Customer Relationship Marketing Essay Research Paper Literature

Customer Relationship Marketing Essay, Research Paper Literature Review The Evolving Sales and Marketing Landscape Marketing and business development professionals are confronting a rapidly different and changing business landscape. The traditional business model that was once the standard is now being transformed due to technology drivers that make advanced marketing and sales capabilities possible. The business model of yesterday supported mass marketing, mass production, and standardized cookie-cutter products and services. Enterprises will have fall behind the competition if they continue to rely and operate on this substandard model. Today, companies are re-engineering their operations and investing in enhanced IT infrastructures, which enable them to provide customized, personalized, information-rich products and services. The new objective for marketers and business developers involves understanding the needs of their clients and the markets that they serve. This new focus on providing customer value is redefining business processes. Professionals, who understand and anticipate this shift, are positioning themselves ahead of the competition. The Impact of Technology Enabled Business Processes There is no denying the effect that technology has had on the way we conduct business. In recent years, technology has begun to play a significantly larger role in all aspects of business, including sales and marketing. Business processes must be re-engineered to incorporate a pro-active strategy for using information and IT to build a competitive advantage over other organizations. In many instances, the functionality provided by sales and marketing technology only automates current processes. Therefore, it is imperative that processes are clearly defined and well proven. Automating a poorly understood or followed process usually results in failure. Technology must be used as an enabler to support an already sound sales and marketing strategy. Beyond automating sales and marketing capabilities, technology is now designed to provide professionals with a wealth of information about their company?s clients and the markets that they serve. Companies are now able to collect data about their customers that when analyzed and utilized properly, can result in a competitive advantage. Online shopping is a prime example. If a customer makes a purchase, then the transaction is completed and revenue is generated. However, if a sales transaction is not made, the company still collects the shopper?s behavioral data and stores it in a marketing database. The company then has the opportunity to segment and analyze this data in order to learn more about that particular customer shopping habits. An analysis can then be performed to determine why this person did not make a purchase as well as what can be done differently to persuade this person to buy their product. The company can now position the four Ps of marketing: product, price, promotion, and place to better serve this customer. This process the company has taken unlitmately succeeds in developing a relationship with the customer. The company now knows more about what the customers preferences are and how to offer them. Consequently, the customer has a vested interest in the relationship as well, and is more likely to conduct business with that company in the future. The Shift to Relationship Marketing Though many of today’s marketing practices have evolved due to increasing technology, the marketing environment still centers around the four Ps of marketing described above. However, in order to remain competitive, companies must create a unique set of those four Ps which appeal to each individual customer and sets them apart from their competitors. Target marketing is no longer an efficient use of marketing efforts because a great deal of resources can be lost to uninterested individuals while in the process of trying to capture potential customers. Because of the potential loss of resources, there is now a movement away from targeting markets to specific individual customers. What is now required is customer-oriented relationship marketing. Many studies have shown that it can cost anywhere from four to ten times as much to acquire a new profitable customer as it does to maintain repeat buyers. These statistics are one of the driving forces behind the move to relationship marketing, which focuses its emphasis on customer retention rather than attraction. This type of strategy calls for a different type of marketing technique that is customer and information driven as opposed to product driven. With this in mind, marketers and business developers are now seeking new ways to obtain, manage, and analyze information on their customers. As we are increasingly finding, one of the most effective ways of capturing and utilizing customer data for marketing and sales efforts is by investing in technologies such as a customer relationship management system (CRMs). The Benefits of a Customer Relationship Management System According to the Gartner Group, the term CRM describes methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. From a technological standpoint, CRM can be categorized as the largest compilation of IT concepts to date. It involves moving the ownership of customers away from individual departments to the enterprise level. In addition, its focus is also on best serving the needs of each customer on a personal level rather than serving the needs of target markets as a whole. The primary functionalities of CRMs are still debated by experts, and often times it varies depending on the purpose the system is intended serve in that instance. However, the high-level buckets of CRM capabilities can be categorized according to customer service, marketing, and sales. Although customer service is an important aspect of customer relationship management, it is primarily employed by companies who sell products as well as have call centers and websites to market and/or sell their merchandise. For example, most consulting firms are in the business of marketing and selling professonal services. which results in their consultants and client managers having closer relationships with customers. Therefore, call centers are not a major aspect of their operations and delivering transactions based customer service over the web is not necessary. The scope of this paper is to explore CRMs and how they improve the sales and marketing efforts within professional services firms. With that in