CUSTOMER RELATIONSHIP MANAGEMENT

Transcription

1 CUSTOMER RELATIONSHIP MANAGEMENT Page 1 of 16

2 Executive summary Customer relationship management is used by organisations in managing their current and potential future customers to understand what they need to meet their expectations. It is used to improve business relationship with customers with an intention to retain and attract more customers to drive sales growth. This report has discussed the reason why most organisations fail when it comes to CRM. One of the reasons that have been covered is that CRM fail due to poor planning and implementation. It has also discussed why CRM should be implemented as through it, organisations are able to learn more about their target market and how best to meet their expectations. It has proposed that Zara Company should implement either collaborative or operative CRM. This will be vital in enabling the company to increase its market base and competitiveness. Page 2 of 16

3 Table of Contents Executive summary... 2 Introduction... 5 Question Critical discussion of why CRM fail... 6 Explanation of the need to implement a CRM strategy... 6 Improve customer service:... 6 Increased personalized service Improve customization of marketing Question Development of two new CRM strategies for Zara Company... 7 Operational CRM... 8 Sales automation Marketing automation Service automation Collaborative CRM... 9 Evaluation of the collaborative and operative CRM strategies using force-field analysis Recommendation Conclusion References Bibliography Page 3 of 16

4 List of Figure Figure 1: Forces for and against the collaborative CRM Figure 2: Forces for and against the operational CRM Page 4 of 16

5 Introduction Customer relation management has an impact on an organisation s sales performance and the general performance of the organisation (Bateman et al., 2011). The company is able to integrate and automate sales, marketing and customer support. In this report, the researcher will discuss how customer relationship management fail and why it is still important to implement a customer relationship strategy in Zara Company. The researcher will be able to develop new CRM strategies for Zara Company that will be via the force field analysis. This is to understand the best strategy that the company should apply in order to meet customer needs. Page 5 of 16

6 Question 1 Critical discussion of why CRM fail Companies face challenges when trying to implement customer relationship management systems leading to failure and unprofitability (Kotler and Keller, 2011). This is because they may not effectively or adequately use their interactions and connections with customers due to development of misunderstanding of the CRM system s analysis. Customers are constantly frustrated with the company s inability to meet their relationship expectations due to inability to understand and translate data from CRM software into feasible plan of action (Chernev, 2009). Customers have many expectations making it hard for an organisation to meet those expectations. For example, customers may expect follow-up calls from the company, and if this doesn t happen, they feel undervalued, hence, showing poor customer relations. Some customers want to be treated like friends where in turn an organisation treats them like a party for exchange. Lack of training programmes is the reason why CRM systems fail in an organisation where it is hard to get the staff to use the system installed. For example, the employees may fail to understand how to implement the strategic CRM that put customers first, hence, leading to poor customer attraction and retention rate. It is important for these organisations to use market research regarding customers preferences to increase its adoption of CRM for consumer satisfaction. Explanation of the need to implement a CRM strategy Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia which is one of the world s largest apparel retailer where the company also owns other brands in the market (Annual report, 2015). The company serves worldwide with more than 2100 stores therefore customers are important in enabling the company to perform towards achieving its goals and objectives (About us, 2016). Implementing CRM is important to Zara Company due to the following reasons; Improve customer service: CRM is important in the company where it provides the ability to produce, allocate and manage customer requests (Evans, 2012). Call centre software helps to connect different customers with managers to assist them with their Page 6 of 16

