On the Interaction and Integration of Cross Selling and Customer Relationship Management

On the Interaction and Integration of Cross Selling and Customer Relationship Management SUN Shaofu School of Management, Dalian Jiaotong University, Dalian, Liaoning, China, 116028 sunshaofudl@163.com Abstract: In recent years, as innovative marketing methods, cross selling and customer relationship management (CRM) received a great deal of attention in enterprise circle. During post financial crisis era, more and more enterprises expect to promote management and technology level of CRM and cross selling, fulfill interaction and integration between cross selling and CRM, improve efficiency of cross selling, enhance profit of enterprises, achieve the goal of sustainable enterprises development.on the base of discussing definition, function, development condition and existing problems of CRM and cross selling, this paper proceed with new ideas of improving interaction and integration between cross selling and CRM, issuing the relationship between CRM and cross selling; the necessity of interaction and integration of cross selling and CRM; and the specific strategies of fulfilling interaction and integration between cross selling and CRM. Keywords: cross selling, CRM, interaction and integration With the back ground of post financial crisis, every businesses are in urgent need of supporting by marketing management theory and practice, and implement advanced marketing management system in order to help enterprises out of dilemma, promote their core competence. More and more enterprises fulfill the connection and integration between CRM and cross selling, improvement efficiency of cross selling and enhancement profit of enterprises, through improving management and technology level of cross selling and CRM of enterprises. Interaction and integration of cross selling and CRM become enterprises key strategy to improve enterprises identity, nurture customers loyalty, fulfilled enterprises sustainable development. 1 Developing and Producing of Cross Selling 1.1 Definition of Cross selling Till now, there are several opinions towards the cross selling come from both domestic and foreign scholars: Nash (1993) and Deighton (1994) give the concept that cross selling is encourages the customer which had already brought product A of company to continue to buy product B of the company [1]. Yasar F Jarrar and Andy Neely (2002) think the cross selling is a brand-new marketing mode under the help of customer relationship management, through discovering the numerous demands of the customers and then stratifying such demands in order to sell variety products and services [2]. Kamakura and others (2003) give the opinion of cross selling is making great effort to let customer use more products and services from a fixed company [3]. Guo Guoqing, the early Chinese professor who study cross selling, states cross selling is the market strategy that using the present customer-company relationship to sell another product [4]. This paper mainly deems that cross selling is the fresh marketing mode which first using analysis technique of CRM and experienced judgment to discover the numerous demands of customers, and then through satisfying the demands to achieve the purpose of getting variety product sold. Cross selling is more than a marketing method, it s a marketing concept guild by the customer demands, on the foundation of detailed analysis and acknowledging the specific demands of customers, to implement marketing strategies by fully using enterprise resources, then providing the satisfactory solution to customers, meeting customers demands, and getting their trusts; even doing wildly horizontal corporation to enlarge the customers value to the limit, and serving the market. 122

1.2 The function of cross selling (1) Enhancing customer s loyalty, pursuing customers life-time value Cross selling can meet customers variety demands, increase customers satisfaction. With the growing of transaction times, the trust and dependence improve between the enterprises and customers, invisibly declines customers brand-turnover rate, decrease the cost of brand changing. Then it s easy to lock customer, enhance customer s loyalty. Achieve the purpose of consolidating old customers, attracting the news, pursuing the life-long value of customers. (2) Develop market efficiently, improve sales rate Enterprises use CRM to acknowledge customers variety realistic and potential demands with characteristics of individualization, provide customer with suitable solution to the demands and problems, targetably implement the one to one marketing strategies, thus to reduce blindly marketing cost, make companies more likely to success. (3) Reduce cost of goods sold, increase companies profits A research from American Academy of Management shows, the cost of developing a customer is 6 times comparing the cost of keeping the current customers. In other words, selling goods to old customers is far more benefit than selling them to the new customers. In a broad sense, cross selling is the market activity using every available resource. To increase companies profits, it has the characteristics of fully use current resources and no additional cost or little additional cost. 1.3 Currency and existing problems of cross selling Cross selling, as a marketing method, was wildly used by foreign banks since the early 1965. However, till late 1990s, with the growing market competition, boom in technologies and refining of related law, did practice and research of cross selling increase. Cross selling then attracted wildly attention. From researches and practices in the foreign countries, we find that cross selling is mostly apply in financial area. Alone with social developing, cross selling is now used in the field of banking, insurance, stocks, telecommunication, hotel services and many other fields about economic life. Cross selling is confirmed by enterprise circle as an efficient marketing method, however, practically, it s not that efficient. The research of cross selling is just started, especially domestically, many enterprises understand of cross selling is within the concept, remain in the level of passive unconsciously used and implement. Besides, Implementing of cross selling is crewed down by the traditional point of views and some other subjective factors, there still problems remain to be solved. 2 Origin and Development of CRM 2.1 Definition of CRM CRM is a new management mode and strategy which puts the customers in the first place, considers information technology as tool, regards customers as the most significant resources, under the modern management method, gives efficient integration and does research systemically towards customers information and resources of company, achieve the sharing of internal resources and information, in order to meet customers demands more efficiently at a lower cost; enhance customers satisfaction and loyalty; bring growth of integrated benefits of company to the limit. CRM is product of combination of modern management technology and professional information technology, either a management mode and strategy focusing on relationship development between customer and enterprise; or a management software and application system which trend to automation on marketing, sales, customer service and support and informational management, in order to achieve resources optimization and efficiency improvement. 2.2 The function of CRM The core of CRM is customers value management, take customer one to one theory as base, through one to one method, to meet different needs required by different valued customer, in order to raise customers loyalty and retention rate, reach the goal of sustainable customer value s contribution and finally promote enterprise profitability to a brand new level. 123

