Customer Relationship Management at Gibca

Customer Relationship Management at GIBCA Group Companies

The current era is generically recognized as the technological revolution, a time in which technological innovations and developments are made on nearly daily basis. This rapid pace of development impacts directly on all features of the every day life, from the preparation of the breakfast, to the complex analysis of the statistical information.

Within the business community, the technological revolution has created countless mutations. Examples in this sense encompass the inclusion of computers in the workplace, the usage of the internet or the development of intranets. This situation has lead to adjacent implications, such as a necessity to train the staff members to operate the technological applications or the best usage of the technologies to create competitive advantages. A specific means in which technologic applications can be used to create these advantages refers to the collection and processing of customer related information.

Modern day customers no longer represent the group which purchases whatever the company produces, but they have become the group which tells the companies what to manufacture and sell. This status quo was generated by the incremental forces of globalization, by the inclusion of technological applications in the manufacturing process or by the intensifying competition, all which presented the customer with a wider product and service offering. In this context, the clients became more pretentious and their satisfaction now represents the key component of business success.

Given this understanding of the modern customer, companies develop and implement wide series of strategic courses of action in order to become better acquainted with the customer base, to understand its needs and to become able to serve these needs in a way that leads to increased organizational profitability. A specific means of achieving these objectives is through the implementation of Customer Relationship Management (CRM) tools, techniques and practices.

CRM, as well as most marketing efforts, has traditionally been the focus of business models in service providing companies. Yet, at a global level, it has to be noted that more and more companies switch their focus from manufacturing to service providing. Within the United States for instance, nearly 80 per cent (76.9 per cent more specifically) of the entire national output is generated by service operations, with the remaining 21.9 per cent being generated by industries and 1.2 per cent by agriculture. In terms of the individuals employed in the sectors, over half of the total labor force is employed in the services sector (Central Intelligence Agency, 2010). This virtually translates into an increased propagation of the CRM practices throughout countries, industries and sectors.

Additionally, the forces of globalization have intensified competition within the manufacturing industries as well, meaning that it becomes more and more crucial for producers to integrate Customer Relationship Management as a means of ensuring customer loyalty. Today, CRM emerges within the non-service industries, but here, it can be observed in rather incipient stages.

2. Problem Statement

As a response to the new challenges within the contemporaneous market place, the GIBCA Group has turned its attention to the strategies of Customer Relationship Management. Yet, rather unfortunate, the company has been unable to adequately gather and process customer information. The poor management of customer data led in turn to poor results in the field of CRM, which subsequently materialized in poor sales levels at the GIBCA Group companies.

3. Study Objectives, Research Questions and Hypotheses

In light of the acknowledged problem, this research strives to identify and present means in which the customer data can be used in a more efficient means, which would in turn lead to superior implementation of the Customer Relationship Management tools and concepts. It aims to retrieve conclusions useful for the group in increasing its sales levels, but also for the individual companies which form the group.

The research commences at three premises, or three hypotheses, as follows:

a) When the company becomes better able to collect and use customer information, it will be better able to implement customer relationship management strategies. In other words, as the marketing team at the GIBCA Group interacts with the customer at the superior level, it will become better abet to understand his desires and to develop the adjacent strategies.

b) Higher quality CRM is better able to serve customer needs, and in turn, generate increased revenues, as well as revenue stability

c) The GIBCA Group places an incremental emphasis on Customer Relationship Management and will continue to do so in order to enhance customer satisfaction and organizational revenues.

In the verification and validation of these three hypotheses, the research will aim to answer the following questions:

1. What are the particularities of Customer Relationship Management at GIBCA?

2. How is the management of customer data related to Customer Relationship Management and how could improved management of customer data lead to improved CRM?

3. How does Customer Relationship Management improve organizational profitability?

4. What measures and strategies should the managerial team at the GIBCA Group develop and implement in order to better manage their customer data and consequently increase their profitability rates?

