Business Accent

CRM: IT tool or business philosophy?

N M Shanthi

What really is CRM? Part I examined different aspects of the issue. Part II, which we feature here, arrives at a very definite conclusion

The objective

The fundamental objective of a CRM programme is to reach high customer loyalty levels. Those who have deciphered the mathematics of the customer lifetime value proposition should be able to appreciate the fact that customer loyalty yields higher returns at lesser or no cost across the lifetime of a customer, and that the lost customer should be brought back in the form of acquisitions. You don’t need CRM to teach this. A businessman knows that his customers are important to him, and that he needs to retain them for profits. CRM only gives a structured process-map to achieve this quickly and efficiently. CRM, like any other business strategy, requires realistic objectives to be set in order to achieve its goals. This is nothing new. All business strategies work on realistic objectives based on current status, available resources, feasibility for change, and the course of business dynamics. Unrealistic objectives only eat up money and time. Several companies in a hurry to earn quick returns fix unrealistic objectives for CRM, taking it for a sorcerer’s wand, and end up blaming it for falling flat. A short journey backwards and a probe on the objectives set would instantly reveal the absurdities.

Myths shattered

• It requires a complete revamp. The primary goal of CRM is to improve process efficiency in customer relationship interactions so that your customer is less dissatisfied and he stays with you and becomes your loyal customer. Process efficiency essentially means keeping an eye on the quality of service. Only those processes where the quality is deficient need correction; in some cases a revamp is required. Why should you go for a complete revamp? Do all the processes in your organisation have quality flaws?
• It is rigid. Once the concept is understood, the myth gets instantly shattered. The processes sketched out for a CRM project may seem rigid, but as it goes they can be modified to suit the current situation, provided you are partnered with an expert consultant to rightly handle the situation. CRM is dynamic, not rigid. As objectives change with the changes in the business environment, processes also take a different route; they ought to, for otherwise the purpose would be defeated.
• It results in downsizing. People are a very important component of CRM. What CRM does is merge people and technology. Technology is difficult only until you don’t know it; once you learn it, technology becomes your toy. One of the many mistakes that companies adopting CRM make is getting a few new people in and sending a few old people out. The issue needs contemplation. Training old people on technology is easier than training new people about your company. Moreover, new people are costlier than old ones. Once this is understood, downsizing becomes ‘Not Applicable.’
• It eats up time and money. Time and money are eaten up only when the objectives are not clearly defined and when the companies want to achieve all possible things through one process. Dividing a broad activity into sub-activities and fixing specific objectives for the sub-activities not only saves time but also a lot of money. Don’t dump everything on one and make things complicated.
• It is a single-use tool. Absolutely not. The process sketch laid out for a CRM project could be single use. Some companies are clever enough to identify a generic model that can be used more than once, but the other components of CRM—technology, people and customer data—can also be put to multiple uses.
• It is suitable only for large organisations. “CRM needs big money, CRM takes time.” When these myths are shattered CRM walks its way into small organisations also. Actually, CRM works better for small organisations which have an already-integrated network and a clearer hierarchy.

A business philosophy

From the discussion and insights gained, let us say ‘Yes’ or ‘No’ to a few statements in a quest to understand what CRM actually is—a mere IT tool or a business philosophy.

The above statements are true to any business philosophy—anything ranging from the good old demand/supply theory to today’s corporate governance approaches. If the ‘Y’ that stands for ‘Yes’ is the answer to all the above statements, CRM gets (re) established as a business philosophy. So don’t you be afraid of CRM. Understand CRM. Go ahead, tailor your CRM. Use it and enjoy its benefits since it is not just a mere tool anymore. It is a business philosophy. Long live CRM.

The author is Assistant Professor at the Loyola Institute of Business Administration, Chennai. She may be reached at shanthinm@liba.edu