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Today, in the business world, organisations competing for market power and success are continuously looking for avenues to step ahead of their competitors.
This, however, is becoming a more taxing objective for organisational managers as rapid advancements in information technology lead to mounting transparency of management activities across companies, making it exceedingly challenging to realize long-lasting differentiation (Kimiloglu & Zarali 2009).
But since the realization by management that customers are the core of a business and that an organisation’s success depends on effectively managing relationships with them (Nguyen et al 2007), companies are increasingly adopting and implementing customer relationship management (CRM) programs to maintain competitive advantage and prevent customers from switching to other companies (Kotorov 2003).
The present paper discusses the critical success factors for a CRM program by illuminating the essential components making up the program.
Essential Components of a CRM Program
Perhaps the most essential component of a CRM program is the customer. Extant literature demonstrates that customers are the only source of the organisation’s present profit and future growth (Kotorov, 2003), hence must be located at the core of any successful CRM program by virtue of the fact that CRM has to result in the delivery of a valued customer experience (Kimiloglu & Zarali 2009).
An efficient CRM program, according to Payne & Frow (2006), must be able to extract and deliver value to the customer through integrating and managing different channels of communication (e.g., face-to-face contacts, phone, Internet or other interactive media) to allow for an ongoing dialogue between customer and the firm across channels.
As postulated by Peelen et al (2009), the organisation must work deliberately and in a premeditated way to ensure that the product, the service offerings, the communications and interactions, the context and the price match or surpass customer expectations if it is to create a positive and long-lasting impact on customer loyalty, retention, recommendation behaviour and lifetime value.
The second essential component of a CRM program is the relationship. As acknowledged by Kimiloglu & Zarali (2009), the relationship between an organisation and its customers assumes a continuous two-way communication and interaction approach, which may be short-term or long-term, continuous or detached, repeating or one-time, and attitudinal or behavioural.
Even though customers may have developed a positive attitude towards the organisation and its products or services offerings, a stream of extant literature (e.g., Payne & Frow 2006; Maleki & Anand 2008) demonstrates that their buying behaviour is highly situational and context-oriented.
Consequently, as suggested by Wang & Feng (2012), an efficient CRM program must have the capacity to manage the customer-organisation relationship in a proactive and structured way to ensure it is profitable and mutually beneficial.
Scholars and practitioners consider management to be a critical component of any successful CRM program. Payne & Frow (2006) argue that CRM should not be perceived as an activity within the marketing domain; rather, it involves continuous corporate change in vision, strategy, culture and processes.
The organisation’s management, including its top leadership, must therefore contribute positively for the CRM program to be able to collect customer information and transform it into corporate knowledge that leads to activities that take advantage of the collected information and of existing market opportunities (Maleki & Anand 2008).
For the CRM program to achieve success, the management should spearhead a comprehensive change in the company and its people. Another component which is inexorably linked to management is organisational collaboration.
For CRM initiatives to bear fruit, scholars and practitioners have realized that the firm has to be built around customer needs (Nguyen et al 2007), and that customer management success must be appraised based on intermediate customer-oriented outcomes, such as satisfaction, loyalty and increased customer profitability (Peelen et al 2009).
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These authors further contend that “…the customer management function has the responsibility of creating reciprocity in a sense that actions taken by the company are matched by actions from the customers and vice versa” (p. 456).
This therefore means that reciprocity is a fundamental characteristic of CRM, and entails the timely and accurate delivery of products and services, the creation of empathy toward the customer, and the expertise to commence a co-creation relationship with customers.
Another key feature within the domain of organisational collaboration is the continuous and bi-directional customer-oriented feedback system, which assist the firm to not only learn about its customers but to also respond to their needs in a structured and proactive way (Peelen et al 2009).
Hence, employees are expected to develop a customer-oriented culture to be able to share and interpret the meaning of customer data (Kotorov 2003), but more importantly to understand customers needs and ensure they are addressed ahead of those of owners, management or employees (Peelen et al 2009).
Still, CRM vision is seen as an essential constituent of a successful CRM program. Scholars are in agreement that the firm needs to articulate or review its vision, related to CRM, if the program is to achieve success (Payne & Flow 2006).
Peelen et al (2009, p. 455) define CRM vision “…as an organisation’s top management commitment to customer centricity as a path to business success.”
Having realized that many CRM programs fail due to a disconnection of CRM vision and execution (Nguyen et al 2007), many managers charged with the responsibility of executing CRM programs have now acknowledged the critical importance of CRM vision not only to align the program with the business strategy and therefore increase the value of the customer relationship (Maleki & Anand 2008), but also to align the scope and direction of CRM within the firm and therefore the development of other components (Peelen et al 2009).
The last component to be discussed in this paper is the CRM strategy, which is basically a description of how the firm plan to realize its vision. Peelen et al (2009, p. 455) acknowledge that “…without the CRM strategy, the vision will remain without (significant) impact on the other components.”
Since the most immediate aim of the firm is to optimize the value of the customer base, CRM strategy assists it to not only position the customers at the heart of its activities but to also provide direction to all parts of the organisation to operate in tandem to realize end outcomes that balance the firm’s revenues/profits with customer satisfaction and loyalty (Wang & Feng 2012).
This exposition shows that the most important function of CRM strategy is to assist in the realization of the firm’s CRM vision, but to also deliver customer value and extract business value simultaneously.
From the discussion, it is clear that a successful CRM program must be grounded on some core components for organisations to reap the benefits associated with CRM, including maintaining competitive advantage, customer loyalty and retention.
Although there are other essential components of a CRM program, the current paper has discussed several critically important ones including: customer, relationship, management, organisational collaboration, CRM vision and CRM strategy. The management of firms intending to adopt CRM programs should consider incorporating these components into their systems to achieve competitiveness, customer loyalty and retention.
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Kotorov, R 2003, ‘Customer relationship management: Strategic lessons and future directions’, Business Process Management Journal, vol. 9 no. 5, pp. 566-571.
Maleki, M, & Anand, D 2008, ‘The critical success factors in customer relationship management (CRM) (ERP) implementation’, Journal of Marketing & Communication, vol. 4 no. 2, pp. 67-80.
Nguyen, TH, Sherif, JS & Newby, M 2007, ‘Strategies for successful CRM implementation’, Information Management & Computer Security, vol. 15 no. 2, pp. 102-115.
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