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    CRM A Database Approach Kumar Reinartz Ch02

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    Sherene Dharshinee
    CRM has evolved from early functional systems to strategic approaches that integrate customer-facing and back-end systems. The CRM industry has grown significantly due to shifts to relationship-based markets and improved IT. Companies can implement CRM through in-house development, buying licensed software, or outsourcing, with stage-wise implementations providing a lower-risk option than full enterprise-wide solutions. The future of CRM includes deeper customer analytics and integrating additional functions.

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    CRM A Database Approach Kumar Reinartz Ch02

    Uploaded by

    Sherene Dharshinee
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    CRM has evolved from early functional systems to strategic approaches that integrate customer-facing and back-end systems. The CRM industry has grown significantly due to shifts to relationship-based markets and improved IT. Companies can implement CRM through in-house development, buying licensed software, or outsourcing, with stage-wise implementations providing a lower-risk option than full enterprise-wide solutions. The future of CRM includes deeper customer analytics and integrating additional functions.

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    40471722 CRM a Database Approach Kumar Reinartz Ch02[1]

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    CRM has evolved from early functional systems to strategic approaches that integrate customer-facing and back-end systems. The CRM industry has grown significantly due to shifts to relationship-based markets and improved IT. Companies can implement CRM through in-house development, buying licensed software, or outsourcing, with stage-wise implementations providing a lower-risk option than full enterprise-wide solutions. The future of CRM includes deeper customer analytics and integrating additional functions.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    239 views19 pages

    CRM A Database Approach Kumar Reinartz Ch02

    Uploaded by

    Sherene Dharshinee
    CRM has evolved from early functional systems to strategic approaches that integrate customer-facing and back-end systems. The CRM industry has grown significantly due to shifts to relationship-based markets and improved IT. Companies can implement CRM through in-house development, buying licensed software, or outsourcing, with stage-wise implementations providing a lower-risk option than full enterprise-wide solutions. The future of CRM includes deeper customer analytics and integrating additional functions.

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    Download as ppt, pdf, or txt
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    At a glance
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    CRM has transformed from functional to strategic by integrating customer-facing and back-end systems. Implementation can be done gradually in stages to reduce risks.

    CRM has evolved from sales force automation and customer service in the 1990s to integrated customer-facing applications in the 2000s to strategic CRM today by connecting front-end, back-end, and external partners/suppliers.

    Companies can buy licensed CRM software, outsource a managed CRM service, or implement an enterprise-wide solution in stages.

    Customer Relationship Management A Databased Approach

    V. Kumar Werner J. Reinartz Instructors Presentation Slides

    Chapter Two CRM Industry Landscape

    CRM

    Topics Discussed
    Evolution and Growth of CRM Strategic CRM vs. Functional CRM Components of the CRM Project CRM Implementation Options CRM Software and Applications Future of CRM

    Evolution and Growth of CRM


    1st generation >1990 2nd generation >1996 3rd generation >2002

    Call Center Management Customer Service Support


    Integrated customer facing Strategic CRM Front-end ( marketing, sales, service)

    Sales force Automation

    Campaign Management Scope: Service function Sales function Goals: Improve service operations Increase sales efficiency

    ERP Integration Customer analytics Complete Web integration


    Entire organization

    Marketing function Service function Sales function Reduce cost of interaction Improve customer experience Increase customer retention

    Cost reduction & Revenue growth Competitive Advantage

    Time-line of CRM Evolution

    1st Generation (functional CRM approach)


    Sales force Automation (SFA)
    Pre-sales functions

    Customer Service and Support (CSS)


    Post-sales functions Combined SFA/CSS market niche small Market for ERP growing

    CRM Evolution (contd.)


