Why does this CRM practice fail to regulate customer relations?
To understand what Integrated Customer Relationship Management (ICRM) is and what differences ICRM can make, we first need to understand why this CRM practice fails to regulate customer relationships.
Any CRM practice must begin by answering the following 6 critical questions:
1. What is consumer relations?
2. What drives customer relations?
3. How to measure customer relations?
4. With which customers should the relationship be built?
5. How to improve customer relations?
6. How to develop effective customer relationship management strategies?
However, there is no CRM system that is capable of answering (or structured to answer) these questions. Without clear answers to these critical questions, how can a company know which customer relationships need to be managed? How is it possible if a company has a strong relationship with its customers in market competition and how can a company know with which customer the relationship is built on? ...
Many people blame CRM system errors on the lack of management support and the lack of an appropriate organizational environment. However, the limitation of the system itself causes the high level of errors of the CRM practices.
Limitation 1: improper definition of customer relations. This CRM practice incorrectly defines purchasing and customer relations as customer relations. So, what is really governed by a CRM system is a customer relationship that is not real but only purchases and customer relationships. But purchases and customer relationships are only real consumer behavior rather than the consumer relationship that drives this behavior. Until a company understands the forces that drive it behind consumer loyalty behavior, a company may not be able to properly manage its customer relationships.
Limitation 2: limited marketing reach. This CRM practice limits the reach of its marketing in a company database. This CRM practice stems from a combination of database technology and database marketing (analytical techniques), so it cannot be avoided, this practice bequeaths its database as the sole focus. When this practice goes into the spotlight and becomes a major marketing practice, this practice bequeaths its characteristics into its limits regarding the reach of its marketing. Companies that use CRM practices narrow their marketing reach to their database. This means that these companies are more and more concerned about the data in their databases, but pay less and less attention to market competition and their marketing potential, especially potential customers who are not yet in their databases. These companies lost their vision of their markets and their marketing which basically became a sub-function of their department.
Limitation 3: ignoring the needs of consumers. The practice of CRM attracts companies away from their markets and their consumers. CRM practices force companies to focus on things like the relationship between product purchases for cross-selling and predictions of what consumers will buy in the future from products / services in their databases. So companies that use this CRM practice tend to ignore the real needs of their customers, where something really drives behind this buying relationship. And also, companies that rely on predictions from their CRM systems, tend to ignore the fact that CRM systems are usually only able to predict what consumers dislike rather than what consumers like most.
2. Integrated Consumer Relations Management (ICRM)
Combined Consumer Relations Management (ICRM) is a solution to handle the limitations of this CRM practice. ICRM provides a theoretical framework for defining and for building consumer relations based on the needs of consumers in market competition. ICRM also provides a practical guide to a standard process for effective customer relationship management.
ICRM is based on the fact that by building a strong customer relationship, a company can build sustainable competitive advantage in the long run. Therefore, in ICRM practice, building strong customer relationships is structured as the main objective of the marketing practices of a company and ICRM requires all marketing functions within a company to work in improving its customer relations.
ICRM puts consumer needs at the center of marketing practices and defines customer relationships based on the basic needs of consumers in market competition. ICRM combines all the main marketing functions in the process of building a strong customer relationship.
1. First, ICRM defines consumer relations as an unreal relationship between a consumer and a company and builds consumer relations from the basic needs of its customers. In ICRM practice, the need to build value and value determines consumer relations.
This non-real consumer relationship is the basic strength behind the 'loyalty' behavior of consumers and the main factor that provides a company with a sustainable competitive advantage. To win a consumer in his lifetime, this is far from enough to only maintain the value of this consumer to be active in a company database or to keep this consumer buying from that company. A company must win this customer relationship from their hearts by giving them the best value among competitors
2. Second, ICRM defines consumer relations in market competition. In ICRM practice, this customer relationship is competitive. ICRM regulates Competitive Customer Relations.
3. Third, ICRM combines all major marketing functions (including database marketing) into its marketing practices and develops marketing strategies to manage customer relations through the combined analytical process of 'Zoom In' and 'Zoom Out':
· Zoom In Process (from market to database): ICRM analyzes Competitive Customer Relations in the market and maps the structure of Competitive Customer Relations into a company database;
· Zoom Out process (from database to market): ICRM analyzes data in a company database according to the mapped relationship structure and develops a Consumer Relations management strategy in market competition.
ICRM is a combination: a combination of data, a combination of marketing functions and a combination of databases and markets. Through this combined process, ICRM overcomes the serious limitations that exist in CRM practices.
