Introduction: -

Within the present business environment, characterized by an increasingly aggressive

competence, the battle to win customers is stronger every day. Companies that enter
to compete in a new market weaken the already existing and solid ones, due to the
new ways of doing and conceiving businesses. One of the factors that have driven all
these changes is the constant change and the evolution of technology. Because of this
reality, the CRM concept has evolved in such a way that nowadays it must be viewed
as a strategy to maintain a long-term relationship with the customers.

 CRM originated in early 1970s when the business units had a manifestation that it
would be advisable to become customer emphatic rather that product emphatic. Birth
of CRM was because of this heedful perceptiveness. The famous writer and
management consultant Peter Drucker wrote; the true business of every company is to
make and keep customers. Traditionally every transaction was on paper and
dependent on goodwill which created hindrance in clutching customers. People used
to work hard in entertaining customers by presenting new products with astonishing
services; they were ready to work overtime for grasping more and more customers for
increasing business. This too resulted in customer satisfaction and loyalty up to some
extent, but at the end of the day there was no such bonding or relation between the
two to carry on with future business smoothly. Previously business was quite easy as it
was mere a one-to-one dealing without any specific process. But with time, due to
incoming complexities in communication, it found itself in troubled waters. Emerging of
new strategies and technologies in global marketplace and a mammoth degree
of competition in business, the approach needed to be changed to proactive rather
than reactive.

Origination of CRM turned out to be a piece of cake for all suppliers and customers
due to its advantages. Customer relationship management came as a process that
dealt with relationships with customers surpassing the whole business. Originally
customer relationship management was based on three major principles; shielding the
current customers, fostering new customers and enhancing asset value of all the
customers. With the advent of CRM which was integrated with high end software and
technology, business perspectives were totally changed. A CRM system eventually
emerged as consisting of company-full of information which is depicted sophistically to
increase business profit and meliorate customer satisfaction and loyalty, on the same
hand reduces business cost and investment.

LITERATURE REVIEW:-

CRM has developed as an approach based on maintaining positive relationships with

customers, increasing customer loyalty, and expanding customer lifetime value
(Blattberg & Deighton, 1996; Brassington & Pettit, 2000; Ahn, Kim, & Han,2003).
Understanding the needs of customers and offering value-added services are
recognized as factors that determine the success or failure of companies. Kotler
(1997) pointed out that CRM principally revolves around marketing and begins with a
deep analysis of customer behavior. Chaffey (2003) presents a three-stage model of
CRM which shows how customer relationships can be managed. His model proposes
that customers are first acquired via clear communication of a powerful value
proposition. They are retained via good service; and the relationship extended via the
delivery of tailored products/services to clearly defined customer segments. This view
means that CRM uses information and communications technology (ICT) to gather
data, which can then be analyzed to provide the information required to create a more
personal interaction with the customer (Swift, 2001; Brohman, Watson, Piccoli, &
Parasuraman, 2003; Pan & Lee, 2003).

From an operations perspective, Bose (2002) pointed out that CRM is an integration
of technologies and business processes that are adopted to satisfy the needs of a
customer during any given interaction. Whilst the potential benefits are attractive,
CRM implementation must be managed carefully to deliver results. In order to
successfully embed CRM, system users should be involved and expectations
managed (Gefen & Ridings, 2002). Business processes need to be changed as well
as technology (Swift, 2002; Goodhue, Wixom, & Watson, 2002; Campbell, 2003),
with two interconnected processes, knowledge management and interaction
management, seen as key by Zablah, Bellenger, and Johnston (2004). The former
process uses marketing intelligence to build and maintain a portfolio of profitable
customer relationships, feeding into the latter process which leverages the
intelligence to ensure the quality of individual exchange episodes.

Directly related to an underlying CRM is the emerging discipline of knowledge

management (KM). In a business context, knowledge is defined as information that
is relevant, actionable, and based at least partially on experience. In essence,
knowledge is what employees know about customers, products, processes, and past
successes and failures. Three key technological aspects of CRM can enable the
creation, capture, and transfer of knowledge- based resources:

1) Customer interaction systems deployed to reduce internal costs while

providing easy access to knowledge resources e.g. product information,
human experts.
2) Integrated channel management intended to make the customer experience is
consistent across all media while simultaneously capturing and using relevant
data-information-knowledge to maximize revenues.
3) Analytical tools e.g., online transaction and analytic processing, allowing for
the analysis, distribution of customer information and profiles within and
between functional areas to support and enable proactive marketing and
sales.