4. Significance of the Study

The research project on the implementation of Customer Relationship Management at the GIBCA Group is characterized by two distinct significances. First of all, there is the academic importance of the paper. From this standpoint, the work reviews and points out to some of the most important researches already conducted in the field. This virtually means that it recapitulates the already made developments, and additionally, that the study is relevant as it starts at proven and solid grounds. Another academic significance of the study is given by the approach taken in the analysis. In this order of ideas, the current paper looks at CRM through the lenses of customer data -- this approach is uncommon within the specialized literature.

Secondly, there is the managerial and practical importance of the study. From this standpoint, the research paper offers solid recommendations for the managerial team at GIBCA as to how they could use customer data to increase their profitability levels. The recommendations are viable at the overall level of the entire group, as well as the individual level of its component companies. Extrapolating, the findings in the study are also noteworthy of consideration for other managers in the construction industry or for managers administering large groups. All these parties would be introduced to the mechanisms of efficient Customer Relationship Management and they will be better able to implement the solutions to their own advantage.

5. Limitations of the Study

There are two sets of limitations -- academic and practical. The academic limitations -- or better said the academic challenges -- refer to the findings of theoretical conclusions within a real life situation. The practical limitations refer to the negative impacts which might be felt by the GIBCA Group companies, such as:

Reduced operational efficiency as more time is spent assisting the research process and professional duties might be neglected

The occurrence of internal tensions based on the results of the study as one company might be implementing CRM at superior or inferior levels relative to the other companies

Internal dissatisfactions on the part of the staff members who would be faced with the necessity to readjust their approach to professional chores.

Additionally, due to these limitations, but also due to issues which would be identified during the actual research, it is highly possible for the current study to raise new questions. And from an academic standpoint, the raising of new research questions is a strength of the research process.

6. Definition of Terms

Before launching the actual discussion on GIBCA and its customer data usage within Customer Relationship Management, it is of the utmost importance to pin point several terms which would be used throughout the development of the research project. They include:

CRM -- Customer Relationship Management -- the process of managing the means in which the company interacts with the customer base with the intent of increasing customer satisfaction and generating increased profits. More information on CRM will be offered throughout the Literature Review chapter, which, among other things, will contain several definitions of Customer Relationship Management, as they have been presented within the specialized literature.

Customer data -- information the company collects on its clients, such as their degree of satisfaction towards a certain product or service, their suggestions for improvement, their complaints and so on.

Organizational profitability -- a complex financial term which reveals the levels of profits a company makes; a distinction should be made between revenues and profits in the meaning that the profit is retrieved by the subtraction of the operational and other costs from the totality of the revenues. The levels of profitability are measured through the composition of several profitability ratios such as gross profit margin or net profit margin. In the context of the current research project, the profitability will be understood in a simplistic manner as the ability of the company to generate revenues in the context of the costs incurred (Investopedia, 2010).

Electronic business -- the concept is based on the word electronic, which in this era of the technological revolution, implies the usage of technological applications and the internet in the various processes, such as business.

Electronic Customer Relationship Management (eCRM) -- the application of Customer Relationship Management within electronic businesses

Customer Data Integration (CDA) -- the process by which data is collected, assessed and integrated within the organization to maximize its chances of attaining its pre-established objectives

Data mining -- the process by which a database is statistically assessed to identify customer patterns -- it transforms data into information

Customer loyalty -- at a most simplistic level, a loyal customer is a client who continually returns to purchase the company's products and services. Through expansion, a loyal customer is also considered one who offers the company consistent feedback, testimonials or product reviews, but also one who promotes the company's products and services through word of mouth (Wise Geek, 2010).

7. Organization of the Project Paper

Once the paper has introduced the context of the research it carries on with the following chapters:

Chapter II: Literature Review

Chapter III: Customer Data and Customer Relationship Management in the Modern Day Business Society

Chapter IV: The GIBCA Group

Chapter V: Customer Data and Customer Relationship Management at the GIBCA Group

Chapter VI: Recommendations for Improving Customer Data Management and Customer Relationship Management at the GIBCA Group

Chapter VII: Concluding Remarks

Before going any further, it is important to mention that this structure is orientational and that there exists a possibility for the above structure to suffer modifications. This possibility is common with research endeavors, as new noteworthy elements are identified throughout the actual research process. Yet, the incurred changes should not be major.

