The customer’s life cycle and the CRM
Project Management Master’s Degree
A Thesis report Presented to the Project Management Program in the School of Management
In Partial Fulfillment of the Requirements For the Degree of Master of science project management
The importance of customer relationship management in software enterprises’ life cycle
By Kranidioti Diamanto
June / 2008
The purpose of this study is to gain a better understanding of CRM in software enterprises. This research surveys, describes and explains the importance of CRM, how CRM is managed, and how CRM is measured and evaluated.
In her quest for answers, the author has found that CRM process is significant in every phase of the project, during its life cycle, as long as the entire project is based on customer’s specifications and expectations.
In addition, the author highlights the main reason of failure of CRM project in software enterprises.
Commonly the people who are in charge in CRM completion are technical experts with no managerial skills concerning the customer relationships and face the CRM as technology and not as business philosophy.
Concluding this thesis, the author comes up with a number of issues that she believes that can be valuable to managers who are interested in receiving knowledge in the area of CRM.
Table of Contents
1.1.Nature of the study7
1.3.Purpose of the Study7
1.4.Relation to the Program of Study8
1.5.Definition of Terms9
Chapter 2 10
Chapter 3 12
3.2.Understanding the meaning of CRM12
3.3.The Customer Relationship Management architecture15
3.4.The core benefits of Customer Relationship Management16
3.6.The steps in the implementation of CRM strategy21
3.7.Metrics of CRM effectiveness24
3.8.CRM: Strategy or technology?26
3.9.Knowledge requirements of CRM29
3.10.Project Life Cycle and CRM’s contribution34
Chapter 4 37
4.1.Description of Methodology37
4.2.Case Study: Themelio Software Company41
Chapter 5 45
5.1.Results of this Study45
5.2.The significance of CRM into the enterprise and during the project’s life cycle45
5.3.The impact of CRM in the organization47
5.3.1The director perspective.47
5.3.2The implementer perspective.47
5.3.3The IT perspective.48
5.4.Components of CRM48
Chapter 6 51
6.2.Recommendation for further research53
Chapter 1 : The customer’s life cycle
1.1. Nature of the study
In today’s competitive business environment it is necessary for organizations to collaborate effectively with their customers in order to win their loyalty and trust.
This collaboration, usually, tends to be very difficult, especially in software enterprises, due to inefficient communication between organizations and their customers and due to the lack of knowledge, and qualified people with the appropriate skills in order to work closely with the customers, understand their needs, and serve them with the best way.
The nature of this study is to make clear the importance of the customer’s role and the significant meaning of a well-organized and customer-focused organization, factor which is able to create a competitive position in the market.
1.2. Need Assessment
The stakeholders of this thesis are the software enterprises and their competitors, the customers, and the customer relationship managers.
This thesis will provide the stakeholders with useful knowledge in order to identify the factors that inhibit the fertile relationships between the organizations and the customers, and will help them to realize the importance of that relationship.
Moreover, the stakeholders can find recommendations/solutions for improving the CRM in their organization.
1.3. Purpose of the Study
The purpose of this study will be to consider the importance of the customer’s participation to ensure a financially sound organization.
The author will analyze the reasons that cause organizations to tend inwards and stop focusing on the customers.
Especially in the case of software enterprises, were the needs and expectations change very often due to the runaway development of technology, the customer relationship managers should observe and follow the customer’s wants.
The human resources in every software enterprise are composed of people who are technical experts with excellent skills in information systems.
The factor that most enterprises don’t take into consideration is that these people don’t have the appropriate managerial skills.
The customer needs to talk with someone who talks the same language as him/her, someone who will listen to him/her and gain his/her trust.
Also, it should be mentioned that the target of any organization is not just to make a good sale, but to make the customer come back for more business.
Effective CRM is a method to succeed in reaching that target and securing it.
In addition, the author will identify tools and methods that will suggest the proper method in order to have a good collaboration between the customers and the organizations.
These include techniques that the enterprise should follow so as to understand what the customer wants and expects.
The results from this process are not only to gain a good reputation and increase the sales, but also to reduce the product cost substantially as long as the product specs are according to customer’s needs so that changes are limited.
1.4. Relation to the Program of Study
As it is mentioned in the course PM 512-The Customer in the Project Process, client, customer, and stakeholder satisfaction are keys for a successful project.
This course showed why it is necessary to sustain a client focus that includes techniques for promoting and maintaining client participation, marketing to clients, client and prospective client relations, training, and client presentation and selling skills.
This thesis will analyze this issue in more detail and will identify who the real customers are along with their actual needs and wants.
Also, this study will stress the importance of a customer’s role and how crucial is to keep the customer aware and communicate with him during the whole life cycle of any organization.
1.5. Definition of Terms
This part of thesis has as a purpose to point out some significant terms and analyze the complexity of them in order to help the reader to understand the meaning of these terms.
- CRM: Customer Relationship Management
- IT: Information Technology
- SFA: Sales Force Automation
- KM: Knowledge Management
2.1. Problem statement
The development of CRM antedates the startup of the project, is comprised during the project execution, and continues long after project consummation.
Customer relationship management CRM is directly associated with the customer’s life cycle.
However, many enterprises think that CRM is dead or even though they apply this methodology they don’t have the appropriate qualified people who can make this work effectively.
All these have as result to lose the key for business success: customer’s satisfaction, which is a key factor (together with the three principle factors of time, cost and performance) for a project successful management.
Customer relationship management (CRM) is an approach that provides organizations with tools and processes in order to serve their customers with the best way.
The first step that the organizations have to make for the purpose of this approach is to understand who the customer is.
Understanding as clear as possible customer’s needs, wants and expectations enables the organization to build strong relationships and increase sales, focusing on both receiving and delivering value.
It is widely known that it takes more effort and costs more money to attack a new customer than to keep an existing one.
Throughout the process of understanding the customer’s life cycle the organization supports its CRM so as to stay close with the existing customers and win new ones.
In today’s competitive business environment a disappointed customer automatically becomes someone else’s customer.
Customer relationship management helps to collect all the appropriate data and information about the customers and serve them with the way that they expect and make them come back for more business.
With this information it will be clear why do customers buy and what do they buy.
The fundamental principles of CRM are:
- Understand what motivates the customer
- Customize services and products
- Good service
- Prioritize profitability
Though this approach the organization is able to control the sales, to improve the product quality and gain competitive advantages.
Nowadays, more and more organizations adapt this new methodology of CRM by using software tools, templates, statistic metrics which help to gather, analyze and ultimately the customers’ databases in order to satisfy the needs of their valued customers.
The CRM can have positive impact across the organization only by implementing the right solutions for it.
Pinpoint the CRM goals of the organization and select the appropriate type of CRM is the first step for that process.
Only by planning and finding the correct people for that work the organization can anticipate and respond to the customers’ needs in a consistent way..