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THE DECISION MAKING ABOUT THE SELECTION OF CRM INFORMATION SYSTEM Viliam LENDEL University of Žilina, Faculty of Management Science and Informatics, Slovak Republic e-mail:
[email protected] Abstract Customer relationship management is a comprehensive business and marketing strategy that integrates technology, process, and people. Implementation and using CRM have to bring advantages to the business. The objective of CRM is to optimize profitability, revenue and customer satisfaction. CRM brings quantifiable advantages and effects that show later. CRM information system is modelled on business processes and activities. This article deals with decision about the selection of CRM information system, particular selection criteria, conditions and variants. Keywords: decision, decision making, CRM, CRM information system, conditions, criteria, variants, problem, solution 1
INTRODUCTION The last several years saw the rise of Customer Relationship Management (CRM) as an important business approach. Its objective is to return to the world of personal marketing. The concept itself is relatively simple. Rather than market to a mass of people or firms, market to each customer individually. In this one-to-one approach, information about a customer (e.g., previous purchases, needs, and wants) is used to frame offers that are more likely to be accepted. This approach is made possible by advances in information technology. Remember that CRM is an abbreviation for Customer Relationship Management, not Customer Relationship Marketing. Management is a broader concept than marketing because it covers marketing management, manufacturing management, human resource management, service management, sales management, and research and development management. Thus, CRM requires organizational and business level approaches – which are customer centric – to doing business rather than a simple marketing strategy.
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CRM involves all of the corporate functions (marketing, manufacturing, customer services, field sales, and field service) required to contact customers directly or indirectly. The term “touch points” is used in CRM to refer to the many ways in which customers and firms interact. 2
BENEFITS OF CRM INFORMATION SYSTEM The principal benefits of CRM information system are to: - Improve the organization's ability to retain and acquire customers, - Maximize the lifetime value of each customer, - Improve service without increasing cost of service. Some of these benefits can be measured and others cannot. CRM is composed of four continuous processes. Each process provides distinctive benefits to the organization. To obtain all of these benefits, sales, marketing, and service functions need to work together. The benefits are shown in Table 1. Table 1 Benefits of CRM information system [6] Source of benefits
Identification Clean data about customer
Benefits
Single Customer View Help sales force Cross selling
Differentiation Understand customer
Interaction Customer satisfaction and loyalty
Customization Customer satisfaction and loyalty
Cost effective marketing campaign
Cost effective customer service
Lower cost of acquisition and retention of customer
Reduce direct mailing cost
Maximize share of wallet There are significant business benefits, which accrue from an effective, integrated CRM approach. These include: - Reduced costs (effective and efficient operation), - Increased customer satisfaction (exceeding expectations), - Growth in numbers of customers, - Maximization of opportunities (increased services, referrals, etc.), - Increased access to a source of market and competitor information, - Highlighting poor operational processes, - Long-term profitability and sustainability.
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DECISION MAKING Decision-making is the cognitive process leading to the selection of a course of action among alternatives. [7] Every decision-making process produces a final choice. It can be an action or an opinion. It begins when we need to do something but we do not know what. Therefore, decision-making is a reasoning process, which can be rational or irrational, and can be based on explicit assumptions or tacit assumptions. Decision making is defined as: - The cognitive process of reaching a decision. - A position or opinion or judgment reached after consideration - Choosing between alternative courses of action using cognitive processes memory, thinking, evaluation, etc - The process of mapping the likely consequences of decisions, working out the importance of individual factors, and choosing the best course of action to take. Barriers to good decision-making are: [7] - Hasty - making quick decisions without having much thought, - Narrow - decisions is based on very limited information, - Scattered - our thoughts in making decisions are disconnected or disorganized, - Fuzzy - sometimes, the lack of clarity on important aspects of a decision causes us to overlook certain important considerations. Decision-making process (Figure 1) has eight general phases, which are interlock. These general phases are: [8] 1. Identifying a problem, Problem is a discrepancy (difference) between an existing and a desired state. 2. Identifying decision criteria, The word criteria, is defined as “a standard by which something can be judged”. A decision criteria, therefore, is the basis of a decision, which outlines the relevant and important factors for a decision. And implicitly, it also defines what is not important. 3. Allocating weights to criteria, The next step in the decision making process is prioritization. Prioritization is achieved by assigning quantitative weights to each criteria element. The weight age defines the relative significance of each element. 4. Developing alternatives, Developing alternatives involves defining the possible alternatives (or choices) that would resolve the problem.
