What is E-CRM?
E-CRM stands for Electronic Customer Relationship Management, which refers to the use of digital technologies to manage and enhance a company’s interactions with its customers. E-CRM aims to improve customer satisfaction and loyalty by providing personalized and timely services through various digital channels, such as email, chat, social media, and mobile devices.
E-CRM is based on the principles of traditional CRM, which focuses on building and maintaining long-term relationships with customers by understanding their needs, preferences, and behaviors. However, E-CRM expands the scope of CRM by leveraging the power of digital technologies to create more efficient and effective communication and collaboration between businesses and customers.
Before delving deeper into E-CRM, it is important to have a clear understanding of what CRM is.
Table of Content
What is Customer Relationship Management (CRM)?
Customer Relationship Management (CRM) refers to the practices, strategies, and technologies used by businesses to manage their interactions with customers and improve customer satisfaction and loyalty.
CRM involves collecting and analyzing customer data to gain insights into their needs, preferences, and behavior, and using this information to personalize marketing, sales, and customer service interactions. By leveraging CRM, businesses can provide a seamless and consistent customer experience across multiple touchpoints, such as email, phone, social media, and in-person interactions.
Organizations adopt the Customer Relationship Management (CRM) program as a strategic, growth-oriented program to build one-to-one relationships with customers so that they become long-term and loyal customers.
The fundamental need for CRM is based on the following three paradigms:
- It costs less to keep an existing customer than to acquire a new one.
- It is easier and more profitable for a company to sell to a satisfied customer.
- Some customers tend to be more valuable than others.
The main purpose of CRM is to emphasize the cooperative and collaborative relationship between an organization and its customers. CRM enables better customer service by combining all the interactions with customers into one integrated unified interaction. Hence, CRM provides benefits to both the organizations and their customers, as shown in Table:
| Organizations | Customers |
|---|---|
| Can build profitable relationships by taking advantage of customer interactions | Interact with organizations directly to specify preferences and convey grievances |
| Access customer information easily | Remain well-informed owing to focussed marketing efforts |
| Identify new opportunities | Achieve better coordination and cooperation with sales executives |
| Evaluate performance and business metrics | Receive administrative support for any issue related to products or their delivery |
| Identify the potential issues in business processes and improve them | |
| Modify the system to integrate it with customer preferences |
CRM Approaches
Operational CRM
This approach allows a smooth integration of the customer interface with back-office transactions. It provides automated support to front-office business processes, such as sales, marketing, and customer service.
Analytical CRM
- This approach allows an organization to analyze its relationship with customers based on data from a data warehouse.
- It analyses the data gathered as part of operational CRM or other sources to identify the means for enhancing the company’s relationship with its clients.
Collaborative CRM
- This approach enables an organization to work closely with selected customers, suppliers, and business partners.
- It focuses on interaction with customers through personal contact, letter fox, phone, or email.
CRM Process Framework
CRM process framework refers to the decisions taken by an organization for initiating relationship-building activities with a single customer or a specific group of customers to develop long-term cooperative or collaborative relationships.
Social CRM is a new component of CRM. It is conducted by communicating with customers via social networking sites, such as Facebook, Twitter, and LinkedIn. Instead of only dealing with data and information as is done in CRM, social CRM enables organizations to engage customers in conversations and relationships.
Social media enables marketers to search, track and evaluate conversations on the web about their brands. On social media sites, users express their opinions about brands, organizations, and customer service. This information is disseminated among other members via social media sites. Marketers can use this information to get a realistic picture of the organization, enabling them to direct their activities toward ensuring increased customer satisfaction.
E-customer Relationship Management (E-CRM)
CRM activities in an organization focus on establishing, developing, and maintaining successful one-to-one relationships with customers. When CRM activities are conducted using web technologies, such as e-mail, chat rooms, and social media networking, they are referred to as e-CRM. It is also known as web-enabled or web-based CRM.
e-CRM refers to the use of information technology in building and retaining relationships with customers. It integrates web applications, such as e-mails, chat rooms, and e-forums into the enterprise CRM strategy. It allows customers to directly interact with organizations, which helps in maximizing customer satisfaction, loyalty, and profitability of the organization.
e-CRM is an extension of traditional CRM techniques and integrates electronic channels with traditional CRM. This helps organizations to operate in real-time and respond promptly to customers’ inquiries. Since the interactions are transparent, organizations can analyze customer behavior and measure the success of activities.
