Factors Required For A Successful Crm

Published Date: 02 Nov 2017

ABSTRACT:

Due to the rapidly growing and diversified nature of Pakistani Banking industry many questions arises as to the factors a company should consider when developing a CRM strategy. Diverse views have been in a fragmented manner about the core issues required for a successful implementation of CRM. The purpose of this research therefore is to unveil the factors that contribute to a successful implementation of a CRM strategy. To achieve this purpose, the following research questions were outlined: What are the (would be) benefits of CRM for financial institutions in Pakistan? What are the challenges for implementing CRM in financial institutions in Pakistan? and, What are the factors that facilitate successful implementation of CRM in financial institutions in Pakistan? In order to obtain the best results from the discussions, the main research methodology Is to be adopted is a case study involving two (2) financial institutions in Pakistan. Findings from the study will reveal whether financial institutions adopt both "hard" and "soft" CRM skills as a means of ensuring the success of their CRM projects.

Findings would also help to determine about the challenges faced especially in the area of data integration which tends to slow down the progress being made by companies in their CRM operations. Further, findings should also underscore the benefits derived from CRM initiatives even at the initial stages of its implementation. Finally, contrary to other theories that CRM requires heavy initial capital investment, findings should indicate that CRM depends very much on the commitment from top management, employees as well as customers.

INTRODUCTION:

Below mentioned section introduces the reader to understand a brief background of Customer Relationship Management and the nature of Financial Institutions in Pakistan. This is followed by the discussion of the aims, the objective of the research, and specific research questions considered.

Background:

Customer Relationship Management (CRM) consists of three (3) major components; customer, relationship, and management. The customer is the only source of the company's present profit and future growth. The relationship between a company and its customers involves continuous bi-directional communication and interaction. Such a relationship on the part of management is not an activity only within a marketing department, but also involves continuous corporate change in culture and process (Paul Gray and Jongbok Byun-2001).

Richard Barrington (2008) maintained that CRM systems began as a way to track customer interactions with the view of producing personalized products and services. Bose and Sugumaran (2003) explained that CRM involves managing customer knowledge to better Customer Relationship Management CRM understand and serve them. They went further to state that CRM is an umbrella concept that places the customer at the centre of an organization. Customer Service is an important component of CRM; however CRM is also concerned with coordinating customer relations across all business functions, points of interaction and audiences. PeopleSoft (2002), states that the goal of CRM is to identify ways that would enable companies to maximize the profitability of every customer relationship. Monitoring each, customer behaviour is important against the backdrop that customers today vary in their needs, preferences, buying behaviour and price sensitivity.

Greenberg (2001) states that in order to understand CRM, you must also understand the changing nature of the customer because customers are not what they use to be. Judith Sandall (2007) reports of a survey conducted by CRM Guru in 2006, 50% of the respondents indicated that they base their satisfaction with a company on the sum of their interactions with the company's brands, products, services and people. This goes to indicate the complexities in customer needs. To this end, Fayerman (2002) thought of CRM as a customer focused business strategy that aims to increase customer satisfaction and customer loyalty by offering a more responsive and customized service to each customer, in view of the fact that each customer is unique. Thompson (2004) argues that CRM is emerging as a critical strategy simply because relationships are coming to the forefront of the competitive battleground. CRM therefore is a tool that supports an organizations strategy and business planning and enables it to measure progress on an ongoing basis. According to Sandall (2007), the basis of successful CRM is to manage people and processes more effectively through user-friendly technology to:

1. Streamline and automate the sales process


2. Streamline and automate the marketing process.


3. Improve the responsiveness of the customer service centre.


4. Analyze and predict customer behavior to improve sales and target market efforts.


5. Productively manage relationship with partners and suppliers.

The financial needs of customers change throughout their lifetime, providing incentives for financial institutions to cultivate lifelong customer relationships. A customer's loyalty increases as the length and quality of the relationship increases. CRM remains the goal of creating and sustaining competitive advantage (Thompson, 2004). Many success stories are told about CRM implementation. Such success results have brought many organizations to the conclusion that CRM is a compelling option to doing business in this era. Richard Barrington (2008) cites some of these stories as follows:

1. Using a system from Oracle Siebel, CRM solutions was able to better target their highest value opportunities, resulting in a 100% increase in revenue.


2. A customer relationship management article in the Harvard Business Review cited sales force results such as a 200% improvement in productivity for lower-quartile representatives, while average representative productivity improved 30% over a two year period thanks to CRM.


3. Beyond sales results, implementation of a thorough sales automation process can add to the overall valuation of a company. A 2007 Business Week article cited CRM as one of seven (7) factors which can boost the value of a business. Considering the benefits and importance of CRM application strategies as we have presented, it becomes a major business strategy for financial institutions to grow their businesses through customer retention.

