Dell's e-Marketing Strategies to Enhance Competitiveness

1.0 Introduction to Dell Asia Pacific Sdn.

Dell Asia Pacific Sdn. is a private and fully owned subsidiary company of Dell Inc., USA. In 1984, Michael Dell, from his dorm room at the University of Texas, Austin, began to assemble and sell PCs to college mates and to the surrounding small businesses i.e. direct to users. Four years later, in 1988, Dell went public with revenues at USD59 million and 650 employees.

Today, Dell Inc. is a USD56 billion revenue multi-national corporation with a market capitalization of more than USD50 billion. Worldwide employee headcount is over 50,000, with over 3,000 in two facilities in Penang, Malaysia.

Dell, well known for its direct business model and extensive usage of information and communication technologies and the Internet is often studied and quoted, or selected for case studies in management, marketing and information technology journals, professional magazines, books, and research.

2.0 E-Marketing Strategies to Enhance Competitiveness

How does Dell continue to maintain market leadership and profitable growth? How does it continue to reach out to customers in existing and new markets? Since we know that Dell extensively uses information and communication technologies and the Internet in its direct business model, let us first map out its business competencies i.e. its strength and unique capabilities, and then explore the types of Internet marketing or e-marketing strategies employed by Dell.

Using the Sloan School of Management’s Delta Model, Figure 2.1 shows the business competencies presently enjoyed by Dell. The Delta Model maps or identifies three major categories of an organization’s core competencies:

• System Lock-In
  The ability of an organization to “lock-in” customers i.e. increase loyalty and repeat patronage through business processes, offline and online exchanges.

• Best Products
  Products and services perceived by customers as superior to others in the areas of feature and functionality, quality, after sales services, value and price proposition through differentiation and/or cost leadership.

• Total Customer Solutions
  The ability of an organization to offer and deliver integrated solutions to meet customer needs and satisfaction. Solutions comprises of products or services, products coupled with services, and customer integration and engagement business processes.

2.1 Marketing Knowledge in E-Marketing Strategy

Internet marketing or e-marketing strategies can be defined as “the design of marketing strategies that capitalizes on the organization’s electronic or information technology capabilities to reach specified objectives.” [Strauss et al, 2006, pg. 41]

With the use of information and communication technology, Dell’s customer information and history are stored in a data warehouse and are easily retrieved online or for reporting needs. The data warehouse system also represents the core repository for Dell’s marketing knowledge management (KM) system and customer relationship management (CRM) system, where customer trends and behaviours are data mined and analyzed for strategic sales and marketing planning and customer retention and service programmes.

2.2 Consumer Behaviour

Understanding the consumer behaviour well is imperative for Dell. Dell uses the Dell Direct Model to deliver the best customer experience to both offline and online customers. The deliverables of the customer experience objective are:

• Best value proposition
• Highest quality and most relevant technologies
• Customized systems
• Superior, tailored service and support
• Products and services that are easy to buy (online 24x7) and use

2.3 Segmentation and Targeting Strategies, and relationship to Product and Pricing Strategies

Dell segments customers into two major groups i.e. Relationship and Transactional. Relationship customers are customers who buy repeatedly and in larger quantities or value, while Transactional customers are customers who buy less frequently and in smaller quantities or value. Both Relationship and Transactional customers are further sub-segmented. Table 2.1 shows the segmentation strategy used by Dell.

Each sub-segment is service by a team of internal sales representatives. Both the Relationship and Transactional segments also own their respective marketing teams who formulate and develop marketing programmes to target the appropriate sub-segments. Furthermore, Dell also employs account managers to manage all Relationship customer accounts.

In targeting offline customers such as those in the Relationship segment, Dell typically engage the customers using direct sales and telesales teams, supported by custom configured Websites known as “Dell Premier Pages” that are specific to the customer account. The Premier Pages enables the customer’s purchasing department personnel to browse a catalogue of products and services containing pre-agreed product and service specifications and pricing, place orders and track order status. Premier Pages can also integrate with the customer’s purchasing system via electronic data interchange (EDI). [Dell, 1999, Pg. 98, 147 – 148]

Dell uses telesales teams and http://www.dell.com/ to target Transactional segment customers. Dell’s online approach to target this segment is via mass marketing. Transactional segment customers are also encouraged to call in using toll-free numbers.

Thus, Dell’s product and pricing strategies are formulated to support the above segmentation and targeting strategies. Product and service offerings are varied and also priced differently between Relationship (where higher volume exists) and Transactional segment customers. Online Transactional customers typically experience segmented pricing that are sales promotional driven via http://www.dell.com/; online Relationship customers enjoy pre-agreed negotiated pricing via Premier Pages; and offline Relationship and Transactional customers enjoy negotiated pricing – all real world examples of dynamic pricing strategy.

