I. List of Abbreviations
II. List of Figures
III. Definitions
1. Introduction
2. Executive Summary
3. Background And Methodology
4. CRM And The Information Society
4.1. Main Objectives For Implementing CRM
4.2. Impact Of CRM On Business Success
4.3. The Stages Of Customer Orientation
5. Developments and Trends in CRM
5.1. Target Marketing Or “Targeting”
5.2. Social Media
5.3. Mobile Devices and Mobile Internet
5.4. Self-Service
5.5. Big Data
5.6. Gamification
5.7. Consequences
5.7.1. Multi-Channel
5.7.2. Customer Experience
5.7.3. Push to Pull
6. Mobile Applications in CRM
6.1. Definition of Mobile Applications
6.1.1. Native App
6.1.2. Web App
6.1.3. Hybrid App
6.2. Facebook Connect
6.3. Company Goals & Desired Outcomes
6.4. External CSPs (Customer Service Processes)
6.4.1. General Information Service
6.4.2. Marketing/ Company Branding
6.4.3. Differentiation, Competitiveness & Customer Loyalty
6.4.4. Customer Data Sourcing
6.5. Internal CSPs
6.5.1. Quantity & Availability of Information
6.5.2. Information Speed
7. Conclusion Of Findings
7.1. Benefits Of Mobile Applications In CRM
7.1.1. Improve Marketing Efficiency
7.1.2. Increase Service Efficiency And Reduce Costs
7.1.3. Increasing Sales
7.1.4. High Quality Customer Data
7.2. Obstacles For Using Mobile Applications In CRM
7.2.1. Technical Infrastructure And Know-How
7.2.2. Data Protection Legislation
7.3. Critics
7.3.1. Alleged Objectivity
7.3.2. “Transparent” Customers
8. The Future Of CRM
8.1. Technological Developments
8.2. Mobile Market
8.3. Social Changes
V. Bibliography
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Figure 1: Companies in the area of tension between competitors and customers
Figure 2: Percentage among respondents who had experienced good or bad customer service, indicating who they told
Figure 3: Visualization of the Push to Pull transformation in today´s customer service
Figure 4: Facebook-Connect Data Permissions
Figure 5: Company goals for implementing mobile application into the CRM strategy
Figure 6: Sample process for customer complaint processing
Figure 7: Number of smartphone users per platform
Figure 8: Time spent on smartphone in minutes per activity
Android Mobile Device Operating System (Google)
Gen-Y Generation Y, those born between 1985-1990 (sometimes also referred to as “Millennials” or “Digital Natives”.
API Interface that allows third-party applications to access certain functions on other software or hardware platforms like the managing Like on Facebook on behalf of the user or accessing the GPS module on mobile devices.
HTML HTML is a set of markup symbols or codes in a file intended for display on a web browser page[1].
CSS “A cascading style sheet (CSS) is a Web page derived from multiple sources with a defined order of precedence where the definitions of any style element conflict. […] CSS gives more control over the appearance of a Web page to the page creator than to the browser designer or the viewer.”[2]
Java Script “Java is a programming language expressly designed for use in the distributed environment of the Internet. Java […] can also be used to build a small application module or applet for use as part of a Web page. Applets make it possible for a Web page user to interact with the page.”[3]
Customer 2.0 “These new buyers rely a lot more on social media and a lot less on advertising to inform their decisions about the products and services they are considering.”[4]
Sharing Economy Sometimes refered to as “Shareconomy” or “Share Economy” – an approach that turns customers into providers and focuses on sharing instead of possessing[5]
Up-Selling Selling more expensive products of the same type to existing customers
Cross-Selling Selling additional products, like accessories or products from a different category, to existing customers[6]
Markets all over the world are currently highly affected by enormous dynamics regarding demands and expectations of customers in customer service. Companies face the challenge of constantly providing high-level service with clear benefits to well informed customers in order to ensure a high customer commitment and loyalty that goes beyond the product life cycle.
The traditional methods of the marketing mix are not suitable anymore and the static marketing and service strategies still widely used do not suffice to reach out to today´s customers.
Especially the so-called “Gen-Y”, the generation Y, is constantly and naturally using highly flexible and interactive mobile communication technology, and requires an individual and qualitative service approach to be satisfied. The customers want to make independent decisions about when they interact with companies and which channel they use to do so.
At the same time, price sensitivity is constantly rising, a contradiction that confronts companies with greater demands for efficiency in everything they do to stay ahead of competition. Especially companies using a more traditional approach have to adapt to big changes, to keep up with the “born globals”, companies been set up in the recent years and currently experiencing incredible growth rates, that baked this flexible customer service approach into their DNA by greenfield development from the very beginning.
How can traditional companies keep up in this rapidly changing environment and at least adapt to current developments, yet not being able to operate and innovate at cutting edge?
This study uses a systematic approach to deal with the complexity of Customer Service and Relationship Management, outlines the specific underlying circumstances of the changing service requirements and identifies the most influential trends that will define the future of Customer Service. Furthermore, the practical part of this study will outline the main obstacles of traditionally operating companies on their way to state-of-the-art customer service, explicitly present examples based on existing high-level companies from various branches like automotive manufacturers and airline carriers as well as retail and fast food chains.
