What is Customer Relationship Management (CRM)? Definition, Objectives, Components, Barriers

What is Customer Relationship Management (CRM)?

Customer Relationship Management (CRM) is the process of managing all aspects of interaction a company has with its customers, including prospecting, sales and service. CRM applications attempt to provide insight into and improve the company/customer relationship by combining all these views of customer interaction into one picture.

CRM Definition

Parvatiyar and sheth (2001) defined CRM is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.

According to Gartner, CRM is a business strategy designed to optimize profitability, revenue, and customer satisfaction‖.

Customer Relationship Management is the establishment, development, maintenance and optimisation of long-term mutually valuable relationships between consumers and organizations. – CRM (UK) Ltd (2002)

According to Philip Kotler and Gary Armstrong, ‘CRM is concerned with managing detailed information about individual customers and all customer “touch points” to maximise customer loyalty. It can also be defined as, ‘an alignment of strategy, processes and technology to manage customers, and all customer-facing departments and partners’.

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Concept of CRM

Customer relationship management is the technique of providing information to prospects and customers and collecting information about prospects and customers, that allows us to help them evaluate and purchase products that deliver the best possible value to them.

One-to-one marketing and relationship marketing is to make it easier for the customer to do business with you. Marketing and salespeople have many opportunities to influence customer purchase decisions.

Until recently it was normal for these functions to be performed separately — by different departments within a company — without acting as a unified team. So we must understand that coordinated efforts are now being made to unify the approach.

Customer Relationship Management has become a popular name for a variety of CRM software tools and techniques aimed at attracting and retaining customers. In general, CRM uses a centralized database to bring marketing and sales activities together in a unified approach to serving customers.

Relationship Management

Relationship Management by an organization can be divided into two categories:

• External Relationship
• Internal Relationship

External Relationship

Two major external stakeholders of a business are customers and suppliers.

Customer relations: customer relations can be defined as the process by which companies promote customer satisfaction and loyalty.

• It involves managing communications with customers, particularly customer‘s questions and complaints and solving their disputes.
• The ultimate goal of customer relations program is to build long term relationships.
• Building a strong reputation for the brand and company.

Supplier relations: All companies try to build a strong relationship with their suppliers.

• Supplier relationships are different from simple purchasing transactions in several ways. There can be a sense of commitment to the supplier.
• Eg: vendor (seller) sells certain items to the buyer for several times then he thinks that he will come for a next time purchase.

Internal Relationship

• It is an integrative process with in a system for fostering positive working relationship in a developmental way in a climate cooperation and achievement.
• Internal relationship is an ongoing process that occurs strictly within a company or organization.
• Internal relationship helps to motivate and empower employees at all levels of management and its consistently deliver a satisfying customer experience.

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Features of CRM

CRM is made up of many features, which include collaborative CRM, analytical CRM and operational CRM.

1. Collaborative CRM
2. Analytical CRM
3. Operational CRM

Collaborative CRM

It is to directly communicate with customers without inclusion of any sales or service representatives. Direct interaction is carried out with collaborative CRM that includes feedback from the customers and reporting of issues if any. This interaction can be carried out through a variety of channels like e-mail, phone, SMS, etc.

The main objective behind going in for collaborative CRM can be reducing the company costs and improving the services provided.

• It is the communication centre, coordination network that provides neural paths to customer and its suppliers.
  
  
• It could mean a Partner Relationship Management (PRM) application or a customer interaction centre.
  
  
• It could mean communication channels such as web or e-mail, voice applications and even channel strategies.
  
  
• In other words, it is any CRM function that provides a point of interaction between customer and channel itself.

Analytical CRM

It is to investigate customer data for a vast range of reasons and functions. Analytical CRM finds multiple uses such as taking management decisions, predicting future trends, analyzing customer behaviour, planning and executing marketing campaigns and much more. It analyzes customer data for the following purposes:

• Design and execution of targeted marketing campaigns to optimize marketing effectiveness.
  
  
• Design and execution of specific customer campaigns.
  
  
• Analysis of customer behaviour to aid product and service decisionmaking such as pricing, etc.
  