    2nd Generation (customer facing front-end approach)
    Similar to ERP - integration of a number of independent sub-systems into one package Customer expectations exceeded realized benefits of CRM technology

    3rd Generation ( Strategic CRM)


    Integration of customer-facing front-end with back-end systems as well as partners and suppliers

    Third Generation CRM

    CRM ERP
    F I N A N C E Distribution Service & Support Order Processing Sales R&D Marketing

    Manufacturing

    C U S T O M E R

    Growth of the CRM Industry

    Approximate Worldwide CRM Investments (applications, hardware, and services)


    50
    40.0 47.5

    60% 50%

    40 Spendings in $million
    34.6 29.7

    40%
    30% 20% 10% 0%

    30
    23.7 20.0

    25.9

    20
    13.5

    10

    0 1999 2000 2001 2002 2003 2004 2005 2006

    Mean estimates as of 2002 and 2003 across various providers CRM outsourcing services not included

    Spendings Year-to-Year Growth %

    Sources: IDC, Aberdeen, Gartner, Forrester

    Year-to-Year Growth

    What Drives CRM Industry Forward?


    Shift from transactional to relationshipbased markets

    Growing proof of value in targeted customer relationships


    Improved effectiveness of marketing communication tools IT vendors and associated change management consultancies Reducing costs of data storage and capture Developments in Customer Value measurement

    Components of the CRM Project


    Strategic component
    Designed to optimize profitability and customer satisfaction
    Foster behaviors and implement processes and technologies that support coordinated customer interactions throughout all customer channels

    Functional component
    Integrate various databases and applications that exist in the enterprise

    Components of the CRM Project (contd.)


    CRM should allow companies to address two key issues:

    Ability to analyze and understand customer data through sophisticated but easy-to-use reporting tools Act on the knowledge obtained to customize services and products and anticipate and fulfill customer needs

    Options for Implementing CRM

    In-house development

    Buy licensed CRM software

    Outsource a managed service

    In-house Development
    Advantages:
    Can have a tailor-made solution adapted to

    companys needs and structure


    Develop internal resources and skills that permit development of the system each time change is required Avoid dependence on CRM vendors or new software developments

    Disadvantages:
    Most expensive option-company has to maintain, operate and improve the system on its own

    Difficult to attract and retain skills to solve and develop data warehousing challenges
    Longer time commitment(1-2 years) comparatively

    Buy Licensed CRM Software


    Advantages:
    Usually have proven record of success IT concept and developments implemented with help of CRM vendor, company only needs to adapt its IT structure to integrate the new solution

    Disadvantages:
    Expensive-initial fees and license costs, license renewal charges usually high, maintenance costs over life of software, payments for newer versions High consulting fees charged to customize solution to companys needs Integration of new software with existing applications usually tough, expensive and time consuming(1-3 years)

    Outsource A Managed Service


    Advantages:
    Upfront costs lower- dont need to pay for software licenses

    and hardware systems


    Can adopt a pay-as-you-go approach, with visible results

    Disadvantages:
    Needs to contact outsourcing company for every new requirement and pay for developments Risk of losing CRM solution investments if the outsourcing company goes out of business

    Implementing CRM: The Decision Process

    Decision To Implement CRM

    Purchase and install a complete CRM solution from a vendor


    YES

    Stage-wise implementation

    Implement an enterprise-wide CRM program Entirely outsource the CRM application process

    NO

    Stage-wise Implementation vs. an Enterprise-wide CRM Solution


    Best-of-breed approach ( Stage-wise)
    CRM software is offered in different, independent modules, adapted to a specific departments needs Company buys sales automation software and

    contact management module from different providers

    Enterprise wide CRM solution


    Composed of different modules from the same provider Implemented as a whole by connecting different modules and existing databases Individual modules usually customized according to company needs

    Future of CRM
    Worldwide increased spending on CRM Next generation CRM-focus on building sustainable competitive advantage that cannot be easily imitated by competitors Integration of HR function into strategic CRM efforts Creation of a single-view of customer Continuous fine-tuning and micro-segmentation of customer database Growing ability of firms to handle deep customer analytics

    Summary
    CRM has evolved from first generation Functional CRM to Strategic CRM Transformation by integrating customer facing front-end with back-end systems and partners and suppliers Growth of CRM facilitated by growth of IT CRM solution providers are now developing specialized solutions for individual industries Increasing pressure to reduce CRM costs is leading firms to shift to new systems that can be further developed and integrated internally Short-term projects and implementing CRM in different stages provides a low-risk approach

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