Chapter II: Literature Review

1. Definitions of Customer Relationship Management

The concept of Customer Relationship Management is rather broad and the academic approaches to offering it a definition have varied from the offering of a cut and clear definition, to the avoidance of offering a definition. Also, it has to be noted that, before offering a definition, some authors have their ideas formed in the direction of their research project, meaning as such that their definition might be biased by the desire to give CRM meaning in the context of their own research. Still, this situation only broadens the approach to CRM by allowing the reader to view the concept from different angles. In this order of ideas, some of the most notable definitions of Customer Relationship Management include:

1.1.

"Customer relationship management (CRM) is about understanding the nature of the exchange between customer and supplier and managing it appropriately. The exchange contains not only monetary consideration between supplier and customer but also communication. The challenge to all supplier organizations is to optimize communication between parties to ensure profitable long-term relationships" (Peel, 2002, p.3). The author of this definition believed that his definition is the most comprehensive one within the current context. To help the reader better understand his train of thoughts and his arguments, Peel highlighted four key words in the definition and explained their meaning and importance as follows:

Exchange between customer and supplier -- it recognizes the complexities of the relationship between the customer and the company; it introduces several metrics which help the company identify the "good" customers (for instance those who pay their debts on time)

Managing the relationship between customer and supplier -- this refers to two dimensions -- consideration and communication. The consideration dimension includes monetary concerns, as well as other elements, such as the ability of the client to make the payments on the purchased product or service.

Communication between supplier and customer -- the communications component is the most important aspect of Customer Relationship Management and the communications include organizational efforts at all levels in interacting with the customer, offering him information and retrieving constructive feedback.

Profitable long-term relationship -- this final element reveals the very scope of all previous efforts in establishing an exchange between the two parties, managing the relationship between the parties and supporting communications. All these efforts are made with the stated intent of adding more value to the company and increasing as such its profitability levels (Peel).

1.2.

Kristin Andersen and Carol Kerr (2002, p.2) take a similar approach to CRM in the meaning that they offer a definition and then explain its main component words. From their standpoint, "Customer Relationship Management is a comprehensive approach for creating, maintaining and expanding customer relationships." In terms of their highlighted words, the two authors explain:

Comprehensive -- it implies that, unlike the general misconception, Customer Relationship Management does not only fall under the responsibilities of the sales and marketing departments, but that it should be present at all organizational levels. The two point out than when a single organizational department is in charge of CRM, the interaction with the customer will be negatively affected. In other words, they argue that CRM is a business philosophy, rather than a simple strategic approach.

Approach? -- the use of this word implies that Customer Relationship Management is a means of thinking on how to improve the relationship with the customer and then intensifying the efforts in this direction. At this stage, the authors once again argue the possibility of CRM to represent a business philosophy through the benchmarking role it would play within the company.

Creating, maintaining and expanding -- these three words imply that Customer Relationship Management is a cyclic process of analyzing and utilizing customer data in a means that attracts new customers and also consolidates the relations with the already existent customers (Andersen and Kerr).

1.3.

Adrian Payne (2006) is one of the authors who clearly state that a definition of a given concept has to be relevant in the context of the specific research conducted. In this order of ideas, within his specific research topic of achieving customer excellence through CRM, the concept is defined as "a strategic approach concerned with creating improved shareholder value through the development of appropriate relationships with key customers segments. CRM unites the potential of IT and relationship marketing strategies to deliver profitable, long-term relationships. Importantly, CRM provides enhanced opportunities to use data and information both to understand customers and implement relationship marketing strategies better. This requires a cross-functional integration of people, operations, processes and marketing capabilities that is enabled through information, technology and applications" (Payne, p.22).