  
• Aid in taking management decisions such as financial forecasting.
  
  
• Provide a tool in predicting the probability of customer defection.

Operational CRM

It provides support to “Front Office” business processes, including sales, marketing and service. Typical business functions involving customer service, order management, invoice or billing or sales and marketing automation and management are the parts of operational CRM.

Each interaction with a customer is generally added to a customer’s contact history, and staff can retrieve information on customers from the database whenever necessary.

One of the main benefits of this contact history is that customers can interact with different people or different contact channels in a company over time without having to describe the history of their interaction each time.

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Types of CRM

• Strategic: Strategic CRM is a core customer-centric business strategy that aims at winning and keeping profitable customers.
  
  
• Operational: Operational CRM focuses on the automation of customer-facing processes such as selling, marketing and customer service.
  
  
• Analytical: Analytical CRM is the process through which organizations transform customer-related data into actionable insight for either strategic or tactical purposes.

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CRM Objectives

Following are the objectives of CRM:

• Enable the company to identify, contact attract and acquire new customers
  
  
• Obtains a better understanding of the customers: their wants and needs
  
  
• Defines the appropriate product and service offering and match it to the unique needs of the customer
  
  
• Manages and optimizes the company’s sales cycle
  
  
• Increases retention of existing customers through improved sales, service and support
  
  
• Identifies Cross-selling and up-selling opportunities

Enable the company to identify, contact attract and acquire new customers

CRM allows the company to focus its limited marketing resources on the most promising target markets with the highest potential value. This is typically done using the information generated by CRM application which:

1. Automatically generates customer and market profiles
2. Identify and target market with high revenues
3. Generates, leads, tracks marketing campaigns across a variety of media
4. Selects appropriate contact media, plans promotions and incentives
5. Manages the proposal process through negotiations to close.

Obtains a better understanding of the customers: their wants and needs

CRM applications, often used in combination with data warehousing, e-commerce applications and call centres, allow companies to gather and access information about customers buying behaviour, wants in terms of products or services provided by the company.

The information is used in the planning and execution go marketing campaigns. It enables customers to seek products and reveal their preferences in an interactive manner.

Defines the appropriate product and service offering and match it to the unique needs of the customer

CRM provides customization and personalization capabilities that gives customers the power to view the enterprise in a way that they can relate to, thereby making it easier for them to do business with it. This includes configuration, pricing, quotation, catalogue and personal generation capabilities that harness the power of the Internet while ensuring the flexibility to respond quickly to changing technical and business conditions.

Manages and optimizes the company’s sales cycle

The productivity of the sale process is increased by accurating the contracting process and improving revenue velocity. This is accompanied to capabilities such as online order entry, credit card processing, tax calculations, auctions, billing, order status and payment processing.

CRM solutions also include tools, which provide the ability to communicate important information from supply chain modules to the customer interface in real-time. These tools can help in determining feasibility, profitability and delivery dates while understanding the constraints of the entire supply production and logistics chain across multiple channels and enterprises.

Increases retention of existing customers through improved sales, service and support

CRM applications document all post-close service and support related interactions with customers, record customer requests and collect feedback from a variety of communication channels and use the information to anticipate the demand for service and technical assistance and maximize customer satisfaction and retention while maximizing customer service staff.

The goal is to ensure greater customer loyalty. CRM provides capabilities for providing online support information, online product registration to an electronic help desk, self-service support logging and tracking and integration with call centres.

Identifies Cross-selling and up-selling opportunities

CRM can help in identifying opportunities for cross-selling and up-selling of higher value-added services to the existing customers, based on their past purchasing behaviour.

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CRM Process

Customer Relationship Management (CRM) consists of all of the approaches to draw and hold relationships with clients. Other approaches include coping with purchaser information, studying facts, and producing reviews for insight. CRM covers all components of commercial enterprise operations that have an effect on clients, consisting of sales, commercial enterprise development, sales, advertising, and purchaser service. Therefore, CRM expands sales strategies, perceive opportunities, decrease risk to gain better results.

