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Understanding the devil: uncovering the detail of how effective CRM is implemented

Clark, M. K., Smith, B. D. and McDonald, M. H. B., (2004) Understanding the devil: uncovering the detail of how effective CRM is implemented. Report. Henley Centre for Customer Management

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This report describes the work and findings of the Cranfield CRM Research Forum in 2004. This work was carried out in the context of an, and as a development of, the Forum’s work in 2003, during which CRM was defined and characterised. The research agenda for 2004, shaped and agreed by the Forum’s members, was designed to further the group’s aim to facilitate excellence in CRM. As such, it seeks to answer three research questions that arose from the 2003 research, namely: a) What is the most effective way to organise for CRM? b) What is the best way to justify CRM investment? c) How can CRM analytics be improved? The work to answer these questions began with a review of the previous, published, work in these areas. In each case, previous work provided some guidance but illuminated gaps in our knowledge: a) Organising for CRM requires both senior management support and cross functional activity. The most practical way to allocate these two expensive resources is not clear from the literature. b) Justifying CRM must provide for buy-in, intelligent resource allocation and subsequent control. Current processes combine rational and non-rational processes, but the most appropriate mixture of these has not yet been elucidated by the literature. c) CRM analytics is based on correlating customer needs and motivations to manageable data and analysing that data. Whilst the mathematical processes of data analysis are well developed, the process of clarifying motivations and correlating them to data is not well understood. The aims of the empirical phase of this work were to explore the areas not yet explicated by the literature in all three areas, rather than an in depth study of one of the areas. Consequently, a qualitative research methodology was adopted to gain insight into the three areas rather than a quantitative approach to prove particular hypotheses. In the course of the research, some 17 companies and 38 individuals were interviewed or took part in the research in some way. In each of the three areas, the findings of the research expanded our knowledge prior to the research. In the area of CRM organisation, a three-stage waterfall metaphor was noted as effective companies adjusted both the level and breadth of involvement in CRM teams according to the stage of project life cycle. As the project proceeds, the level of senior management involvement lowers and the breadth of involvement widens in three observable stages. Further, key factors were noted in the practical implementation of CRM cross functional teams. In the area of CRM justification, the justification process was found to blend financial justification, strategic imperatives and linked investment decisions. Notably, the most effective processes were those that fitted the organisation’s culture. Hence effective CRM justification was observed to operate in a manner analogous to a key, with the size of each of the three justification factors adjusted to meet the particular circumstances of the company. Finally, CRM analytics were found to be improved and elucidated by the use of motivationally based segmentation models. These provide valuable insight but operate effectively only when the available data is of a type that provides useful correlation with customer motivations. The implications of this work for practitioners are wide ranging and important. CRM is best implemented by the deliberated management of cross functional teams, varied according to project stage and recognising key HR and management prerequisites. CRM is best justified by a process specific to the company involved. Managers can best achieve justification by adapting that process to the internal context of the company. CRM analytics can be improved by the application of motivationally based segmentation. However, the optimal level of value creation is dependent upon data acquisition that is atypical of many organisations. This work greatly elucidates CRM implementation but, inevitably, suggests new questions. In particular, it raises the issue of value creation. Whilst CRM can be seen to create value, it is not clear how much value it creates and whether this value is to customer, company or both. Further, it is not clear if this varies according to the mode of CRM approach taken or business model employed. These unanswered questions may form the basis of future research work.

Item Type:Report (Report)
Divisions:Henley Business School > Marketing and Reputation
ID Code:83725
Publisher:Henley Centre for Customer Management


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