7 existing problems. For example, the customer service staff may receive customer complaints via phone, forward to management so that organisational strategies and products are adjusted to meet customer needs. The company is able to improve customer service to increase efficiency which is one of the abilities of customer relationship management. Increased personalized service- CRM is used by Zara Company to understand and gain important knowledge about the target audience based on their fashion taste, preferences, requirement and demands (About Us, 2016). For example, the company does altering service of their clothing products in order to meet preferences of each and every customer segments. This is important in product development where the company is able to develop quality designs to match with the customers expectations. This also improves customers knowledge through acquiring information by tracking customer behaviour to customers expectations. Improve customization of marketing- the use of CRM enables Zara Company to adapt to market changes based on its products and services to meet customer expectations. The company is able to present different and unique fashion products to ensure customer satisfaction through customization. Through CRM the company is able to frequently interact with customers by personalized messages produced to match on a timely basis (Bruhn et al., 2012). For example, through segmentation, Zara company divides its market into different segments and implements a different marketing strategy for example use of pamphlets and newsletters to make their customers much closers to it, hence, retaining most of them. Question 2 Development of two new CRM strategies for Zara Company In this section, two CRM strategies will be developed for Zara Company. According to the annual report (2015), Zara has not in the past implemented the operational and collaborative CRM strategies. The company has no specified CRM approach and only relies on market research to identify the needs of its customers (About us, 2016). This Page 7 of 16

8 has been significant in enabling it to win a large customer base in the fashion market in the UK and globally (Annual Report, (2014). In the competitive market, it is important for an organisation to share the right information with customers at the right time for the business to avoid losing its opportunities to sell its products (Freling and Forbes, 2013). CRM is used to communicate with current and potential customers in the market to enable the organisation to understand what customers fashion trends are. Zara Company uses CRM software to retain existing customers and capture new opportunities in the market by building strong customer relationship (Expert Market, 2007). Below is an explanation of the different CRM approaches that have been developed for Zara Company; Operational CRM The main purpose of operational CRM is to generate leads and converting them into contacts to capture all the required details to provide proper customer care services (Carauna, 2002). The CRM strategy is used to streamline the business process including sales automation, marketing automation and service automation. Sales automation- Sales automation includes various CRM sales modules including contact management, lead management and sales forecasting (Kotler et al., 2009). CRM is important in sales automation where it helps Zara to automate sales process which is used to set standards within an organisation to deal with current customers and acquire new customers. For example, the company has online platforms that contribute to sales automation as they are vital in enabling online customers to access its products and communicate with the company. The company is able to organize important information about the market to increase sales more efficiently and effectively. Marketing automation- CRM is also important in marketing automation as it helps in finding out the best way to approach customers in the market and how to offer different fashion designs to meet their expectations (Jaccard and Becker, 2010). Campaign management is important in marketing automation where it enables the business to decide effective channels of communication to meet up with potential customers. For Page 8 of 16

9 example, through social media marketing, the company links with customers via the social media sites and communicates with them on how to improve its products. Service automation- this is where Zara Company retain customers by providing quality fashion products to build strong relationship with customers worldwide. The company is able to fix customers issues and problems by handling customers request based on the company products and services based on key performance indicators (Barnet, 2016). For example, through its websites, the company is able to link with customers, serve them, receive their complaints, and improve its products to meet their expectations, satisfactorily. Collaborative CRM This is an effective CRM strategy, which will enable Zara Company to share customers important information with other units in the organisation including the sales team, marketing team, technical and support team. This is based on interrelationship between various departments where each department depends on each other in the decision making process. Collaborative CRM is used to unite all departments in the company with the main goal of improving the quality of customer care services given to customers (Jobber, 2013). For example, through collaborative CRM, employees work together whilst serving customers in order to, fully, satisfy their needs and to retain as many of them they can. This is to gain loyalty of current customers while acquiring new customers to increase sales. Feedback from support team in the company is useful in various organisations including marketing team to be able to approach targeted customers to provide fashion products that meet their expectations (Berthon et al., 2012). For example, the feedback makes the company to learn about new fashion demands of customers and offer them what they need, so as to meet their expectations. Lack of interrelationship between functional units in an organisation leads to poor organisation performance and business losses. Information from one functional unit in the company is used to influence operations in the other unit in the organisation to make important decisions based on customers expectations. Different types of CRM applications have different features and advantage Page 9 of 16