CRP Process involves following steps:

• Generate Brand Awareness
• Acquire Leads
• Convert Leads Into Customers
• Provide Quality Customer Support
• Drive Upsell

Generate Brand Awareness

The first step in the CRM procedure is to make potential clients aware of your product or service. The first step in attracting new clients is to introduce them to your enterprise by following means:

• Understand the goal group: Marketers behaviour studies to perceive cantered demographics, benefits, favoured channels of verbal exchange, the messages they reply to maximum, and what’s critical to them.
  
  
• Target market segmentation: Audience personas are created to divide a brand’s audience into comparable businesses primarily based totally on comparable benefits and demographics.
  
  This allows entrepreneurs recognise which kind of human are more in all likelihood to be clients and who campaigns for the marketing campaign.
  
  
• Create advertising campaigns that goal those audiences: With A/B checking out and advertising automation, you could perceive what works and what does not, create your very own campaigns in your very own purchaser segments, together with social media and electronic mail, and expand lead acquisition strategies.

Acquire Leads

After introducing your brand to potential clients, the second step is to gather leads. Your sales and advertising groups interact together along with your audience through e-mail campaigns and Google Ads. For example, an advertising team can use an internet site sign-up form to inspire traffic to enrol in a publication. Lead acquisition is quite smooth when CRM is adopted with lead enrichment equipment such as research.

Convert Leads Into Customers

Once you have got the eye and interest of your potential leads, the following step is to convert them into actual clients. If leads are positive, sales representative want to keep expanding leads and construct positive outlook of the brand and product.

Provide Quality Customer Support

The CRM should not end at lead conversion. Companies want to retain their customers and deliver superior customer service, preferably via various communication channels (live chat, email, and phone) and whenever your customers need it.

Leverage your CRM’s help desk and service system to understand your customer’s user experience after they make a purchase. It is important to gain honest feedback from them to understand the changes that you need to make to improve their experience.

A right CRM provides assistant workforce with the statistics and assets they want to remedy their clients’ issues efficiently (for example, CRM is a conversation tool (chat, e-mail) that can reply fast to client complaints or phone) additionally provided).

Drive Upsell

Upselling is a sales method used to persuade current clients to buy extra products or improvements in reference to their preliminary buy. CRM can arrange your client listing via way of means of buy records and ship custom e-mail templates for associated products to potential leads.

If your commercial enterprise is career oriented, then you could locate a possibility to upsell a check-in call. Set reminders for your CRM and ma

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Components of CRM

CRM software consolidates and documents customer information into a single CRM database so that company users can access and manage it more quickly. CRM systems have become increasingly useful as a result of the incorporation of numerous additional functions over time. Customers’ interactions with the company are recorded via email, phone, social media or other channels.

Various workflow automation processes, such as tasks, calendars and alerts, are automated based on system capabilities. Managers are given the ability to track performance and productivity based on the information logged within the system.

The following are the components of CRM:

• Marketing Automation
• Sales force automation
• Contact centre automation
• Geolocation technology or location-based services
• Workflow automation
• Lead management
• Human Resource Management
• Analytics
• Artificial Intelligence
• Project Management
• Integration with other software

Marketing Automation

CRM platforms that have marketing automation features can automate repetitive operations in order to improve marketing efforts at various points in the lead generating lifecycle, such as during the sales cycle. For example, once sales prospects enter the system, the system may automatically send email marketing content with the goal of converting the sales lead into a paying client.

Sales force automation

Marketing automation technologies manage client contacts and automate specific business processes throughout the sales cycle that are critical for following up on leads, acquiring new customers, and fostering customer loyalty.

Contact centre automation

Contact centre automation, which is intended to minimise the time-consuming portions of a contact centre agent’s job, may include pre-recorded audio that aids in customer problem-solving and information distribution, among other things.

There are a variety of software solutions that can manage customer requests and interact with the agent’s desktop tools in order to shorten call lengths and streamline customer support procedures. Chatbots, for example, are automated contact centre solutions that can improve the user experience for customers.

