Changes in the competitive environment
The globalization of markets, the greater number of competitors, and an increase in the demands of better-informed customers have led to changes of great importance that force companies to change and renew management systems.
In the last ten years, Information Technology (IT) has established itself as an effective instrument to improve the strategic positioning of companies in their reference markets, creating a new organizational paradigm.
The pillars on which the dynamics of change have been based are both methodological and technological as well as management.
Methodological and technological elements:
- The consolidation of concepts and methodologies such as business process reengineering, supply chain management, finally, the availability of innovative technological elements such as network technologies, network operating systems, Data Warehousing applications (data warehouse, collection of consolidated and managed data, oriented to a domain, integrated, thematic, historical, non-volatile and varies in time that helps the decision making of the company or organization), analytical applications, resource planning of company (ERP), in short.
Both elements have found in the explosive growth, both in the Internet in general and in electronic commerce in particular, a dynamizing element.
Management elements:
- The role of IT as the only instrument capable of allowing companies to efficiently manage a growing volume of data, placing greater emphasis on data that contains strategic information about the company itself and its customers.
Thus, companies find as an element on which to base their differentiation from the competition, their knowledge management. It is therefore a matter of identifying the sources of knowledge, classifying them and making them available to all those involved in decision-making within the organization.
Change of organizational paradigms
Starting in the late 1980s, business process engineering or BRP (Business Process Reengineering) has been the main engine of change in companies, with the aim of reducing costs and improving the quality of operational activities.
The business management packages or ERP (Enterprise Resource Planning), which include in an integrated way the functions of administration / finance, logistics, production and human resources management, based on business models structured by processes, have given an adequate response to the demand for improvement and optimization of internal operating processes, also due to the fact that ERP applications include the best practices that result from a very high amount of experiences carried out in the international arena.
On the other hand, the significant improvement in processes goes hand in hand with a broad improvement in the company's positioning in relatively modest markets. When the majority of companies in a certain sector have undergone an optimization of their own internal processes, this actually becomes a condition to remain in the market, but not sufficient to achieve a position of excellence.
Differentiation from the competition must now be based on something else, since the true competitive advantage currently depends on the speed with which a company is able to respond with innovative products and services to the demands and demands of the market.
This new organizational model places the client in a central position, so that the company's processes are oriented towards it. By means of specific analysis of customer requirements, it is possible to put into practice the concepts of "segment by one" and "mass customization".
And, although customer service has always been a fundamental rule in commercial activity, the set of activities and technologies included in the concept of Customer Relationship Management now allows the customer relationship to be managed in new ways and to maximize value. that he expects from the company.
In this context, technologies such as ERP and Data Warehousing applications, to name just a few, have played a key role in the optimization of internal procedures (Business Process Reegineering) and external processes related to the management of the supply chain. supply, while technologies or, better said, CRM (Customer Relationship Management) solutions close the loop playing a key role in customer management procedures.
Thus, in an environment of globalization of markets, where effective customer management is a fundamental element to remain in the market profitably, it is observed how companies are redesigning their own processes in order to adopt an organization focused on the client and who sees precisely in the information derived from the client the moment and the object on which to establish business strategies.
What does CRM offer?
CRM solutions offer companies the necessary tools to improve the management of relationships with acquired and future customers, from a customer-focused business perspective.
The creation of a relationship with the clients themselves, in the sense of an effective management of the relationship system, implies for many companies the need to radically change their own behavior and direct the emphasis towards a true CRM strategy. A strategy that will acquire fundamental importance with respect to the obvious objective of continuing to be a profitable company, with a growing shareholder value compared to a world market subject to strong competitive tensions.
It is above all for this dynamic of globalization, with all that it means regarding the various processes, that the demand for Customer Relationship Management or CRM solutions has arisen, with the aim of determining an effective reengineering of processes for an evolution towards a customer-centric business model.
