How CRM systems could improve Mercedes-Benz customer relations

¶ … CRM Systems Help / Effect Mercedes Benz

How can CRM Systems Help / Affect Mercedes Benz

In the auto industry, information technology solutions have been used as a way to maintain low profit margins, while allowing manufacturers the ability to outsource a variety of operations. Where, many will often utilize CRM technology as a way to be able to effectively maintain control over the supply chain. At the same time, they will use this technology to improve communication and collaboration with OEM manufactures. Simply put, an OEM manufacturer is a company that builds components that will be used in the automobile. Where, they will construct various parts for different manufacturers on a contractual basis. ("Definition of OEM Manufacturers on the Web," 2010) This is significant, because it highlights how the industry is utilizing this technology to be able to maintain its low cost structure. The problem is that this technology has often, led to poor relations with customers, especially over the last several years. The reason why is because various supply chain issues would lead to a shutdown of other areas of the supply chain. A good example of this can be seen with Nissan in 2010, where supply chain disruptions would force a work stoppage at several different plants. (Murray, 2010) This is important, because the various challenges surrounding the industry have caused the general public, to view manufacturers in a negative light. For Mercedes Benz, they have been protected to a certain extent from some of the negative publicity. However, in order to be able to maintain their image and lead as one of the top manufacturers in the world, they must build better relations with customers. One way to achieve this objective is through the use of various CRM technologies. To fully understand how to implement such a strategy requires: examining services that can fit the needs of the customer, comparing off shelf solutions with custom software, how dealers could utilize this solution and other ways that the technology can improve the operations of Mercedes. Together, these different elements will provide the greatest insights, as to how the company can be able to improve customer relations.

Brief background of Mercedes Benz

Mercedes Benz has historically been at the forefront for implementing technology, as part of its business model. Part of the reason for this, is the desire to be able to maintain the image of quality, safety and luxury. These different elements have been consistently a part of the culture and atmosphere that the company has become known for. A good example of this can be seen with the use of safety technology in the different automobiles that are sold by the company to include: braking bags, sliding doors with gas fired guard rails, state of the art child safety seats and interior air bags. (Kristoff, 2010) This is important, because this commitment to these different standards, would allow Mercedes to remain at the forefront for utilizing new technology. That being said, the company was not always using a state of the art supply chain management system. Prior to the merger with Chrysler the company was relying mainly on: faxes, telephone calls and outdated filing system to address the organization's needs. This would cause inefficiency to increase, as it would take them months to resolve various supplier related issues. To address this situation, the company began to use Powerway. This is an IT solution that would allow Mercedes to be able to increase communication and collaboration across a number of different areas. This is significant, because the implementation of the system would revolutionize productivity and it would allow the company to improve operational efficiency. (Mayor, 2007)

Discussion of Proposed Solution

To effectively address these different customer issues, Mercedes Benz must begin using some type of CRM software solution. In this case, there are two different routes that the company can take to address the various software needs (purchase the products through an off the shelf solution or customizable solution). Simply put, an off the shelf solution is when you are purchasing software that can be utilized, once it has been placed in the system. While a customizable solution, is when you are having a specialized CRM software solution created, to address various issues that are specific within the organization. The advantages of using an off the self CRM solution as opposed to a customizable solution would include: there are lower prices, it is easy to use and you can be able, to have a workable CRM solution running within a few minutes of installing the software. The drawbacks of using off the shelf software would include: the applications are widely used and security / software updates will require paying a consistent fee. (Morris, 2009) When you compare the different kinds of solutions, it is clear that the customizable solution is ideal for Mercedes. The reason why, is because the data that will be contained in the software and databases, will have information about customers who purchased vehicles from the company. If an off the shelf solution is utilized, this information could be compromised by hackers. A good example of the underlying nature of this threat to the company can be seen with one the largest cyber attacks ever. Where, 75,000 computer systems were hacked into between 2008 and 2010, in a coordinated effort to create a supercomputer. (Nakashima, 2010) While, Mercedes was not one of the companies targeted, the incident highlights how the underlying nature of the threat is constantly evolving. Where, hackers will often attack off the shelf CRM and security solutions, because they have figured out a way, to be able to exploit the common weaknesses in the code. Given the fact, that this software is often widely distributed, means that if Mercedes used this kind of solution, they could become one of the victims of a cyber attack. If this kind of scenario were to occur, it could mean that the company may have trouble restoring and protecting its image with the general public. To avoid these kinds of possible situations, it is advisable that a customizable solution is utilized.

