Initiation of CRM in contemporary business organizations
Question:
Write a report about the current status about CRM in China. How do the companies use their CRM for operational and analytical decision making?
The current business scenario for the contemporary business organizations is much more competitive and thus it is important for the business organizations to adopt newer technologies. One of the key technologies being initiated by the contemporary business organizations is the CRM or customer relationship management software (Lee, Tang & Sugumaran, 2014). Initiation of the customer relationship management software helps the business organizations to accumulate and analyze different and diverse data in order to promote singular organizational approach. Thus, in order to enhance the organizational effectiveness, more business organizations are promoting the use of customer relationship management.
However, in the current business scenario, Customer relationship management software is not only being used for the data mining purpose but also in different alternate organizational activities. With the increase in the use of the customer relationship management software in different business organizations, various companies are being set up to cater to this market (Masanet et al., 2013). Thus, the competition in this market is increasing and further with the entry of the global players, the competition further intensified.
This report will discuss about the current market scenario of the customer relationship software in China along with identifying the key players in this market. Moreover, the alternate use of the customer relationship management software will also be discussed in this report. Various types of customer relationship management software will be determined in this report along with providing some recommendations for the small business organizations in order to effectively use the customer relationship management software.
In the current global business scenario, China is one of the key destinations of the leading business houses from all over the world. This is due to the reason that, China is having the largest population in the world and they are one of the leading countries in the world in terms effective infrastructure for latest technologies (Jansen, 2013). One of the leading companies operating in China is Apple Inc. They are using customer relationship management software mainly in order to determine the need and requirement of the customers. Apple follows a distinctive approach in using the customer relationship software by designing software for the end customers. This helps them to engage their customers along with gathering data effectively.
Another leading organization in China using customer relationship management software is Lenovo. It is also one of the leading software organizations in the world. Lenovo is using their customer relationship management software in order to identify the new business opportunities and to analyze the change in the market trend and requirement. Initiation of the customer relationship software helps them to accumulate diverse customer data and conclude effectively.
It is being reported that, CRM market in China is being projected to grow at the rate of 17 percent up to 2020. Thus, huge growth is being expected, which will further attract more global and domestic competitors in the market. Top vendors operating in this market include Oracle, salesforce, Infor, IBM, SAP and Aplicor.
Alternate use of CRM software in the current business scenario
Figure: 1
Market share of the CRM vendors
Source: (Pang, 2017)
One of the key sources of data for the customer relationship management is the point of sales. Point of sales is the connecting point of the buyers and sellers and thus, the sales executives can identify the requirement and expectation of the buyers. This source is one of the authentic sources of customer data (Wilcox et al., 2012). Another source of market data is buying from the third party companies. There are various third party vendors are being available, which sells customers leads. Another effective source of data is the Google Adwords. This helps the organizations to identify the potential customers who are interested in their products. Google adwords also helps to determine the trend in the market for the business organizations. Inbound marketing also helps in gathering customer data by attracting more customers through content. This strategy involves initiation of designing the website with photos, videos and other information in order to attract more number of customers.
Both the operational and analytical CRM are closely related to each other, however, widely varies. Both of them address different aspects of CRM program. The operational CRM tools are considered and required for implementing a CRM system. The Analytical CRM on the other hand analyze the collected data of the customers ad identifies the behavioral pattern among them (Milovic, 2012).
The operational CRM is used in various front office business processes that help the company to take care of their customers. It prioritizes customers’ perceived value and identifies the needs of particular customer segment. Operational decision-making involves marketing, sales and service (Khodakarami & Chan, 2014). The data of the customers is used for determining, evaluating and developing communication necessary mode of marketing with the target customer segment. The sales automation on the other hand involves the utilization of the data in identifying the potential customers and retaining the existing ones (Li & Mao, 2012). The service automation tries to utilize the data for satisfying the customers’ needs through direct mail, feedback portal, call centers and other mediums that enables the customers to connect with the company.
The analytical CRM on the other hand help the company in identifying the geographical distribution of the potential customers and their behavior pattern. The company uses it to identify the beneficial customers in the market and market specific customers based on the collected data. The company using analytical CRM is a continuous process as the behavior of the customers’ changes over time (Ranjan&Bhatnagar, 2011). Hence, company modifies the product and service line accordingly based on the data collected through analytical CRM for meeting the customers need.
There are three primary types of CRM software used by the organizations; those are operational CRM, analytical CRM and Collaborative CRM (Alavi, Ahuja &Medury, 2012).
Utility of operational CRM is to streamline the process, which incorporates service automation, marketing automation and sales automation. This helps in generating leads, modify them into contacts, confine the required details and provide service throughout customer lifecycle. The sales automation facilitates in organizing information and set standards for the business to attract new customers and retain the existing customers. The marketing automation on the other hand identifies the medium for communicating the products with the customers. Last component of the operational CRM is service automation that helps the company to hold the customers’ perceived value (Mosadegh&Behboudi, 2011).
Key players in the CRM market in China
The analytical CRM software on the other hand help an organization to manage, market, sale and support for better serving its customers. The roles of this CRM is to gather and analyze the data of the customers coming from various sources, implement business methodologies accordingly and attempt to achieve effectiveness in the business performance (Ranjan&Bhatnagar, 2011).
The collaborative CRM software helps the company to direct the customer information to various departments of the organization such as sales, marketing, technical and support team (Alavi, Ahuja &Medury, 2012).
