Customer Relationship Management and E-Business: More Than a Software Solution
Ragins, Edna Johnson, Greco, Alan J., Review of Business
Internet business-to-business sales will reach $1.3 trillion by 2003 and, by 2004, business-to-consumer sales will reach $100 billion. E-businesses today have reached a point where they are trying to move beyond a cursory view of their customers to engaging in rich customer relationships. Strategic customer relationship management and its relationship to e-business is the focus of this paper.
Internet business-to-business sales will reach $1.3 trillion by 2003 and, by 2004, business-to-consumer sales will reach $100 billion (14). By 2005, U.S. companies will spend $63 billion annually on online advertising, promotions and Email Marketing (9). The Gartner Group estimates that 75 percent of all e-business ventures will fail due to lack of technological understanding and poor business planning (14). Despite the risks, the Internet challenge is intriguing. Successful e-businesses today have moved beyond an arm's length transactional view of their customers to forging rich customer relationships (15).
Effective e-business strategy requires that an organization provide customer value that is superior to that of the competition. To offer superior delivered value, marketing should directly influence three core business processes: product development management (PDM), supply chain management (SCM) and customer relationship management (CRM) (19). The goal of the PDM process is to create solutions that customers need and want. SCM processes comprise the acquisition of physical and informational inputs and the efficiency and effectiveness of transforming these inputs into customer solutions. The objectives of the CRM process are to shape customers' perceptions of the organization and its products through identifying customers, creating customer knowledge and building committed customer relationships. In essence, CRM "is a business strategy that attempts to ensure every customer interaction (whether for sales or service) is appropriate, relevant, and consistent -- regardless of the communication channel" [11:1]. C RM is a core business strategy for managing and optimizing all customer interactions across an organization's traditional and electronic interfaces (18). An effective web site, for example, can help build relationships between an organization and its stakeholders (20). Without a doubt, customers are the primary stakeholders of any organization. CRM can be used to gain clearer insight and more intimate understanding of customers' buying behaviors, thus helping to build an effective competitive advantage. Strategic CRM and its relationship to e-business is the focus of this paper.
The CRM/E-Business Connection
The Web promised customers personalization and customization; it promised marketers deeper insights into the habits, feelings, likes and dislikes of customers. But has it lived up to these promises? According to Don Peppers and Martha Rogers, authors of The One to One Future, among the "new rules of engagement governing business competition" were "initiating, maintaining, and improving dialogs with individual consumers, abandoning the old-fashioned advertising monologs of mass media" [1:1]. Weiss (20) argues that CRM drives relationships and purchases (both online and off) and drives brand loyalty by fostering trust. Sowaiskie (18) suggests that CRM is driven by three factors: 1) consumers empowered by information, technologies, choice, globalization and deregulation; 2) increased competition; and 3) the Internet and e-business, which facilitate the emergence of new distribution channels and enhance sales and marketing as well as service effectiveness and efficiency. Blue-chip companies are investing millions in software products from CRM leaders like Epiphany Kana Communications and Siebel (9).
Strategically effective CRM requires the intelligent application of technology. It must be remembered that effective CRM is more than a software solution; it is about how customer information is used to create an ongoing relationship with the customer. …