Abstract

Background

What is CRM?

Integration of Front and Back Office Systems

Integration of CRM Strategies with the Internet

Practical Examples of CRM Strategies on the Internet

Conclusion

References
 

 
Technology makes it easy to analyse data and produce reams of useless information, which is seldom read by managers who have other time constraints.  Simple business information relative to customer transactions is seldom seen as a "real-time" necessity or a service / marketing tool.

According to von Ruben "CRM systems must be able to manage customer contacts across disparate channels."

One of these channels is the Internet, which is increasingly being used for business to business transactions.  In a recent study released by the University of Texas, and funded by Cisco systems, it was reported that the Internet economy generated $301 Billion in US revenue in 1998.  By the year 2003 B-to-B the commerce is projected at $ 1 Trillion. 

According to a report issued by eMarketer, a New York-based firm, there will be 350 million active Internet users by the year 2003.

These growth figures along with its ability as a multimedia communications channel make the Internet a key element in CRM. 

The Internet provides the opportunity for customers and employees to access information in a self-service manner while at the same time activating "trigger's" that process the transaction or deliver information.  A good example of this are global freight forwarders Expeditors.

The following quote is taken from the Expeditors 1998 annual report.

"...we don't simply move goods by air, sea, and land - we also move the information that executes the strategies of our customers...."
 

Through Internet access to a secure site, all shipments can be tracked via any reference number for both current status and expected delivery date. A built-in report writer allows customers to manage both historical and current information in formats they determine, while the system integrates and expands three optional processes (Expeditors Corporation – web page):

1. A transportation management system, which executes all transport and customs clearance operations.
2. A cargo management system, which provides centralized supplier consolidation management.
3. A distribution management system, which provides complete distribution information to customers.
 

The very nature of CRM demands that companies use continuously refined information about current and potential customers to anticipate and respond to their needs. 

Most Airlines are able to identify their valuable customers and upgrade them to first-class in preference to occasional travelers.  In addition to this the dietary preferences of customers are available without continuous requests.

Similarly insurance companies are using data supplied online by customers to segment risks more effectively.  Low-risk customers are offered premiums 15 to 20 percent cheaper than competing offers. (McKinsey and Company 1995)

Communication over the Internet happens in real-time and the key enabler to utilising the Internet as an integral part of the CRM strategy lies in the quality of the data a company is able to give or receive from a customer.

Customers require that you know their needs and are able to do business with them in one transaction.  When doing repeat business or talking to other departments, customers are irritated when asked for information that they have previously supplied, therefore seamless integration of information within companies is imperative.

However, few companies have collected much data about customer behavior.  In his paper "Using The Data Warehouse To Drive Customer Retention, Development And Profit" (NCR Corporation 1998), Michael Meltzer, says the following.  "To make specific offers to your customer base you have to know who they are.  Without a clear picture of who your own customers are, it is just as easy to pursue your competitors customers."

Michael Meltzer also notes that a reliable predictor of future behaviour is actual past behaviour and he believes transactional information is the key.  However, past behaviour is no guarantee of future profit and the real issue to be considered when evaluating customers is the future "lifetime value"?

The concept of Customer Relationship Marketing (CRM) has become relatively well known and talked about by traditional marketers. This paper briefly looks at CRM and how it is or should be applied on the Internet.

Practical Examples of CRM Strategies on the Internet ........