2.1.7 Setting a Customer Relationship Management CRM Program
Before executing a Customer Relationship Management CRM plan, getting to understand the processes is very important. As stated by Winer (2001), different people perceived CRM to mean different things. To some, it means direct e-mails, some other see it as mass customization or developing products that fit individual customers’ need. IT specialist sees it as some sort of technical jargon like online analytical processing (OLAP) or customer interaction centers (CICs).
Before microfinance institutions go into launching their Customer Relationship Management CRM, the author will highlight the CRM Model developed by Winer (2001) that will help them to get a sense of direction. These Seven components are as follows: creating a database, analyzing the data, selecting the customer, targeting the customer, set relationship marketing, considering privacy issues, and designing a metrics.
Customer Database Creation: This step deals with the construct of a customer database or file for customer information. For existing microfinance companies in Cameroon that have not collected much information on their customer because Customer Relationship Management CRM has not been used, they could first seek customer history stored in their functional unit records such as accounting, customer service or marketing. Information to be obtained from the historical records of these units will be on transaction, customer contacts, descriptive information and response to marketing stimuli (Winer, 2001).
Data Analyses: This stage deals with segmenting the customers. According to Kamakura and Wedel (1999), there are different statistical methods (e.g. Cluster and discriminant analysis) for grouping together customers with similar behavioural patterns and the descriptive data interpreted can be used for developing different product and services to each customer segments. However, Peppers and Rogers (1993) disagree with this approach by suggesting that understanding be paid to each “row” of the database. To do this, understanding each customer and defining what he or she can contribute to the firm (Profitability) this will then determine the nature of product and services targeted at individually customer or as a small cluster.
Customer Selection: this point of action is to sort out the customers to target for the firms’ services programs. If segmentation kind of analysis has been performed on purchasing or other relation-based behaviour, selection can match with customer in the most desired segments (highest purchasing rates, greatest brand loyalty, etc) and served with retention programs. According to Winer (2001), it would be easier task to determine on which customer to focus if individual customer-based profitability is also available through Life time customer value or other analysis means.
Targeting Customer: Differently from traditional relationship which was based on mass marketing approaches (e.g. television, radio, newspapers, etc), Winer argued that they are poorly-suited for Customer Relationship Management CRM due to their impersonal nature. A more modern means are through a portfolio of direct marketing means like- telemarketing, direct mail, etc. In matter of fact, Pepper and Rogers (1999), suggest that the One-to-One relationship is better for firms to deal with their customers rather than the mass marketing approach as customers are not the same and therefore, their expectations in terms of product and services differs. The internet is good means of having a 1-to-1 relationship with the customer.
Relationship Programs: Contacting customers through e-mail offerings is a not only a useful components of CRM but also a technique for implementing Customer Relationship Management CRM even than the program itself. Contributory relationship programs which could produce satisfaction for customers are shown in figure 2.5 below. They include customer service, frequency/ loyalty programs, customization, community building, reward programs (Winer, 2001).
Figure 2.5: Customer Retention Programs (Winer, 2001)
Privacy Issues: privacy issue is not a “stand-alone” component but rather, it cuts across all the other components stated in Figure 2.5. A study by Forrester Research according to Smith (2001) found a continuum of privacy issues in forms like;
- Simple irritation which often come from unwanted/ unsubscribed e-mails
- Impression of violation which could spur out questions like “how do they know about me”?
- Concerns of harm
This issues, Peppers, Rogers and Pine (2000) had foresaw will become increasing over-time due to the proliferation of wireless devices which means more customer information will become more readily available even without the customers taking much cognizance of it.
Metrics: These are parameters with which business operators investing in CRM will measure their implementation success in line with their rudimentary principles pre-empting the initiatives. Lehmann and Winer (2001) defined some the Customer Relationship Management CRM evaluation parameters either as web-based or non web-based in terms of; Customer acquisition costs, conversion rates, retention/ churn rates, same-customer same-rate method, loyalty measures, customer’s purchases in a category devoted to brand, etc. All these parameters will enable the enterprise to know how there are performing at their customer level.