2.4 Differentiation and Positioning Strategies, and relationship to Product and Pricing Strategies

With the Dell Direct Model, Dell does not only strategize to be the low cost leader of computer hardware products, but also differentiates its computer hardware offerings, ranging from PCs and notebooks to workstations and servers to other peripherals such as storage, network switches, printers, enterprise software, etc.

For e.g. Dell offers two lines each of personal computers (PCs) and notebooks, namely Optiplex™ and Dimension™ PCs, and Latitude™ and Inspiron™ notebooks. The Optiplex™ and Latitude™ product lines have a longer product roadmap lifecycle, thus more stable and helps meet corporate customers’ asset stability and depreciation lifecycles. In contrast, the Dimension™ and Inspiron™ product lines have shorter product roadmap lifecycles, thus experience more frequent new technology updates and introductions.

Further product differentiation at customer level is possible via “ChoiceBoards” available during the online buying process that enable customers to self-select or change the product configurations for e.g. opting for 512MB of main memory instead of the default 256MB main memory, or selecting a 80GB hard disk instead of the offered 60GB hard disk, or to include a colour inkjet printer. ChoiceBoards enables mass customization. [Slywotzky, 2000, Pg. 60]

A differentiation strategy requires the products and services to become differentiated for different customer segments, thus again this results in and support the need for a dynamic pricing strategy. With the Dell Direct Model, Dell positions itself as engaging the customers directly without traditional sales channel intermediaries. Dell develops direct relationships with the customer in order to:

• Establish the most efficient path to the customer
• Become a single point of accountability
• Develop build-to-order efficiencies
• Become a low cost leader
• Offer standards-based technologies

2.5 Distribution Strategy

In the supply chain management process, Dell employs the direct distribution channel strategy beginning with its suppliers of materials and components, Dell as the assembler, and sells directly to the customer either via offline means e.g. telesales and field sales and/or online via the Internet acting as the cyber-intermediary or cybermediary.

Since Dell’s products and services are not digital products that can be delivered or transmitted across the Internet to the customer, product delivery or shipment fulfillment is outsourced to a logistics service provider for e.g. DHL, FedEx. Figure 2.2 shows the Dell direct distribution channel strategy.

In the direct distribution channel strategy, Dell is responsible for the transactional functions that involve contact with buyers, marketing communications, matching products to buyer’s needs, negotiating pricing and process transactions; and facilitating functions such as market research. Logistical functions are outsourced.

In the upstream portion of Dell’s direct distribution channel model, Dell utilizes B2B e-commerce and EDI technologies with its suppliers, while B2C e-commerce and EDI technologies are deployed in the downstream portion of the distribution channel supporting traditional telesales and field sales activities.

2.6 E-Marketing Communication Strategy

The major e-marketing tools adopted or deployed by Dell in its e-marketing communications strategy are:

• e-Mails
• Permission marketing e.g. opt-in or opt-out promotional e-flyers (in addition to print media e.g. newspaper ads, flyers and direct mailers)
• e-Loyalty programmes e.g. e-Coupons
• Internet advertising e.g. banner ads, keyword search, sponsorships
• Links to online independent product reviews and technology e-magazines
• http://www.dell.com/ website landing pages, information search and shopping experience
• http://www.direct2dell.com/ blog site
• http://www.ideastorm.com/ website for customers to contribute ideas and suggestions
• “Voice of the Customer” e-mails i.e. electronic word-of-mouth endorsements

2.7 Relationship Management Strategy

Dell also utilizes information and communication technologies to support its relationship management strategy. Both customer relationship management (CRM) and partner or supplier relationship management (PRM) software and processes are in place and practiced.

However, relationship management extends beyond using CRM or PRM software to the ability to develop a continuous learning organization and knowledge management culture that will contribute to long-term relationship-oriented results that truly matters.

2.8 Using the Internet to Reshape the Competitive Environment

Dell is able to utilize Internet marketing or e-marketing strategies to impact the competitive forces as follows:

Impact on Competitive Rivalry

The Internet widens the geographic market, thus increasing the number of rivals a typical brick-and-mortar company faces. With economies of scale, increased communication, service and support quality, execution and delivery speed, Dell increases the competitive pressure against competitors.

Impact on Entry Barriers

Entry barriers into the e-commerce marketplace are relatively low. However, while any organization can formulate and implement Internet marketing or e-marketing strategies to try to establish or sustain competitive advantage, few organizations can actually execute the strategies as well as or better than Dell’s track record to date. Competitive advantage is achievable only through a high degree of success in strategy execution and organizational culture development to build core competencies.

Impact on Buyer Bargaining Power

Dell understands that the Internet makes it easy and convenient for customers to gather extensive information about competing products and brands, and to shop for the best value deals. Dell is also a customer – it can join online buying groups to pool their purchasing power together to secure significant volume discounts.