1.4.

Edna Johnson Ragins and Alan J. Greco (2003) do not offer an individual and independent definition of Customer Relationship Management, but quote previous works. Within their article Customer Relationship Management and E-Business: More than a Software Solution, the two authors promote the idea that CRM is "is a business strategy that attempts to ensure every customer interaction (whether for sales or service) is appropriate, relevant, and consistent -- regardless of the communication channel." CRM is a core business strategy for managing and optimizing all customer interactions across an organization's traditional and electronic interfaces."

1.5.

Another simplistic definition is offered by Dyche (2002), who argues that Customer Relationship Management represents "the infrastructure that enables the delineation of and increase in customer value, and the correct means by which to motivate valuable customers to remain loyal - indeed to buy again" (Dyche, p.290)

1.6.

A less academic, but still noteworthy definition of CRM is that offered by the Search CRM Website, which defines the concept as "an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way." The editors at the website offer the example of a CRM implementation in the company's construction of a database to contain valid and relevant information about the company customers. The information in the database would be gathered and detailed "so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased, and so forth" (Search CRM).

2. Customer Data

As it has been mentioned throughout a previous section, customer data refers to the information the company can or does collect on its customers, with the intent of using the data to increase its chances of attaining the organizational goals. Julia A. Jacko, Constantine Stephanidis and Don Harris (2003) identify four primary types of customer data, as follows:

Information on customer identification

Information on the behavior of the clients

Information on the desires of the customer, and finally

Information on the needs of the clients.

The customer data on the customer identification includes elements such as the name of the customer, his occupation or the number of years he has spend in school. All personal information is protected by the company and used only in the directions stated by the organization and agreed upon by the respondent. Incremental emphasis is being placed on identification data in order to be able to re-interact with the customers in the future, present him with the latest products, retrieve feedback and so on. An important element companies take into account when requesting customer identification data is that of ensuring data privacy.

The marketing specialists within companies also gather information on the behavior of the customer. This behavior could refer to elements such as the loyalty to a given brand and its determinants. Another example of customer behavior is the trust in a brand or the purchase of a specific product based on motivation such as television advertisements or recommendations from family and friends. This type of data helps the companies develop and implement the best means in approaching the customer base.

The customer desires category includes information relative to the preferences of the customers, such as whole wheat bread in the detriment of white bread. Finally, the last category includes information relative to the actual needs of the customer base, such as its need for bread.

It is traditionally assumed that the first stage in the management of data is that of data collection. Yet, Kristin Andersen and Carol Kerr disagree and mention that the first stage is that of reassessing the organizational goals and strategies. Based on the analysis, the managerial team would identify the type of data and information required to maximize the company's chances of attaining its objectives. At this level, it is important to make the distinction between data and information. Data is generally understood as figure, such as income, age, number of purchases and so on. In the words of the authors, "data includes everything that can have a number attached to it" (Andersen and Kerr, p.59). On the other hand, the information is perceived as the additional explanation of the data. Assuming a data according to which a customer has been loyal to the company's products and services for twenty years, information will be retrieved by asking what determined the individual to remain loyal for such a long period.

The nature of the data and the information each company collects relative to its customers is determined by the company and customer particularities, such as the products and services offered or the market features. This means that each company will develop its own set of questions to which customers would offer answers. Yet, at a basic level, each data gathering process should strive to respond to at least the following issues:

the duration of the customer's relationship with the company the customer's preferred aspects regarding the company the elements they perceive could be improved within the company and within the relationship of the parties the frequency of their purchases; for maximum efficiency, this data would be compared against industry averages the type of the life events -- such as weddings, retirements, access to internet and so on -- which do or could impact the customer's relation with the firm the engagement of customers in business relations with the competition the factors which influence their purchase decision, such as the quality of the product or service, its price, its complementary products or services, the customer service attached and so on the life cycle of the purchased product, with the scope of identifying the possibility for a new purchase (Andersen and Kerr).