IBM think, CRM is a trade cycle includes enterprise recognizing, picking, achieving, developing and keeping customer. (1) Recognizing and picking customers Under analysis technique of CRM, using regression analysis, factorial analysis, clustering analysis method and so on, enterprises are able to evaluate customers benefit creation ability, then pick up the available and potential customers for the enterprise, in other words is to pick the most profitable customer thus to implement cross selling. (2) Achieving and developing customers Under the help of CRM, enterprises can refine business cycle, bring the core of customer into the every segments of management. Through the reformation of business cycle in order to integrate and manage customers information resources, and sharing the customers information and resources internal the company; integrating marketing, sales and services function, refining market management, under the base of recognizing customers current and potential requirement, to provide products and services with individualization, raise customers satisfaction and loyalty, in order to keep and attract more customers. (3) Maintaining and keeping customers Another function of CRM is to keep the current customers, thus to enlarge the profit. Through CRM, build the communication system to attract customer to join in the marketing activities, in order to acknowledge and predict customers demands; appropriately gives return visit and cross selling,to enhance the communication between customers and enterprise, strengthen each others sustainable corporation relationship, reach the goal of maintaining and keeping customers, pursuing customers life-long value maximization. 2.3 Currency and existing problems of CRM CRM was started in 1990s American, the origin of CRM is Contact Management in early 1980s and Customer Care in mid 1990s.CRM was first suggested by Gartner Group. Since 1997, CRM software is a bomb in globalized software market. From the view of application, many developing countries enterprises had used CRM system or quasi-crm system, the foreign statistic shows that, CRM is becoming a brand new customer service market. The worldwide CRM market profit is 110 hundred million dollars, Chinese started CRM market since late 1999, and developing rapidly. In 2007, The revenue of Chinese CRM software market is 4.41 hundred million dollars, increase 25.8% compare to the last year [5]. From domestic and foreign condition of implement of CRM, developing speed is fast, but the failure ratio is high. According to statistic, there are 70% of CRM cases unsuccessful. Variety information shows that many Chinese enterprises has already used CRM system, but all of them are partial and crude. Currently, CRM only fulfilled telephone service center, customer information management and some other function which is partial, as for aspect of deeply customer data discovery to make strategies is obviously a defect [6]. This kind of high failure ratio make many enterprises confuse on how to develop the CRM, and make them afraid of inducing the CRM. It s seriously restrict growing and developing of CRM market, also restrict efficiently conducting of CRM. 3 Interaction and Integration of Cross Selling and CRM 3.1 Relationship of cross selling and CRM As innovative marketing method, both cross selling and CRM have a relation of asymmetrical dependency, the tendency of becoming interaction and integration development is more and more obvious. With the help of CRM system, enterprises put collected customers data information into effective analysis and integrating, recognizing and picking the most available and suitable target customer for cross selling, thus to provide the pointed service, avoid blindness of cross selling, promote the efficiency of cross selling; and again with providing cross selling enterprises can learn more and get more feedback of customers information, deepen the company-customer communication and acknowledgement, make 124

