Enhancing the Sales Function through the Effective Adoption of CRM Applications: Lessons Learned and Future Research Directions Adam Vrechopoulos Lecturer & Scientific Coordinator ELTRUN-IMES (Interactive Marketing and Electronic Services) Research Group ELTRUN The Research Center Department of Management Science and Technology Athens University of Economics and Business 76 Patision Ave., 104-34 Athens, Greece Tel: +30-210-8203723, Fax: +30-210-8203731 e-mail: avrehop@aueb.gr Abstract Several companies today use CRM applications to automate their sales function. However, they face several problems during the adoption process of these systems. This paper presents all the important factors that determine the CRM adoption process, summarizes the lessons learned as well as sets the research agenda for future studies on that critical issue. Indicatively, the findings of this study imply that companies should have a clear vision & commitment, invest in training and education, involve all stakeholders in the CRM adoption process, adopt an interdisciplinary research approach and a customer centric strategy, consider significant differences between cultures, markets, business sectors and size of the company, realize what is ecrm and what is not, invest in consumer behaviour surveys, follow permission marketing principles, measure results from the beginning of the project and avoid unrealistic expectations. Keywords: CRM, Sales Automation, ICT, CRM Adoption, Critical Success Factors
1 Enhancing the Sales Function through the Effective Adoption of CRM Applications: Lessons Learned and Future Research Directions 1. Introduction The evolution of the Internet as a selling medium has radically affected the sales function. In general, however, Information and Communication Technologies (ICT) offer today a plethora of alternative channels and applications to reach, communicate and support customers both at business-to-business and business-to-consumer relationships (e.g. mobile commerce, customer relationship management software that offers Sales Force Automation services, etc.). Such tools and applications support both sales managers and salesmen in their jobs, providing huge opportunities towards enhancing the value offered to their customers and conducting their daily tasks more efficiently. To that end, several research studies have already addressed the emerging role of Customer Relationship Management (CRM) applications in the sales function (Pass et al. 2004; Yim et al. 2005). It should be noted that those companies that have automated their back-end process mainly through Enterprise Resource Planning (ERP) Systems, they are now focusing on the corresponding front-end ones by introducing CRM systems. CRM software is one of the most promising tools for enhancing the value offered to customers (businesses and consumers) and is available today in many alternative versions by several suppliers. Also, CRM vendors today work on providing vertical solutions meeting, therefore, the peculiarities and specific requirements of different sectors (e.g. CRM for Tourism, Telcos, Banking, Grocery retailing, etc.). However, despite the differences in the structure, focus, and offered services of the available CRM software packages, the majority of them mainly offer three basic modules: the Marketing Automation, the Sales Force Automation and the Customer Service module. Nevertheless, the application of the CRM philosophy (based on the Relationship Marketing principles and guidelines) on current business practice is highly dependent on software applications and tools, namely on ICT in general. The available CRM software packages support business to design effective marketing, sales and customer service programs towards enhancing the value offered to their customers, meeting at the same time their organization goals (i.e. win-win long-term relationships). However, companies trying to effectively adopt and exploit CRM applications face several problems during this process. In addition, several research issues on that topic still remain open. To that end, the present study aims to discuss the critical factors towards effective CRM adoption by companies that sell products and services either through business-to-business or business-to-consumer relationships, or both. In other words, the objective of this paper is not to describe what CRM really is (i.e. available definitions, benefits, how it works, etc.) but rather to present some basic guidelines for effective CRM adoption provided through the combined review of the available business practice (i.e. lessons learned) and corresponding theoretical frameworks. The paper is structured as follows: Section 2 includes the research methodology of the present study while section three discusses the critical success factors for effective CRM adoption. Then, section four presents the generic conclusions and managerial implications
2 provided by this study as well as sets the research agenda for future research on that important, for the sales function, topic. 2. Research Methodology This paper follows a desk research approach combined with a qualitative empirical one. Specifically, the author conducted a series of in-depth personal interviews with: major CRM software vendors CRM business users in different sectors (e.g. banking, retailing, etc.) customers (i.e. businesses and consumers) that enjoy the CRM provided services undergraduate and post-graduate students in the context of CRM courses However, it should be clarified that these interviews were actually conducted during the last years as part of the research and teaching activities of the author and not for the specific purpose or writing this paper. In other words, the findings of the present paper are actually derived through a longitudinal type of qualitative empirical research executed in an indirect manner. In sum, the results of this study could be labeled lessons learned from the current business and research practice as far as the adoption of CRM philosophy and applications are concerned. Finally, it should be also clarified that the present study follows an interdisciplinary approach which actually constitutes a common research practice in this area (Park and Kim 2003; Javachandram et al. 2005; Wehmeyer 2005; Kevork and Vrechopoulos 2006). Specifically, since CRM software applications are actually Information Systems (IS), there is need to include theory not only from the Marketing discipline (where the Sales topic actually belongs) but also from the IS one in any similar to the present one research attempt. 3. Critical Success Factors for Effective CRM Adoption The adoption of any Information System is not an easy process. According to the framework for organizational and societal impacts of Information Technology (Turban et al. 2002), organizations are composed of five major components which are in a stable condition, called equilibrium, as long as no significant change occurs in the environment or in any of the components. These components are: Information Technology, Organization Structure and the Corporate Culture, Management and Business Processes, Individual and Roles and the Organization s Strategy. Since these components are interrelated and interconnected, any change on each of them (e.g. introduction of a CRM system) will cause effects on the other ones. This implies that the company should be aware of these effects before introducing such a system in order to be able to proceed on the required modifications. To that end, several CRM consultants work towards preparing the organizations to make the appropriate adjustments and redesign their processes in order to effectively adopt a CRM system. However, particular attention should be placed on investigating the degree of improving, changing and redesigning existing business processes (Priers and Stone 2004). In other words, a difficult task is to decide the degree of adapting business process on the CRM solution or vice-versa (i.e. adapt the CRM out-of-the-box solution to the existing business processes).
