(The Jakarta Post Via Thomson Dialog NewsEdge) from THE JAKARTA POST -- WEDNESDAY, JUNE 21, 2006 -- PAGE 19
Nowadays, customers are more demanding and have many choices to satisfy their needs and wants. This creates a shift of power from producers to consumers. Therefore, the determining factors to win market battles are a company's ability to gain market knowledge and how fast it converts to differentiated products and services compared to its competitors. For this reason, to be competitive many companies transform into market-driven entities.
In a market-driven company, the management pays extra attention and effort to managing relationships with customers. In this case the concept of customer relationship management (CRM) is more dominant.
There are three main focuses in CRM: gaining market knowledge, retaining current customers and attracting new customers using the personal touch.
It is important to realize that maintaining current customers is more profitable compared to attracting new customers, which is difficult and expensive.
In principle, CRM encompasses a broad set of activities including sales, customer service and marketing, but the focus of CRM has changed considerably. In the early 1990s, CRM primarily emphasized improving a single service channel, namely a call center, with the objective of retaining unhappy customers. Later, companies widened the focus to include sales, channeling for interaction and gathering more customer information in every contact point with customers. The latest objective of CRM initiative is to gain market knowledge and attract new customers, without neglecting current customers.
CRM has produced many important benefits for customers and companies as well. Customers in this case become confident and comfortable in buying a company's product, while the companies enjoy the benefit of learning and better understanding for better strategy and implementation.
Unfortunately, a higher level of CRM requires sophisticated and expensive information technology. A survey conducted by Gartner found that 55 percent of IT-CRM projects had failed in that they did not produce significant benefit and wasted money because they were developed on ambition and incorrect concepts.
This is to say that the key to success is carefully carrying out a concept step by step. The initial step starts with simple, traditional and fundamental things. A company should interact intensively with its consumers in terms of human approach. Salesmen, service technicians and other front liners should be more helpful, responsive and able to grasp complaints sensitively. That way a company's culture will undergo change into being market driven, with the added benefit of avoiding high up- front expenses. The next step is upgrading the quality of traditional interaction by utilizing advanced IT technology while considering the computer skills and literacy of the company's employees.
There are plenty of IT tools to improve interaction with customers, ranging from simple to complicated, and from cheap to expensive systems.
The tools and systems include a call center, direct sales, customer care, a website, unassisted selling, WAP, PDA, fax, self-service and traditional personal front liners.
To ensure the effectiveness and efficiency of interaction with customers, controlling all the tools is mandatory. A key performance indicator is a call center's ability to handle a number of clients, which it should be able to do in a sufficient and effective manner. The number of visitors entering, product sign-ups and click-through rate are good indicators of website performance.
To achieve optimal results in terms of responsiveness and reliability, all these tools mentioned should be connected and linked to the internal core business process, including supply chain management and enterprise resources planning.
In addition, there are five activities for improving your CRM: defining all interaction points with customers, mapping existing process to support interactions, preparing alternatives to improve the quality of interactions, assessing all alternatives relating to value-creation (benefit for the customer and cost for the company) and also considering the difficulty of implementation in each alternative, and taking those alternatives that provide high value-creation which are workable.
From a management's point of view, CRM can be considered as "technology" on how the company relates to it customers effectively and efficiently. It is more than sophisticated IT, software and hardware as known by many people. It is a concept, strategy, system to implement and control a company's relationship with customers. It should be built on a proper concept. However, it is necessary to point out that IT is only a tool, while the most important thing is building a market-driven culture and mentality.
By taking extra care going through each process and critical factors mentioned above, three main problems in marketing -- customer acquisition, customer retention and developing value for customers -- can be solved. Finally, a company may expect improvement of customer satisfaction, increased sales and gaining the ultimate goal of superior profitability.
I. Heruwasto Dr. Heruwasto is a product development manager and senior consultant at the Management Institute, Faculty of Economics, University of Indonesia (UI) and lecturer at Masters of Management Program of UI
Copyright 2006 The Jakarta Post