As the world enters the era of knowledge economy, it is found that companies are forced to move from a product-centric management philosophy to a customer-focused philosophy. Increasingly, companies are depending on delivering excellent customers services to achieve competitive advantages in the marketplace. This makes the concepts of customer relationship management (CRM) an increasingly important concept cannot be neglected by corporations around the globe.
Different researchers may adopt different version of CRM definition. However, a review of the literature on CRM indicates that CRM has a common theme as follow. Basically, CRM means the methods, software, hardware, people and communication capabilities and strategies to assist a firm in managing the relationships with customers, to ensure customers’ satisfaction, and subsequently, growth and profitability for corporations.
However, the implementation of CRM is never an easy task. In this paper, the several integration and implementation of CRM into an organization will be discussed. Then, examples or cases about how CRM were implemented successfully (or miserably) in various organizations will be presented. From that, this paper will summarize the pitfalls to be avoided, as well as the critical success factors to be aware of, in integration of CRM system to a corporation. Last but not least, possible areas for future research will also be suggested.
Ambitious organizations that have been trying to integrate CRM into its business processes are facing with a lot of issues. In the following paragraphs, the several common issues found in the process of integration of CRM to businesses will be presented.
It may not be easy. To integrate CRM into a business process or value delivery channel is never an easy task, as CRM is effectively an all-embracing method to connect to the customers. To implement CRM, many departments will be involved. Managers and employees from the sales, customer services, marketing, IT support to the senior management team will be involved. In some cases, suppliers will also be involved. As the integration of CRM will affect many parties, effective and successful integration of CRM in an organization require managers to pay attentions to a great deal of issues, and any mis-management of a particular issue can lead to the failure of integration process in the organization.
It is expensive. Implementation of CRM can be financially taxing to a corporation. In fact, according to Morgan (2010), many of the banks that had implemented CRM programs are not seeing the returns that they expected earlier, despite huge financial costs had been spent. From the analysis, it is found that to reap financial rewards from integration of CRM programs in company is never something automatic. Installing the hardware and putting in relevant policies in the organization is one thing; to be able to utilize the system towards excellent customers’ satisfaction and profitability can be altogether another issue.
It takes time. Many managers considered implementation of CRM a relatively easy process. However, in the integration process of CRM to other functional departments in an organization, managers started to realize that there is not short cut to successfully implementation of CRM system in any firm. The hardest part of the integration process can come from the human resources issues, whereby employees’ resistance to change (Shum, Bove and Auh, 2008), unsuitable organizational culture, or the complexities introduced by integrating CRM system to the usual business practices in organization. Unfortunately, to change all these takes time, patient, and in many instances, may need months or years to do so.
It is a continuous process. Many people misunderstood that CRM integration is a one-time process. However, like any other practices, system or business management ideas, CRM are subjected to continuous improvement. As business environment changes, how the way CRM can be integrated to an organization must adapt accordingly. In fact, successful CRM system and integration is not static, it is dynamic, responsive and evolving. Only through a dynamic system, customers can be best served, and the success enjoyed by firms due to high customer satisfaction can be sustained.
Success cases are rare. Besides, according to Wang, Hu & Yu (2010), there are relatively few success cases on which CRM has been effectively implemented by institution. Many firms had invested in CRM system, with high hopes, only to get disappointed when the system is proven hard to be integrated to the existing business practices in the organization.
It is not purely a technology. As argued by Morgan (2010), many mangers wrongly believe that CRM is a form of new technology that can be installed and integrated in an organization for better profitability. In many organizations, Chief Information Officer (CIO) is being assigned the task of managing CRM programs. This is causing that the CRM to serve purely as a database of customers’ information, instead of something to contribute new insights or knowledge to the organization. Other departments are not getting the necessary insights or fail to react to market when circumstances changes. As a result, the true benefits of CRM cannot be reaped, as the organizations had not been able to live the spirit of CRM and adopt the customer-centric philosophy in the value delivery process. These corporations tend to perceive CRM negatively, blaming the vendor providing the services, causing the CRM consultants to modify their value proposition to anything but CRM to avoid the negative stigma currently attached to CRM.