How ICRM works
ICRM provides a standard process for effective customer relationship management. This process is called the IMIM process. Namely: Identification of Consumer Relations, Measuring Consumer Relations, Improving Consumer Relations and Supervising Consumer Relations.
1. Identification of Consumer Relations
The key step in the practice of structured, combined Consumer Relations Management is to identify consumer relations in market competition.
ICRM identifies consumer relations based on how a consumer accepts the value of a company and builds the perception of that value from the basic needs of consumers. In ICRM practice, basic needs build value that is accepted and that value determines customer relations.
People usually define value as a comparison between quality and price. However, it is difficult to regulate customer relations based on this value construction, because different consumers may build the value received by them in very different ways. ICRM builds value from the basic needs of consumers and in the way consumers receive that value. Values built in ICRM are easy to measure and easy to identify the direction of improvement
Also, because ICRM identifies consumer relations in market competition, ICRM also identifies Competitive Consumer Relations.
Measuring Customer Relations
Because ICRM defines consumer relations as a value based on an unreal relationship between a consumer and a company and builds value from the basic needs of consumers, ICRM provides a possible solution for measuring customer relations.
ICRM also gives consideration to market competition when measuring consumer relations. Because consumers typically have relationships with companies that compete in a market, ICRM measures Competitive Customer Relationships in market competition. Therefore, ICRM provides a more realistic view of the relationship of consumers in dynamic market competition.
Improving Consumer Relations
Measuring Competitive Customer Relations is to enhance this Competitive Customer Relationship and ultimately, increase the competitive strength of the company.
There are two important steps in increasing Competitive Consumer Relations in ICRM practices.
1. Identify the Most Valuable Consumer segment in the market. When CRM practices focus on the Most Valuable Customers in a company database, ICRM helps a company find the Most Valuable Customers in the market. Improving customer relations with the Most Valuable Customers in the market helps a company generate the highest ROI in its customer relationship management and in the long run, maintain a sustainable competitive advantage from the company.
2. Identifying Key Drivers of customer relations. This increase in Key Drivers of customer relations helps a company improve its Competitive Customer Relationship more effectively.
Understanding the Key Drivers of customer relations is the first step towards effective customer relationship management. The Key Mover Analysis is finding the most important factors in improving customer relations. this analysis must be embedded throughout the Combined Consumer Relations Management process. This process demands the practice of customer relationship management on the right track in maximizing ROI.
ICRM combines all the main marketing functions to help improve a consumer relationship of a company. However, ICRM uses a marketing practice in its joint process only when this marketing practice helps a company identify and / or improve the Key Drivers of customer relations. For example, ICRM also tries to identify the Most Valuable Customers in a company database. However, unlike the Most Valuable Customers in CRM practice, these consumers need to be the Most Valuable Consumers in the market. This has always been the best strategy for a company to increase its relationship effectively with the Most Valuable Consumer segment in the market while retaining its customers.
3. Oversee the Consumer Relations
Combined Consumer Relations Management is not just one strategy shot. ICRM is a continuous marketing practice that helps a company run in the long run. Improving customer relations requires continuous effort. This is because:
- A company cannot achieve optimal customer relations in a short term. Companies need to oversee the process of customer relationship management to check how far this goes and what efforts are needed for customer relationship management in the future.
- Changing competition. Consumer relations is competitive and a company's main competitors also manage their customer relationships with the same potential customers.
- Consumer needs change. When their needs change, so does relationships
ICRM is different from existing CRM practices because:
1. In ICRM practice, building strong customer relationships is explicitly set as the main objective of a company's marketing practice. ICRM requires a marketing function to be carried out in enhancing a consumer relationship of a company.
2. ICRM defines consumer relations in market competition. ICRM regulates Competitive Consumer Relations;
3. ICRM defines customer relations based on the basic needs of consumers and builds customer relationships from the value of shipping from a company to its customers, while CRM practices incorrectly estimate consumer behavior as customer relations;
4. ICRM puts the needs of consumers at the center of its marketing practices and develops marketing strategies based on the needs of its consumers. ICRM incorporates the 'Concentrating on the Consular' marketing practice into the overall marketing process and bringing this marketing back to market;
5. ICRM incorporates all major marketing functions (including database marketing) into its customer relationship management process and makes a company's practice a joint process;
6. ICRM sends very different ROI to customer relationship management, because ICRM guides a company's marketing practices on its path to maximizing ROI by focusing on the Key Drivers of customer relations.