further efforts on elaborating customers information of CRM system, promote reconstraction and development of CRM, establish a solid foundation for further implement of more efficiency cross selling method. Therefore, CRM is the base of implement cross selling scientifically, cross selling the key tool for enterprise to implement CRM and an important practical field of CRM. Under current competitive marketing circumstance, more and more enterprises gain customers and improve customers loyalty through the practicing cross selling which based on CRM system. 3.2 The necessity of integration and interaction between cross selling and CRM (1) With the explosion of worldwide financial turmoil and the development of economic integration, the increasing market competition makes customers discovering harder and harder, enterprises are in urgent need of finding customers and business opportunities from multiple point of views, to change traditional marketing method. Therefore, enterprises pay more and more attention on keeping relationship with current customers, expecting further value from current customers. Cross selling happen to be a important tool for keeping solidity customer-company relationship, however, only under the help of CRM enterprise can implement cross selling thus to get satisfactory result. The core is application of data base, mostly it s under the foundation of database marketing, for exploration and application of CRM. In order to recognize available customers, acknowledge customers requirement, implement the well targeted marketing method, the integration and interaction between cross selling and CRM should be well enough, the better it integrate and interact, the better marketing result come out. Only though establishing and operating a good CRM method and system, enterprises can confirm the high efficiency of cross selling in order to make their integration inevitable. (2) A marketing theory of customer focus is widely spread and used, which requiring enterprises to start form the customers point of views, fully understand, analysis customers current and potential demands; according to such demands, making the one to one overall solution to implement cross selling, in order to fulfill customers need. The core idea of CRM system is exactly customer focus, to improve customers satisfaction and refine company-customer relationship. Integration management of CRM towards customers data information, is exactly the fully reflection of customer focus. To fulfill the aforesaid marketing strategy, enterprises also in a great need of integration and interaction between cross selling and CRM. (3) Highly development of technologies in recent years provide technique support for application of cross selling, there comes out many effective methods in fields of information collecting, storing and selecting. CRM make all these segments more systemically. The core of CRM is sales management, which extend fore of management system, has a directly connection with customers, improving customers loyalty and taking the advantage to bring in more potential customers. Through CRM, enterprises can trace and conclude customers transaction truthfully and dynamically, decrease cost of data collecting, selecting, analyzing and using. It s because of the integration and interaction between cross selling and CRM, the practicability of enterprises implementing cross selling is risen. (4) Marketing cost and customer profitability is the factors that cross selling must consider about. Customer profitability is a key standard to judge whether customers are fit for implementing cross selling, so before the cross selling enterprises must do the customer profitability analysis. The database technologies of CRM make profits of cross selling possible, under the low costing circumstance it will increase successful selling ratio. CRM system is able to recognize customers profitability rapidly, thus to make it easier for enterprise to implement cross selling for profits. Therefore, only fulfilled the integration and interaction between cross selling and CRM, we can make sure that cross selling will bring in the expected profits. 3.3 Choice of developing strategy integration and interaction of cross selling and CRM Currently, both domestic and aboard has done some researches on process of how CRM implement cross selling, But during the practical process, cross selling and CRM are always separated, run independently, connection with each other is not enough, lacking integration and interaction, strikingly affect of cross selling and CRM. To fulfill integration and interaction between cross selling and CRM, 125

we need good jobs in several following aspects: (1) Changing conception, establishing advanced marketing concept, changing traditional operation mode, enacting suitable integration and interaction of cross selling and CRM marketing mechanism. Force enterprises to execute customer orientation strategy, establishing customer orientation based structure, which is the effectively support to their integration and interaction and benefit for successful implement and operated efficiently of CRM and cross selling. Integration and interaction of cross selling and CRM need every departments in the enterprises to obey CRM rules, following CRM request strictly, through the integration of customers data, sharing information among departments, to better analysis and grasp customers value and demands. at the same time, enterprise can use customers information and data to adjust departments strategies, in order to improve the efficiency of cross selling. (2) Establish delicate CRM analysis and cross selling system. Complete CRM analysis and cross selling system is fundamental of realizing integration and interaction of CRM and cross selling. Only the CRM system is completely and efficiently, focusing on enterprises database rearrangement, analysis and discovery, permitting accuracy and integration of customers information, we can identify the cross selling opportunities, and implement well targeted cross selling. As the four stages of sales, integrating customers information, indentifying cross selling opportunities, implement cross selling, evaluate performance of cross selling are all base on the complete system analysis of CRM and cross selling. (3) Establish motivation system and enterprise culture benefit the fulfillment of integration and interaction of CRM and cross selling, create the soft environment fir for their integration. Propaganda is the key, from the height of sustainable enterprises development to comprehensively understand the importance of integration and interaction of CRM and cross selling, create enterprise culture adapting integration of cross selling and CRM, emphasize on collaborative culture training, use power of enterprises culture to affect and change staffs minds and consciousness. Furthermore, enact the related motivation system, award the best in implement of cross selling and CRM. (4) Further construction of talent team, establish effective training and testing system. Induct and foster all kinds of talents include fields of management, marketing, risk management, computer etc.. Following require of well implementing cross selling and CRM to distribute human resources reasonably. The integration and interaction of cross selling and CRM must depend on high-tech and high quality sale man, with high level managers for controlling. Hence, enterprises should train their staffs with clear purposes, enhance the training on CRM technology operation and start training on cross selling strategies, permitting the skill of manager and sale men within company is exchanging and upgrade, providing the human resources for well implement of integration and interaction of cross selling and CRM. References [1]. Knott A, Hayes A, Neslin S A. Next-product-to-buy models for cross-selling applications[j]. Journal of Interactive Marketing, 2002, 16(3):59~75 [2]. Jarrar F Y, Neely A. Cross-selling in the financial sector: customer profitability is key[j]. Journal of Targeting, Measurement and Analysis for Marketing, 2002,10(3):282~296 [3]. Kamakura W A, et al. Cross-selling through database marketing: a mixed data factor analyzer for data augmentation and prediction[j].international Journal of Research in arketing,2003,20(1):45~65 [4]. Guo Guoqing. Application and inspiration of CRM and cross selling in American financial [J]. J Shandong University, 2003,(5):79~84(in Chinese) [5]. Zhou Lili. Researches on problems of customer relationship management [J]. Modern Commerce, 2008,(11):225(in Chinese) [6]. Wang Yong, Liu Qianqian. CRM Current Situation[J]. Corporation of Economy and Science, 2010, (3): 74~75(in Chinese) 126