Once the system has been implemented, both dealers and headquarters would be able to access the various customer profiles, of the different vehicles that are being sold. Over the course of time, this information could be used to provide the company with insights, about customer satisfaction levels, after the sale of the product. Where, the use CRM technology would regularly send customers a newsletter and various satisfaction surveys of the different products / services that are sold by Mercedes. At which point, the various responses and customer issues could be addressed with each dealership. Where, they could use the CRM solution to find out what specific issues are causing the problem. This is important, because one of the biggest customer issues that Mercedes is facing is: the inability to communicate and address these issues effectively. Once these kinds of situations begin to become more common, is when many customers (who were loyal to the company) will begin purchasing products from competitors. The reason why is because many of the different customers, will begin to view the company as unconcerned about their issues. Given the fact that these people are paying more for their vehicles and the reputation that Mercedes has for quality, means that this is something, that is within the normal realm of effective customer relations. Once this situation begins to occur, it could hurt the image of the company over the long-term, as the lack of effective customer service is hurting the quality. However, if the company / dealers begin using the CRM solution, to follow up and address customer service issues, it could help to identify possible factors affecting vehicles after the initial purchase. This would help to improve customer relations by bringing those products which are having problems, into the dealerships, so that they can be repaired quickly. If the situation cannot be fixed, then the dealer should replace the vehicle at no cost to the customer. Utilizing this kind of strategy, would allow both Mercedes and its dealerships to be able to improve effective customer communication. Where, it will eliminate the lack of: communication and follow up that often occurs, once the customer has purchased a vehicle.

Another way that this technology could be utilized is: to identify possible design issues. Where, the various CRM tools would help to improve communication and identify specific factors that could be related to product defects. This information is important, because it will allow the company to see if a trend is developing in particular defects. If the problem becomes large enough, this information would serve as an effective way of recalling and repairing those products that are of inferior quality. At which point, the information can be used by company engineers, to address various design flaws in future models. Over the course of time, this would improve the underlying product that is being produced, by allowing various design issues to be rectified quickly, helping to improve the reputation of the company.

Recommendations for the Executive Committee

Mercedes Benz is at a cross road in its business model, where the company has an outstanding reputation for quality and high levels of superior performance. However, when it comes to issues of customer service, the company has been slow to respond to various issues after the vehicle has been purchased. This is problematic, because if left unchecked, it could cause the company to lose market share to competitors. To mitigate the fallout from these events, it is recommended that Mercedes begin addressing customer issues quickly and as effectively as possible. This means that a customizable CRM solution must be utilized. Where, both dealers / the company would use this software, to randomly inform customers about: various issues with the customer and find out what factors are affecting the vehicles that they purchased. This would provide an initial foundation for addressing the various customer issues over the medium to long-term, by identifying what factors could be affecting perceptions. At which point, a strategy can be utilized to consistently monitor and improve customer experiences after the sale of a vehicle.

The impact of using this technology over the three years is that it will help to: improve sales, customer experience and the design process. In a recent study that was conducted by Hewlett Packard, they found that the use of CRM technology, as a part of the business strategy will reduce operational deficiencies by 20%. ("Business Case for CRM," n.d.) This is important, because one could argue that the customer services issues that are being experienced are tied directly to a lack of operational efficiency. Where, the company and dealerships are not communicating, about how they can improve the customer experience and the underlying quality of the product. By implementing the CRM solution as part of the strategy, this will help to reduce operational deficiencies by 60% over three years (20% a year). At the same time, it would help to increase sales at the various dealers for a variety of products and services. Evidence of this can be seen by looking no further than the Harvard Business Review. Where, they found that those companies that focus on customer retention / satisfaction increases of 10 to 15%; saw sales double for their organization. ("Business Case for CRM., " n.d.) Given the fact that Mercedes will focus on every customer, means that this could help to cause the overall levels of profitability increase by six times over three years. The reason why, is because the company would be going beyond the number used by the Harvard Business Review and would be focused on addressing all customer needs. This makes the assumption that profits would double every year after the implementation of the strategy, a conservative estimate. At the same time, the different design and service issues can be used to help improve the overall quality of products being sold. Where, the consistency of problems in select makes / models could be used to improve the designs of future vehicles. This information is important, because it would allow the company to be able to identify and fix any kind of design problems early on in different vehicles. As a result, if such a strategy can be utilized by Mercedes Benz, this would help the company be able to build upon the image of quality and luxury that it is known for, while allowing it to adapt to changes that are taking place. Over the course of time, this would help the company be able to improve customer relations and the underlying products that they are selling. It is through examining this issue, provides the greatest insights on how Mercedes can mitigate these effects.

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