In the last decade, it can be seen that many new contemporary e-business applications are changing the business landscape – by changing the rules and practices on how businesses compete in the global arena (Newell et. al., 2002). Such a trend is not something can be neglected by businesses, particularly those entrepreneurial, start-up or small to medium sized businesses, as there are many opportunities to be reaped (de la Rosa et. al., 2009). With proper preparation, knowledge, hard work, and investment, it is possible for the small businesses to compete effectively against the many bigger corporations (Robson, 1997), by being more responsive to market demands, more flexible and usages of more effective sales channels. Under such a context, the applications of Customer Relationship Management (CRM) are becoming more popular in business management. In this assignment, the applications of CRM for an entrepreneurial firm in UK, namely Psyche, will be presented. The structure of this assignment is presented in the following sequences. Firstly, a brief introduction on the company will be outlined. Then, the benefits offered by CRM applications to Psyche will be presented. Thirdly, the challenges faced by Psyche in the implementation of CRM applications will also be discussed. After considering the benefits offered by CRM applications, as well as the challenges or difficulties of CRM implementation, recommendations will be provided to Psyche on how to best implement the many CRM concepts of tools in the firm for better growth and profitability in the future.
Psyche is a small fashion retailer founded by the famous Steve Cochrane in 1982. Since then, the firm has been growing very fast, and has been able to obtain several fashion related award in UK. This make the firm becomes more popular and famous in the recent years. Today, the firm offers a wide range of products to the customers, which include contemporary arts, footwear, apparels for men, women, children, gifts, accessories and other fashionable products. Most of the revenue of Psyche is derived from its departmental stores. However, the founder is also trying to apply e-business tools and concept for further profitability. The firm has a internet sales portal, which can be access via http://www.psyche.co.uk/. However, the application of contemporary e-business concepts and tools in the firm is still limited. This makes the firm a suitable candidate to be used as a case study to discuss how the powerful CRM applications can be applied to the firm.
The economy structure and trends of the world is changing fast, as the world is fast to move from an industry-based economy to a knowledge-based economy. Besides, as the product centric management philosophy is soon replaced by the services oriented management philosophy, businesses are forced to compete based on excellent customer services (Dych, 2009). Such a trend is driving the many corporations to find ways to enhance customer services for better customer satisfaction and loyalty. For this, CRM is one of the popular and yet powerful e-business tools for such purposes. All the benefits offered by CRM can be reaped by Psyche, if the CRM concepts and tools are applied properly. In the following paragraphs, the several benefits offered by CRM applications will be illustrated.
Firstly, the CRM system is powerful as it enable small firm such as Psyche to be better equipped to compete effectively with the larger players. The internet as well as the change of IT/ IS technologies enable the smaller firm to compete based on flexibilities as well as responsiveness to marketplace. With such, it is then possible for Psyche to achieve better customer satisfactions (Dych, 2009), with better and excellent customers’ services and accurately fulfilling the consumers’ preferences, needs and wants. In the long run, the customer loyalty can be enhanced. All these means that the business of Psyche can grow at a faster rate, and indeed, grow to other part of the world (Rahimi et. al., 2009). Putting all these together, the better profitability and financial performance of Psyche after successfully implementation of CRM system and applications can be ensured.
Although CRM is a powerful tool and concept, the implementation of CRM in any organization can be a daunting task. Businesses that are motivated with higher profits may suffer from failure of implementation of CRM due to several unforeseen factors. Indeed, the unsuccessful implementation of CRM is not something uncommon. All these lessons learned from the past failure of CRM implementation are critical to remind the management on the many challenges to be expected during implementation of CRM applications in their respective organization.
Firstly, the implementation of CRM applications is a highly challenging task, whereby the many departments in the organization must work together for success. As contrast to major belief, CRM is not only a tool to be applied in the Sales and Marketing department only. In contrast, the many other departments must be involved to ensure the CRM applications and concepts are fully integrated into business process, system and practices. In fact, in many cases, the implementation of CRM applications may extend beyond the boundary of the organization, whereby the suppliers will be involved in development of strategies and business practices for cope with the CRM demands (Wu, 2010). This is because CRM in fact is a customer centric philosophy, and the many employees in the workplace must be educated and taught on how to put customers at the very first place in their work design and practices. In many instances, cooperation from suppliers is also required to become more responsive, fast, and flexible to meet customers’ demands and needs (Dych, 2009). Essentially, it is not to extreme to view that the implementation of CRM applications are something demands holistic management of the various functional departments in an organization, to serve customers more efficiently and effectively.