CASE STUDY about implementation of CRM in IBM:-

Problem:-

Over the past four decades, the approach IBM has taken to selling products and
serving customers has evolved. With its commanding market share of mainframe
computers in the 1960s and 1970s, IBM’s renowned product support generated a
steady stream of revenues. By the 1980s, however, the rise of smaller, cheaper,
networked computers led to increasing competition and choices for
customers.During the early 1990s, IBM deployed a geographically based sales
organization that was increasingly unable to serve customers. As one IBM executive
put it, We were a mile wide, but only an inch deep in understanding and supporting
our customer’s needs. R&D focused on product functionality versus serviceability. In
a competitive marketplace with decreasing product differentiation, function alone can
be a hard sell.

From 1986 to 1992, IBM’s market share dropped from 30% to 19%, with each
percentage point representing US$3 billion in revenues. In response, rather than
paying attention to customer needs, IBM focused on its own financial needs and tried
reducing costs by cutting customer service staff and levels of support. In the end,
customers were driven away. Thus, by the mid-1990s, the changing market
environment and downsizing necessitated that IBM rethink the basic way they
service customers. In late 1994, an IBM executive from Corporate Strategy was
charged with the task of addressing the problem of declining market share and
customer defection. The executive put together a cross-functional task force
consisting of system development experts and representatives from business,
marketing, and product development.

Methodology to implement CRM:-

Understanding the Customer:-

The first step for the task force was to identify and understand the customers’ current
points of pain in their interactions with IBM. This step was essential before
undertaking any design effort intended to leverage the new electronic channel
opportunity. Using a combination of qualitative research i.e. interviews, focus groups.
and quantitative research i.e., structured, semi-structured surveys., the task force
sought to understand the drivers of satisfaction for various customers in addition to
their current points of pain. Customers defined satisfaction in four ways:

1. The overall responsiveness of IBM, i.e., a holistic view of responding to customer

needs and not just selling technology, (39%);

2. Ease of access to and ease of conducting business with IBM (35%).

3. Trust in continuing future product development, i.e., customers wanted assurance

that IBM would remain current in meeting their technology needs (18%).

4. Product-to-price value ratio, i.e. IBM would continue to be competitively priced

( 8%).

Initial interviews revealed that overall customer satisfaction was not trending in a
positive direction. When asked, in the past 2 years, has your satisfaction with IBM
increased, stayed the same, or decreased?, only 21% reported an increase, while
40% reported a decrease.
Re-engineering of the customer relationship objectives of Inside IBM

With a deeper understanding of the customers, the task force set forth to design a
new CRM process and electronic system for implementation, called Inside IBM. The
CRM process and system was to be organized around customer needs, not IBM
products. After careful study of best practices, the task force identified several
general system design requirements:

1. Inside IBM should provide a common and single interface, or point-of-contact, for
the customer.

2. Inside IBM should be flexible in use, allowing customers to control as much of the
interaction as possible according to their needs. Multiple sources of information
should be accessible in a consistent way, but customizable to reflect individual
customer needs.

3. Inside IBM should be intuitive and user friendly or all external and internal
audiences who interface with it.

4. Inside IBM should provide easy access to IBM’s organizational knowledge-based

resources and improve decision-making processes for both the customer and IBM’s
workforce.

5. Inside IBM should provide a learning opportunity by facilitating knowledge

exchange in the areas of business, technology, and marketing, i.e., integrate product
development, CRM, and the supply chain.

6. Inside IBM should improve backend communication and cross-functional

coordination.