Impact on Supplier Bargaining Power and Supplier-Seller Collaboration

With e-procurement and e-bidding systems via the Internet, Dell can source beyond its national boundaries for the best suppliers and to collaborate with them to achieve efficiency gains and cost savings.

Overall Influence on the IT Industry’s Competitive Structure

While Internet marketing strategies can drive important shifts in competitive forces – intensified rivalry, greater entry threats, somewhat greater bargaining power over suppliers, a better bargaining position for buyers, and strategic collaborations – it only allows a company to enhance its profitability and gain competitive advantage to the extent that the company can clearly do a better job of capitalizing on Internet technology compared to its rivals.


References:

Dell, Michael, with Catherine Fredman. (1999). Direct from Dell: Strategies that Revolutionized an Industry. New York: Harper Business

Holzner, Steven. (2006). How Dell Does It: Using Speed and Innovation to Achieve Extraordinary Results. New York: McGraw-Hill

Kirkpatrick, David. (October 28, 2002). “Can anyone compete against Dell?” Fortune, Vol.146 No 7, pg.42 – 48

Magretta, Joan. (March – April 1998). “The Power of Virtual Integration: An Interview with Dell Computer’s Michael Dell.” Harvard Business Review (Reprint 98208), pg.72 – 84

Park, Andrew, with Peter Burrows. (November 3, 2003). “What you don’t know about Dell.” BusinessWeek (Asian Edition), pg.56 – 64

Porter, Michael E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press

Saunders, Rebecca. (2000). Business the Dell Way: 10 Secrets of the World’s Best Computer Business. Oxford: Capstone Publishing Ltd.

Serwer, Andy. (March 7, 2005). “The Education of Michael Dell.” Fortune, Vol.151 No.4, pg.50 – 56

Sloan School of Management. OpenCourseWare: Strategic Management I, Fall 2005. Dell University

Slywotzky, Adrian J. & David J. Morrison, with Karl Weber. (2000). How Digital is your Business? New York: Crown Business

Strauss, Judy; El-Ansary, Adel & Frost, Raymond. (2006). E-Marketing. (4th International Edition). Upper Saddle River, New Jersey: Pearson Prentice Hall

Impact of Web-based CRM in e-Business

1.0 Overview

Today, more than ever, businesses, companies and corporations are subjected to stronger, more rapidly changing forces such as globalisation, deregulation, convergence, and mergers and acquisitions.

These changes have been with us for quite a while, but now a well-established newcomer, especially to Asia Pacific markets, is providing even more fuel to the bonfire of change – the Internet (or the Web) and Internet technologies such as electronic business and electronic commerce are the new kids that are causing more disruptive changes.

With the appropriate use of the Internet and Internet technologies, the competitive forces are being manipulated to a new level of business competition where competitive advantages previously enjoyed may be nullified or further enhanced, and new competitive advantages created.

However, throughout these changes, one business aspect remains central to all arguments and that is the customer. Customer satisfaction, customer retention, and customer generation remains critical to the path of profitable growth for any organization. Thus, customer relationship management (CRM) is imperative but CRM is nothing more than one-to-one relationship marketing and disintermediation, but that is a lot as the implications are far reaching.

With the advent of the Internet, we are able to achieve a higher level of efficiency and effectiveness to successfully execute CRM strategies on a mass basis through the use of technologies that allow us to establish individual relationships with customers like never before. The foundation for all this are PCs, telecommunications, networks, multimedia content, contact centers, data warehouses and data mining tools, and sales and marketing automation systems.

1.1 What is Customer Relationship Management?

As the market becomes increasingly fragmented and commoditised, organizations are finding it more challenging to use traditional mass media marketing techniques to capture and grow market share. Broad marketing and advertising campaigns are simply no longer as effective as they once were.

To continue to succeed, organizations will need to better understand what customers want. Marketing will be more finely tuned and managing the relationship with customers will be paramount. To counter the decline of mass media as a vehicle for effective advertising and communications, organizations are moving quickly to embrace customer relationship management (CRM).

What exactly is CRM? In its simplest definition, CRM is the process of acquiring, retaining and growing profitable customers. It requires a clear focus on the service attributes that represents value to the customer and that creates loyalty. CRM has several advantages over traditional mass media marketing such as:

• Reduction of advertising costs


• Easier to target specific customer segments by focusing on their needs


• Easier to track the effectiveness of a given sales campaign


• Enables organizations to compete for customers based on service and not prices


• Balances overspending on low-value customers and underspending on high-value customers


• Speeds-up or shorten the time to develop and deploy a product marketing communications activity


• Improves the use of the customer channel, thus making the most of each contact with a customer

1.1.1 CRM and e-CRM – is there a Difference?

Some three decades ago, a new electronic world of communication or cyberspace called the Internet appeared on the horizon. Today, the Internet has evolved and integrated itself into both the business and the personal environments.

