- Use of CRM in Cameroon Microfinance Industry
- Microfinance Industry – Research Problem, Question and Objectives
- Understanding Relationship Management – Customer RM
- Customer Relationship Management and Customer Differential
- CRM Applications and Technology
- The CRM Frameworks/Models : IDIC, QCI, Value Chain
- What is Microfinance? Limitations and Gaps
- Research Strategy & Data Collection: CRM in Microfinance
- Microfinance industry in Cameroon
- CRM Project et Microfinance Institutions System Tools
- The Theoretical CRM Framework (Artefact Produced)
- Conclusions and recommendations, Microfinance
2.2 The CRM Customer Relationship Management Frameworks/Models
A various range of comprehensive Customer Relationship Management CRM models has been developed. The author introduces five of the most famous CRM models in this chapter.
2.2.1 THE IDIC Model
The IDIC is described below (Figure 2.6)
Figure 2.6: The IDIC Methodology ( Peppers and Rogers, 2004)
The IDIC Model has been developed by Peppers and Rogers (2004). This CRM model is a leading approach in understanding the CRM model. According to the IDIC model, businesses should take four actions to build closer one-to-one relationships with customers:
Identifying who the customers are and building a deep understanding of them.
They differentiate their customers to identify which ones have the most value now and offer the most for the future. Besides, the differentiation can allow the busnisses to devise and implement a customer-specific model designed to satisfy individually different customer need.
The clients represent different levels of value to the company, and their needs are radically not the same from the enterprise. The CRM model will help you to tailor the management of each customer according to their relationship with your company and their needs. According to Peppers and Rogers (2004), the customer differentiation task will involve an enterprise in categorizing its customers by both their value to the firm and by what needs they have.
They interact with them to ensure that startups understand customer expectations and their relationships with other suppliers or brands. Thus, enterprises must improve the effectiveness of their interactions with clients. Each subsequent interaction with a customer should take place in the context of all previous interactions with that customer.
A conversation with a customer should pick up where the last one left off. Effective customer interactions provide better insight into customer’s needs. Any CRM model or software will organize your employees’ exchanges with any customer in a single place so that you can continue from where your colleagues stopped. This level of organization provided by CRM software will significantly advance your relationship with your customers.
They are customizing the offer and communications to ensure that the expectations of customers are met. Indeed, the company should adopt some aspect of its behavior toward a customer based on that individual’s needs and values.
To involve a customer in a relationship, a company needs to adapt its behavior to satisfy the customers expressed needs. This might entail mass-customization a product or tailoring some aspect of its services (Peppers, Rogers and Dorf, 1999).
2.2.2 The Quality Competitiveness Index Model (QCI)
QCI are independent specialists who assist blue-chip busnisses in managing customers. They are both strategic theorists and foremost practitioners (Hewson et al., 2002).
The QCI model shown below is described below.
Figure 2.7: The QCI Customer Management Model (Hewson et al. l, 2002)
The above is described as a customer management model CRM, omitting thereby the word relationship. At the center of the model, they highlight a range of activities needed by companies to perform in perspective to acquire and retain customers.
This model also features people performing processes and utilizing technology to assist in those activities.
2.2.3 The Customer Relationship Management CRM Value Chain Model
The CRM value chain (figure. 2.7) is a model which businesses can follow when developing their CRM strategies (Buttle, 2004). This model had been developed by a range of SMEs such as IT, software, telecoms, financial services, retail, media, manufacturing, and construction.
This model is built from strong theoretical principles and the practical requirements of the business.
Figure 2.8: The CRM Value Chain (Buttle, 2000)
The primary purpose of this model is, according to Buttle (2004), to ensure that the company builds long-term mutually beneficial relationships with its strategically significant customers. Thus, some customers are merely expensive to acquire and service.
Buttle has identified four types of strategically significant customers (SSC), such as the high lifetime value customer that is a crucial SSC and the present day of all margins earned in a relationship. He stated that tempting as it may be to believe, not all high volume customers have high LTV.
If they demand JIT, customized delivery, or are in other ways costly to serve, their value may be significantly reduced. We know of one company that applied activity-based costing disciplines to trace process costs to its customer base; as a consequence, the company re-engineered its manufacturing and logistics processes, and salespeople negotiated price increases
The second group of SSC is, according to the above author benchmarks that are customers that other ones copy. For instance, a manufacturer of vending machine equipment is prepared to do business with any company because they can tell other customers that they are supplying to the world’s biggest vending operation (Buttle, 2000).
The third group of SSCs is customers inspirations. They are the ones that find new applications, come up with new product ideas, find ways of improving quality or reducing cost. They may be the most demanding of customers or frequent complainers, and though their own LTV potential low, they offer other significant sources of value.
