Introduction
Customer relationship management (CRM) is one of the popular approaches pharmaceutical companies use to reach potential buyers. The supplier company approaches customers in a largely passive and reactive manner, confident that it can select, acquire, understand, and readily retain them as desired. Performance measurement processes are rudimentary, as are internal and external communication.
Some companies evaluate customer needs, train staff to be more proactive with customers, and/or create teams or assign individuals to upgrade customer services (Bergeron, 2002). In addition, performance-based companies more frequently compensate sales and other staff at least partially on customer satisfaction scores. Pfizer is the largest pharmaceutical company, with $48.418 billion in revenue. This type of business requires an effective and unique set of management tools in order to reach a customer and retain him. The paper aims to prove, analyze, and evaluate the success factors of CRM and the impact of these strategies on customer relations.
Customer relationship Management Defined
The goal of CRM is to examine and analyze customers’ needs and wants in order to meet their requirements and expectations. CRM has a great impact on the profitability and effective performance of organizations (Freeland, 2002). The importance of CRM is explained by the fact that many organizations have begun to develop global markets and have established face-to-face sales teams either directly, using their own personnel, or indirectly, through contracted sales agents. Bergeron (2002) defines customer relationship management as “the dynamic process of managing a customer-company relationship such that customers elect to continue mutually beneficial commercial exchanges and are dissuaded from participating in exchanges that are unprofitable to the company” (p. 3). In the modern environment, CRM and development influence profitability because the attention has shifted to a greater emphasis on the management of the whole system and its relationship with other systems.
In this situation, CRM can be seen as a mediator who helps to cope with different demands both within the production system itself and between that and other systems. As environments change, they pose new problems for managers of organizations. Thus, with the emphasis on CRM comes the realization of increasing operating efficiency (Dow 1999). CRM influences profitability because it includes changing knowledge and technology, new values, new markets, and changes in the global distribution of wealth. New knowledge, for instance, can invalidate the existing knowledge of an entire industry. “Customers are always looking for more value for their money. One way that companies can provide enhanced value-and realize greater profitability is CRM projects” (Bergeron 2002, p. 57). When environments become turbulent, complex, and resource constrained, the knowledge, and skills that companies once possessed can become useless and even a hindrance to change. CRM projects acquire new knowledge and technology and employ these assets in production quickly (Critical CRM Decisions 2004).
Current State of Customer Relationships Forms
Pfizer, as the B2B supplier company, is entirely customer-driven, proactively approaching customers as partners. It is strategically directed toward keeping customers, with attaining commitment and loyalty (of both staff and customers), a paramount objective. Management style is often lattice or horizontal, with a company focus on continuous improvement in all activities: understanding and serving customers, creating knowledge and information flow around customer needs, staff communication and empowerment, team process, and so forth. Performance measurement is ongoing, with improvement activity prioritized around customer retention, their intended market action, and proclivity to remain loyal (Freeland, 2002). The supplier company has greater awareness and sensitivity regarding customers. Though management still tends to operate from a traditional hierarchy, the company has formal processes in place for measuring performance and collecting/acting on complaints (Pfizer Home Page 2008).
The main forms of CRM are database for customer lifecycle, front-of-house customer service, employees training, information management, and online support. At Pfizer, customer needs are better understood because there is a regular interface with them by multiple levels of staff (Reynolds, 2002). Employees are trained to be proactive with customers, gathering information on their requirements and sharing that feedback internally. Customer service performance is regularly evaluated, and teams may be created to improve services and other operational processes. Customers put reliability first in assessing service, yet salespeople and sales managers still perceive that customers regard responsiveness as more important (Pfizer Home Page 2008). One possible reason for this disparity is that, unlike reliability, which is a wider organizational issue and takes an investment of time and money, responsiveness is most often provided by sales and service people and therefore is an easier dimension for them to control (Nicho 2004). Research reveals that salespeople and sales managers even make references about reliability less often than their customers. Customers have considerable empathy for the seller’s position, yet they have little patience for sellers who overpromise, don’t establish the proper expectations, or bring the customer in on a problem when it’s too late for them to contribute to its solution.
According to Reynolds (2002), technology is one of the environmental factors that continually threatens existing arrangements. At times, technological changes occur so radically as to constitute a “technological discontinuity,” a sharp break in industry practice that either enhances or destroys the competence of firms in an industry. Fast-changing technologies, such as information technology, pose a particular threat to organizations. “Technology is essential to the implementation of a CRIA strategy (it underpins the processes)” (Reynolds 2002, p. 33). Such researchers as Stauss and Seidel (2005), Newell (2003) discuss the role of technology in CRM and emphasize the need for successful relations. The combination of goal difficulty and the extent of the person’s commitment to achieving the goal regulate the level of effort expended. If employees understand specific CRM goals, they perform better than employees with no set goal or only a vague goal such as do the best you can. On the basis of recent experiences in several of its key businesses, including computers, printers, and medical products, successful CRM projects have concluded that this is indeed possible (Dow 1999).