Therefore, this study does not only provide a theoretical fundament for company decisions regarding the development and implementation of innovative customer service strategies, but detailed recommendations for action to guide firms through the challenges of constant change into a more efficient and sustainable future of quality customer service.
This concept is apt to provide a distinct evaluation of current developments in CRM technology and trends and their impact on traditional CRM strategies with a focus on mobile applications. Furthermore, new concepts are evaluated, using the constantly evolving technology of mobile applications to increase customer satisfaction on one hand and provide a 360° customer view, more effective CRM business processes and higher quality data for companies on the other.
The general market conditions dramatically changed in the recent years. On one hand, due to the oversupply of more and more similar and substitutable products in a world of shared and less exclusive knowledge, the markets developed from seller markets to buyer markets, which makes it increasingly difficult for companies to differentiate.
On the other hand, big changes also changed consumer behaviour and expectations. Customer demands and needs are getting more complex and less predictable, changing at a similar speed as the more and more accelerating product life cycles. The evolving community culture of shared knowledge and shared experiences, especially trough social media, and the “always on” mentality of the “Customer 2.0” enables them to make more critical decisions based on very detailed and always up to date information.
These changed market conditions require companies to adapt and to face up to the challenge of constant innovation to ensure future competitiveness. More and more substitutable products and services require companies to add further unique value in their customer relations. This is why customer service evolved to become one of the critical success- and differentiation factors in today´s market environment.
Today´s companies are operating between the poles of increased competition on one side and increasingly flexible and well-informed customers on the other, like shown in the chart below.
Figure 1: Companies in the area of tension between competitors and customers
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Companies are therefore operating in an area of tension, facing various challenges from different parties that have to be mastered successfully.
This thesis is based on a 6-months innovation project “Identification and Evaluation of the Potential of Mobile Applications in CRM”, working with high-level companies from throughout Europe and various branches from Automotive to Travel, Fast Food, Insurance and Public Transport. It aims to identify specific market trends and opportunities as well as obstacles for non-digital companies in using mobile application to ensure a competitive mobile customer service strategy and provides examples and specific recommendations for action to take advantage of the cost-cutting potentials, marketing opportunities and efficiency improvements involved.
The project “Potential of Mobile Applications in CRM” aims to identify and evaluate the most recent trends in how companies react and adapt to the challenge of keeping up with technological developments and using mobile applications not only to increase efficiency, but also to increase customer satisfaction.
After in-depth research with high-level customers, the following theses can be identified as the main challenges companies are facing in implementing high-quality customer service:
- Increasing competition forces companies to higher efficiency and lower costs
- Customers are more autonomous and flexible in their communication habits, both privately and publicly
- Customer expectations are higher and less predictable regarding the quality and kind of offered company services
Based on these assumptions, customer needs where elaborated and the benefits of mobile customer service channels where identified. Various internal meetings with high-level customer representatives (Head of Customer Service, Managing Executives and more) where set up, to gain insight about current mobile service strategies and their future plans for implementing mobile services to customer service.
More than a century ago, before the turn up of the supermarket, the internet, and the automobile, people went to their neighbourhood store to purchase goods. The proprietor and the staff recognized the customer by name and knew his preferences, wants and needs. The customer, in return, remained loyal and made repeated purchases. Today, this idyllic customer relationship has disappeared.[7] But what happened?
Flexible customers, increased competition, urbanization, economies of scale and the always-on information society, just to name some of the enormous changes society went through in the last decade.
With lower prices and goods more uniform in quality, customers became fickle, always moving to the supplier with the lowest price or the most features and the lowest price. Many shops, businesses and service providers in today´s economy offer comparable products and services, and are in need of new differentiation factors. This need triggered the rediscovery of Customer Relationship Management as a unique business approach, going back to personal, individual and reliable customer relations rather than market to an anonymous mass.
CRM does not only cover marketing efforts, but is a much broader concept that additionally involves all parts of an organization, like manufacturing, human resources, sales, service and research and development. It is a holistic approach, referring to all the different ways in which customers and companies interact on an individual level.
Increase revenue growth
- Increase share of wallet by implementing up- and cross-selling
- Maximize lifetime value of each individual customer
- Improve an organization’s ability to retain and acquire customers
- Improve the service without increasing the costs of service
Increase customer satisfaction
- Make the customer experience so pleasant that he will return for the next purchase Reduce cost for sales and distribution
- Target advertising to specific customer groups to increase efficiency
- Implement a digital point-of-sale, e-commerce and self-service to decrease the number of direct sales where personnel is needed
Minimize customer service costs
- Make information available to customer service representatives so they can answer any query
- Implement self-service so that no employee is needed for the most frequent requests
- Get customer information so that representatives have access to customer history and preferences and can up- and cross-sell
To obtain all these benefits, sales, marketing, and service functions within the organisation need to work together. A company needs to manage customer relations instead of products.