In the past, many companies have adopted strategies that can be defined as product-centric.
The change towards a customer-centric strategy is determining by companies a strong demand for methodologies and solutions capable of allowing an expansion of their resources through a model closer to their demands and business demands, and consequently the gradual abandonment of the traditional IT infrastructure and the corresponding implementation methodologies.
Therefore, business organizations can take advantage of new generation technologies such as Enterprise Resource Planning or ERP (Enterprise Resource Planning) products and Data Warehousing solutions, as well as use alternative or complementary distribution channels such as Sales Force or SFA (Sales Force Automation) and interactive call centers or Call Centers (CCS) that allow the acquisition of strategic information and sensitive data from the clients themselves.
CRM is something more
The complexity of a CRM solution does not derive exclusively from the technological components that make it up, but also from the effects it exerts on business processes and in particular on marketing processes.
The implementation of a CRM solution actually often requires a preventive reengineering of business processes, which in turn demands the support of consulting and marketing companies.
It then becomes a critical element, for the development of an effective system, the realization of a wide network of collaborations, formed by companies that, although they do not belong to the IT sector, possess the competencies and complementary resources related to the CRM subject.
CRM solutions can be defined as an integrated system of front-office components (automation of the sales force, customer service and call centers) and back-office (support applications for order management, warehouse, accounting, anyway.). These solutions are articulated through three large areas:
1. Contact management (the management of contacts and data collection)
2. Business intelligence (integration and processing of the acquired data, turning them into useful information to support the business decision-making process).
3. Marketing itself, that is, the conversion of information into marketing actions and programs.
The increasing importance given to building customer relationships in a competitive environment is certainly a critical factor. Many companies do not realize that customer loyalty is the key to maintaining the profitability of the company in the future.
However, the first step to implement CRM management is through customer acquisition. During this period, it is necessary to know how to segment customers, manage and exercise effective marketing efforts. Once this has been achieved, the process will become easier and the company can focus on improving the values offered to the customer.
CRM management is above all a strategy and an operating modality that aims to improve and extend customer relationships, generating new business opportunities. The implementation of a CRM system affects above all the points of contact with the customer within the company in the following areas:
- SalesMarketingCustomer serviceOrder management, distribution and logistics
The first areas that are normally addressed by CRM solutions or applications are the automation of the sales force and the management systems of the call centers. While an implementation of a CRM system undoubtedly brings advantages due to the use of new specialized applications, it is also true that many of the implementations carried out so far use or reuse investments already sustained in structures such as customer service (help desk), websites Web and instruments of the front office area, redirecting them towards a CRM perspective.
This means that the service component is for now clearly more important than the application software component.
Currently, CRM management has been extended to also include activities that are not directly in contact with the client, such as Data Warehousing and Data Mining (business intelligence methodology that gives us information on “who our clients are and what they demand”). These applications are not enough by themselves to implement a true CRM management system in the company environment, although they can constitute an important component once integrated with the activities of relations with clients, carried out through call centers. call) or other similar structures.
Total integration within the company of all activities that contribute to managing customer relationships, including back-office processes (set of network server applications used as a configuration system and information center for the company) and front-office (automation of the sales force, customer service and call centers), is indicated under the term Integrate Customer Management (IECM).
In short, the realization of a CRM project, fully integrated in the business environment (IECM) currently covers the following application areas:
1. Back-office / Front-office.
2. Call centers and interaction centers, centers that offer an integration of the various types of channels to interact in the service and attention with the customer, such as voice, fax, Email, Internet.
3. Data Warehousing / Data Mining.
4. Integration with back-office processes, and in particular with ERP systems.
5. Integration with customer support services such as help desk (Order management and logistics, assistance services and technical support).
6. Knowledge Management System, KMS (Knowledge Management).
Implementation of a CRM system
The CRM management systems made can be in various stages of implementation with respect to the established model.