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5. Analyzing alternatives, Alternatives are rated and analyzed on the basis of the criteria. The rating can be based on a specified scale, say 1 – 5 etc. Rating may be subjective in nature and thus, may depend on the judgment of the individual(s). 6. Selecting an alternative, Selecting an alternative involves choosing the best alternative, based on the above rating and analysis. Generally implies selecting the alternative with the highest score. 7. Implementing the alternative, Implementing the alternative is putting the decision into action and involves clear communication of the decision to all concerned and obtaining their commitment. 8. Evaluation (of decision effectiveness). Evaluation forms an integral part of any process. Involves evaluation of the outcome based on the desired goal and criteria. Evaluation involves assessing the effectiveness and efficiency of the outcome (or the entire process). In case of any undesired results, each step of the process is carefully reviewed to trace the root causes.
Figure 1 Decision-making process [4]
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4.1 Problem definition The most important profess of the CRM is the communication. This problem was identified by rigorous analysis. There's the Administration system of communication missing in the company. The solution of this problem is the implementation of effective CRM information system and its main priority is the consolidation of communication processes. The realisation of decision about the selection of CRM information system is needed in this situation.
Figure 2 Decision making about the selection of CRM information system
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Communication is central to any successful relationship. In terms of Customer Relationship Management, communication needs to be consistent and high quality; as determined by: [5] - On time, - Focused, - Relevant, - Reliable, - Coherent. Communications must be judged most vitally by the reaction of the receiver. If the reaction is not good then the communication is poor. The information contained in a CRM system allows communication to be directed at the correct audience, in the correct way. The communication system must also encourage and facilitate honest and actionable feedback. Feedback from customers, especially complaints are essential for good organizational performance and ongoing development. Most organizations avoid, discourage and hide from complaints. Complaints are free guidance for improving quality, and free opportunities to increase customer loyalty. 4.2 Decision criteria and conditions The following characteristics are associated with delivery of excellent CRM information system: [5] - Reliability, - Responsiveness, - Accessibility, - Safety, - Courtesy, - Consideration, - Communication, - Recognising the customer and competence. Effective CRM information system with the priority of consolidation of the communication processes must fulfil the following selection criteria: [1] - Openness, i. e. possibility of interface of system to the other information systems, - English and Slovak language version, - Intuitive and "user friendly" control system, - Modularity of system, i. e. the possibility of later repurchasing of followup modules, - Credibility, reliability and adaptability.
