Customer relationship management implementation at GIBCA Group Companies

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Modern day customers no longer represent the group which purchases whatever the company produces, but they have become the group which tells the companies what to manufacture and sell.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

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).

In order for any company to increase its online sales, it has to ensure that the processes generate more value for the customer -- be it an individual or an organization. In other words, it is necessary for the company to act on three distinct channels: (1) first, it is compulsory for the economic agent to focus on improving the product development management (PDM); (2) secondly, it is of the utmost importance for the managerial team at the respective economic entity to focus on improving the management of the supply chain (SCM); (3) and finally, it is crucial for the company to intensify its efforts in the management of its relationship with the customer (Ragins and Greco).

To reformulate the findings in a more concise and clear sentence: today's organizations strive to increase their sales by vending in the virtual environment; to succeed in the virtual environment, it is compulsory to offer increased customer value -- this is achieved through CRM.

The relationship with the virtual customer is improved through the adequate collection and processing of data; these processes are best conducted through the usage of the latest technological developments. As it has been previously mentioned, the virtual environment constitutes the most efficient means of interacting with the customer and retrieving constructive feedback. Customer Relationship Management, effectively used within the electronic business domain, has the ability to improve the nature of the relations with the customers, to lead to a better identification and satisfaction of the needs, to offer customer value and ultimately, to increase organizational revenues.

This application of Customer Relationship Management within the virtual environment is generically referred to as eCRM, or electronic Customer Relationship Management. eCRM strives to attain three distinct goals -- (1) attraction of new customers; (2) retention of the new and the already existent customers and (3) the registration of higher profitability margins. In achieving these three desiderates, the company will implement eCRM through four specific business components: (1) interaction; (2) connection; (3) knowledge and (4) relation.

(1) At the level of the interaction component, transactions are continually made between the company and the customer; through these interactions, the customer makes purchases and also enters dialogues with the firm representatives. These interactions occur in the environment in which the data is collected.

(2) At the connection level, the company representative will establish a fruitful relationship with the customer, relationship through which he will be able to gather information.

(3) At the third level of knowledge, it is pivotal for the company employee to possess vast skills of interacting with the client, but also of gathering the desired information. As the information is retrieved and processes, new knowledge is formed on how to better satisfy the customer.

(4) Finally, at the fourth level, the company applies the lessons previously learnt to improve its interaction with the customer and to increase the company's sales levels. It has to be mentioned that after relations are established, the company constructs new interactions with the clients, revealing as such the cyclic character of the electronic Customer Relationship Management process (Jacko, Stephanidis and Harris).

4. Building Customer Loyalty through Customer Relationship Management

A noteworthy variable in the discussion of CRM is that of customer loyalty. The management of the customer data and the customer relationship aims, among other things, to increase the loyalty of the individual consumer to the selling organization. These efforts are constructed on the premises that a satisfied and loyal customer will continually return to the company to generate revenue stability and sustainability. Additionally, a satisfied and loyal customer implies reduced marketing costs as it is easier to maintain a customer than to invest new resources to attract new customers. Additionally, a satisfied customer will also reduce marketing costs by creating favorable word of mouth publicity. The editors at the Loyalty Lock Website argue that the costs of attracting new customers are seven times larger than the costs of retaining already existent clients -- their list continues to reveal 101 reasons as to why it is beneficial to create customer loyalty.

The more intriguing question at this stage refers to the nature of the relationship between customer data and customer loyalty. In essence, customer data enhances the company's ability to satisfy the demands and needs of the customers, meaning consequently that customer satisfaction, and as such customer loyalty, would increase. At the organizational level, such a situation would lead to superior financial results. Numerous theoreticians reached and promote this conclusion. Carolyn Brown, quoted in the Black Enterprise edition of 1998 for instance simply argues that "by identifying your clients' needs and expectations, you'll maximize customer loyalty -- and your company's profits" (p.27). Two of the most important presences in the contemporaneous academic field of marketing, Philip Kotler and Gary Armstrong (2009), support the same idea by arguing that the proper use of customer data leads to a superior treatment of the customers, which in turn leads to increased customer loyalty and superior organizational results. The whole challenge remains that of adequately collecting, processing and integrating the customer data to improve Customer Relationship Management and organizational profitability.

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Bearson, A., Smith, S., Thearling, K., 1999, Building Data Mining Applications for CRM, McGraw-Hill Companies, ISBN 0071344446

Brown, C.M., 1998, Turn Customer Data into Company Profits, Black Enterprise, Vol. 29, No. 3

Dyche, J., 2002, The CRM Handbook: A Business Guide to Customer Relationship Management, Addison-Wesley, ISBN 0201730626

Jacko, J.A., Stephanidis, C., Harris, D., 2003, Human-Computer Interaction: Theory and Practice, Vol. 2, Routledge, ISBN 0805849319

Kotler, P., Armstrong, G., 2009, Principles of Marketing, 13th edition, Pearson Education, ISBN 0137006691

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