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”[8]
Sam Walton (Walmart)
What about CRM that companies rediscovered it as a critical success factor in highly competitive markets?
- Fickle customers can be expensive. The costs for acquiring a new customer can be significantly higher than keeping existing ones According tot he Boston Consulting Group, the costs to market to existing online customers is 5x lower compared to costs for acquiring a new online customers.[9]
In industrial sales, it takes about 8 to 10 physical calls to sell to one new customer, but only 2 to 3 calls to sell to existing customers[10]
- A typical dissatisfied customer tells 8 to 10 people about his or her experience[11]
- A 5% increase in retaining existing customers can leverage a significantly higher increase in profitability[12]
Anderson Consulting believes, based on a survey of more than 500 executives in six industries (communications, chemicals, pharmaceuticals, electronics/high-tech, forest products and retail), that even a 10% improvement of all CRM capabilities could add up to $35 million benefits to a $1 billion business unit[13].
Additionally, more than 57% of CEOs in another survey with 191 companies believe, the major objective of CRM is customer satisfaction. Another 17% said it is also designed to increase cross- and up-selling.[14]
Finding new ways to constantly satisfy and delight the customers for their patronage will definitely increase overall sales, as people like to spend money when and where the feel comfortable. In general, the cost or effort on adding some bonuses for frequent customers can lead to increasing overall sales as well as highly valuable and cost-free word of mouth marketing and personal referrals. Companies that provide great customer service can create a number of “raving fans” that are acting as promoters for their business and drive growth automatically, without creating a larger expense.
Some companies might think they should spare the effort for implementing great customer service and just leave it on a level they consider to be “ok”, which is a kind of a gambling game. Bad news spread a lot faster and easier in times of social media, than good news do. And one truth didn´t change since the early days of customer relations: first impressions last forever. According to research, good experiences are shared with others in 87% of all cases, but only 33% are shared with more than 5 people. While bad experiences are shared in 95% of all cases and 54% are shared with at least 5 people. All in all it adds up to all customer service reviews on social media only 30% being positive and 45% being negative experiences. Who cares? That´s when the real problem kicks in: 88% of all customers are influenced by online customer service reviews when making buying decisions[15]. The following graph shows the sharing tendencies of good and bad experiences in more detail.
Figure 2: Percentage among respondents who had experienced good or bad customer service, indicating who they told
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The bottom-line[16]:
- 52% indicated that a good customer service experience led to more purchases from the company
- 55% said they switched to a different company with similar products of services after a bad customer service experience
- 40% recommend others not to buy products or services after a bad customer service experience
"I know who you are, I remember you. I get you to talk to me. And then, because I know something about you, my competitors don't know, I can do something for you my competitors can't do - not for any price"[17]
Frederick Newell (loyalty.com)
Customer orientation is key for delivering exceptional service and therefore increasing the customer value and loyalty for the company, ultimately resulting in higher profit and fewer costs. The process of implementing a customer centric CRM approach involves 4 stages[18]:
1. Customer Identification
In order to provide value to its customers, a company must know or identify them, using marketing channels, transactions, and interactions.
2. Customer Differentiation
Each individual customer has his own lifetime value from the company's point of view and imposes individual and unique demands or requirements for the company.
3. Customer Interaction
A company needs to learn about its customers continually. Technical and social changes always affect customer behaviour, in order to keep up with those developments to ensure the customer´s long-term profitability and relationship to the company. Keeping track of changing customer needs is a critical task of a CRM program.
4. Customization/ Personalization
The motto of the CRM process should be “Treat each customer uniquely”. Customer loyalty can be increased significantly through the personalization process. As Jeff Bezos, the CEO of Amazon.com, said, “our vision is that if we have 20 million customers, then we should have 20 million stores.”[19] The automation of personalization and customized customer experiences is being made feasible by constantly advancing information technology.
"Instead of developing real relationships with our customers, we often reduced them to mere ones and zeroes [...]"[20]
Bryan Pearson (Alliance Data Systems)
The constantly intensifying competition in the product and service industry forces companies to adapt to tougher market conditions on a strategic as well as on an operative level. Especially CRM, by means the direct interface between the company and it´s customers, is highly affected by the changing market conditions and customer requirements. Being considered to be a critical factor for success, customer satisfaction and customer management is increasingly seen as one of the companies core competences and objectives, which puts CRM in the centre of many company´s economic activities.
When was the last time you responded to a mass mailer, email or even a cold call? Sure, mass marketing works and typically makes “some” return, but at what expense? The typical response rate for a mass mailing is about 2%[21]. Thus, mailing one million copies of an ad, on average yields not more than 20,000 responses. That´s not exactly the return businesses strive for when doing a marketing campaign, not mentioning the inefficiency.
Targeting is the slogan that spreads around marketing departments in organizations all over the world. Know your customer and target exactly those who are most likely to respond positively to your offer. Those who need exactly the service or product your organization can provide and doing that transforms traditional marketing efforts into an individualized service.
[...]
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