In this section, several approaches used to integrate CRM into an organization are discussed. To achieve this, examples on business cases on the implementation or integration of CRM to corporations will be discussed. From these examples, many lessons can be learned.
Successful integration of CRM in Charles Schwab is one of the key reasons leading to the company emergence as one of the top American personal financial services firm. For Charles Schwab, the consumers are provided all sorts of consulting services at low costs. The philosophy of customer-centric is adopted. For this, the company perceives that maintaining good customers’ relationships is far more important than to reap immediate profits from the customers. The company had then divided the customers into different segments – whereby different services are provided to different customers. Based on the 80/20 rules, efforts had been concentrated on the clients that bring biggest revenue to the firm. To achieve such objectives, the company had spent a great deal of money in analysis of the customers’ information – and subsequently transfer the knowledge learned to the customer services departments in each of the branches. As a result, the company can tailor their services in a highly personal manner. As the customers are divided into different categories, they are being served with different services and products. Such personalized services had brought the customers much closer to the firm, essentially producing happy customers, and in the long run, growth and profitability for Charles Schwab.
Meta Group is yet another firm successfully integrated the CRM system into its business. According to the senior project manager in the firm, in order to fully embrace the CRM system, all of the salespersons in the firm are asked to adopt new practices and methods in servicing customers. A lot of efforts had been spent to tackle the resistance towards new innovation from the sales force. A lot of training, courses and materials are provided to the employees – to teach the philosophy of CRM as well as the powerful functions in CRM to the workforce. A meeting room is even renovated to become a training room in the organization. The course on how to utilize new software platform are taught frequently. The program become successful when salespersons adopted the new methods, thereby granting them more insight on the needs and requirement for each of the customer.
As we had discussed above, we can then found that the failure to integrate CRM into the business process is no without reasons. Implementation and integration of CRM can achieve great success, if these pitfalls can be avoided. In this section, several pitfalls that must be acknowledged by managers (who eager to integrate CRM into their corporations) are presented.
Avoid misconception on CRM. According to Wang et. al. (2010), most of the people tend to have wrong perceptions on what CRM actually is. It is argued that people tend to believe that CRM is a set of software, or some sort of technical application. Such a perception cause people to under-estimate the efforts required to integrate CRM system into a corporation, when they may subconsciously think that integration of CRM can be done via simple installation of hardware and software to be used by people in the corporations. However, such thinking will likely to cause misalignment between the people, process and CRM applications in the firm. Thus, in order to ensure successful integration of CRM into an organization, executives should have more accurate understanding on what CRM actually is. It is actually a set of solutions, a modern business management philosophy that is designed to enhance the company relationships with customers. Merely installing the software or hardware can do no benefits to a firm, as integration of CRM require involvement of all people in the organization, in changing the normal daily practices and policies, as well as to the extent of new customer-orientation culture to fully utilize the strengths of CRM system.
Lack of rationale in CRM adoption decisions. Another common pitfall is to see the integration of CRM into the organization as a trend. Thus, there are relatively little understandings, by the senior management on why exactly they need CRM system. Thus, they tend to listen to external consultants advices, and might end up choosing the wrong applications or wrong methods in building relationship with the customers.
Lack of cultural preparation. In many of the firm, cultural issues tend to present barriers to successful integration of CRM system into an organization. For example, it is reasonable to expect that any organizational culture that resist change, non-innovative, anti risk-taking or conservative might not ready to accept the usage of CRM system in the organization (Maklan et. al., 2009). To successfully integrate CRM system in these organizations, the organizational culture must firstly be changed.
User resistance. One of the common reasons of failure to integrate CRM to a firm is due to employee resistance against change (Shum, Bove and Auh, 2008). The may be a lot fo reasons why employees resist changes. For example, salesperson may not like the new working style, as they had already used to the traditional and more flexible methods. They may have self-interest to be taken care off. Salesperson may not like to share information with other sales representatives, causing the ability of corporations in collection of valuable information being impaired. People may also resist the adoption of new technology, and perceive that the advancement of CRM will create extra works and responsibilities for them. Some workforce may not have the confidence or interests to learn up new technology. Thus, integration of CRM system into an organization may not be as easy in these cases. Often, a proper change management program should be implemented simultaneously to firstly educate the workforce, involve the workforce, convince and communicate to the workforce, to lower down the resistance level, before they are asked to adopt new techniques or technologies in workplace. Training and development program, or Organizational Development (OD) Programs may be required, to further enhance the capabilities of workforce to use and benefit from the CRM system.
