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
 

 
The Internet provides the ideal platform to track transactional behaviour and profile this information against historical records using traditional marketing methods.  This integration of systems and information allows companies to implement cost-saving initiatives such as intelligent agents (IA's), predictive and retentive modeling, and cross selling.

Intelligent agents (IA's) are particularly suited for application on the Internet?

In his paper "Intelligent Agents and Relationship Marketing" Salvatore Larosa (Business Consultant, Cap Gemini Italy) explains intelligent agents (IA's) as follows.  "We need a way to detect what a person wants (information, products, services), and consequently given her a possibility to get it in the fastest way.  Intelligent agents are - in our vision - a suitable tool to mechanise such task.  IA's give us the possibility to interact at a single user level without using human resources (or, at least, reducing the need of them) for the most of such interaction.  Moreover, IA's can make inferences about user data, needs and habits".

Salvatore Larosa goes on to explain how IA's will guess customers habits and suggest suitable products.  This concept is already widely used by most search engines.  However, due to competitive nature of the Internet few companies are willing to share the secrets of their success. 

In combination with the Internet IA's are able to automatically generate email responses to customers.  At the same time the details are logged in the customer history or passed on to a "human" for personalised follow-up.  The same technology can be utilised to customise the customer interface when a known customer logs on to an Internet site.
 

Retention and acquisition strategies on the Internet are not vastly different to those implemented through traditional marketing channels.  However, the speed and reduced cost with which companies can react to market developments when using online channels is the key-differentiating factor.  New products can be brought to the market almost overnight.  Nick Mehta, Vice President of Marketing, at Chipshot.com notes that they can create and run the own campaigns within days and are able to quickly create and run special promotions around holiday and golfing events. 

Another success story with regard to retention and acquisition strategies on Internet is MotherNature.com.  Jennifer Murphy - Director of customer retention says. "We knew the more relevant information we could get out to customers, the better their decision-making abilities, and the likelihood they would come back to Mother Nature for all their natural product needs."  MotherNature’s first campaign combined information about the enhanced web site with targeted special offers, successfully driving traffic to the site.
 

A further major benefit of the Internet as a platform for customer relationship marketing is the ability to link the supply chain and other business partners.

According to von Ruben of IBM "Banks don't print cheque books themselves, so their printers have to be included in the cycle, otherwise the system will fall down.  Customers will call and then no one will know what has happened to the printing of the cheque book."

Dell Computer Corporation should be a role model for businesses wishing to integrate the supply chain.  The company was founded in 1984 on the direct business model.  The following is an extract from their web page. 

"Today, Dell is enhancing and broadening the fundamental competitive advantages of the direct business model by increasingly applying the efficiencies of the Internet to its entire business.  Forty three percent of Dell's sales are Web-enabled, and about 40 percent of Dell's technical support activities and 50 percent of Dell's order status transactions occur online."

Through integration of the Internet with back office and front office systems, Dell allows customers to place customised orders directly on the factory.  Payment is handled online through e-commerce and copies of the order are routed to localised third party distribution agents.  Without further unnecessary interaction with the customer or Dell, the distribution agent collects the computer directly from the factory and delivers it to the customer.  This process is standard throughout the world and lead times are generally shorter than four days.

The Dell direct business model has significant financial advantages.  By cutting out the middleman and integrating the business transaction it is estimated that Dell make up to 35 percent more margin than their competitors.

Cross selling is an obvious benefit for businesses utilising the Internet as part of their CRM strategies.  For companies that have a limited product range this benefit is still achievable through partnering in a "virtual mall". 

Salvatore Larosa, Business Consultant – Cap Gemini Italy, notes that smaller companies who wish to implement CRM strategies but lack the financial resources or technological capabilities are easily accommodated in the virtual world.  He says "It is an interesting way to get the business and technological intelligence from a partner that is specialised in the usage of Internet for business purposes."
 

The concept of sharing back office systems and databases in the “virtual mall” environment, offers Small/Medium Business Enterprises (SMBE’s) the opportunity of competing on an equal footing against larger competitors with more resources and experience.
 

Conclusion..........