CUSTOMER RELATIONSHIP MANAGEMENT

Where do you start?

University of ManchesterStudy Objectives

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

What is CRM?

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)

KRM?

• Kindly Release the Money

• Fashion• Software• CRM gurus• £ billions market• HIJACKED BY VESTED INTERESTS!

Why CRM developed

• 1980’s 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

Relationship management

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

Advocate

Supporter

Client

Customer

Prospect

Emphasis On

developing and

Enhancing relationships (customer keeping)

Emphasis on new

Customers (customer catching)

Advocate

Supporter

Client

Customer

Prospect

Advocate

Supporter

Client

Customer

Prospect

Emphasis on

developing and

enhancing relationships (customer keeping)

Emphasis on new

customers (customer catching)

Source: Christopher et al (1991)

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%)

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

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

Relevance to HEI’s

• Changes in the market that have driven interest in CRM also apply to HEI’s

• Marketing at most HEI’s is at a rudimentary level

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”

Does CRM work?

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

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

Is there potential for CRM at the University?

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

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

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?

What guidelines are there for CRM implementation?

Blueprint for CRM success

Analysts, the business media and many in the CRMcommunity 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

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

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!

Cumulative effect of key predictors

Number of key factors implemented

% chance of CRM success

1 21

2 38

3 56

4 74

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

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

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 doesn’t add value to customers• Require at least some functional department

reorganisation to implement

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!

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

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

What not to do

• Don’t attempt to implement CRM without adopting customer-centric strategies

• Don’t attempt to scale down CRM to a tactical level• Don’t justify CRM implementation on the hope of

achieving operational efficiencies• Don’t take shortcuts that bypass key implementation

steps (such as customer satisfaction research)

What not to do (2)

• Don’t try to avoid organisational change• Don’t allow changes in workflow and process without

involving those affected• Don’t start implementation by buying software or

reengineering work processes• Don’t let consultants or software vendors limit the

scope of your implementation to their capabilities