10 therefore it is important for the company to implement CRM strategies that are effective in achieving future goals and objectives. Evaluation of the collaborative and operative CRM strategies using force-field analysis Force field analysis is a useful decision-making technique enabling an organisation to make decisions analysing the forces for and against a change (Brassington and Pettit, 2006). Force-field analysis is also used to identify if a certain decision made is effective, including the use of operational and collaborative CRM strategies to build strong customer relationship. Through collaborative CRM, information gained from functional units in the company will enable different departments to make decisions based on the company products and services (Beccera and Korgaonkar, 2011). The sales automation is important in the sales department and the marketing department where the company is able to automate sales forces to meet customers expectations. This means that the company will handle the customer demands and complaints online (sales automation) and this will improve service delivery. According to the diagram below, the forces for change include customers needs for new products, therefore the sales team communicate with the marketing team using collaborative CRM in decision making. Through the strategy, the company s operations will be automated, effective CRM policies will be developed and implemented and customers needs will have high chances of being met. However, high employee training costs will be incurred, there will be excessive concentration on customers and as a result slow decisions will be made as customers will have to be consulted from time to time by management. Figure 1: Forces for and against the collaborative CRM FORCES FOR Sales automation meaning that the company will deal with customer via online FORCES AGAINST Excessive concentration on customers and this may make the company to forgo its Page 10 of 16

11 platforms, hence, speeding service delivery to meet customer needs on time (Clemens and Reilly, 2004). For example, the customers can access the products via the company s website. Customer needs are met and this is vital in enabling the company to attract a lot of customers and retain them to improve its market share (Aaker, 2006) Development of effective CRM policies that will facilitate good relationship between the company and its customers priority of maximising sales and revenues in the market it operates in (Kotler and Kevin, 2006) Slow decision making as customers will have to be consulted from time to time by management so that their needs and wants can be met (Barnett, 2016). For example, customers have to be consulted when the management is deciding on the new products and the consultations slows decision making. Employee training costs will raise the expenses of the company, hence, minimising the revenues that could have been generated by the organisation The force for operational CRM is that through sharing important information and knowledge about customers, it will enable Zara Company to lower its maintenance costs. This is important, enabling the company to develop quality products and services to retain current customers and attract new customers, clients and partners in the market. Sharing information between departments will save operational time ensuring the staff commit in their performance to meet customers expectations and achieve organisation objectives (Jobber, 2007). One of the forces against is the extra operations costs that will be incurred as a result of employee training fees (Kwaku, 2009). Resistance to change by employees is another force that may affect the full implementation of the CRM strategy in Zara. This may result to ineffective development of customer relationship hence damaging its competitiveness in the market. Page 11 of 16

12 Figure 2: Forces for and against the operational CRM FORCES FOR Low maintenance costs in the organisation since automation via the operative CRM strategy of the company s operations will be done via advanced and effective technology Customer attraction and retention since the needs and wants of customers will be met on time and satisfactorily (Kotler and Keller, 2011) Time will be saved since through online service, customer complaints will be acquired and timely acted upon for the overall benefits of the company (Goodwin and Wright, 2004). For example, customers complaints will be acquired via the website rather than manual system hence time will be saved as they will be attended to immediately. FORCES AGAINST Extra operational costs as a result of employee training for the strategy to be fully implemented, hence, minimising revenue generation capacity of the company (Armstrong, 2011) Resistance to change as employee may fail to adapt and fully implement the new CRM strategy, meaning that the operations of the company will be slowed down Competitiveness may be reduced as the company will mostly focus on needs of customers rather than improve its market performance in the fashion industry Recommendation It is significant for Zara Company to use the operative customer relationship management strategy where the forces of change are stronger than the forces against. According to Kamakura and Russell (2003), operational CRM is also effective although all the processes require the use of various functions of the organisation and the Page 12 of 16