Impact after implementation CRM:-

The purpose of the pilot study was to assess the feasibility of Inside IBM, as well as
quantify the benefit and value of supporting the customer relationship.
Fundamentally, the question was: Would Inside IBM address customer frustrations
and Apoints of painB and enhance satisfaction and performance? At the end of the
6-month period, a survey was distributed and follow-up interviews were conducted.
Results indicated that nearly two-thirds of customers found using Inside IBM to be
beneficial 21% very beneficial, 45% beneficial, 26% some-what beneficial, and only
8% of little or no benefit. Customers identified key benefits including easy access to
information 43%., access to human experts and information for problem resolution
33%., and ease of purchasing 22%.. Essentially, Inside IBM provided a painless
means of accessing IBM and assured that IBM would be available and ready to meet
customer needs.

Overall, customers participating in the pilot study gave a strong endorsement of

Inside IBM. Over 75% reported that it would enhance IBM’s image as a solution
provider. When asked if Inside IBM would enhance the value of the customer’s
relationship with IBM by addressing the Apoints of painB, nearly 63% indicated that it
would have a significant or very significant effect. Less than 8% reported that it
would have little or no significance in enhancing the relationship. Importantly, the
task force found value to be Ain the eye of the beholderB. That is, customers who
perceived the most value were also those customers who depended on IBM as a
valued resource.

Finally, customers reported that they would purchase more from IBM due to Inside
IBM. The potential to grow revenue was attributed to three key factors. First, for
customers who already prefer IBM products and services, Inside IBM would help
maintain this mindset by enhancing the customer relationship and loyalty i.e., grows
the share of customer. Second, the pilot test indicates that Inside IBM enhanced
awareness of IBM’s products and services, thereby addressing the problem that you
can’t purchase products or services you are not aware of. Third, Inside IBM
increased the ease of ordering, which should support revenue growth. In fact, during
the pilot study, over US$2.2 million in actual revenue was generated via Inside IBM.
The task force concluded that loyalty could be significantly enhanced, leading to
revenue growth, as service and support issues were being addressed.

In conclusion, results of the pilot study highlighted a key lesson learned regarding
keeping customer’s satisfied: Consistency and accuracy of information, access to
knowledge-based resources, and timely communication would prevent problems or
assist in resolving them faster.
Benefit of CRM:-

CRM focus on managing the relationship between a business and its current and
prospective customer base as a key to success (Gebert et al., 2002; Falk, 2004). To
be effective, a CRM strategy must encompass and integrate all customer-facing
activities. It should ensure that no matter where, when, or how a customer interacts
with the company, the contact is personalized, consistent, and demonstrates that the
company knows and values that customer.

 Nurturing and maintaining company’s customer base.

 Developing a closer relationship with customers.
 Increasing customer satisfaction.
 Declining customer acquisition costs.
 Ensuring sustainable competitive advantage.
 Maximizing profitability due to increased sales.
 Increasing customer loyalty as a result of more personal and efficient service.
 Enabling micro-segmentation of markets according to customers’ needs and
wants.
 Collaborating with customers for joint value-creation.
 Acquiring well-accepted outcomes of data-mining activities.
 Supporting effective sales efforts through better management of the sales
process.

The barriers to CRM

Some of the most important barriers to CRM are inadequate supporting budgets,
lack of senior management commitment to CRM, and poor communication.
Furthermore, there were other important barriers including an absence of
complementary customer management skills, inefficiencies in business process, lack
of end-user input at the service/design stage, a lack of standardization, and inter-
departmental conflicts, apart from the lack of cultural readiness.
Conclusion:-

CRM is emerging as a new area of focus for service firms globally. But these are
mainly based on some loyalty programs and  investments  in  technology  for
enhancing  the capability  of  databases. Managers  should  ensure  that while
investing  in  databases,  technology,  human  resources  and CRM programs,. A
holistic approach which leads firms to develop customer centric process,
approaches,motivate employees to perform to their full potential through
empowerment are prerequisites for firms to successfully utilizetheir customer 
knowledge to enhance relationships with their customers. Customer relationship
management is do-able. Presently, Companies have wonderful opportunity to fully
utilize the power of Customer Relationship Management a CRM
Software. If a phased approach is adopted in an planned manner with cross
functional teams  implementing  the  customized  solutions  under  the  co-leadership
of  both  the  IT  and  strategists,  it  will  obtain  the appropriate approvals at each
stage and organization will have a successful CRM system to compete globally..
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