3 Similarly, several research studies have focused on investigating the effects of CRM introduction to people, processes, etc. within the organization (e.g. Chen and Popovich 2003) and the success factors of CRM strategies (e.g. Chen and Chen 2004). Companies employing CRM systems must have a clear vision about what to expect from them and how. They should also have a top-down and bottom up commitment on this project from its beginning and during the whole period of its execution. All these imply that companies should adapt their philosophy and operation to what CRM actually dictates. In other words, being a CRM organization is not achieved through just buying an expensive CRM software. CRM must be included in the strategic marketing planning of the company either as a strategic mechanism or as an effective tool to implement the selected marketing strategies. Besides, CRM is actually both a strategy and a tool. This implies that it must be clear why and how to use a CRM system in order to avoid situations like we will buy a CRM system because our competitors did it. Similarly, companies need to clarify what is CRM and what is not (e.g. what is the difference between CRM and ecrm?) as well as avoid unrealistic expectations! Along these lines, effective measurement and evaluation mechanisms as well as contingency plans should be in place before the execution of any marketing plan. Training and educating all the involved players (i.e. people that will use the CRM system) is an issue of great importance not only for CRM but for any business information system. For example, many salesmen refuse to use CRM systems simply because they do not have the required skills to conduct such an action. Along these lines, many salesmen have negative attitudes towards CRM systems simply because they afraid that they will use their bargaining power against the organization simply because they will provide to the system all the information they have about their clients. This information, at the moment belongs only to them (they perceive it like a competitive advantage) and they believe that providing this information in a central warehouse it will be easier for the company to recruit and train new salesmen in order to easily replace them with minimum cost. To that end, training and education, should have as an objective to communicate to the salesmen the benefits of using such a system and how and why their jobs will be improved by using it. Similarly, strong motives should be provided to salesman as a tool to increase the diffusion of such systems. Specifically, since a CRM system promises efficiency and effectiveness, a percentage of the savings and profit increases caused by CRM should somehow return to sales personnel as bonus. This constitutes a strong motive for increasing the use or start using this system. The introduction of a CRM system to any organization should be treated as a project within which all the interested partied (e.g. suppliers, customers, company users) must be involved (e.g. participate in vendors presentations, etc.) from the beginning (Corner and Rogers 2005). Apparently, users will set the requirements that should be supported by the system during its out-of-the-box customization on the corresponding business processes and users needs. In addition, involving users (e.g. salesmen) from the beginning of the project usually increases their commitment on the system since they feel that they actively participated on its creation, installment and diffusion within their company and, thus, they form positive attitudes towards it (i.e. they perceive the CRM system as an outcome of their work within the project). Similarly, involving customers in the project is very critical since they will provide useful feedback about what services they really want and how they prefer these services to be offered. It should be noted, however, that while letting customers to help
4 themselves and do their jobs through self-service features, it s important for the company to keep the control of the key manipulated variables that are critical for its strategic marketing planning. For example, while low cost CRM-enabled mass customization (e.g. individualized printed catalogues) is a clear business opportunity it should be treated with caution. Speed is very critical for such projects. Technology evolution is very fast and in case a CRM project takes a long time to end, the threat of technology obsolescence is apparent (i.e. company investments on infrastructure). Other critical issues involve the integration with the companies legacy systems as well as the interoperability with the available applications (e.g. supply chain management applications). Today, however, there are many available standards (e.g. XML) that enable different systems to collaborate in a seamless fashion. In the context of multichannel retailing, which is a reality today (Hughes 2006), companies adopting CRM applications should enable multichannel coordination in order to provide an integrated view of the company to their customers on the one hand, and create a 360 degree view of the customer relationship on the other (Pan and Lee 2003, Reid and O Brien 2005). Indicatively, companies should not ignore other than e-mail communication channels (e.g. call-centers, salesforce, mobile commerce, etc.). In addition, companies should streamline business processes that impact the customer (CRM-ERP-SCM). Targeting the right customers through the intelligent mining of data considering, however, significant differences between cultures, markets, business sectors and size of the company are also some key indicators of success (Ellis-Chadwick et al. 2002; Vrechopoulos et al. 2006). To that end, investing in consumer behavior surveys is quite critical. Finally, getting certifications, foster community (e.g. blogs!!), building loyal customers and seeking for vertical solutions (i.e. sector based) are also some important guidelines for effectively exploiting CRM features. However, it should be reminded that differentiation by valuation is not profitable unless a firm can say that at least half of its profits come from 20% or fewer of its customers. 