Secondly, the implementation of CRM applications can be financially burdening to an organization. Depending on the complexities and the specification of the CRM tools or applications to be applied, the financial costs required can be huge. Not only is that, despite many money had already been spent on the applications, success is not something automatic or certain. For example, according to Morgan (2010), it is pointed that many ambitious banks that have been passionately implementing CRM functions to the many subsidiaries are not seeing any significant returns to the bottom line of the bank, despite a lot of financial resources had been spent. This means that the initial investment costs may not be recovered, if the implementation is not successful. Even in certain success cases, the initial investment outlay can be huge as well. For small companies such as Psyche, this can create financial burden as well as extra risks to the firm.
Thirdly, the process of CRM implementation can be long. As CRM applications are nothing something simple, or easily executed, the process to put CRM applications in actions can be a daunting and long process (Storr et. al., 2009). A lot of time may be required. This is not hard to understand, as the many workforce from various departments may be re-educated, re-trained and the work scope or work practices may be changed. In fact, it can be perceived that the CRM implementation is essentially a change process, to change the old habits and working styles in an organization, to adopt a new, innovative and more dynamic customer centric philosophy. For any change process, the time required can range from 6 months to several years. Persistence is definitely important and managers must be patient in pushing forward to fully integrate CRM applications to the workplace. Thus, management must set correct expectations, on how complicated the CRM applications can be, and the time period required may well exceed their initial expectation.
Fourthly, the CRM applications must be implemented as a continuous improvement process, but not something to be performed once and it can work automatically forever. One of the great challenges of CRM tools is that it is not something designed to be fixed, and by definition, CRM should be changed or adjusted to fit the market situation and changes in consumers preferences, needs or demands (Limsarun et. al., 2011). Thus, it is not something to be designed once, and it can work for the rest of the time. However, constant adjustment, improvement and redefining the many aspects of the CRM tools will be required, to that the CRM system can become more responsive to the market, more suitable for the firm as well as more readily to contribute to attainment of competitive advantages to the organization. This is particularly true for firms such as Psyche, as the fashion and apparels industry is a fast changing one.
Fifth, it is necessary for the management to understand that success cases in terms of CRM implementation remain something rare. As argued by Wang, Hu & Yu (2010), the failure rate of CRM implementation in real world is high, as many of the projects did not yield intended results. This is not surprising, as many of the pitfalls are not understood by the management or even the CRM consultants in the past. However, such a fact must be well aware by the management, so that the CRM implementation process in Psyche can be designed in a way to avoid the many traps in the CRM implementation process.
Sixth, the CRM implementation can be difficult as it is not a process of applying new technology applications for a business, but instead is more related to a change in business management style and approaches in an organization. As commented by CRM researchers such as Morgan (2010), many people wrongly believe that CRM is just a technological tools to be applied in workplace, whereby they under-estimate the many other criteria to be fulfilled for successful implementation of CRM concepts to any organization. For this, it is crucial to understand that the implementation of CRM is not something to be performed only by the IT/ IS department, but should indeed involve other functional areas such as the marketing, sales, operations, and even the human resources management department to ensure the concepts of CRM can be integrated to workplace practices and work flow. Without all these, it is impossible for the firm to fully utilize the hardware offered by CRM tools, for attainment of competitive advantages in the dynamic and fast changing market place and market space.
Seventh, it is very important to realize that very often, the key issues causing failure of CRM implementation is due to user resistances. Effectively, CRM implementation in any organization is a change process. This means the employees behaviours, attitudes, and resistances to the change must be properly managed and handled (Shum, Bove and Auh, 2008). The managing resistance to change is perhaps most critical in the sales and marketing department, as the salesperson of marketing executives may not willing to spend extra time to learn up the new technologies, feel stressful to apply new working habits, forced to adopt new reporting style, forced to share information related to their customers with the headquarters, or simply feel extra burden from more heavier workload caused by implementation of CRM system in the workplace (Wang et. al., 2010). In fact, people may even fear that they will be soon replaced by the CRM technologies, unwilling to learn up new knowledge or simply do not believe that CRM can bring any benefits to them or the organization. This will be a tremendous challenge for Psyche, as implementation of CRM is demanding the firm to change accordingly, and to convince, persuade manage and guide the many workforces in the organization to adopt new philosophies and system. It can be very critical that various organizational development or change management tools, mechanism to be applied. Transformational leadership will often be highly useful as well.
