FREE ESSAY ON CUSTOMER RELATIONSHIP MARKETING

CUSTOMER RELATIONSHIP MARKETING

Literature Review
The Evolving Sales and Marketing Landscape
Marketing and business development professionals are confronting a rapidly different and
changing business landscape. The traditional business model that was once the standard is
now being transformed due to technology drivers that make advanced marketing and sales
capabilities possible. 
The business model of yesterday supported mass marketing, mass production, and
standardized cookie-cutter products and services. Enterprises will have fall behind the
competition if they continue to rely and operate on this substandard model. Today,
companies are re-engineering their operations and investing in enhanced IT
infrastructures, which enable them to provide customized, personalized, information-rich
products and services. 
The new objective for marketers and business developers involves understanding the needs
of their clients and the markets that they serve. This new focus on providing customer
value is redefining business processes. Professionals, who understand and anticipate this
shift, are positioning themselves ahead of the competition.
The Impact of Technology Enabled Business Processes
There is no denying the effect that technology has had on the way we conduct business. In
recent years, technology has begun to play a significantly larger role in all aspects of
business, including sales and marketing. Business processes must be re-engineered to
incorporate a pro-active strategy for using information and IT to build a competitive
advantage over other organizations. 
In many instances, the functionality provided by sales and marketing technology only
automates current processes. Therefore, it is imperative that processes are clearly
defined and well proven. Automating a poorly understood or followed process usually
results in failure. Technology must be used as an enabler to support an already sound
sales and marketing strategy. 
Beyond automating sales and marketing capabilities, technology is now designed to provide
professionals with a wealth of information about their company's clients and the markets
that they serve. Companies are now able to collect data about their customers that when
analyzed and utilized properly, can result in a competitive advantage. Online shopping is
a prime example. If a customer makes a purchase, then the transaction is completed and
revenue is generated. 
However, if a sales transaction is not made, the company still collects the shopper's
behavioral data and stores it in a marketing database. The company then has the
opportunity to segment and analyze this data in order to learn more about that particular
customer shopping habits. An analysis can then be performed to determine why this person
did not make a purchase as well as what can be done differently to persuade this person
to buy their product. 
The company can now position the four Ps of marketing: product, price, promotion, and
place to better serve this customer. This process the company has taken unlitmately
succeeds in developing a relationship with the customer. The company now knows more about
what the customers preferences are and how to offer them. Consequently, the customer has
a vested interest in the relationship as well, and is more likely to conduct business
with that company in the future.
The Shift to Relationship Marketing
Though many of today's marketing practices have evolved due to increasing technology, the
marketing environment still centers around the four Ps of marketing described above.
However, in order to remain competitive, companies must create a unique set of those four
Ps which appeal to each individual customer and sets them apart from their competitors.
Target marketing is no longer an efficient use of marketing efforts because a great deal
of resources can be lost to uninterested individuals while in the process of trying to
capture potential customers. Because of the potential loss of resources, there is now a
movement away from targeting markets to specific individual customers. What is now
required is customer-oriented relationship marketing.
Many studies have shown that it can cost anywhere from four to ten times as much to
acquire a new profitable customer as it does to maintain repeat buyers. These statistics
are one of the driving forces behind the move to relationship marketing, which focuses
its emphasis on customer retention rather than attraction. This type of strategy calls
for a different type of marketing technique that is customer and information driven as
opposed to product driven. 
With this in mind, marketers and business developers are now seeking new ways to obtain,
manage, and analyze information on their customers. As we are increasingly finding, one
of the most effective ways of capturing and utilizing customer data for marketing and
sales efforts is by investing in technologies such as a customer relationship management
system (CRMs).
The Benefits of a Customer Relationship Management System
According to the Gartner Group, the term CRM describes methodologies, software, and
usually Internet capabilities that help an enterprise manage customer relationships in an
organized way. From a technological standpoint, CRM can be categorized as the largest
compilation of IT concepts to date. It involves moving the ownership of customers away
from individual departments to the enterprise level. In addition, its focus is also on
best serving the needs of each customer on a personal level rather than serving the needs
of target markets as a whole.
The primary functionalities of CRMs are still debated by experts, and often times it
varies depending on the purpose the system is intended serve in that instance. However,
the high-level buckets of CRM capabilities can be categorized according to customer
service, marketing, and sales. 
Although customer service is an important aspect of customer relationship management, it
is primarily employed by companies who sell products as well as have call centers and
websites to market and/or sell their merchandise. For example, most consulting firms are
in the business of marketing and selling professonal services. which results in their
consultants and client managers having closer relationships with customers. Therefore,
call centers are not a major aspect of their operations and delivering transactions based
customer service over the web is not necessary. 
The scope of this paper is to explore CRMs and how they improve the sales and marketing
efforts within professional services firms. With that in mind, this paper will not
provide an in-depth analysis of the customer service capabilities offered by CRMs.