The fourth one deal with what Buttle (2004) calls cost magnets relating to those that absorb a disproportionately high volume of fixed cost, thus enabling other, smaller customers to become profitable
John Stevenson (2007) asserts that the CVC includes four stages:
– The first stage deals with grouping customers in order to determine which of customers are most profitable.
The first stage deals with grouping customers to which of customers are most profitable.
The result the companies should seek is their target customer base. They should rate and segment their clients into groups that are most desirable to do business to meet their criteria for what a hot customer is.
This is called, according to Stevenson (2007), the Customer Portfolio Analysis.
– The second stage deals with the customer intimacy.
Having found the firms’ segments want to pursue, they need those in that segment very well, and then their competition knows them.
Briefly, they want to appear that they know them intimately by, for example, wing their birthday, the number of children they have, and their respective birthday.
– The third stage relates to Value Proposition Definition.
Thus having understood as much as they can about the customers they have chosen to serve, companies are then in a position to create a specific and tailored value proposition for them.
Buttle (2000) previously raised five steps to profitable relationships that are, customer portfolio analysis (CPA), customer intimacy, network development, value proposition development, and managing the relationship.
Very briefly, the CPA analyses, according to Buttle (2000), the customer base to identify customers to target with different value propositions. Customer intimacy involves the business in getting how to know the selected customers as segments or individuals and building a customer database that is accessible to all those whose decisions or activities impact customer attitude and behavior
Buttle involves network development as the third step wherein a strong network of relationships is to be built with employees, suppliers, partners, and investors who understand the requirements of the chosen customers.
The fourth stage involves developing, with the networks compliance, propositions that jointly value the customer and the company. At this stage so far, the network has to work together to create and deliver the chosen value(s) to selected customers; a great deal is found more effective and more efficient solutions to customers problems (Buttle, 2000). The final step is to manage the customer relationship.
However, the above activities or stages need to be managed. Companies need to address each customer through their lifecycle. To enable the management of the customer lifecycle and the phases within portfolio analysis, intimacy, and value proposition development, automated data systems are necessary.
2.2.4 The Payne’s Five Forces Model
This is a comprehensive model developed by Adrian Payne. The model identifies five core processes in Customer Relationships Management CRM, the strategy development process, the value creation process, the multichannel integration process, the performance assessment process, s and the information management process.
They can be grouped into strategic CRM, operational Customer Relationship Management CRM and analytical CRM.
Figure 2.9: The Strategic Model for CRM (Payne, 2006).
Payne (2006) also introduced a strategic framework/model (Figure 2.8) for Customer Relationship Management CRM consisting of five generic processes as Strategic Development, Value Creation, Multichannel Integration, Information Management, and Performance Assessment.
The Strategy Development process is concerned with integrating the business strategy from the organization angle and the customer strategy to how firms interact and choose their customers. The Value Creation process to identify the value the firm can create for the customer and the value the organization can also benefit from.
The Multichannel integration consists of all the virtual and physical channels with which the firm Strategy to interact with. But the main thing here is that, regardless of the channel contact, the goal is to create an experience that is uniform and also shared.
The Information Management process consists of many different data repositories, IT systems, back and front-office applications, and analytical tools. It is thus necessary to access the visibility of the system, so they need for performance assessment process set in, and it is concerned at the strategic monitoring can be used to determine customer satisfaction and standards,
Various authors have proposed a Customer Relationship Management CRM strategy framework. Buttle (2001) provides a Customer Relationship Management CRM value chain that identifies a series of primary stages highlighted above. These are helpful as it considers implementation issues. Sue and Morin (2001) develop a framework for CRM based on initiatives, expected results, and contribution.
However, this Customer Relationship Management Frameworks is not process-based and, as the authors acknowledge, many initiatives are not explicitly identified in the framework. Winer (2001) outlines a model, which contains: a database of customer activity; analyses of the database; decisions about customers to target; tools for the customer targeting; how to build relationships with the targeted customers; privacy issues and metrics for measuring the success of the Customer Relationship Management CRM program.
All these frameworks provide some valuable insights; however, Payne and Frow (2005) argue that none appear to adopt an explicit cross-functional process-based conceptualization; they used an expert panel of executives with extensive experience within the CRM IT sectors to identify specific cross-functional processes.
Thus both authors identify five CRM processes: strategic development, value creation; multi-channel integration; information management; and performance assessment (figure. 2.7).
2.2.5 The Dasai et al /Conceptual Model
The conceptual framework was developed by Dasai et al. (2007) in which consideration is driven towards competitive CRM performance from both internal and external perspectives.
The dynamic capability for CRM is the critical source for competitive CRM performance considering the rapidly changing nature of the business environment today, which erodes the values of existing competencies (figure.2.8 below)
Figure 2.10: Conceptual Model (from Desai et al., 2007)
Figure 2.8 above comprises resources reconfigurability, social networking capability, and market orientation as the drivers of dynamic power for CRM.