As discussed above, it is shown that the applications of CRM to Psyche can be highly beneficial, but the process of CRM implementation can be daunting, challenging and risky (if it is not properly handled or managed). However, the risks should not be used as an excuse to avoid progress, continuously improvement of the company performance through the highly powerful CRM tools and concepts. For this, several recommendations on how Psyche can utilize the CRM tools as well as how the management can plan the implementation process to mitigate the risk while maximizing the potential rewards from CRM will be articulated. All these will be presented in the paragraphs as follow.
Firstly, it is critical for the firms to assess its organizational needs. According to Mukerjee and Singh (2009), the very first step of CRM implementation is to understand what is truly required and important to the firm before the applications of CRM is to be implemented. This is very important to derive and formulate the specific objectives or goals to be achieved via CRM system or implementation process. Thus, for Psyche, it is important for the management then to understand the vision, mission and the short terms goals to be obtained. These visions and missions are crucial to ensure the many steps, process and strategies are aligned properly during the implementation process. Besides, they are also critical to provide the reasons to employees on hwy the implementation of CRM are truly critical and can benefit them as well as the organization.
Secondly, it is also important for the management o have accurate mindset on the implementation process of CRM. Many pitfalls of CRM implementation can be avoided if the senior management has accurate perceptions on the CRM tools, platform and requirements for integrating the CRM system to workplace. Thus, for Psyche, it is important for the management to understand that the process should be best treated as a continuous improvement process, whereby patients, passion and persistence are required (Ranjan et. al., 2008). All these will definitely affect the success or failure of the CRM implementation process, as it had been discussed extensively above that CRM applications may need a long time period to be integrated and the process of integrating CRM to any organization can be complex and challenging. Thus, it is very important, for the management to plan the implementation process as a step by step process to deal with the many challenges that can arise during the integration period.
Thirdly, it is critical for all the functional departments to come together, work closely and aware their respective duties and responsibilities to make the CRM integration process a successful one. As articulated above, CRM is not something to be only concerned by the sales and marketing department, or worst, something to be implemented by the IT/ IS department. In contrast, all the departments in Psyche have significant duties and roles to play. The success of CRM implementation will be heavily relied on how the different departments can work together in a mutually supportive and internally consistent manner to adopt a customer centric philosophy in the organization. In fact, the culture of the entire organization may be changed as well. While the information technologies and the hardware of software installed is required to implement the CRM tools and system in any organization, the human factors can be more important and determining in contributing to the firm’s ability to leverage on the powerful CRM system. Thus, Psyche must work hard and incorporate all the functional departments in discussion, to that the many different people participate and involve in the implementation process.
Lastly, organizational development and organization change management program is required for integrating CRM into the firm. As presented above, the integration of CRM is something comprehensive, integrating and over-reaching in any organization. Psyche should then implement change management program to cater for the integration process, as it is reasonable to expect resistance to change will occur in the organization. People may not be ready to change, or may not buy into the idea that CRM can be useful, beneficial or needed. Thus, change management program, specifically designed to handle the issue related to CRM implementation, should be outlined, and formulated. Besides, several tools used in organizational development program, such as team building, classroom training or on the job training can be executed (Babu et. al., 2010), to equip the workforce with relevant knowledge, skills and the proper attitudes to cope with the demands from CRM system.
In conclusion, in assignment had demonstrated how CRM system can be important to the success of an organization from the customer perspective. The many challenges are also presented, as they serve as good lesions to be learned. After discussing both the advantages offered by CRM system, as well as the pitfalls or challenges to be tackled upon in the CRM implementation process, recommendations fro Psyche had be articulated. It is important for Psyche to follow the suggestions to ensure higher chances of success, so that the firm will not become just another statistics of CRM implementation failure in the future.
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