As the needs of the data gathering process have been identified, the company moves on to actually collecting the information. The traditional approach to this process has implied tedious work and even questionable results due to lack of relevance. Today however, with the innovations of the technological revolution, the data collection process has become much more accessible. Marketing specialists gather information through direct communications and dialogues with the customer base, through telephone conversations or via the internet; the internet is however the most common ground for data collection. These developments all serve purposes of increasingly useful information. In order for any piece of data or information to be considered useful, it has to be reliable, well documented, relevant and sufficient.

Once the information is collected, it will go through processing operations. These processing operations refer to the creation of results and the comparison of these results within the company context, the industry context, the customer base context, the national context, and so on. The processed information is then sent over to the managerial team which makes its decisions based on the findings. Generally, the new decisions will integrate the findings and should be observable at all levels of the organizations, not just marketing and sales.

All of the previously mentioned stages in the management of data become combined to create a setting in which the company profitably interacts with the customers. In other words, a realization is made that the management of customer data is an integrant party of Customer Research Management. The processes previously outlined are organized under the generic name of Customer Data Integration (CDI), which, as explained by the Search CRM Website (2010) "is the process of consolidating and managing customer information from all available sources, including contact details, customer valuation data, and information gathered through interactions such as Direct marketing. Properly conducted, CDI ensures that all relevant departments in the company have constant access to the most current and complete view of customer information available. As such, CDI is an essential element of customer relationship management (CRM)." In other words, improving the use of customer data leads to improvements in the company's Customer Relationship Management, and consequently, to improvements in the organization's financial results.

As a particularity of customer data integration, Alex Berson, Stephen Smith and Kurt Thearling (1999) mention the concept of data mining and its relationship with customer relations. The concept is generically understood as the transformations implemented over the collected data to transform it into information. In a more specific formulation, data mining represents the "process of discovering patterns, automatically or semiautomatically, in large quantities of data" (Witten and Frank, 2005, p.8).

In a more simplistic formulation, data mining allows the company's marketing specialists to identify customer patterns within the database. An example of extracted pattern would be the tendency of married males with children to drive a certain car, as opposed to married men, but without any children, who tend to drive a different type of vehicle. Traditionally, data mining was an extremely difficult process because it virtually implied that specialists mine for data and then statistically process it. Today, the data is extracted by computers and their latest software applications, which search the database and retrieve the desired results, to then transform them in useful information for the company.

Also, along the years, the process has suffered additional improvements, such as the integration of various data into the contemporaneous context. In the own words of Berson, Smith and Thearling, "for many years, statisticians have manually "mined" databases, looking for statistically significant patterns. Data mining uses well-established statistical and machine learning techniques to build models that predict customer behavior. Today, technology automates the mining process, integrates it with commercial data warehouses, and presents it in a relevant way for business users.

The leading data mining products are now more than just modeling engines employing powerful algorithms. Instead, they address the broader business and technical issues, such as their integration into today's complex information technology environments" (p.6).

3. Customer Relationship Management in the Era of the Internet

Electronic commerce has traditionally emerged as a complementary means of shopping, without facing the dreads of crowded places, long lines or useless trips to the stores to discover the inexistence of the desired product on the store shelves. Electronic commerce is already a contemporaneous improvement in the better satisfaction of the customers' needs and wants due to the benefits it offers, such as the elimination of geographical and time barriers or the ability to avoid crowdedness. Yet, as in the case of traditional commerce, as more and more companies implement the adjacent strategies and as the customers become more pretentious, it is necessary to further develop the mechanisms of electronic commerce. One particular means in which this objective is achieved is through the implementation of Customer Relationship management.

Despite the fact that internet purchases were initially used mostly by individual shoppers, they are now most common within business to business transactions. In 2003 for instance, B2B internet transactions totaled up to $1.3 trillion, whereas business to consumer sales accounted for less than $100 billion. Yet, both figures were expected to maintain their ascendant trends in the following periods (Ragins and Greco).