Marketing Capabilities of CRMs
One of the key reasons that companies invest in CRMs is because they can provide an
analysis of customer data that can result in an improvement in process or product. CRMs
can achieve an improvement in marketing processes because they help enterprises identify
and target their best customers. An important question to consider is, "If 20 percent of
customers bring in 80 percent of revenue, why not serve only that 20 percent?"
(Collins-White, pg. 1). CRMs can perform customer segmentation, which helps marketers
focus their efforts on where they will make the greatest impact. 
Before technology-enabled marketing, individuals were usually segmented into groups with
others who shared similar demographics or social characteristics. Today, CRMs are able to
segment individual clients, perform statistical modeling, and provide profitability
calculations in order to detect the relative value of that client to the business.
For companies such as professional services firms, one customer can mean substantial
revenue opportunities. Discovering these opportunities is one of the goals of effective
marketing departments. CRM's can aid in this process by providing lead management and
opportunity tracking. Lead management technology analyzes company or proprietary data to
determine where an enterprise's greatest opportunities lie. In addition, consulting firms
can employ the technology of CRMs to track requests for proposals. The technology behind
CRMs has the capablity of keeping track of which RFPs were followed. In addition, an
analysis can be conducted on those industries or markets from which the company is
receiving RFPs in order to determine those areas that are most profitable and therefore
focus on in the future.
Not only can CRMs assist in identifying opportunities, they can also track marketing
efforts against wins in order to determine how effectively a company's campaigns are.
Many companies blindly market to current and potential customers without really knowing
if their efforts are working. An integrated CRM has the functionality to calculate the
percentage of those who responded to a marketing campaign compared to those who were
targeted in the campaign. This is an invaluable tool in identifying the most appropriate
methods and tactics for reaching current and potential clients.
A technique that has long been employed by marketers to get a better sense of their
customer's needs and preferences is through surveys and questionnaires. Many CRMs come
equipped with tools that can automate and improve upon this process. Survey tools can be
used to distribute, compile, manage, and most importantly analyze survey findings.
Technologies as common as MS Access and e-mail are capable of distributing, compiling,
and managing these findings. But it takes the more advanced functionality found in
technologies such as CRMs in order to conduct an in-depth analysis of the survey results.
This type of analysis is what makes the survey results meaningful to marketers and
business developers.
Sales Capabilities of CRMs
Sales and marketing efforts often go hand in hand in ensuring revenue and growth within
an enterprise. Hence, much of the information and process improvements, which benefit
marketing, can also be used to improve sales efforts as well. Because these two functions
are so closely related, its only logical that the technology that enables them is
integrated. CRMs provide information, resources, and tools that allow marketing teams to
win clients and enable sales teams to generate additional business. 
These two departments need to form a partnership in order to ensure their efforts are
being focused on using CRM tools to optimize sales and marketing efforts. The backbone of
CRM sales automation is a centralized customer database that lets customer information
collected throughout the enterprise available to the company's sales force. This provides
the sales team with more information to use for prospecting and customer contact.
CRMs allow sales people in the field better manage their contacts by creating client
profiles as well as records of their historical interactions with the company. Effective
and accurate contact management is a vital tool to any client manager. Client managers
need to track who their contacts are in a particular company, what their job role is,
where they are located, etc. This information ensures that they are communicating with
the right people in the company and keeping key people informed of developments. For
example, a client manager may want to send a letter out to all of their contacts within a
particular industry. A CRM with proper contact management features will allow a client
manager to identify those contacts and create distribution lists or mail merges so the
communication is sent to the intended recipients.
Client profiles are another essential feature of a CRM. Client managers need the most
relevant, accurate and complete data on their clients as possible. A CRM can help make
this possible. A truly integrated CRM is an ideal system for collecting and managing
customer data. This means that all interactions with the customer are stored in a
centralized database for easy retrieval. To a client manager, this information is
invaluable. 
A CRM can create a customer profile based on data received from web registrations,
surveys, as well as historical interactions. Information from client transactions can be
used to determine customer preferences, needs, as well as activities or events the client
has attended. This information can be used when making decisions on how to best optimize
sales with that client in the future.
The Architectural Components of a CRM
To understand the structure of a CRM solution one must consider the business model it is
designed to support. As mentioned previously, marketing and sales departments are
increasingly relying on relationship marketing as a means to more effectively acquire and
retain clients. In short, in order to say competitive, companies must operate based on a
customer-centric business model. 
The Gartner Group predicts there is an 80% probability that by 2001, 70 percent of
marketing applications will be entirely redesigned to focus on customers instead of
products and redeployed to take advantage of emerging technologies. CRMs are at the
forefront of emerging sales and marketing technologies, but there are many tools that
contribute to this technologies vast functionality.