For the business environment, the Internet acted as the catalyst for the evolution of electronic business. E-Business is already having a profound effect on business strategy and operations.

(i) E-Business Impact on Strategy

In e-Business research and case studies, it has been shown that when deployed correctly, e-Business can help serve customers better – which is a key strategic goal when most companies today are restructuring to become customer centric. As traditional brick-and-mortar retailers or storefronts yield to 24-hour relationships with customers, the new business dynamics can assist companies to achieve a key goal i.e. to provide premier service “anywhere, anytime” to customers.

(ii) E-Business Impact on Operations

Simultaneously, on a parallel track, e-Business enables companies to accomplish new operational efficiency and effectiveness goals. Managing technology and quality and speed of information are key operational concerns for managers, and process streamlining, and cost control and efficiency are strategic pathways to gain competitive advantages. E-Business also promoted the operational use of enterprise resource planning (ERP) systems, business intelligence (BI) and knowledge management (KM) systems, customer call centers, intranets and extranets that link business partners and suppliers in the supply chain, and data warehouse and data marts that help improve customer relationships by providing timely customer information and trends gained from data mining technology.

With the evolution of this new electronic channel, traditional client/server computer-based CRM functions and processes i.e. CRM systems, evolved to become “Internet value-added” or Web-based with the adoption and integration of the Internet and Internet technology, and Web browsers to become electronic CRM or Web-based CRM. Figure 1.1 gives a graphical representation of e-CRM or Web-based CRM.

Thus, the key difference between CRM and e-CRM or Web-based CRM is the infusion of Internet technology into traditional client/server computer-based CRM systems and methodologies. [Greenberg, 2002, pp.49 – 54]

1.2 Not all e-CRM Investments are Equal

Businesses are aware of the opportunities offered by CRM enabled by technology or e-CRM or Web-based CRM, as evidenced by the investments they are making and plan to make in the future.

Typically, most e-CRM first phase investments are made to re-engineer or significantly upgrade customer care as customer satisfaction is no longer a differentiator but a minimum requirement – today, customers no longer tolerate poor service. With more choices than ever, they simply take their business elsewhere if not satisfied.

The major e-CRM investments are in customer contact centers, Internet sites and channels, for e.g. Dell deploys a technical support Web portal for customer self-service to download new software and driver updates.

The second phase of investments is in relationship marketing – loyalty management, target marketing, marketing automation, using a data warehouse and data mining tools for segmentation, profiling, profitability analysis and targeting, and sales campaign management tools.

The third phase of investments is in implementing a multi-channel strategy and the various sales automation tools. The final phase would typically see the complete deployment on the Internet of all the tools of CRM in marketing, sales and service.

1.3 Reduction in the Costs of Customer Contacts

One of the early benefits from the successful execution of an e-CRM strategy is reduced cost of a customer contact. However, the Internet does not solve everything. For e.g. most banks offering e-banking services have learned that the self-service Internet banking channels are insufficient. They need to add integrated contact centers as a complement to the Internet, and in most cases today, some old-fashioned brick-and-mortar branches are still required since a majority of customers still like to see someone face-to-face. Successful e-CRM involves the integration of multiple channels to serve multiple markets at the optimal costs.

1.4 Profitable and Sustainable Revenue Growth

The reduction of cost of customer contact is only one dimension, but most of the benefits come from revenue from additional sales and margins leading to profitable and sustainable revenue growth.

Improved customer satisfaction due to better customer care has a major impact on customer loyalty and retention. This can lead to improved margins (via higher or value-added prices) and less marketing and sales expenditures to acquire new customers to replace defections. Another aspect of profitable revenue growth covers four major areas:

• Up-selling and cross-selling to existing customers


• Targeting of more profitable customers


• Focusing on products and services with better margins


• Improved conversion rate of prospects with greater potential

These benefits are the basis of the development of the lifetime value of the relationships with the customers from acquisition through development and retention. Sustainable and profitable revenue growth through the development of lifetime value is the biggest benefit of e-CRM.

1.5 Integration Challenges – Marketing, Technology and People

There are major challenges to extract all the benefits of e-CRM, which relate to integration in marketing, technology and people. The key challenge in marketing integration in CRM is the difficulty of implementing a multi-channel strategy that has always been difficult even without the use of technology, and is actually more complicated with the use of technology. The key questions raised are:

• How to integrate the new Internet channels with existing ones?


• How to prevent conflicts with the existing channel partners?


• How to make sure that it does not simply cannibalize traditional channels rather than really winning new customers when new Internet channels are created?

There is also the challenge of integrating the various e-Business and e-CRM technologies. It is not easy to get all the front- and back-office technologies working together. It will be especially difficult when solutions are from different vendors.