Geolocation technology or location-based services

Some CRM systems feature technology that allows businesses to construct geographic marketing campaigns based on the physical locations of their consumers, which can occasionally be integrated with popular location-based GPS (Global Positioning System) apps.

It is also possible to employ geolocation technology as a networking or contact management tool in order to identify sales prospects depending on their location.

Workflow automation

CRM solutions assist firms in optimising processes by reducing boring chores, allowing staff to devote their time and energy to more creative and high-level activities.

Lead management

Salesforce allows sales teams to input, track, and analyse data for leads in a single location, making it easier for them to close more deals.

Human Resource Management

Within a corporation, CRM systems assist in tracking employee information such as contact information, performance reviews, and benefits. This enables the human resources department to manage the internal staff more effectively.

Analytics

By evaluating user data and assisting in the creation of focused marketing initiatives, analytics in CRM may help improve customer satisfaction rates and increase revenue.

Artificial Intelligence

Artificial intelligence technologies, such as Salesforce Einstein, have been integrated into CRM platforms to automate repetitive operations, discover customer-buying trends, anticipate future consumer behaviour, and perform other functions.

Project Management

Some CRM systems provide tools that allow users to keep track of client project information such as objectives, strategic alignment, processes, risk management, and status.

Integration with other software

Many CRM systems are able to integrate with other software, such as call centers and enterprise resource planning (ERP).

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Examples of Facilities Created by CRM

Examples of various facilities created by CRM are as follows:

Manage Customer Data

The CRM system maintains data on customers that not only pertains to the details about the customer – such as name, address, and demographic profile – and the products the customer has purchased, but also maintains a history of contacts with the customer.

A CRM system for a bank, for instance, will maintain data on when a potential customer called or visited the website of the bank, when the customer enrolled and who he/she talked to at the bank when he/she began transactions, whom he/she has talked to or contacted over the years regarding different services, and how many calls he/ she has responded to. With such data available to them, sales personnel can recall any prior transactions with the customer, showing that they are aware of the customer’s needs.

Manage Sales Force

The CRM system allows sales managers to track the activities of sales force personnel and plan their tasks. The CRM system supports sales personnel by providing access to data about customers, orders, delivery status, invoice status, payments, and payment histories. Furthermore, the system helps sales personnel follow up on leads and record details about their visits and conversation. The system also enables the creation of quotes, based on the current prices of products, in the field.

Marketing Management

The system can be used to plan for and execute marketing campaigns and then systematically analyze the results. The system can help plan events, campaigns, and promotions and retain data and results related to these. Marketing managers can then use customized analysis to assess the impact of their campaigns. The system can show maps, charts, graphs, and dynamically adjusted visuals of marketing activities across regions and products. Some special add-on analysis products can also enable managers to simulate scenarios to decide on their campaigns.

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Marketing System of Customer Relationship Management

Some special marketing tasks that the CRM system enables are cross-selling, up-selling, and bundling.

Cross-selling

It enables sales personnel to offer complementary products to customers; the system helps them by providing information on the customer’s past purchases, for example, a laptop, and then showing what complementary products can be offered to them, for example, a printer.

Up-selling

It offers higher value or higher priced goods to customers. For example, a customer, who has purchased a basic mobile phone, may be offered a smart mobile phone when it is known, from the customer’s profile, that he/she can afford the product.

Bundling

It is the act of clubbing together products to help the customer get a better price on all than on any one alone. The system can help the sales personnel offer this, based on the customer’s profile and estimated preferences.

Service Support

The CRM system can provide data and analysis regarding all activities related to servicing customers – feedback reports, payment information, delivery information, and so on. This support is used mainly by the call center and helps desk personnel.

As with other enterprise systems, CRM systems to are designed with industry best practices built in. For instance, the process of customer call handling is standardized within CRM packages to represent the best practices followed in the industry. CRM systems enable processes to be built on existing and future databases of firms.

The ideas of relationship management are extended to employees and partners too. Systems known as employee relationship management (ERM) and partner relationship management (PRM) follow the same principles as CRM but are targetted for use by employees and partner organizations. PRMs are used by vendors to manage their clients through electronic means.