In such a dynamic market, it is clear that a single solution provider company will hardly have all the knowledge and resources necessary to respond effectively to the intrinsic complexity of a CRM project.
This is due to the unique and uniform nature of the business context in which the solution must be integrated, which therefore requires a high customization content. A common approach taken by companies is to acquire the most common components externally, that is, with cross-industry characteristics, and develop, internally or externally, the modules that require further customization.
At the same time, it can be deduced that the management processes of acquired customers and potential customers are different from one sector to another, and that therefore in the implementation of a call center solution (CCS. Call Center Solution) user companies prefer a partial integration approach between standard components.
Therefore, in the completion of complete CRM projects, including Sales Force Automation (SFA) and CCS modules, the part of the project relating to the implementation of the CCS system is more likely to require a greater customization and customization effort. adaptation to the specifications of the business context and especially of the reference vertical market, while the SFA part, in most cases, can be implemented largely using standard components.
The differences in terms of customization between SFA systems and CCS systems have important implications on the choice of partner firms and the choice of third parties by companies offering themselves as CRM solution providers. In fact, while for the sale and delivery of OSS solutions, traditional partner firms may also be suitable for end-to-end CRM solutions, in view of the greater complexity derived from the high customization component required in The implementation of CCS solutions, it is necessary to develop an extensive network of collaborations and agreements between companies from various sectors: application providers, consultancy, system integrators, distributors, agents, in short.
Market sizing and development prospects
The market for services related to the implementation and management of CRM solutions shows strong growth worldwide.
The United States represented more than 48% of the market at the end of the last century, and maintained a higher growth rate, both with respect to Western Europe and the rest of the world.
In fact, US companies have started before European companies to focus on customer relationship management and in particular call center development, and will continue to invest heavily in this area. Mexico is the second North American country (the third, obviously, Canada) and the first in Latin America that continues to grow in placing more and more these centers because this is what the leading companies demand and the customers ask for.
At the European level, it is observed that the market for SFA Sales Force Automation applications amounted to more than 250 million dollars at the end of the last century.
For the implementation of systems based on CRM it is necessary, as already anticipated, to resort to the help of IT service providers (Information Technologies).
The three main categories of IT services are:
- Consulting: consulting services include both technological and organizational aspects, the latter being more important. From a technology point of view, the system architecture and the choice of instruments and applications can be particularly complex.
From the organizational point of view, the adoption of CRM solutions such as Sales Force Automation, Data Warehousing or Call Centers, require changing the organizational and process models or paradigms of the company.
Various activities are interesting in areas such as customer intelligence and segmentation, sales, transformation channels, distribution management, marketing and customer loyalty. Since few companies have the necessary internal competencies, these areas represent an interesting consulting opportunity for companies that do not have adequate and consolidated experience.
- Systems Integration: expenses in systems integration services correspond to the initial investment phase to set up a CRM system, and represent the segment with the highest growth rate in the period under study. A CRM project encompasses and has a complex set of software / hardware and service technologies, the implementation and integration of which within a company goes beyond the resources and / or competencies available within it.. In many cases, a CRM project focuses on the implementation of a specific application that is customized and integrated into the company's information system, particularly with ERP systems. Outsourcing:Outsourcing services represent more than 50% of the total quota and will continue to be the most important components of CRM expenses. These services refer essentially to the Outsourcing of call centers and tele-sales and tele-assistance services (Telemarketing), they represent the short and medium term evolution of the management of processes and technology of a CRM system.
There is currently a strong growth in demand for other types of Outsourcing services, such as the preparation and management of information on Data Warehousing, distribution, order management and, in particular, management of operations for electronic commerce, among other areas. Mexico has the leadership of this matter in Latin America, since it exports all resources, both material and human.
Bibliography
Buttle, Francis. Customer Relationship Management. Ed. Elsevier. Italy
Gajardo Ugas, S. What is CRM and what is its true meaning. Ed. HiTEK. Mexico
