatically capture data and cut out a manual input process, writing software to automatically update customers with order history and weekly purchases and recording what offline marketing customers are receiving. Another very important process was the change management and training of the staff. This was a system that was to be introduced into the business and was completely different to what they were used to and would change the way they worked in the business. The team was updated on a fortnightly basis with progress on the new system, as well as what areas of work would change for them, and how their work would be made easier. The importance here was to generate buzz and, again, educate so that the team were positive about the changes when they arrived. When it came to the training of the teams, thorough training notes were written about how to use the system, and then time was spent with each team member teaching them how to use it. The training has been on going, and still is. The team when/if they have questions, offer suggestions as to how to improve usability, inform of any missing information etc. It is important that this system is in place, because they are the end users and must enjoy/understand it for the business to get the most out of it and consistently use it properly. Results: The result of thoroughly looking into, researching and purchasing a CRM system for the business is it now has a system that fits with their current requirements, and those they might have in the future. It is a system that is receiving continual development from the owners and has a qualified trainer based locally for on-going support during set up and implementation. The system is one that is more advanced than being using previously- with the capability to record and monitor both online and offline marketing activity, find a balance between automated and personal ing and provide an in depth level of targeting and segmenting our database so as to continually ensure they are communicating with the customers about what they want to hear when they want to hear it. It has the ability to grow with the business so that as and when it is ready to ask more it is possible. The new system was purchased in October 2011, and went fully live in the business in February of this year- the initial set-up took approximately 4 months, with intense on-going work on a daily basis to this day. Clear results of the success of the system are yet to be established, however, initial indications are positive. All of the new season marketing was implemented via the new CRM. This included: A total of 6 s sent to different segments of our database based on a combination of geographical, demographic, order history and interests 16,000 brochures ed to our customers based on similar groups to above- we had a reason for sending to each and every customer Although only 9 weeks into a 16 week season, sales and conversions rates are signalling that the marketing done via the CRM is the most successful ever. Predictions for the future, in terms of the business and the CRM system, are that return on investment of marketing will improve as a number of different ideas are implemented including: A new customer sequence using the automated ing functionality Asking people to tell us how frequently they would like to receive communication

6 The subject of the communication they would like to use- e.g. newsletter, sale promotion, new arrivals. Extending the refer a friend scheme to be online. Conclusions: The purchase of a CRM system is a journey. The CRM, to this point, has been a learning curve for everyone in the business- from senior management, to the marketing manager and the team who use it on a daily basis. It has been an investment of time, money and skills on both the businesses as a whole and the marketing manager s job in choosing and implementing. Foss, B., Stone, M. and Ekinci, Y. (2008) What makes for CRM system success or failure? Database Marketing and Customer Strategy management, 15(2) Payne, A. And Frow, P. (2006) Customer Relationship Managment: From Strategy to Implementation, Journal of Marketing Managment, Vol 22, Petty, C. (2008) s/2001/pr b.html. Any CRM that is purchased by an SME, and indeed any company needs nurturing and a commitment of time for successful implementation. It will not simply run itself. And despite the CRM being live in the business, the journey is far from over. There is still a lot of learning to do, ideas and processes to put into place and areas that need fine tuning. Planning and implementing marketing from a CRM system leads to better improved targeting and segmenting as well as evaluating and monitoring therefore leading more successful marketing with improved results and ROI. Despite the CRM taking time and money, if looked at as an investment and a tool to run a business a CRM system can dramatically improve the profitability and success of any organisation, large or small, in any sector. References Blattberg, R.C. (2008) Database Marketing: analysing and managing customers, New York, Springer Buttle, F. (2008) Customer Relationship Management, 2 nd edition, Oxford, Butterworth Heinemann