People are always affected with organizational and process changes, and successful e-CRM projects always require the integration of people into the change process from day one. Change management is fundamental to achieve the expected project benefits because people – from employees to channel partners and customers – are the ones generating the benefits by using the e-CRM technologies to implement e-CRM strategies.

2.0 Literature Review

Customer relationship management (CRM) is not new. Many companies operate call centers in order to serve their customers better. This scenario further evolved with the use of computer systems and networks, call center software and databases. The emergence of the Internet and the Web introduced a fundamental change. With Internet technologies, businesses could expand their market reach into the borderless world – into cyberspace to trade and communicate more efficiently and effectively. Electronic communities and electronic marketplaces were created. Business-to-Consumer (B2C) electronic commerce enabled a new channel to reach customers previously difficult via traditional channels. This gave rise to establishing electronic relationships with customers. [O’Toole, 2003; Scullin, Fjermestad and Romano Jr., 2004] Business-to-Business (B2B) e-commerce enabled a new level of business relationship interaction with business partners and suppliers, and quickly gave rise to the need of business intelligence systems, data warehousing and data mining technologies in order to better understand the business and customers.

With Internet technology, CRM systems also embraced the Web – the new and better CRM was known as Web-based CRM, electronic CRM or e-CRM. However, strangely enough, businesses, companies and corporations still struggled to understand and implement successful e-CRM systems. [Adebanjo, 2003] Is not the Web with all its multimedia glory the best interaction media between an organization and its customers? Many organizations failed to understand that the Web merely gave them a new channel to interact with their customers and not to replace their existing customer interaction channels. The Web is meant to complement.

Nevertheless, evidence abound that many organizations have failed in their e-CRM implementations or the results obtained are not as expected. [Bradshaw and Brash, 2001; Fjermestad and Romano Jr., 2003] What went wrong? To achieve successful e-CRM implementation, an organization needs to understand what the Web and Internet technology is offering. Additionally, knowledge of how and what Web features or attributes are used by the e-CRM system is important as these features and attributes represent the human equivalent in cyberspace to interact with customers. [Feinberg and Kadam, 2002; Feinberg et al, 2002]

Furthermore, the lack of a clear classification of e-CRM systems by vendors does not help in improving selection of the best-fit e-CRM system for an organization. [Adebanjo, 2003] The onus is on the organization to possess quality customer information via knowledge management systems. [Rowley, 2002; Park and Kim, 2003] With the proper knowledge and profiling of the customers, an organization can then understand what their customers’ perception and expectations are about customer care and service, and what drives customers to remain loyal [Lee and Lin, 2005; Lee-Kelley, Gilbert and Mannicom, 2003; Singh, 2002; Taylor and Hunter, 2002]

Lastly, to ensure successful e-CRM implementations, organizations having understood what CRM is, what CRM can offer, and knowledgeable of their customer needs, will need to develop an implementation roadmap or plan, which needs to cater for organizational change management and training. [Adebanjo, 2003; Bradshaw and Brash, 2001; Fjermestad and Romano Jr., 2003; Xu et al, 2002]

3.0 Current Trends and Issues

In section 1.1.1, I touched a little on e-Business. Let us now understand more about e-Business before I continue to discuss how e-CRM impacts e-Business.

3.1 The e-Business “Goodies” Bag

With almost the same rapid pace as the Internet, the growth of e-Business is bringing the business world into faster, closer reach for many corporate leaders, changing both their strategic vision and their operations. What does e-Business mean to business leaders today?

In a world of continuous change, businesses, companies and corporations are more concerned than ever about finding new ways to meet customer needs and wants. Business leaders recognize that this involves improving employee skills and providing new products and services while continuing to stay ahead of the competition. Many have gone further to re-examine the fundamentals that drive business success and looking to exploit new technologies and business models to meet the continuous business challenges.

E-Business is one prescription for meeting customer demands in today’s fast-paced, increasingly global marketplace. Based on the integration of numerous strategies, processes and technologies, e-Business changes the rules of competition, leveling the playing field among large and small companies and reducing the importance of issues such as physical distance.

E-Business causes companies to re-examine their assumptions governing customer and supplier relationships, time-to-market and the value propositions they present to customers. The economics governing e-Business are different and typically defy conventional thinking for e.g. transaction costs can fall significantly, value can be created with little or no additional capital investment and customers may take on some of the administrative tasks involved in purchasing products and services, often for free.

Companies that have successfully integrated e-Business into their operations can capture the full range of advantages it provides, including stronger relationships with customers, distributors, retailers, suppliers and business partners. [Turban et al, 2004, pp.3 – 26]. To adopt e-Business, companies typically evolve through four stages in the course of developing sound e-Business models:

• Presence – the first stage in business-to-consumer (B2C) e-Business commonly involves the development of an electronic presence, usually a corporate website, which presents information about the company, its products and services and its key differentiations.