The problem is that technology does not drive relations, and the importance of dialogue becomes more urgent for successful CRM. Technology is recasting the process of management, providing powerful new capabilities to help managers strategize and plan, organize, lead, and control. Technology implementation is one of the most complicated and important steps for any organization to react to changing environments and introduce new systems of management. Firms with successful strategic systems have broken down organizational barriers that block the sharing of data across functions (Freeland 2002).
Design, sales, and manufacturing departments must work together. The use of appropriate technology is properly planned systems can have dramatic effects on operations (Stauss and Seidel 2005). Pfizer takes a proactive approach to customers and internal processes. While management still tends to follow traditional hierarchical and bureaucratic models, inhibiting internal, horizontal communication somewhat, many of these companies have gotten closer to their customers. Methods of doing this include complaint monitoring and handling through customer service centers, segmentation of customers according to their needs, and more representative, thorough, and current measurements that track levels of company performance on key attributes and transactions. Some measurement programs also assess the importance of the attributes. The more progressive performance-based companies differentiate themselves by their approaches to an organization built on higher emphasis, or focus, on customers. Management structure tends to be flatter, and customers are served on a local or departmental basis (Reynolds 2002; Pfizer Home Page 2008).
A marketing database is a key tool for making that happens. Nowhere is building share of mind, and in turn customer loyalty, more complex than in the B2B environment. Multiply those parties by the many touchpoints in the life cycle of a B2B sale—initial transaction, ongoing support, account management, and so forth—and the company has got thousands of interactions that must be monitored and coordinated. This is why solidifying a strong B2B relationship often starts with sophisticated database analysis (Pfizer Home Page. 2008). In years past, Pfizer followed industry tradition and relied on selling, where lone-ranger salespeople negotiated sales, closed deals, and in the process shared little information with others in the company. In some cases, B2B transactions can involve six or more parties in a single endeavor. Pfizer must build effective B2B relationships with those distributors and retailers that form the distribution channel to the ultimate customer (Schwalbe, 2005).
Pfizer has begun using CRM software to collect and track data about the interaction with distributors buying their products. This data collection and tracking is paying off. Pfizer has discovered that distributors buying a greater range of products typically recommend the Pfizer brand over competitive brands. Because when it comes to products, distributors know that stores champion a brand name over a single product (Schwalbe, 2005). Marketing efforts and selling incentives should be honed for distributors who buy multiple products of the same brand and not simply bulk orders of a single product. Moreover, Pfizer is working to constantly identify those distributors who most successfully sell pharmaceuticals to distributors who, in turn, sell to the ultimate customer. For the pharmaceutical company, identifying these high-value distributors is a crucial step in improving key B2B relationships and thereby maximizing brand loyalty throughout the distribution channel to the end consumer. Reynolds (2002) underlines that “many businesses realized they had not been actively managing their most important asset – their customers. Increased competition and decreased profitability became the wake-up call. At its most basic, CRNI is a strategic concept that manages this very important asset (84).
B2B Marketing Strategy and Success Factors of CRM
Currently, Pfizer follows a focused differentiation strategy aimed to establish low prices and deliver high-quality products to global consumers. Pfizer is competitively aware and stable, operating strategically and innovatively within the marketplace. Because they are more focused on serving customers, they actively seek to minimize registered complaints and problems as well as recover lost customers. Over the past few years, an increasing number of companies have instituted incentive compensation, recognition, and staff performance assessment constructed around satisfaction or performance scores given by their customers in research surveys (Schwalbe, 2005).
While this usually includes sales staff and event management, other customer-touching personnel, such as customer service, may be compensated or evaluated this way. Pfizer began using CRM data analysis to sharpen its marketing strategy in the Asian region by identifying which resellers were doing a better job of selling specific products (Stauss & Seidel 2005). Now, Pfizer is able to direct qualified leads generated from its customer-facing Website to those Asian resellers that have proven themselves most productive in driving product sales. CRM reseller analysis is also helping Pfizer manage the often-thorny issue of deciding which new products go to which resellers in which geographic areas. In essence, the manufacturing giant optimizes its Asian distribution network by knowing the reseller’s selling strength and how quickly inventory is likely to turn over (Schwalbe, 2005).