These different kinds of CRM software are utilized by organizations to attain specific advantage in the market. This is related to the organizational goals and objectives and needs to be in proper alignment before implementation.
McKinley (2012) spoke about the ethical considerations the organizations should incorporate during collecting, storing and using the personal data collected from the customers. These personal data of the customers are considered as the valuable assets for the organizations as it helps in understanding customers demand, followed by value proposition. However, the organizations should consider the limits of personal data collected and shared as it might harm the interest of the customers. Henceforth, protection of the collected data is the primary responsibility of organization. Bull and Adam (2011) on the other hand took a holistic approach in defining the need of ethical approach while implementing customer relationship management.
According to the author, the ethics needs to be maintained in both operation and privacy. The companies should consider CSR ethics for keeping the personal data for safeguarding the customers’ interest. For example, the companies should secure the personal data such as the ATM card information and other similar details with high priority to prevent the data theft. Frow et al (2011) identified dark side of the CRM used by various organizations over industries. The paper identifies ten form of dark side behavior of CRM in by various organizations for getting competitive advantage that violates the ethical boundaries. For example, may of the organizations incorporated CRM in their business process fails to meet the standard of security required for safeguarding customers’ details that result into data theft. It ultimately cause harm to the customers
The above discussion regarding the concept of customer relationship management software is mainly applicable for the large business organizations. This is due to the reason that, initiation of customer relationship software involves huge investment cost and infrastructure. Thus, it is important for the small business organizations to have effective strategies in order to implement CRM software. The following sections will discuss about recommended steps to be followed by them.
- Initiation of the CRM software should be outsourced in order to reduce the cost of the implementation. This is due to the reason that, outsourcing of the CRM software will involve third party vendors, which will help the business organizations to reduce the price as well as the responsibilities.
- Implementation of the CRM software should be followed by the employee training. This is due to the reason that, if the employees are not being effectively trained to operate the new system, then it will be an extra cost for the organization.
- Small businesses should implement CRM software in a specific organizational activity rather having holistic implementation. This will help them to try and test the software in a particular area rather investing big at the very first stage.
Conclusion
Thus, from the above discussion, it can be concluded that, contemporary business organizations are using customer relationship management software in order to determine the frequent change in the market trend. Thus, it helps them to have the fair idea about the market and offering the products accordingly. This report discussed about the recommended steps to be followed by the small business organizations in effectively implementing the customer relationship software. It is being expected that, effective implementation of the discussed recommended steps will help the small business organizations in China to reduce the cost of the implementation.
References
Alavi, S., Ahuja, V., &Medury, Y. (2012). Metcalfe’s law and operational, analytical and collaborative CRM-using online business communities for co-creation. Journal of Targeting, Measurement and Analysis for Marketing, 20(1), 35-45.
Bull, C., & Adam, A. (2011). Virtue ethics and customer relationship management: towards a more holistic approach for the development of ‘best practice’. Business Ethics: A European Review, 20(2), 121-130.
Frow, P., Payne, A., Wilkinson, I. F., & Young, L. (2011). Customer management and CRM: addressing the dark side. Journal of Services Marketing, 25(2), 79-89.
Jansen, S. (2013, August). How quality attributes of software platform architectures influence software ecosystems. In Proceedings of the 2013 international workshop on ecosystem architectures (pp. 6-10). ACM.
Khodakarami, F., & Chan, Y. E. (2014). Exploring the role of customer relationship management (CRM) systems in customer knowledge creation. Information & Management, 51(1), 27-42.
Lee, Y. C., Tang, N. H., & Sugumaran, V. (2014). Open source CRM software selection using the analytic hierarchy process. Information Systems Management, 31(1), 2-20.
Li, L., & Mao, J. Y. (2012). The effect of CRM use on internal sales management control: An alternative mechanism to realize CRM benefits. Information & management, 49(6), 269-277.
Masanet, E., Shehabi, A., Liang, J., Ramakrishnan, L., Ma, X., Hendrix, V., Walker, B. & Mantha, P., (2013). The energy efficiency potential of cloud-based software: A us case study(No. LBNL-6298E). Ernest Orlando Lawrence Berkeley National Laboratory (LBNL), Berkeley, CA (United States).
McKinley M. (2012) Ethical dilemmas in customer relationship management. In: McKinley M.M. (eds) Ethics in Marketing and Communications. Palgrave Macmillan, London
Milovic, B. (2012). Prediction and decision making in health care using data mining. Kuwait chapter of arabian journal of business and management review, 1(12), 126-136.
Mosadegh, M. J., &Behboudi, M. (2011). Using social network paradigm for developing a conceptual framework in CRM. Australian Journal of Business and Management Research, 1(4), 63.
Pang, A. (2017). Top 10 CRM Software Vendors and Market Forecast 2015-2020. [online] Apps Run The World – Apps Research & Buyer Insight. Available at: https://www.appsruntheworld.com/top-10-crm-software-vendors-and-market-forecast-2015-2020/ [Accessed 23 Dec. 2017].
Ranjan, J., &Bhatnagar, V. (2011). Role of knowledge management and analytical CRM in business: data mining based framework. The Learning Organization, 18(2), 131-148.
Wilcox, A. B., Gallagher, K. D., Boden-Albala, B., & Bakken, S. R. (2012). Research data collection methods: from paper to tablet computers. Medical care, 50, S68-S73.
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