• Integration – the second stage brings closer interaction as customers and suppliers work together online and as vendors customize content for the users. Electronic exchange of critical information brings greater understanding and value for all parties concerned. Fast and effective customer service becomes critical.

• Transformation – in the third stage, organizational transformation begins as executives and managers distinguish between core and non-core competencies. And with transformation comes the additional challenges involving organization, staff training and retention. Other related areas may include the outsourcing of non-core operations, and changes in processes and systems.

• Convergence – finally, in stage four, companies can achieve improved integration with other organizations both inside and outside their own industries. Over time, this will produce cross-industry supply chains that will come together to create inter-networked markets.

Lastly, for e-Business to be successful, companies must align their business goals with their e-Business plans and investments, and they must carefully analyze what actions and decisions are needed to achieve success.

3.2 Challenges in Delivering e-CRM

With the new electronic channel provided by e-Business models, there are many trends and challenges in moving to a true e-CRM environment. The trends and challenges can be categorized as follows:

• Consistency


• Balance


• Technology


• Change Management


• Customer Expectations


• Legacy Customer Care Environment [Barnes, 2001, pp.240 – 249]

(i) Consistency – developing an integrated interaction channel strategy

The development of an integrated interaction channel strategy that addresses all current and Web-based technologies and that is designed to enhance the overall customer experience rather than just reducing costs is a key part of adopting e-CRM. The high cost of acquiring customers, the ability to pass on and access information quickly and the one-to-one relationships which can be facilitated by intra-organizational data access, has led to a paradigm shift in the importance of customer care. Companies now compete not only in the traditional areas of price and product but also on pre- and post-sales support.

A loosely planned e-CRM strategy will result in unsatisfactory customer experiences which will have drastic negative impact on the companies in the mid to long term. Hence, e-CRM strategies must:

• Be integrated across all relevant customer interaction channels


• Be integrated through the use of consistent customer data


• Address how does the customer wants to contact the organization


• Consider which interaction channels are the most appropriate for which types of customers and for which types of interactions

Existing channels must also be considered along with new channels, for e.g. in sales, a typical company may have existing retail outlets, a direct sales channel or telesales operations. For customer service, there may be a call center that can be contacted via telephone, fax or e-mail. However, a strategy for e-CRM adoption may include kiosks and online access to account and customer information via the Internet using Web browsers.

A successful e-CRM strategy must therefore span across all parts of the organization’s value chain from marketing, product development and sales to distribution to customer service. Furthermore, it is necessary to understand the customer profile for e.g. it is important to know the percentage of existing customers with no Internet access at home or at work, as well as customer access to other existing interaction channels. Thus, it is also necessary to establish:

• Current interactions by customer segment by interaction channel


• Expected interactions by customer segment by interaction channel

(ii) Balance – getting it right between self-service and agent-assisted interactions

It is incorrect for any organization to view customer care as being simply a choice between Web-based self-service and traditional telephone-based interaction. This is a gross myopic view that fails to recognize that moving forward, greater integration between the channels with which organizations interact with customers will evolve.

Technology is moving customer interaction to a new level, with both an increase in new channels such as Web, e-mail, interactive chat, video conference, kiosks, etc, together with the combining of channels to enhance the quality of the interaction.

Hence, it is essential to ensure that the balance between unassisted/self-serve, agent-assisted and wholly voice calls is carefully planned to provide self-serve maximum value to the customer and not just to reduce operational costs. Thus, as part of the development of an integrated interaction channel strategy, organizations need to:

• Understand the desired balancing required between assisted, unassisted and wholly voice interactions for different customer segments

• Understand when and how to influence the balance. A decision to remove another interaction channel to force the use of Internet and Web-based channels must not be taken lightly without consideration of the potential impact

(iii) Technology – adopting the right technology at the right time

Internet or Web technologies that have the capability to enhance the overall customer experience are available today. An e-CRM solution will require deploying such technologies across the value chain of the business and between the business and its customers. There are different technological options to consider in deciding what technology is best for the customers and requirements of the business.

There are also several key points that will impact the successful use of technology in the provision of e-CRM:

• The readiness of different customers to use or interact with technology


• The performance versus customer expectations of that technology


• The integration of new technologies with existing ones


• The design and development of a technology adoption or technology management strategy that enables timely deployment of the right technology


• The use of customization capabilities provided by Web applications


• The maturity of the technology and uncertainty of who will succeed in the technology acceptance space

(iv) Change Management – recognizing radical change

Developing the e-CRM strategy, defining the architecture and choosing the appropriate technology components is not the whole solution yet. The most challenging aspect of delivering or implementing e-CRM is the associated change management that is required.

