CUSTOMER RELATIONSHIP MANAGEMENT Where do you start

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CUSTOMER RELATIONSHIP MANAGEMENT Where do you
start?
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University of ManchesterStudy Objectives

• What is CRM?
• Does it work?
• Is there potential for CRM at the University?
• What guidelines are there for implementation?

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What is CRM?
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Some definitions of relationship marketing

• Relationship Marketing is attracting,
  maintaining and in multi-service organisations
  enhancing customer relationships. (Berry,
  1983)
• Relationship marketing is marketing seen as
  relationships, networks and interaction.
  (Gummesson, 1984)
• Relationship Marketing is to identify and
  establish, maintain, and enhance relationships
  with customers and other stakeholders at a
  profit, so that the objectives of all parties
  involved are met and that this is done by mutual
  exchange and fulfilment of promises.(Gronroos,
  1996)
• An emergent disciplinary framework for creating,
  developing and sustaining exchanges of value,
  between the parties involved, whereby exchange
  relationships evolve to provide continuous and
  stable links in the supply chain. (Ballantyne,
  1994)
• Relationship Marketing refers to all marketing
  activities directed to establishing, developing,
  and maintaining successful relational
  exchanges.(Morgan and Hunt, 1994)
• Relationship Marketing is the process whereby
  both parties the buyer and provider establish
  an effective, efficient, enjoyable, enthusiastic
  and ethical relationship one that is personally,
  professionally and profitably rewarding to both
  parties.(Porter, 1993)

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KRM?

• Kindly Release the Money
• Fashion
• Software
• CRM gurus
• billions market
• HIJACKED BY VESTED INTERESTS!

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Why CRM developed

• 1980s onwards saw rapid shifts in business that
  changed customer power
• Supply exceeds demand for most products
• Sellers have little pricing power
• Only protection available to suppliers of goods
  and services is in their relationships with
  customers

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Relationship management

• Move from a transactional model of marketing to
  a relationship model

Source Christopher et al (1991)
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Ups and downs

• Increasing interest in the use of CRM because it
  is profitable if it succeeds (acquisition,
  retention lifetime values)
• There is a high level of reported failure rate
  (50-70)

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What CRM involves

• Organisations must become customer centric
• The organisation must be prepared to adapt so
  that it takes customer needs into account and
  then delivers them
• Market research must be used to assess customer
  needs and satisfaction

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What CRM involves

• Develop a customer strategy and introduce
  segmentation to allow those requirements to be
  fulfilled
• CRM may mean radical changes on many levels in
  the organisation
• Chances of failure are reduced if some basic
  pitfalls are avoided
• Relationship marketing does not have to be
  technology intensive

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Relevance to HEIs

• Changes in the market that have driven interest
  in CRM also apply to HEIs
• Marketing at most HEIs is at a rudimentary level

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What is CRM?
CRM is adopting customer-centric business
strategies, implementing these strategies by
changing how customers do business and how people
do work and then enabling new strategies, new
customer interactions and new workflow by
providing appropriate technology support
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Does CRM work?
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Business case studies

• Extensive research produced few case studies
• Very little valuable (independent) guidance out
  there
• Importance of-
• Research
• Planning
• Segmentation
• Central databases
• Being bold with organisational change to create
  the structures needed to give good customer
  service

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CRM at other HEIs

• Little evidence of true CRM activity in large UK
  higher education institutions
• Some smaller ones are beginning to use the
  technique successfully (Roehampton)
• Some business schools are using central databases
  to identify and pursue good prospects (Henley)
• The lack of good CRM practice in education may
  present an opportunity for the University of
  Manchester

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Is there potential for CRM at the University?
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Current application of CRM processes

• Internal review of practices in three areas at
  University of Manchester (undergrad, post grad,
  research)
• Six key factors that can be used to determine the
  level of customer retention capability in
  commercial organizations (Prof John Murphy)
• Customer Focus
• Processes
• Employee Involvement
• Training and Development
• Measurement
• Continuous Improvement

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Internal review

• There are isolated areas of good CRM type
  practice
• In general there is little understanding or
  implementation of the technique
• No overall policy in place to allow the areas of
  good practice to coalesce and develop
• Poor segmentation of customers, a lack of shared
  goals and low understanding of business drivers
• Many relationships with other organisations are
  personalised and vulnerable in the long term

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Conclusions

• Our research suggest that CRM presents
  opportunities
• BUT the University is a long way from being able
  to exploit those opportunities
• What is the way forward?

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What guidelines are there for CRM implementation?
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Blueprint for CRM success

• Analysts, the business media and many in the CRM
• community regularly cite CRM failure rates at
  65-70.
• Is this a failure of CRM or the way it is
  implemented?
• Study of 450 companies which have implemented CRM
  (Lee et al 2002)
• Statistically valid results on a varied sample of
  companies

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Activities characterising the CRM process

• Software specifications
• Vendor evaluation
• New organisational values
• Organisational change
• Line level training and support
• Process re-engineering

• Customer-centric strategy
• Vendor customisation
• Vendor bias
• Third party customisation
• Goals measured statistically

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Blueprint for CRM success

• 45 achieved ROI success, 35 reported failure
• The four factors which determine success or
  failure were
• presence of customer centric strategies
  (dominant)(hard)
• training and support
• organisational change
• measuring outcomes statistically
• Software is irrelevant!

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Cumulative effect of key predictors
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Customer centric planning

• Using customer defection rate data (key)
• Using customer satisfaction research (key)
• Adopting the customer perspective
• Developing a comprehensive planning write up
• Developing specific business objectives
• Adopting planning tools designed for this purpose

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Customer centric strategies

• Provide benefits to both customer and company
• Are based on listening to customers not talking
  at them
• Are based on what the customer wants, not what
  the company wants
• Depend on interaction with the customer rather
  than promoting to them
• Rely on access to accurate and comprehensive
  customer information

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Customer centric strategies

• Lead to shorter cycle times
• Lead to greater customer involvement in product
  development
• Require sharing of customer information among all
  those with customer contact
• Reduce operating costs by redesigning workflow to
  eliminate work that doesnt add value to
  customers
• Require at least some functional department
  reorganisation to implement

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Activities characterising the CRM process

• Software specifications
• Vendor evaluation
• New organisational values
• Organisational change
• Line level training and support
• Process re-engineering

• Goals measured statistically
• Customer-centric strategy
• Vendor customisation
• Vendor bias
• Third party customisation

CRM failures are self inflicted!
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Conclusions

• There is potential for CRM at the University in a
  higher education world which is becoming much
  more competitive
• Successful implementation would mean many changes
  to attitudes and structures
• The process would almost certainly be painful

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Conclusions

• It would probably be particularly difficult to
  develop and install customer centric strategies
• If CRM is used must be with the backing of those
  at the highest level and it must be planned
  carefully
• A process must be gone through which would take
  note of CRM theory and use the experiences of
  others to maximise the chances of success

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What not to do

• Dont attempt to implement CRM without adopting
  customer-centric strategies
• Dont attempt to scale down CRM to a tactical
  level
• Dont justify CRM implementation on the hope of
  achieving operational efficiencies
• Dont take shortcuts that bypass key
  implementation steps (such as customer
  satisfaction research)

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What not to do (2)

• Dont try to avoid organisational change
• Dont allow changes in workflow and process
  without involving those affected
• Dont start implementation by buying software or
  reengineering work processes
• Dont let consultants or software vendors limit
  the scope of your implementation to their
  capabilities