4. Conclusions, Implications and Further Research In fact, CRM means different things to different people. For example, is CRM a Marketing or an IS job? This situation calls for interdisciplinary research approaches where people with different backgrounds will communicate in a neutral setting. This also justifies why several organizations today create a separate division in their business structure, labeled CRM Department, in which people with mixed backgrounds (mainly Marketing and Information Systems) participate in it through a process rather than a functional based organizational structure. CRM is (and should be treated in that way) a customer-centric philosophy. This implies that companies that may not want to invest in buying an expensive CRM software solution they could apply its philosophy though a typical low-cost ICT environment (e.g. Excel or Access and Internet). Similarly, there is a debate on whether CRM is an all or nothing process. For example, for those companies that may want to pilot test a specific CRM module (either due to budget constraints or due to the fact that they may want to get some measurable
5 results and clear evidence in order to support the investment decision) CRM is applied only to a specific task or department (e.g. customer service). In general, however, the management of customer relationships should be an integrated process in the sense that collecting, processing and exploiting all the important customer information (e.g. responses to promotional campaigns, cross-sell figures, in-store behavioural patterns, number of complaints and response times, etc.) is the only reliable way to offer value added services to them (see Kevork and Vrechopoulos 2006). To that end, CRM philosophy and relevant software applications provide the necessary and suitable tools to accomplish this objective and, therefore, constitute a prerequisite for success and competitive advantage sustainment. Nevertheless, changing the business culture (e.g. family vs. non family business see Cooper et al. 2005) should be conducted before proceeding on redesigning processes and introducing CRM systems. The use of CRM consultants in case such an action is needed (i.e. in case there is not any available expertise in the company) helps the company to avoid reinventing the wheel and ensure a quick but effective CRM implementation. However, companies should invest through training and education to create expertise within the company also in the case of total outsourcing. This is very important not only for selecting quality partners and evaluating the quality of services offered by the external consultants but mainly for the diffusion and establishment of the CRM philosophy within the organization. Similarly, successful companies continuously work through brainstorming sessions and meetings towards seeking and findings ways to exploit CRM for designing new business models and explore business opportunities. Finally, since information is the lubricant of a CRM application, companies should place emphasis on guarding consumer privacy and in general apply Permission Marketing rules and guidelines. Future research should work mainly through a case study approach towards measuring the results of CRM projects and providing evidence on whether such an investment helped the organization to meet its business goals. Specifically, since today most of the CRM projects are actually running for a short period of years, there is a strong need to support companies to measure the first results of these projects. Several CRM consultants and researchers work already on that topic, helping companies to find out whether their CRM system helped them to meet their objectives, how, why and in what extend. Similarly, this case study research approach provides several research opportunities for building corresponding theoretical frameworks and guidelines. Finally, it is quite important to design conclusive research studies (either descriptive or causal) and formulate and test corresponding research hypotheses that could be well packedup by the available exploratory studies and relevant literature through an interdisciplinary perspective. In other words, since most of the available studies on CRM are more exploratory rather than conclusive ones (this is well explained by the fact that CRM is a new and not wellresearched issue until now) there are many open research questions that need to be answered through a conclusive type of research. Indicatively, future research could deal with investigating the differences between different sectors as far as the effectiveness of the offered services are concerned (i.e. which are the most effective services for which sectors and how these services should be offered?) or different cultures, types of business, etc. Along these lines, future research could investigate how a CRM system could be used as a tool for mass customization purposes in the context of e-tailing.
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