The necessary change management involves many fundamental areas of the organization in its transition to an e-CRM environment, such as:

• Organizational design


• People and Culture change


• Business processes


• Management processes


• Training and Recruitment requirements


• Performance measurements

(v) Customer Expectations – gauging customer expectations of Web-based service

Being able to provide Web-enhanced customer care is in many ways a typical and safe starting point. More people or customers are using the Internet today as part of their daily lives in communication for e.g. e-mail, Internet chat; and information search, online transactions and shopping for e.g. e-banking, holiday offers and booking air-tickets; as long as it is easier for them to use compared to traditional methods.

However, the Internet is still not the appropriate channel for many customers who are not comfortable with it or have no access to it, just as many customers are still reluctant to use interactive voice response to access services and information over the telephone.

In planning further Web customer care interactions, companies must develop ways to retain the customer as the focal point for all Web-based initiatives so as to ensure that Web initiatives are targeted at the right customers and for the right reasons.

(vi) Legacy Customer Care Environments – avoiding building on soft ground

While the Internet may appear to be a lower cost communication channel and in many cases it probably is, but if customer interactions are limited to the Internet, then there is danger in planning to provide and sustain a high level of customer care.

For e.g. if a company has problems with its current call center operations, then it is not ready for an Internet strategy until it solves those problems because the move to e-CRM must be part of a major customer interaction programme that aims to bring the whole of the call center and customer interaction operations to a leading-practice position. Attempts to merely bolt on a Web-based interaction channel to a problematic call center operation is unlikely to succeed.

Furthermore, unless optimization of the operation across the board in respect to customer interaction is achieved, then the full benefits possible from e-CRM will not be achieved, and possibly a detrimental effect to customer care is likely instead.

4.0 Management Implications

Having now examined the current trends and issues, the implications for managers in the evaluation and selection, adoption and implementation of e-CRM can be categorized into the following key areas:

• Business objectives and best of breed processes
  
  Managers must be clear about their business objectives and knowledgeable of the various business processes that collectively support and enable the management of customer relationships.

• Customer profiling and segmenting
  
  Managers need to be knowledgeable about their customers’ behaviour, needs and wants, and preferences, their comfort level with the Internet and with technology.

• Correct use of technology to integrate the multi-interaction channels
  
  Adopting e-CRM does not mean embracing only Web technology and discarding existing successful customer interaction channels, but the holistic integration of both offline and online customer interaction channels. Technology is not solely used to replace but to enhance the customer interaction channels, for e.g. technology should be used to detect when a customer is having difficulty searching for a product or facing confusion in how to check-out and pay for the goods, so that technology can prompt the customer to offer help either online or diverting to the call center for human intervention.

• Need to manage change
  
  Implementing e-CRM, likely many other major business strategies require organizational changes. Existing business processes, people and intra-organizational relationships will be affected. Successful change management is perhaps more important because it is the pre-cursor to many successful e-CRM implementations.

5.0 Conclusion

E-CRM is all about effectively harnessing Internet or Web technology both to drive efficiency and to provide support to enhance the customer experience. Leading-practice organizations are those that can successfully maintain the balance between the two business drivers.

The main issue here is that the element of human interaction has been removed from the equation. This may lead to two potentially damaging effects:

• It may become more difficult for organizations to identify and recover a difficult situation at an early stage since it is easier for a trained customer service representative to detect the level of a customer’s frustration during a telephone conversation than it is for the organization to spot it when the customer is navigating through the process on their own via a self-service e-commerce application or website trying to buy a product

• The Web has to a great extent leveled the playing field. A customer more easily identifies competitors, and upstarts can easily develop a market presence on the Internet. In this situation, customers are likely to compare wholly on price rather than differentiating on perception, customer care, loyalty and other factors

So, what has happened in this new model to balance between efficiency and customer care effectiveness? It appears that there is a danger of moving backwards in terms of the customer experience of interacting with an organization. The customer, being driven to a lower cost channel may feel removed from the organization and therefore become less loyal, no longer having a voice in the level of service provided.

However, there have been several innovations in e-CRM technology where if adopted and capitalized on can help rather than hinder the enhancement of the customer experience. Firstly, the integration of self-service and call center technologies, and secondly, the provision of Web applications that can be customized for an individual customer or targeted customer segment.

E-CRM strives to achieve the integration of such technologies, together with refined business processes and information in a way that enhances the overall customer experience rather than depersonalizes it which separates the leaders from the laggards in the area of providing sustainable quality customer care.