13 strategy is vital in improving the speed of serving customers. For example, through the company s website, customers will order the products that they need online and get them delivered on time. The discussion of this report has shown that through direct mails, the client will communicate with the company in a timely fashion and have their complaints attended to, leading to development of good customer relationships. Hence, the decision for Zara Company to use operative CRM will enable the company to operate effectively and efficiently to meet the needs, preferences and desires of customers in the market. This will ensure sales automation, service automation and marketing automation hence making the company s operations to be effectively and efficiently executed. Conclusion Customer relationship management is important in an organisation where customers needs and expectations are identified to develop strategies to meet those needs. It is vital for an organisation to identify new CRM systems to enable them to share information about the target audience in the market to build strong customer relationships. Collaborative and operation CRM are effective CRM strategies used in various organisations to ensure efficiency in organisation operations in achieving its general goals and objectives. Page 13 of 16

14 References About us (2016), Business strategy and management approaches, retrieved at on 6 th January 2017 Annual report (2014), Financial and non-financial analysis of Zara Company, retrieved at on 6 th January 2017 Annual report (2015), Yearly performance of Zara Company, retrieved at on 6 th January 2017 Aaker, A. (2006), Building Strong Brands, Free Press, New York Armstrong, K. (2011), Marketing: An Introduction, Pearson Education, Inc. Publishing As Prentice Hall Barnett, M. L. (2016), Stakeholder Influence Capacity and the Variability of Financial Returns tocorporate Social Responsibility, Academy of Management Review, Vol. 32, Nº 3, pp Bateman, P.J., Pike, J.C and Butler, B.S., (2011), "To disclose or not: publicity in social networking sites", Information Technology & People, 24 (1), pp Becerra, E.P and Korgaonkar, P.K., (2011) "Effects of trust beliefs on consumers' online intentions", European Journal of Marketing, 45 (6), pp Brassington, F and Pettit, S. (2006), Principles of Marketing, Prentice Hall, 4 th Edition Berthon, P. R., Pitt, L. F., Plangger, K.,and Shapiro, D. (2012), Marketing meets Web 2.0, social media, and creative consumers: Implications for international marketing strategy, Business Horizons, 55(3), Bruhn, M., Schoenmueller, V., and Schäfer, D. B. (2012), Are social media replacing traditional media in terms of brand equity creation?.management Research Review, 35(9), Carauna, A. (2002), Service loyalty. The effects of service quality and the mediating role of customer satisfaction, European Journal of Marketing, 36(7/8), Chernev, A. (2009), Strategic Marketing Management, 5th Edition, Prentice Hall: UK Page 14 of 16

15 Clemen, R., and Reilly., (2004). Making Hard Decisions (2nd ed.), Belmont CA: Southwestern College Pub Goodwin, P. and G. Wright (2004), Decision Analysis for Management Judgment (3rd ed.). Chichester: Wiley. Evans, D. (2012), Social media marketing: An hour a day, John Wiley & Sons Expert Market (2007), Zara CRM Case Study, Retrieved at on 6th January 2017 Freling, F. and Forbes, L. (2013), An Empirical Analysis of the Brand Personality Effect. Journal of Product and Brand Management, Vol 14: Issue 7 Jaccard, J. and Becker, M.A. (2010), Statistics for the behavioural sciences (5th ed.), Belmont, CA; Wadsworth Jobber, D. (2007), Principles and Practice of Marketing, 5th ed. McGraw-Hill Jobber, D. (2013), Principles and Practice of Marketing, 7th edition, McGraw: London Kotler, P. and Keller, K., (2011), How to do effective marketing, 14th edition, Prentice Hall Kwaku, A., (2009), The Impact of Marketing Mix Decisions on Performance, Journal of Global Marketing, Vol. 13, Issue 2, P Kamakura, W. And Russell, J. (2013), Measuring Brand Value with Scanner Data, International Journal Research Marketing, Vol. 10, pp Kotler, P., Kevin, K., Mairead, B., and Malcolm, G. (2009), Marketing Management, Publisher: Prentice Hall Kotler, P. and Kevin, K. (2006), Marketing Management, Prentice Hall of London; 12 edition Page 15 of 16

16 Bibliography Hammond, J. S.; Keeney, R. L. and Raiffa, H. (2009), Smart Choices: A Practical Guide to Making Better Decisions, Harvard Business School Press Holtzman, S., (2009), Intelligent Decision Systems, Addison-Wesley Page 16 of 16