Isolated approach to CRM implementation. One of the key reasons that CRM system fail miserably among most of the adopters is that the management fail to bring together the providers and customers into the management system. In integration of CRM, an integrated supply chain is highly important, as without the cooperation from vendors, as well as continuous alignment of CRM system to suit the customers demand, it is hard for firms to enhance customer satisfaction and loyalty. In fact, according to Wang et. al. (2010), some of these must be achieved for successful implementation of CRM system: (a) responsive to customer demand and change the system accordingly, (b) eliminate barriers in servicing customers, and (c) continuous improvement to provide personalized services to customers.
Lack of appropriate network infrastructure. Although this is not the most common pitfalls in integration of CRM to organization, the lack of proper and relevant hardware infrastructure can prevent effective and successful integration of CRM system. In fact, a certain degree of advance networking infrastructure and capabilities should present before the CRM system can be laid out in an organization. The employees, particular those from the sales and marketing functions, may be required to get connected to the system, to stay updated and to gain valuable insights on how to provide quality, excellent and personalized services to the customers.
Budget overrun. Financial support is definitely required in implementation of CRM system. One pitfall is that managers are not cautious in controlling the costs factors, leading to overspent, and eventually failure to fully integrate CRM system into the organization (Lassar et. al., 2008).
There are several key success factors, which if followed properly, can enhance the success rate of CRM integration process in any organization. These critical success factors are discussed in paragraphs below.
Well established organisational needs. As argued by Mukerjee and Singh (2009), the starting point of any CRM initiative is the CRM vision, followed by CRM goals. In order to achieve success, it is highly critical to understand the objectives to be achieved by the firm even before the CRM system is being implemented or integrated into an organization. By having a clear direction, then only people can work towards the directions. The goals can be enhanced customer satisfaction, strengthen customer relationships or customer loyalty. If such goals are not defined, CRM system will eventually fall back to become just a fancy system in the organization, when people find that it is hard to integrate it in daily operations.
Understand that integration of CRM is a step by step, continuous process. To ensure success of integration of CRM system, it is crucial for manager to understand that overnight success is not possible. Indeed, they should adopt the attitude of 4P presented by Lassar et. al. (2008), namely – passion, practice, patience, and persistence. With a proper mindset, they will not easily give up, and able to stay in course and follow through the hard process of implementing CRM system into the organization (O’Reilly and Paper, 2009).
Integrated and coordinated communication between departments. As discussed in previous section, integration of CRM system is not the responsibilities or issues concern only with the technical or information system department. Without the involvement of people, adaptation of the process, as well as the proper management of resources and business practices in the organization, a successful integration of CRM system is virtually impossible (Rahimi et. al., 2009). Thus, it is very critical for any firm to firstly outline a plan, strategies and approaches to be used in integrating CRM system into the organization. Deliberate and conscious efforts must be present to ensure the new business practices, processes, flows as well as the policies should internally consistent and mutually supportive of each others, when CRM system is integrated. This will prevent conflicts between departments that may hinder the effectiveness of the integration process.
Training and Development of Employees. It is highly critical to understand that human aspects are one of the most important (if not the most important) factors to be managed in integrating CRM system into an organization (Kimiloglu et. al., 2009). This is not hard to understand. Ultimately, people will determine if the integration is successful, and responsible to utilize the CRMN system to the fullest. People must willing to adopt the new technology, change accordingly, and then to learn and improve so that they can perform in accordance to the demands or requirements of a CRM system or philosophy. Thus, the developments of employees are not something that can be neglected.
The contribution of this paper is to present the pitfalls to be avoided as well as the critical success factors to be followed by manager in implementation of CRM system. However, CRM is essentially a broad scope of knowledge, and many valuable researches can be conducted in the future. Several suggestions for future research will be presented here.
