Electronic customer relations management as relationship marketing strategy

ECRM Strategies

The Age of Marketing has undergone a profound paradigm change over the last few decades. Instead of advertising and product driving the market, globalism has both shrunk the borders of economics and made products far more available worldwide. With this availability of production and shipping comes the inevitable -- hyper competition. What then, are organizations to do to keep their sales and marketing edge? Because of the number of choices today's consumers have, the organization must differentiate itself in some manner that appeals to a specific customer base -- and to hope that base is large enough to fulfill its internet profit needs. The answer for many organizations has been the development of enhanced customer management systems, collectively known as e-CRM (electronic customer relations management). This powerful tool organizes the individual organization's customers, uses appropriate contact and data manning protocols, and amasses information in a way that allows the organization to make better decisions that actively involve its customers. This report reviews one such study on eCRM, the way the authors view the model, and the usefulness in the marketplace.

1.0 Introduction

eCRM (Electronic Customer Relations Management) is derived from E-Commerce, or the sales and marketing of goods and services over a net environment (intranet, extranet and internet). In its most basic form, eCRM concerns the ways of managing relationships with clients and customers using information technology and integrating that technology into all aspects of marketing in order to fulfill their needs best. The power, of course, is that the technical data available. eCRM is designed to not only forge relationship marketing, but to allow companies to more profitably address the needs of its major customer base in a dynamic and proactive manner, necessary due to the tremendous competition in the marketplace (Chen & Chen 2004).

This paper will provide a critical analysis of the journal article, Exploring the success factors of eCRM strategies in practice, by authors Chen and Chen. This article was published in July, 2004 in the Journal of Database Marketing and Customer Strategy Management.

3.0 Methodology

Chen and Chen examined 180 companies using an empirical survey along with in-depth interviews of 36 firms. They selected industries that were most likely to employee CRM techniques (retail management, hospitality, financial services, consumer electronics, media, etc.). They also tried to hone their choices into fields that were extremely competitive and then further delineated their choices based on company revenue. The authors broke the interviews into stages and collected both qualitative and quantitative data, multiple respondents per firm, and a statistical process of data triangulation to provide the most robust analysis (Chen & Chen 336).

4.0 Discussion and Examination

Most managers of the firms analyzed find eCRM extremely important as a competitive tool within their industry -- and indeed, view it as a strategic necessity in taking care of their customers -- specifically in view of the competitive environment. All are quite aware of the choices consumers have, and how even the most innocuous of events or perceptions can have a serious effect upon the customer's perception, and therefore, loyalty to the company. Indeed, the authors find that there are both tangible and intangible benefits to eCRM:

Tangible Benefits

Intangible Benefits

Increased revenue and profit

Increased customer Satisfaction

Quicker turnaround time

Positive word of mouth marketing

Reduced internal costs

Improved customer Service

Higher employee productivity

Streamlined business processing

Reduction of marketing costs

Closer and faster contact management

Higher customer retention rates

Increased depth and customer segmentation

Protected marketing investment with maximized returns

Acute targeting and profiling of customer; better understanding of their needs

(Chen & Chen, 338).

5.0 Results and Implications for Future Research

Now that there seems to be consensus on the value of eCRM, software developers might look at the four basic steps to implementing an eCRM model and expand for smaller companies (e.g. retailers or sole enterprises). Along with this, the paradigm shift about customers may require further research to determine saturation rates, etc. -- as eCRM evolves, so will customers' perception of such. Will consumers come to expect a much higher level of service or will they believe themselves to be part of a psychographic profile? What will the relationship be between consumer loyalty and increased eCRM programs? Indeed, how might consumers respond to algorithmic choices that help predict what other goods or services they might enjoy? (Lawson-Body & Limayem 2004).

6.0 Representation of data

Chen and Chen vividly explain their data through prose, charts, and graphs. They find that there are four basic steps to implementation of an eCRM system:

Needs analysis -- how do the technical needs of the organization mesh with the qualitative needs of sales and marketing? What data is necessary? What implications does that data have for sales?

Design -- Once technical concerns are addressed, how will the needs of the customer translate back into the system in a robust and vibrant manner that will allow for appropriate implementation?

Application Testing -- Testing with stakeholders.

Rollout -- rollout in test market, elaboration and redundancy issues (Chen & Chen; see also: Holmen 2010).

7.0 Limitations

Designing and creating eCRM systems is risky in that there is no typical customer, no typical business model that will adapt to each stage or need. However, that being said, failure rates in eCRM systems seem to drop continually as technology improves -- from a high of 80% in 1998 to half that in 2003 again to half that by 2010. Additionally, the authors found five major areas of failure using eCRM techniques: 1) difficulty in accurate measurement and valuing of intangible benefits; 2) failure to identify and focus on specific business problems; 3) lack of active senior management sponsorship or endorsement; 4) poor usage acceptance, and 5) trying to automate a poorly defined process. Still, 70-80% of good data may override some of the limitations (Chen & Chen; Turban 2008, pp. 330-5).

8.0 Future Research Recommendations

Since there is some discrepancy in the research of the actual efficacy of the eCRM model, more studies are needed to determine some of the variables and limitations of the model. The Chen and Chen study was certainly thorough in both breadth and reach, but was not set up to be longitudinal. Additionally, in view of the influence of globalization, more research is needed in how organizations in various countries and growth phases use and develop eCRM plans, and how they measure their effect.

9.0 Writing Structure and Format

Chen and Chen are thorough, professional, and adept at bringing disparate materials together both for the specialized and lay audience. Sourcing and methodology are quite thorough, and certainly one cannot find fault with their methodology, sample size, or analysis.

10.0 Conclusions

Clearly, the data shows that organizations that utilize an eCRM method do find tangible benefit from the information received. There seems to be a measurable benefit between the amount of time and money spent on the design, implementation and use of the organization's individual eCRM system and the direct (and measurable) benefits received. Reviewing this study should thus help organizations gain more control over additional eCRM methodologies and, as technology changes, to evolve with those changes for a more vibrant experience.