The difference between PRM and CRM is based on the fact that vendors typically have to deal with fewer clients, their clients are usually organizations, and vendors have a more interactive relationship with clients. Vendors use a PRM to reduce the costs associated with a sales force that establishes and maintains contact with clients; the electronic interface serves to do the same.

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Importance of CRM

Customer Relationship Management is the most effective and strong technique for preserving and growing client relationships. Most of the organisations have dedicated excellent tools for maintaining CRM systems into their workplace.

Some of the efficient tools used in most of the renowned organisation are Batch Book, Salesforce, Buzz stream, Sugar CRM, etc. The following points explain the importane of CRM:

Learning

CRM facilitates organisations recognise extra approximately their clients, who they are, why they purchase products, and developments of their buy records. This permits companies to higher count on and reply to their clients’ goals. Effective use of client control additionally gives strategic benefits. Well-prepared client statistics facilitate companies choose the proper recipients for promotions and new products.

Organisation

CRM allows companies to emerge as extra green via way of means of organising and automating sure components in their enterprise. From sales approaches to advertising campaigns, commercial enterprise analytics and client statistics, CRM automates and streamlines those approaches for companies. This permits organisations to arrange those approaches into simpler, easier to apprehend statistics.

Optimisation

Finally, CRM software programme permits companies to optimise their interactions with their clients. CRM improves client pride via way of means of simplifying and optimising the extra complicated client interplay approaches.

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Barriers to CRM

Businesses currently compete in intensely competitive markets, which makes it difficult to succeed. In order to maintain effective business growth in the face of changing client needs, habits, and expectations, an innovative approach is required.

When it comes to enabling the formation and development of client relationships, the concept of CRM is increasingly becoming a central emphasis for every organisation’s business strategy. The prevailing assumption is that deeper relationships can be built between carefully selected customers and the relevant organisations, allowing the customer’s lifetime value to be maximised.

The barriers to CRM are as follows:

• Business objectives
• Organisational alignment
• Technology trade-offs
• Evolving definitions
• Poor leadership
• Technology focus
• Insufficient help from CRM vendors

Business objectives

When it comes to CRM failure, the most prevalent and significant reason is a failure to set clear business goals and objectives prior to commencing a CRM initiative. The organisation chooses from among a plethora of potential customer relationship management efforts.

Organisational alignment

The effectiveness of a customer relationship management system is dependent on its users, many of whom are in direct contact with customers. Because representatives must be trained in order to exploit such features, a lack of training could be a contributing factor to poor organisational performance.

Technology trade-offs

The best-in-class application for a specific CRM function such as customer care assistance or sales tracking is often promised by several vendors. Companies can cherry-pick solutions and eliminate unnecessary features because data must be obtained from a variety of sources with this method. These applications, on the other hand, make it difficult to integrate and maintain this system.

Incomplete or poorly routed information, too many passwords or logins for users, inconsistent data models, and inconsistent instructions for entering data in different units are some of the symptoms that may be experienced by the organisation. Any of these issues can cause users to become dissatisfied.

Evolving definitions

CRM is always being surrounded by new concepts, new technologies, and new processes, and it is evolving at a rapid pace. As a result, many businesses are unclear of where to begin and what to give up or buy in order to take advantage of new technologies.

One of the most common mistakes is that businesses frequently become victims of management “fad,” which is to follow the current market trend in order to obtain the “latest technology” or the “authorised” name for particular departments or services, which is one of the most common blunders.

Poor leadership

Leaders of CRM projects are frequently functional heads that lack sufficient strategic planning or viewpoint experience in CRM to effectively lead the operation. In the same way that many other initiatives have a project champion, a person with authority, a leader who can make things happen, most successful CRM installations do as well.

Technology focus

Many businesses place a greater emphasis on technology than they do on meeting business requirements. The CRM system is a strategic procedure that can assist businesses in better understanding their customers’ demands.

As a result, businesses can better serve their clients by meeting their demands at the appropriate moment and enhancing their overall process. Management, dedication of support, and personal accountability all play a significant role in achieving success.