The main disadvantage of this approach is the increased number of staff and a need for constant training. The company had to retrain many professional employees in order to meet CRM requirements. It took time and investments in employees and technologies. Carefully selecting the means by which information is fed to the new buyer can help reduce postpurchase dissonance. Consumers are becoming more concerned about service and how they are treated when they purchase something than they are about the price alone (Stauss & Seidel 2005). Nurturing customer relationships is the cornerstone of a growing number of new customer marketing strategies, as reflected in the prevalence of offering a long-term guarantee on products, service packages, investments, and other similar incentives. “CRM is not a software application – it is a business strategy that can optimize profitability, revenue, and satisfaction at the individual level” (Reynolds 2002, p. 221).
The connection between good levels of customer service and good levels of customer satisfaction and retention underpins the common association of customer service with keeping, rather than winning, customers (Freeland 2002; Newel, 2003). Customer service, therefore, plays a pivotal role in relationship marketing (Freeland 92). But these packages, while providing essential infrastructure, need to be supplemented by managerial processes to address such fundamental questions as which channels to use, and how best to use them to deliver customer value. “On the basis of security- and growth-enhancing effects, profitability goals are also achievable by means of customer retention” (Stauss and Seidel 2005, p. 6).
Recommendations
The B2B company must revise its framework and policies to incorporate the customer satisfaction mind-set into the company’s foundation to ensure employee involvement. Special attention to be given to intercultural communication patterns and continuous communication with buyers through e-news and press releases. For example, employee profit or gain-sharing programs should include customer satisfaction goals, and employee performance systems should include team work and customer satisfaction measures. As has already been demonstrated, the reality is that there is frequently little or no relationship between perceived satisfaction levels and the levels of sales, profits, or customer retention (Greenberg, 2004). When companies build appraisal and incentive compensation systems around customer satisfaction or perceived performance levels, they are likely to discover that they have created a very different culture, and different, perhaps, than intended.
In some companies, sales staff and management have even corrupted, or at least infected, the system by hand-selecting customers to be included in the satisfaction research, or contacting them and stepping up levels of attention and service just prior to the survey. More progressive performance-based companies have evolved by setting up incentive compensation for all staff based on profit and revenue goals in addition to desired customer satisfaction/performance levels. This upgraded approach creates a win-win situation, with each employee having more direct investment in the company’s short-term and long-term financial success. Thus, staff should be viewed as an essential component of strength and employee loyalty is encouraged. Companies wishing to create and sustain a customer commitment based culture and infrastructure must also create and sustain real value for the customer. Value can be expressed in terms of tangibles (time, money, efficiency, quality, etc.) or intangibles (pride and wellbeing). Customers have become increasingly selective and less strictly logical in their search for more attractive quality, service and price (Kaneshige, 2001).
Client follow-up strategy can be an important way to anchor the loyalty of both the company and the buyer. Most buyers communicated with their office daily, so the strategy will work nicely. In the event there is a problem, the sales director can help remedy the situation. This follow-up technique can help the sales director forge relationships with customers from different countries. The mailing, sent after a purchase and telling the new owner in painstaking detail how to use the product or service, helps motivate customer to use the product (Greenberg, 2004). The mailing tells the customer why the decision to buy is a wise one and how to get the most out of what is bought. Pfizer should design mailing to draw the first-time customer’s attention back to the product and to reinforce the person’s original interest in it. Send the mailing out to a customer immediately after he receives the product or uses the service.
Conclusion
CRM and development influence the profitability of B2B organizations like Pfizer because they allow management to design products around a number of independent modules that can be easily combined in a variety of ways. At Pfizer, CRM tasks are designed and performed as independent modules that can be relocated or rearranged to support new requirements. Maintenance of high standards is a key factor to maximizing CRM outcomes. The purpose of maintenance of high standards is to attempt to maximize the performance of service by ensuring that it performs regularly and efficiently. The effective operation of banking systems is dependent on the maintenance of all parts of the system. There are more than a dozen different types of flexibility that CRM projects will not pursue here—design, volume, routing through the production system, product mix, and many others.
Involving employees into CRM can offer good results obtained from these projects. Pfizer provides custom products without the customers’ knowing that a product has been customized for them. The main problem is lack of professional staff communication with customers, which reduces their response. Faced with increasing pressure from its customers for quicker order fulfillment, employees would be able to meet all requirements only following CRM principles and tactics. CRM and development influence profitability and effective performance because they allow companies to build longer-term customer relationships and maintain a dynamic knowledge of customers’ requirements, preferences and expectations. Getting this role right, and to a standard of expertise that is superior to that of competitors and sustainable in the longer term, requires an in-depth understanding of the nature and nuance of customer service. CRM and development influence profitability because they allow organizations to build customer value by offering customers both a wider range of channels and more personalized treatment through the integration of channels.
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