While the IT variables, which are the CRM technology and knowledge management, are the moderators linking the relationship between dynamic capability for CRM and competitive CRM performance. The direct impact of IT competence variables should be tried and seen on competitive CRM performance.
2.2.6 The Forrester Model
The Forrester CRM model is grouped into four types: Strategy; Process, Technology; and People. The model produced results in the findings on hundreds of companies using CRM as strategically, thorough analysis of over several vendors solutions providers and also with discussion with about numerous consultants.
For firms willing to kick-start their CRM programs or for those that are finding it tough to get the best out of their CRM programs after it has been launched. Also, the performance scorecard (figure 2.9) highlights the criteria used by enterprises to measure the overall performance using CRM.
Figure 2.11: Forrester CRM Model (from Forrester Research, 2008)
Figure. 2.12: CRM Performance Scorecard (Forrester Research, 2008)
The author notices that the above scorecard looks similar to Gartner Group’s (IDM, 2002). Yet, few criteria were used.
Thus it should be suitable to assert the Forresters CRM performance scorecard is an improvement of Gartnerâs one.
Table 2.1 presents Gartner’s performance scorecard.
Table 2.1: Gartners CRM Performance Scorecard (IDM, 2002)
2.2.7 The Maturity Model
Gartners CRM Maturity Model is a tool in which the group used in rating enterprises in terms of their capabilities in effectively using CRM. To determine the category in which an enterprise is placed on the model, they are first evaluated in terms of Overall CRM vision and strategy, consistent valued-customer experience, organizational collaboration, processes, information, technology, metrics.
All these elements were composed of the Gartners performance measurement scorecard, which was discoursed earlier on. Still, the difference is that haven scored your performance based on these elements, the maturity model will then enable the firm to know where they are at present and where they want to be over some time, what the requirement they will need to achieve that status.
It is a handy tool as each enterprise that aims to satisfy their customer and maintain a lead in its industry should use maybe at every set intervals. Table 2.2 shows what the model looks like.
Table 2.2: Gartners CRM Maturity Model for Enterprise (Gartner Group, 2001)
From the Customer Relationship Management Frameworks analyzed above, it was observed by the researcher that there are similarities that cut across them.
Using Forrester Research as a benchmark and placing frameworks by Dasai et al. and Payne on both sides of Forresters framework, each of the components in the framework was linked together, making it clear that they all similarly have in them all the four elemental components of Forresters framework.
Dynamic Capability of CRM
Figure 2.13: Different Frameworks Summary (By the Author)
Figure 2.13 above shows what each of these Customer Relationship Management Frameworks contains. Looking at the strategy, this is focused on customer and organization on one side; and strategic development and value creation on the other side.
A successful company should understand how the customer base can be turned into an asset by delivering a value proposition. According to Close et al. (2001), it provides objectives, segments, and customers, and it should define how resources will be used interactions.
Respectively the organization, involves the change of culture, structures, and behavior to ensure that the staff, partners, and suppliers work together to deliver what is promised. However, the researcher will only consider the Forresters framework as a basis for our further research.
Use of CRM in Cameroon Microfinance Industry
Msc. in Technology Management / Ludovic KEUTCHA TANKEU
The CRM models that we discussed will develop your company in many ways. If you implement any of these models using good CRM software, your business will get better in sales, relationships with customers, and better work dynamics in the team.
CRM may help your team find solutions for their problems thanks to the data organized by the CRM model. Your business will find new ways to grow and improve sales using CRM software. Multiple CRM services are available, including salesforce, Zoho, and Hubspot.
What is the meaning of a CRM tool/model?
CRM is an acronym for Customer Relationship Management. It is simply software that manages all kinds of interactions between your company and the customers and potential ones. This software aim at a simple goal which is to grow your business and improve the quality of services that your business offers.
CRM, customer relationship management adapts different index models. Each data model of CRM will help your business differently. The relationship model built within the CRM tool will organize the data among your clients. If your company has competent management, CRM will drive high client satisfaction and help your company offer a better service for the people. The CRM business’s primary value is the easy social CRM communications among the teams of your business.
Each company offers various model-driven apps. The social CRM model is the leading seller model determining whether to buy the paid version of the CRM or not. The buyer-seller model is an important model to notice when choosing the best choice for your company.
Analyzing the capabilities model is also a crucial way for your business to keep a perfect link between IT and business.
Some CRM providers as Salesforce may use a new model to implement their services to be a good choice. The giants in the field use different dynamics, CRM is a rapidly developing field. The leading CRM giants use different research models rather than already using outdated models. Many other CRM providers are already using model-driven system for their mobile applications. The client relationship model will always be a crucial determinant in your success. The longer you use CRM the longer you will discover amazing CRM capabilities.