Insufficient help from CRM vendors

Vendors of CRM software are the ones who have developed new tools for enterprises. If the software is capable of addressing critical aspects of CRM, the program can bring significant economic value to the organisation while also providing a distinct competitive edge.

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CRM Software Selection

Installing a good CRM software package is the cornerstone of any customer relationship management program. Without good CRM software, gathering and storing the multitude of details gained about a customer from each interaction would be very difficult.

Small business CRM software has gone ahead in leaps bounds in recent years, with several top quality packages now available to choose from. Prior to beginning the search for good CRM software technology, however, there are a few basic features you should seek in a potential CRM package:

• Basic Functions
• Recognised CRM Software Supplier
• 360 Degree Customer View
• Seamless Connectivity
• Managing Campaigns
• Data Transfer
• External Support

Basic Functions

The CRM software should manage data relating to both individuals and companies and it should also provide time management features.

As most businesses use Microsoft Office, including Outlook, the CRM package should offer seamless integration with MS Office and/or fax software, as the ability to compose letters, faxes and email without leaving the CRM software is vital.

Recognised CRM Software Supplier

Do your research. Make sure your proposed CRM software supplier is recognised in the industry and has a solid backing with reputable customer testimonials and reliable 24/7 technical support.

360 Degree Customer View

It is important to know which people work for the same company; who said, emailed or wrote what to whom, and when. These details need to be a single click away. Does the CRM package you are considering provide this 360-degree view?

Seamless Connectivity

These days it is becoming more and more common for a growing business and its mobile workforce to utilise networked access to a central database, to mobile phones, and to PDAs. You need to ensure your CRM software package supports all the connectivity required by your company.

Managing Campaigns

In order to optimize your business marketing dollars, tracking of marketing campaigns and measuring their performance is critical. You will need a CRM package that provides this function. · Managing Leads: If you want sales opportunities to become closed sales, tracking leads is of prime importance. Make sure you select CRM software that provides lead tracking.

Data Transfer

Unless you are starting a business from scratch, you will probably need to import information from the previous software. Make sure you will be able to import directly, instead of spending hours processing the data through an intermediate stage or even worse, manually.

You will also need the ability to export data in order to exchange information with businesses that might use another CRM software package.

External Support

To get the most from any CRM package, you will find tips from fellow users, industry-specific templates, plug-ins to be vital. Make sure the package you are considering is well-known and supported.

CRM gurus Dr Martha Rogers and Don Peppers say that practising good CRM means you need to develop a one-to-one learning relationship with each customer, over four stages:

• Identification
• Differentiation
• Interaction
• Interaction

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Causes of CRM Failure

Some of the causes of CRM failure are mentioned below:

• Mistaking CRM as the substitute for good marketing management
  
• Failure to appreciate the dynamic nature of marketing
  
• Inadequate appreciation of the potential of the customer database
  
• Failure to use brand intelligibly in the CRM programme
  
• Reluctance to measure customer satisfaction precisely
  
• Failure to follow up the feedback from the customers
  
• Reluctance to share the data on customers with all staff
  
• Ignoring the need for efficient, trained, well-motivated employees
  
• Some CRM programmes incur very high costs
  
• Failure to appreciate that the scope for CRM varies over businesses
  
• Failure to fit in the needed flexibility
  
• Poor planning affects business goals
  
• Resistance to Change
  
• Commitment from senior management

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How Can I Use CRM in My Business?

The table below displays the types of information you can collect with a CRM system, along with the questions that the information can help answer:

Type of Information	Questions
Customer profile	• Who are they? • Are they a business or a person? • Where are they located? • If they are a business, how big are they? • If they are a business, what do they do? • Why do they need your product? • How do they communicate with you? • Do they have an account? • How long have they been a customer?
Customer buying profile	• How often do they buy? • When do they buy? • Is there a pattern to their buying habits (e.g., seasonal)? • How much do they buy at one time? Overtime?
Customer buying preferences	• What do they buy? • Do they always buy the same thing? • Why do they buy it?
Customer service profile	• What kinds of problems/issues do they encounter? • What is the current status of their issues? • How many open tickets are there? • How many cases have been resolved?