Misunderstanding CRM as a part of marketing, IT, and which applies to all, remain as a common mistake made by most businesses. However, the misconception varies from database marketing to the perspective that every business is capable of implementing all types of CRM strategy.
According to Buttle, (2009), a business that should implement operational CRM should not implement analytical CRM or strategic CRM. Many businesses lack the knowledge of identifying the required type of CRM for implementation. For instance, operational CRM is meant for businesses that want to intensify their sales and leads from the data to improve service requests and complaints management. Therefore, companies retail and investment businesses are more appropriate for
The conceptual challenge to implement CRM
According to Ahearne, et. al., (2012) the challenge occurs from the concept of CRM itself, whereby the majority of businesses consider them as a tool but not a strategy leading to business failures. CRM is too often implemented with a focus on a software package and without an in-depth understanding of the issues of integrating culture, process, people and technology within the business process. However, many researchers and businesses still adopt CRM as a tool, which only helps in collection of data and evaluating the methods towards customer segmentation. Ahearne, et. al., (2012) defines CRM as the
Processof capturing customer information and developing an appropriate strategy in consultation with the salesperson in order to optimize sales performance (pg. 119).
Another conceptual challenge is that the choice of CRM must be based on the type of operation. There are three main types of CRM strategies, strategic, analytical and operational (Buttle, 2009). As mentioned earlier, strategic CRM is used in case of businesses that are customer-centric and focuses more on customer satisfaction than retention, like the banking sector. On the other hand, businesses that focus on company and customer value altogether use this strategy to generate data to optimize the customer base segments. Now, under the consideration that CRM is a tool, many businesses start implementing analytical strategies and remain focused on the market rather than retention and satisfaction. Therefore, not all businesses can adopt all types of CRM strategy.
Different challenges to implement CRM
According to Khan, et. al., (2016) not all businesses face the same challenges to implement CRM. Many businesses face the eminent challenge of effective leadership and conducting customer orientated business processes. Similarly, many businesses outsource a significant proportion of their CRM solution to experts who implement CRM as a tool and not as a strategy. Challenges also arise from the perspectives of business focused primarily on a profitable relationship with all customers. Businesses fail to establish a clear set of objectives, however, linked to the lack of conceptual knowledge. Many businesses have financial challenges and human capital challenges and still want to implement any CRM strategy.
However, choosing the right framework or model of CRM on the basis of its type is also challenging. In many cases, the businesses use fragmented implementation strategies due to lack of information. Furthermore, many businesses are impatient for the outcome of CRM implementation. Therefore, it is very important that different businesses should have a fair understanding and should know how a particular type of CRM strategy will impact in their business model. Since challenges vary from business to business, it is important to identify process challenges related to customer retention and satisfaction.
Using the CRM value chain
The CRM value chain was implemented by Francis Buttle, which comprises of primary stages
- customer portfolio analysis,
- customer intimacy,
- network development,
- value proposition development and,
- managing the customer lifecycle.
And supporting conditions of:
- leadership and culture,
- data and IT,
- people and,
It enable the CRM strategy to function effectively and efficiently (Buttle, 2009). Now, this model has all the aspects that every business may need or not need to conduct its businesses.
For instance, a business implementing analytical CRM will use customer portfolio analysis and IT for building a profitable customer relationship. Whereas, operation CRM implementation will manage the customer cycle and people for achieving a profitable customer relationship. Therefore, if this model is used, it is seen that not all variables of supporting conditions and primary stages are needed by the businesses. To implement CRM on the basis of the business process the businesses should choose the appropriate type of strategy. Therefore, not all business can implement all type of CRM, but all CRM can be applicable to all types of business.
- Ahearne, M., Rapp, A., Mariadoss, B.J. and Ganesan, S., 2012. Challenges of CRM implementation in business-to-business markets: A contingency perspective. Journal of Personal Selling & Sales Management, 32(1), pp.117-129.
- Buttle, F., 2009. Customer Relationship Management: Concepts and Technology.
- Khan, H.U., Fournier-Bonilla, S.D., Jinugu, A. and Madhavi Lalitha, V.V., 2016, March. possible challenges of the successful implementation of CRM in the service sector: a case study of Saudi Arabia. In Northeast Decision Sciences Institute Conference (Vol. 31).