eCRM Electronic CRM concerns all forms of managing relationships with customers making use of Information Technology (IT).

From Relationship Marketing to Customer Relationship Marketing

The concept of relationship marketing was first coined by Leonard Berry in 1983. He considered it to consist of attracting, maintaining and enhancing customer relationships within organizations. In the years that followed, companies were engaging more and more in a meaningful dialogue with individual customers. In doing so, new organizational forms as well as technologies were used, eventually resulting in what we know as Customer Relationship Management (CRM).

The main difference between RM and CRM is that the first does not acknowledge the use of technology, where the latter uses Information Technology (IT) in implementing RM strategies.

The essence of CRM

The exact meaning of CRM is still subject of heavy discussions. However, the overall goal can be seen as effectively managing differentiated relationships with all customers and communicating with them on an individual basis. Underlying thought is that companies realize that they can supercharge profits by acknowledging that different groups of customers vary widely in their behavior, desires, and responsiveness to marketing.

eCRM

As the internet is becoming more and more important in business life, many companies consider it as an opportunity to reduce customer-service costs, tighten customer relationships and most important, further personalize marketing messages and enable mass customization. Together with the creation of Sales Force Automation (SFA), where electronic methods were used to gather data and analyze customer information, the trend of the upcoming Internet can be seen as the foundation of what we know as eCRM today. We can define eCRM as activities to manage customer relationships by using the Internet, web browsers or other electronic touch points. The challenge hereby is to offer communication and information on the right topic, in the right amount, and at the right time that fits the customer’s specific needs.

Channels through which companies can communicate with its customers, are growing by the day, and as a result, getting their time and attention has turned into a major challenge. One of the reasons eCRM is so popular nowadays is that digital channels can create unique and positive experiences – not just transactions – for customers. An extreme, but ever growing in popularity, example of the creation of experiences in order to establish customer service is the use of Virtual Worlds, such as Second Life. Through this so-called vCRM, companies are able to create synergies between virtual and physical channels and reaching a very wide consumer base. However, given the newness of the technology, most companies are still struggling to identify effective entries in Virtual Worlds.Its highly interactive character, which allows companies to respond directly to any customer’s requests or problems, is another feature of eCRM that helps companies establish and sustain long-term customer relationships.

Furthermore, Information Technology has helped companies to even further differentiate between customers and address a personal message or service. Some examples of tools used in eCRM:

• Personalized Web Pages where customers are recognized and their preferences are shown.
• Customized products or services (Dell).

CRM programs should be directed towards customer value that competitors cannot match. However, in a world where almost every company is connected to the Internet, eCRM has become a requirement for survival, not just a competitive advantage.

Different levels of eCRM

In defining the scope of eCRM, three different levels can be distinguished:

• Foundational services:

This includes the minimum necessary services such as web site effectiveness and responsiveness as well as order fulfillment.

• Customer-centered services:

These services include order tracking, product configuration and customization as well as security/trust.

• Value-added services:

These are extra services such as online auctions and online training and education.

Self-services are becoming increasingly important in CRM activities. The rise of the Internet and eCRM has boosted the options for self-service activities. A critical success factor is the integration of such activities into traditional channels. An example was Ford’s plan to sell cars directly to customers via its Web Site, which provoked an outcry among its dealers network. CRM activities are mainly of two different types. Reactive service is where the customer has a problem and contacts the company. Proactive service is where the manager has decided not to wait for the customer to contact the firm, but to be aggressive and contact the customer himself in order to establish a dialogue and solve problems.

Mobile CRM

One subset of Electronic CRM is Mobile CRM (mCRM). This is defined as “services that aim at nurturing customer relationships, acquiring or maintaining customers, support marketing, sales or services processes, and use wireless networks as the medium of delivery to the customers. However, since communications is the central aspect of customer relations activities, many opt for the following definition of mCRM: “communication, either one-way or interactive, which is related to sales, marketing and customer service activities conducted through mobile medium for the purpose of building and maintaining customer relationships between a company and its customer(s).

eCRM allows customers to access company services from more and more places, since the Internet access points are increasing by the day. mCRM however, takes this one step further and allows customers or managers to access the systems for instance from a mobile phone or PDA with internet access, resulting in high flexibility. An example of a company that implemented mCRM is Finnair, who made it possible for their customers to check in for their flights by SMS.Since mCRM is not able to provide a complete range of customer relationship activities it should be integrated in the complete CRM system.

Implementing and integrating CRM solutions

Several CRM software packages exist that can help companies in deploying CRM activities. Besides choosing one of these packages, companies can also choose to design and build their own solutions. In order to implement CRM in an effective way, one needs to consider the following factors:

• Create a customer-based culture in the organization.
• Adopt customer-based managers to assess satisfaction.
• Develop an end-to-end process to serve customers.
• Recommend questions to be asked to help a customer solve a problem.
• Track all aspects of selling to customers, as well as prospects.

Furthermore, CRM solutions are more effective once they are being implemented in other information systems used by the company. Examples are Transaction Processing System (TPS) to process data real-time, which can then be sent to the sales and finance departments in order to recalculate inventory and financial position quick and accurately. Once this information is transferred back to the CRM software and services it could prevent customers from placing an order in the belief that an item is in stock while it is not.

Designing, creating and implementing IT projects has always been risky. Not only because of the amount of money that is involved, but also because of the high chances of failure. However, a positive trend can be seen, indicating that CRM failures dropped from a failure rate of 80% in 1998, to about 40% in 2003.Some of the major issues relating to CRM failure are the following:

• Difficulty in measuring and valuing intangible benefits.
• Failure to identify and focus on specific business problems.
• Lack of active senior management sponsorship.
• Poor user acceptance.
• Trying to automate a poorly defined process.

Privacy

The effective and efficient employment of CRM activities cannot go without the remarks of safety and privacy. CRM systems depend on databases in which all kinds of customer data is stored. In general, the following rule applies: the more data, the better the service companies can deliver to individual customers. Some known examples of these problems are conducting credit-card transaction online of the phenomenon known as 'cookies' used on the Internet in order to track someone’s information and behavior. The design and the quality of the website are two very important aspects that influences the level of trust customers experience and their willingness of reluctance to do a transaction or leave personal information. As the use of the Internet, electronic CRM solution and even the existence of e-business is rising, so are the efforts in order to further develop the systems used and increase their safety for customers in order to further reap the benefits of their use.