References:

Electronic Documents

Adebanjo, Dotun. (2003). Classifying and Selecting e-CRM Applications: An Analysis-based Proposal. Management Decision, 41/6, pp. 570 – 577
http://www.emeraldinsight.com/0025-1747.htm

Bradshaw, David and Colin Brash. (2001). Managing Customer Relationships in the e-Business World: How to Personalise Computer Relationships for Increased Profitability. International Journal of Retail and Distribution Management, Vol. 29, No. 12, pp. 520 – 529
http://www.emerald-library.com/ft

Feinberg, Richard and Rajesh Kadam. (2002). E-CRM Web Service Attributes as Determinants of Customer Satisfaction with Retail Websites. International Journal of Service Industry Management, Vol. 13, No. 5, pp. 432 – 451
http://www.emeraldinsight.com/0956-4233.htm

Feinberg, Richard et al. (2002). The State of Electronic Customer Relationship Management in Retailing. International Journal of Retail and Distribution Management, Vol. 30, No. 10, pp. 470 – 481
http://www.emeraldinsight.com/0959-0552.htm

Fjermestad, Jerry and Nicholas C. Romano Jr. (2003). Electronic Customer Relationship Management: Revisiting the General Principles of Usability and Resistance – An Integrative Implementation Framework. Business Process Management Journal, Vol. 9, No. 5, pp. 572 – 591 http://www.emeraldinsight.com/1463-7154.htm

Lee, Gwo-Guang and Hsiu-Fen Lin. (2005). Customer Perceptions of e-Service Quality in Online Shopping. International Journal of Retail and Distribution Management, Vol. 33, No. 2, pp. 161 – 176
www.emeraldinsight.com/0959-0552.htm

Lee-Kelley, Liz; David Gilbert and Robin Mannicom. (2003). How e-CRM can Enhance Customer Loyalty. Marketing Intelligence and Planning, 21/4, pp. 239 – 248
http://www.emeraldinsight.com/0263-4503.htm

O’Toole, Thomas. (2003). E-Relationships – Emergence and the Small Firm. Marketing Intelligence and Planning, 21/2, pp. 115 – 122
http://www.emeraldinsight.com/0263-4503.htm

Park, Chung-Hoon and Young-Gul Kim. (2003). A Framework of Dynamic CRM: Linking Marketing with Information Strategy. Business Process Management Journal, Vol. 9, No. 5, pp. 652 – 671
http://www.emeraldinsight.com/1463-7154.htm

Rowley, Jennifer. (2002). Eight Questions for Customer Knowledge Management in e-Business. Journal of Knowledge Management, Vol. 6, No. 5, pp. 500 – 511
http://www.emeraldinsight.com/1367-3270.htm

Scullin, Shannon S.; Jerry Fjermestad and Nicholas C. Romano Jr. (2004). E-Relationship Marketing: Changes in Traditional Marketing as an Outcome of Electronic Customer Relationship Management. The Journal of Enterprise Information Management, Vol. 7, No. 6, pp. 410 – 415
http://www.emeraldinsight.com/1741-0398.htm

Singh, Mohini. (2002). E-Services and their Role in B2C e-Commerce. Managing Service Quality, Vol. 12, No. 6, pp. 434 – 446
http://www.emeraldinsight.com/0960-4529.htm

Taylor, Steven A. and Gary L. Hunter. (2002). The Impact of Loyalty with e-CRM software and e-Services. International Journal of Service Industry Management, Vol. 13, No. 5, pp. 452 – 474
http://www.emeraldinsight.com/0956-4233.htm

Xu, Mark and John Walton. (2005). Gaining Customer Knowledge Through Analytical CRM. Industrial Management and Data Systems, Vol. 105, No. 7, pp. 955 – 971
www.emeraldinsight.com/0263-5577.htm

Xu, Yurong et al. (2002). Adopting Customer Relationship Management Technology. Industrial Management and Data Systems, 102/8, pp. 442 – 452
http://www.emeraldinsight.com/0263-5577.htm

Books

Barnes, James G. (2001). Secrets of Customer Relationship Management: It’s All About How You Make Them Feel. New York, NY: McGraw-Hill

Berry, Michael J.A. & Gordon S. Linoff. (2000). Mastering Data Mining: The Art and Science of Customer Relationship Management. New York, NY: John Wiley

Curry, Jay, with Adam Curry. (2000). The Customer Marketing Method: How to Implement and Profit from Customer Relationship Management. New York, NY: Free Press

Greenberg, Paul. (2002). CRM at the Speed of Light: Capturing and Keeping Customers in Internet Real Time. Berkeley, CA: McGraw-Hill/Osborne

Groth, Robert. (2000). Data Mining: Building Competitive Advantage. Upper Saddle River, NJ: Prentice-Hall PTR

Turban, Efraim; King, David; Lee, Jae & Viehland, Dennis. (2004). Electronic Commerce 2004: A Managerial Perspective. Upper Saddle River, NJ: Pearson Prentice Hall

Zikmund, William G., McLeod, JR., Raymond & Gilbert, Faye W. (2003). Customer Relationship Management: Integrating Marketing Strategy and Information Technology. Hoboken, NJ: John Wiley