Aims:

The market forces facing financial service providers in the retail sector in no doubt require "new" core competencies for differentiation. Financial service providers must be sure to differentiate their managerial capabilities: service (customer interface), intellectual capital and infrastructure management. The combination of these factors and the timing of technology innovation places substantial pressure on the structure of the financial services industry. Some industry experts postulate that the global financial services infrastructure is destabilizing, due to the reduced barriers of entry brought on by new technologies, deregulation and globalization. The once familiar and distinct territories known as the banking industry, insurance industry, and securities industry are quickly disappearing. Deregulation, technology, and global competition are blurring the lines that traditionally defined the financial services markets — geography, product offerings, and distribution channels.

The traditional means of doing business are also changing. Instead of going to the bank or an insurance company, people will more likely visit the automated teller machine (ATM), a kiosk, or website, where they can also check their stock portfolio or compare insurance rates online. Customers, faced with an increasing array of financial products and services, are expecting more from providers in terms of customized offerings, value, ease of access, and personalized service. For example, it is now more difficult for companies to differentiate their products solely on price. Forward-looking financial industry executives wanting to keep pace with the rapid changes are seeking to better understand, respond to, and anticipate the challenges of the new marketplace (PeopleSoft, 2002). Wilson, Daniel and McDonald (2002) identified and summarized financial institution's core objectives in doing business as:

• Providing the right offer for each customer.


• Providing the right offer at the right time for each customer.


• Providing the right offer through the right channel for each customer.


• Improving the process to communicate with the right customers.

Financial institutions are discovering the compelling nature of the CRM business strategy. Protecting valued customers is synonymous with protecting future earnings as an alternative to being acquired or gaining massive scale. Thompson (2004) intimated that CRM is a business strategy adopted to acquire, grow and retain profitable customer relationship with the goal of creating a sustainable competitive advantage. It is noted first and foremost that CRM is a business strategy. CRM is one of many potential business strategies that underscore the need for any financial institution to identify and leverage its primary competitive advantage. According to Trepper (2000), CRM requires a large amount of initial investment in hardware and software but without any immediate cost saving or revenue improvement.

Sam Klimer (2002) reports of Gartner Group as stating that companies implementing CRM business strategy, to date, have spent three to five times more on implementing the technology than they have on acquiring the technology itself. Among many financial institutions in Pakistan, CRM application technology implementations have arrived as part of an early sales force automation movement that has expanded its presence into a more operational, customer service focus. In many cases, the technology has arrived with an inherent sales tracking and incentive-planning objective. Sandall (2007) maintained that while sales tracking and performance incentives are consistent with a CRM business strategy, they bring many organizational and cultural issues to the forefront in the process of implementation. Also, customizing a CRM-related application, particularly the Relational CRM application, is an iterative process. When an application technology has been designed to cross industries, fit various data models, and all screens need to be customized, the implementation and its resources can drag on for months and years (Sam Kilmer, 2002). In their presentation "12Manage" (2008) underscores ten (10) main elements away from technology as needed to create a customer oriented organization. These, the group noted are:

1. Strong customer oriented leadership


2. The mission to be a relation oriented -organization aimed at long-term interaction


3. The corporate purpose is aimed at the customer


4. The main strategy is to win by customer intimacy


5. Company values are employee values focus on caring for customers


6. Behavioural standards reflect customer empathy and the wish to building long-term relationship and commitment.


7. A relation-oriented organizational culture


8. An organization that is putting customer contacts in the centre.


9. People empathic communication skills caring for customers


10. Systems that help to connect and manage hard values with soft values, such as the value chain and the Balances Scorecard.

Among others, Sam Kilmer (2002) identified the three (3) key factors that determine the expense and success of an implementation of the CRM business strategy as Employee/cultural issues, Customization issues, and System integration issues. In summary, the researchers have in the first place outlined the benefits of CRM strategies. Again, acknowledgement is made that the nature of the current financial market leaves CRM as a compelling option for financial institutions. Such a move, the researchers identified, begin with leveraging customers' data into a single portfolio and managed through technology. Technology however, requires initial heavy investment which may not allow many institutions to think of adopting a CRM strategy. Financial institutions which constitute an aspect of intangible producers of goods and services have not been subjected to an in-depth study to identify factors outside technology that can ensure successful implementation of a CRM strategy. According to Galbreath and Rogers (1999) CRM is relatively a new management concept, a new approach to managing customers, currently sweeping through businesses worldwide and it is especially finding audiences in the professional service sector. The research problem can be stated as follows; "What are the factors required for a successful CRM implementation among financial institutions in Pakistan?"

Objectives:

The objective of the study is to understand the CRM application strategies and their successful implementation among financial institutions to bring about maximum customer satisfaction. By so doing, we hope to make CRM applications attractive to financial institutions in Pakistan regardless of company's size and capital base.

Research questions:

With reference to the above stated research problem, "What are the factors required for a successful CRM implementation among financial institutions in Pakistan for the year 2010?" the following research questions have been posed to guide the study to achieve the purpose.

1. What are the (would be) benefits of CRM for financial institutions in Pakistan?


2. What are the challenges for implementing CRM in financial institutions in Pakistan in year 2010?


3. What are the factors that facilitate successful implementation of CRM in financial institutions in Pakistan for the current year?