CUSTOMER RELATIONSHIP MANAGEMENT Where do you start?

1. CUSTOMER RELATIONSHIP MANAGEMENT Where do you start?

2. University of ManchesterStudy Objectives • What is CRM? • Does it work? • Is there potential for CRM at the University? • What guidelines are there for implementation?

3. What is CRM?

4. Some definitions of relationship marketing • ‘Relationship Marketing is attracting, maintaining and – in multi-service organisations – enhancing customer relationships.’ (Berry, 1983) • ‘Relationship marketing is marketing seen as relationships, networks and interaction.’ (Gummesson, 1984) • ‘Relationship Marketing is to identify and establish, maintain, and enhance relationships with customers and other stakeholders at a profit, so that the objectives of all parties involved are met; and that this is done by mutual exchange and fulfilment of promises.’(Gronroos, 1996) • ‘An emergent disciplinary framework for creating, developing and sustaining exchanges of value, between the parties involved, whereby exchange relationships evolve to provide continuous and stable links in the supply chain.’ (Ballantyne, 1994) • ‘Relationship Marketing refers to all marketing activities directed to establishing, developing, and maintaining successful relational exchanges.’(Morgan and Hunt, 1994) • ‘Relationship Marketing is the process whereby both parties – the buyer and provider – establish an effective, efficient, enjoyable, enthusiastic and ethical relationship: one that is personally, professionally and profitably rewarding to both parties.’(Porter, 1993)

5. KRM? • Kindly Release the Money • Fashion • Software • CRM gurus • £ billions market • HIJACKED BY VESTED INTERESTS!

6. Why CRM developed • 1980’s onwards saw rapid shifts in business that changed customer power • Supply exceeds demand for most products • Sellers have little pricing power • Only protection available to suppliers of goods and services is in their relationships with customers

7. Relationship management • Move from a ‘transactional’ model of marketing to a ‘relationship’ model Source: Christopher et al (1991)

8. Ups and downs • Increasing interest in the use of CRM because it is profitable if it succeeds (acquisition, retention & lifetime values) • There is a high level of reported failure rate (50-70%)

9. What CRM involves • Organisations must become ‘customer centric’ • The organisation must be prepared to adapt so that it takes customer needs into account and then delivers them • Market research must be used to assess customer needs and satisfaction

10. What CRM involves • Develop a customer strategy and introduce segmentation to allow those requirements to be fulfilled • CRM may mean radical changes on many levels in the organisation • Chances of failure are reduced if some basic pitfalls are avoided • Relationship marketing does not have to be technology intensive

11. Relevance to HEI’s • Changes in the market that have driven interest in CRM also apply to HEI’s • Marketing at most HEI’s is at a rudimentary level

12. What is CRM? “CRM is adopting customer-centric business strategies, implementing these strategies by changing how customers do business and how people do work and then enabling new strategies, new customer interactions and new workflow by providing appropriate technology support”

13. Does CRM work?

14. Business case studies • Extensive research produced few case studies • Very little valuable (independent) guidance out there • Importance of:- • Research • Planning • Segmentation • Central databases • Being bold with organisational change to create the structures needed to give good customer service

15. CRM at other HEIs • Little evidence of true CRM activity in large UK higher education institutions • Some smaller ones are beginning to use the technique successfully (Roehampton) • Some business schools are using central databases to identify and pursue good prospects (Henley) • The lack of good CRM practice in education may present an opportunity for the University of Manchester

16. Is there potential for CRM at the University?

17. Current application of CRM processes • Internal review of practices in three areas at University of Manchester (undergrad, post grad, & research) • Six key factors that can be used to determine the level of customer retention capability in commercial organizations (Prof John Murphy) • Customer Focus • Processes • Employee Involvement • Training and Development • Measurement • Continuous Improvement

18. Internal review • There are isolated areas of good CRM type practice • In general there is little understanding or implementation of the technique • No overall policy in place to allow the areas of good practice to coalesce and develop • Poor segmentation of customers, a lack of shared goals and low understanding of business drivers • Many relationships with other organisations are personalised and vulnerable in the long term

19. Conclusions • Our research suggest that CRM presents opportunities • BUT the University is a long way from being able to exploit those opportunities • What is the way forward?

20. What guidelines are there for CRM implementation?

21. Blueprint for CRM success Analysts, the business media and many in the CRM community regularly cite CRM failure rates at 65-70%. • Is this a failure of CRM or the way it is implemented? • Study of 450 companies which have implemented CRM (Lee et al 2002) • Statistically valid results on a varied sample of companies

22. Software specifications Vendor evaluation New organisational values Organisational change Line level training and support Process re-engineering Customer-centric strategy Vendor customisation Vendor bias Third party customisation Goals measured statistically Activities characterising the CRM process

23. Blueprint for CRM success • 45% achieved ROI success, 35% reported failure • The four factors which determine success or failure were: • presence of customer centric strategies (dominant)(hard) • training and support • organisational change • measuring outcomes statistically • Software is irrelevant!

24. Cumulative effect of key predictors

25. Customer centric planning • Using customer defection rate data (key) • Using customer satisfaction research (key) • Adopting the customer perspective • Developing a comprehensive planning write up • Developing specific business objectives • Adopting planning tools designed for this purpose

26. Customer centric strategies • Provide benefits to both customer and company • Are based on listening to customers not talking at them • Are based on what the customer wants, not what the company wants • Depend on interaction with the customer rather than promoting to them • Rely on access to accurate and comprehensive customer information

27. Customer centric strategies • Lead to shorter cycle times • Lead to greater customer involvement in product development • Require sharing of customer information among all those with customer contact • Reduce operating costs by redesigning workflow to eliminate work that doesn’t add value to customers • Require at least some functional department reorganisation to implement

28. Software specifications Vendor evaluation New organisational values Organisational change Line level training and support Process re-engineering Goals measured statistically Customer-centric strategy Vendor customisation Vendor bias Third party customisation Activities characterising the CRM process CRM failures are self inflicted!

29. Conclusions • There is potential for CRM at the University in a higher education world which is becoming much more competitive • Successful implementation would mean many changes to attitudes and structures • The process would almost certainly be painful

30. Conclusions • It would probably be particularly difficult to develop and install customer centric strategies • If CRM is used must be with the backing of those at the highest level and it must be planned carefully • A process must be gone through which would take note of CRM theory and use the experiences of others to maximise the chances of success

31. What not to do • Don’t attempt to implement CRM without adopting customer-centric strategies • Don’t attempt to scale down CRM to a tactical level • Don’t justify CRM implementation on the hope of achieving operational efficiencies • Don’t take shortcuts that bypass key implementation steps (such as customer satisfaction research)

32. What not to do (2) • Don’t try to avoid organisational change • Don’t allow changes in workflow and process without involving those affected • Don’t start implementation by buying software or reengineering work processes • Don’t let consultants or software vendors limit the scope of your implementation to their capabilities