mind, this paper will not provide an in-depth analysis of the customer service capabilities offered by CRMs. Marketing Capabilities of CRMs One of the key reasons that companies invest in CRMs is because they can provide an analysis of customer data that can result in an improvement in process or product. CRMs can achieve an improvement in marketing processes because they help enterprises identify and target their best customers. An important question to consider is, ?If 20 percent of customers bring in 80 percent of revenue, why not serve only that 20 percent?? (Collins-White, pg. 1). CRMs can perform customer segmentation, which helps marketers focus their efforts on where they will make the greatest impact. Before technology-enabled marketing, individuals were usually segmented into groups with others who shared similar demographics or social characteristics. Today, CRMs are able to segment individual clients, perform statistical modeling, and provide profitability calculations in order to detect the relative value of that client to the business. For companies such as professional services firms, one customer can mean substantial revenue opportunities. Discovering these opportunities is one of the goals of effective marketing departments. CRM’s can aid in this process by providing lead management and opportunity tracking. Lead management technology analyzes company or proprietary data to determine where an enterprise?s greatest opportunities lie. In addition, consulting firms can employ the technology of CRMs to track requests for proposals. The technology behind CRMs has the capablity of keeping track of which RFPs were followed. In addition, an analysis can be conducted on those industries or markets from which the company is receiving RFPs in order to determine those areas that are most profitable and therefore focus on in the future. Not only can CRMs assist in identifying opportunities, they can also track marketing efforts against wins in order to determine how effectively a company?s campaigns are. Many companies blindly market to current and potential customers without really knowing if their efforts are working. An integrated CRM has the functionality to calculate the percentage of those who responded to a marketing campaign compared to those who were targeted in the campaign. This is an invaluable tool in identifying the most appropriate methods and tactics for reaching current and potential clients. A technique that has long been employed by marketers to get a better sense of their customer?s needs and preferences is through surveys and questionnaires. Many CRMs come equipped with tools that can automate and improve upon this process. Survey tools can be used to distribute, compile, manage, and most importantly analyze survey findings. Technologies as common as MS Access and e-mail are capable of distributing, compiling, and managing these findings. But it takes the more advanced functionality found in technologies such as CRMs in order to conduct an in-depth analysis of the survey results. This type of analysis is what makes the survey results meaningful to marketers and business developers. Sales Capabilities of CRMs Sales and marketing efforts often go hand in hand in ensuring revenue and growth within an enterprise. Hence, much of the information and process improvements, which benefit marketing, can also be used to improve sales efforts as well. Because these two functions are so closely related, its only logical that the technology that enables them is integrated. CRMs provide information, resources, and tools that allow marketing teams to win clients and enable sales teams to generate additional business. These two departments need to form a partnership in order to ensure their efforts are being focused on using CRM tools to optimize sales and marketing efforts. The backbone of CRM sales automation is a centralized customer database that lets customer information collected throughout the enterprise available to the company?s sales force. This provides the sales team with more information to use for prospecting and customer contact. CRMs allow sales people in the field better manage their contacts by creating client profiles as well as records of their historical interactions with the company. Effective and accurate contact management is a vital tool to any client manager. Client managers need to track who their contacts are in a particular company, what their job role is, where they are located, etc. This information ensures that they are communicating with the right people in the company and keeping key people informed of developments. For example, a client manager may want to send a letter out to all of their contacts within a particular industry. A CRM with proper contact management features will allow a client manager to identify those contacts and create distribution lists or mail merges so the communication is sent to the intended recipients. Client profiles are another essential feature of a CRM. Client managers need the most relevant, accurate and complete data on their clients as possible. A CRM can help make this possible. A truly integrated CRM is an ideal system for collecting and managing customer data. This means that all interactions with the customer are stored in a centralized database for easy retrieval. To a client manager, this information is invaluable. A CRM can create a customer profile based on data received from web registrations, surveys, as well as historical interactions. Information from client transactions can be used to determine customer preferences, needs, as well as activities or events the client has attended. This information can be used when making decisions on how to best optimize sales with that client in the future. The Architectural Components of a CRM To understand the structure of a CRM solution one must consider the business model it is designed to support. As mentioned previously, marketing and sales departments are increasingly relying on relationship marketing as a means to more effectively acquire and retain clients. In short, in order to say competitive, companies must operate based on a customer-centric business model. The Gartner Group predicts there is an 80% probability that by 2001, 70 percent of marketing applications will be entirely redesigned to focus on customers instead of products and redeployed to take advantage of emerging technologies. CRMs are at the forefront of emerging sales and marketing technologies, but there are many tools that contribute to this technologies vast functionality.