Conduct the research at greater depth – to a specific industry. So far, this paper only discusses a general picture about integration of CRM system in corporations. However, every industry has different characteristics, and thus warrants different discussions on how CRM can be integrated to the specific industry. Thus, further research on CRM can be concentrated on a certain industry, to investigate issues regarding CRM integration to that particular industry. Such kind of research can be more valuable and accurate.
Investigate the linkages between successful implementation of CRM to other areas of business management. As CRM is not something to be implemented in isolation, future research can investigate how CRM relate to other field of business management, such as human resources management, operation management, organizational culture and structure and how to utilize or integrate CRM in an organization for attainment of competitive advantages in the competitive business environment.
To study the viable performance measurement system in evaluating CRM progress and performance in a firm. This paper is relatively silent on how to evaluate the degree of success or effectiveness of CRM system. Thus, further researches can be conducted to define a framework to analyze, evaluate and track the progress of CRM in an organization.
In short, CRM is a highly powerful tools and philosophy to be adopted by organization in the ever challenging business environment. However, to integrate CRM into an organization is never easy. Manager should understand the complexities of the integration process and by a better comprehension on the pitfalls and critical success factors related to integration of CRM system in businesses, they can enhance the probability of successful implementation of CRM system in their organization.
Babu, K., & Kumar, B. (2010). Customer Service Management – Turning Customer Loyalty Into Profitability. Synergy, 8(2), 93-98.
Dych, J. (2009). The New World of CRM :Three game-changers and how to make the most of them to benefit your customers. Information Management, 19(5), 53.
Kimiloglu, H., & Zarali, H. (2009). What signifies success in e-CRM? Marketing Intelligence & Planning, 27(2), 246-267.
Lambert, D. M. (2010). Customer relationship management as a business process. The Journal of Business & Industrial Marketing, 25(1), 4-17.
Lassar, W., Lassar, S., & Rauseo, N. (2008). Developing a CRM Strategy in Your Firm. Journal of Accountancy, 206(2), 68-70,72-73,14.
Limsarun, T., & Anurit, P. (2011). The Different Perspective of Managerial and Operational Level toward Customer Relationship Management Practice in Thailand. Journal of Management Research, 3(1), 1-13.
Maklan, S., & Knox, S. (2009). Dynamic capabilities: the missing link in CRM investments. European Journal of Marketing, 43(11/12), 1392-1410.
Morgan, J. (2009). Customer Information Management (CIM): The Key to Successful CRM in Financial Services. Journal of Performance Management, 22(3), 47-59.
Mukerjee, K., & Singh, K. (2009). CRM: A Strategic Approach. IUP Journal of Management Research, 8(2), 65-82.
O’Reilly, K., & Paper, D. (2009). Customer Relationship Management (CRM): An Approach for Transforming the ‘Myth’ of CRM Success into Dual-Creation of Value. Journal of Information Technology Case and Application Research, 11(3), 1-8.
Rahimi, I., & Berman, U. (2009). Building a CSF framework for CRM implementation. Journal of Database Marketing & Customer Strategy Management, 16(4), 253-265.
Ranjan, J., & Bhatnagar, V. (2008). Principles for successful aCRM in organizations. Direct Marketing, 2(4), 239-247.
Salami, M. (2008). IMPACT OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM) IN THE IRAN BANKING SECTOR. International Journal of Organizational Innovation (Online), 1(2), 30-49.
Shum, P., Bove, L., & Auh, S. (2008). Employees’ affective commitment to change: The key to successful CRM implementation. European Journal of Marketing, 42(11/12), 1346-1371.
Storr, T., Forbes, D., Carraher, S., & Baird, T. (2009). CUSTOMER RELATIONSHIP MANAGEMENT IN RBC ROYAL BANK OF CANADA (BAHAMAS): AN ANALYSIS OF THE PRESENT AND A PATHWAY TO FUTURE SUCCESS. Allied Academies International Conference. Academy of Marketing Studies. Proceedings, 14(1), 45-48.
Wang, F., Hu, F., & Yu, L. (2010). The Application of Customer Relationship Management in Investment Banks. Asian Social Science, 6(10), 178-183.
Wu, Y. (2010). Applying the Strategic Approach to Assess Customer Relationship Management. International Journal of Organizational Innovation (Online), 2(3), 186-205.