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In addition to specified criteria, this CRM information system must fulfil these following conditions: - Saving of all important customer information saved in database, - Administration of all communication with customer contacts, - Saving of all realized operations related of any contact in history, - Available for administration of contacts about company employees, - Time management. 4.3 CRM solutions in market (variants) Complete view of CRM systems supplied and used in Slovak market is not easy to show because a lot of small and medium-sized enterprises use their own various systems. Following list include CRM systems, which are supplied as independent solutions or as addition complete company information system (Table 2). Table 2 View of CRM systems at Slovak market CRM solutions at Slovak Market ABRA G3 CRM
Addition to ABRA G3 information system
Cígler CRM S3
Addition to Money S3 electronic system
Datalock CRM
Addition to SPIN information system
FLEX CRM
Addition to FLEX IS information system
Microsoft Dynamics CRM
Part of business solution Dynamics, before Microsoft Business Solutions
Oracle, Peoplesoft a Siebel
Parts of information systems
SAS CRM
Can use other solutions and analytical tool of SAS
mySAP CRM
ERP addition to SAP R/3 system
Modern CRM systems provide to build effective customers relationship in optional sphere of business. We use quantitative (number of request) or qualitative ways of evaluation these CRM systems. A few years ago, technology vendors had their own specialties. For example, Siebel was in sales force automation, Remedy was in helpdesk systems, Davox was in call center systems, eGain was in e-mail management, and BroadVision was in the front-end application area. Today, however, there is no specific boundary of vendors. All vendors are trying to expand their products over the entire CRM area. For example, Siebel says it can do everything, Davox moved into customer contact management, and
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BroadVision is trying to integrate backward with ERP. Most of CRM vendors came from two different origins: [6] - Back-End Application Traditional ERP vendors (SAP AG, Oracle Corporation, Baan (now Invensys plc), and PeopleSoft) acquire, build, and partner their CRM application for ERP functionality. - Front-End Application Some companies started with front-end solutions such as personal information management system (PIMS). Siebel, BroadVision, and Remedy are in this category. Table 3 lists some of the major categories and players. Table 3 Major CRM Vendors [6] Category Enterprise-wide back-end office
Front-end office
Web-based front-end solution Adhere to Microsoft Standards Midsize Player Contact Management
Vendor Company SAP AG Oracle Corporation Baan Company (now Invensys plc) PeopleSoft, Inc. Siebel Systems Saratoga Systems Vantive Corporation (a division of PeopleSoft, Inc.) Clarify (a division of Nortel Networks) Onyx Software Corporation Firstwave UpShot.com Rubric Remedy Corporation Onyx Software Corporation Interact Commerce Corporation (previously SalesLogix) Sales Automation Group Symantec Corporation Multiactive Software Inc. (Canadian)
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CONCLUSION The present is an era of company loyalty to the customer in order to obtain customer loyalty to the company. Consumers are more knowledgeable than ever before and, because the customer is more knowledgeable, companies must be faster, more agile, and more creative than a few years ago. [6] The Internet allows information to be obtained almost instantaneously. The Internet permits firms to establish a personalized customer experience through online help, purchase referrals, quicker turn-around on customer problems, and quicker feedback about customer suggestions, concerns, and questions. CRM is very hard to implement throughout a company. The IT department needs extensive infrastructure and resources to implement CRM databases successfully. Executives must be willing to support the CRM implementation process forever because CRM never ends. REFERENCES [1] [2] [3] [4] [5]
[6]
[7]
CHLEBOVSKÝ, V.: CRM – Řízení vztahů se zákazníky. Brno: Computer Press, 2005. 190 s. ISBN 80-251-0798-1. BURNETT, K.: Klíčoví zákazníci a péče o ně. Praha: Computer Press, 2002. 382 s. ISBN 80-7226-655-1. DOHNAL, J.: Řízení vztahů se zákazníky. Procesy, pracovníci, technológie. Praha: Grada, 2002. 161 s. ISBN 80-247-0401-3. HITTMÁR, Š.: Manažment. Žilina: Edis, 2006. 300 s. ISBN 80-8070-558-5. CHAPMAN, A.: CRM - principles, strategy, solutions, applications, systems, software, and ideas for effective customer relationship management. Available on internet: http://www.businessballs.com/crmcustomerrelationshipmanagement.htm. GRAY, P. – BYUN, J.: Customer relationship management. Center for research of information technology and organizations, University of California. 2001. Available on internet: repositories.cdlib.org/cgi/viewcontent.cgi?article=1133&context=crito ALSAGOFF, A., Z.: Decision Making. Available on internet:
http://www.slideshare.net/zaid/decision-making/ [8]
MALIK, M., I.: Decision Making: The Essence of Managers´ Job. Available on internet: www.letsstartthinking.org/presentations/Decision%20Making.ppt
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