E-CRM System
All activities in an e-CRM system revolve around customer selection, acquisition, retention, and extension.
Customer Selection
- Who to target?
- What value do these customers bring to your objectives?
- Where do we find these customers?
Customer Acquisition
- Focus on the right segments and target them
- Minimise acquisition costs
- Prioritise customer relationships and service quality
- Approach appropriate platforms
Customer Retention
- Know customers’ needs individually to develop a good e-CRM strategy
- Offer value continuously to retain online interest and improve customer relationship
- Focus on delivering unsurpassed service quality
- Choose the right channels for your strategy
Customer Extension
- Recognize the customer’s interests
- “Cross-sell” to customers by persuading them to buy additional products
- “Upsell” to customers by persuading them to upgrade their purchase
- Provide good service quality
- Use appropriate platforms to expand the customer base
Benefits of E-CRM
e-CRM reinforces customer relationships by automating sales, marketing, customer support, and quality control processes across an organization. The various benefits of e-CRM are as follows:
- It reduces customer acquisition costs. For example, customized e-mails reduce the costs of direct mail sent to customers in bulk.
- It provides a source of information for marketing intelligence.
- It enhances customer service, as customers make inquiries through multiple channels and contact points in e-CRM.
Limitations of E-CRM
Despite all the benefits that e-CRM offers, it can be a challenge to provide consistent and timely customer service when customers make inquiries through multiple channels and contact points. This leads to some disadvantages in the use of e-CRM.
Organizations using e-CRM may encounter the following problems:
- It can be a challenge to design an e-CRM structure to integrate it with an existing or older system.
- To create an e-CRM platform for customer contact, organizations need different tools to implement the platform.
- It is difficult to ensure the optimal performance of the system against the expected outcomes.
- To manage workflow in e-CRM, there is a need for continuous technical knowledge, which leads to training costs for employees.
- It might be expensive to update the system with continuous development and evolution in e-CRM technology.
Working of E-CRM
The working of an e-CRM system involves two types of activities:
- Primary Activities: These are customer-centric and include customer acquisition, retention, and expansion.
- Supportive Activities: These are more CRM-related. Primary activities might need some supportive activities, such as channel integration and information management.
Information management in e-CRM involves the creation of a customer database based on the following information:
- Of the customer
- For the customer
- Provided by the customer
Components of the E-CRM Framework
The common components of an e-CRM framework are displayed.
- Strategy Formation
- Multiple Channel Integration Activity
- Information Management Activity
- Customer Acquisition
- Customer Retention
- Customer Expansion
Strategy Formation
To make the existing strategies custom-er-centric, organizations need to identify their key capabilities and the different ways in which they can offer value to their customers. e-CRM enables organizations to have one-to-one relationships with their customers, satisfy their expectations and solve their problems. In such ways, strategy formation is related to the integration of business and customer strategies.
Multiple Channel Integration Activity
A major challenge of e-CRM is to develop an integrated strategy for the existing channels as well as new, web-based ones to improve customer relationships. Multiple channel integration should:
- Provide integration to all channels
- Get integrated into the customer base
Information Management Activity
Organizations use e-CRM to collect customer data from all points of contact. Thereafter, they use a database to create an updated and comprehensive profile of customers. This enhances the quality of interaction with customers.
Customer Acquisition
e-CRM enables customer acquisition through the web by converting website visitors into customers.
Customer Retention
Organizations use customer retention strategies to effectively maximize their return on investments in customer acquisition. Customer acquisition requires more investment than customer retention. Therefore, organizations find methods to extend the duration of their relationships with customers, focusing on the most profitable ones.
Customer Expansion
In several organizations, the most valuable customers actively participate in two-way interactions through e-CRM. Moreover, companies expand their existing customer base through ‘word-of-mouth’ marketing. Feedback or reviews from existing customers increase the customer base. This also helps organizations to introduce new products, enhance business processes and meet customer needs through e-CRM.
Implementing E-CRM
To implement e-CRM successfully, three factors are necessary. Let us now study these factors in detail.
Process Appropriateness
The processes in an organization should support e-CRM technology. To evaluate the appropriateness of a process, the organizations can consider the following criteria:
- Communication (frequency, volume, style, medium, and purpose) between the organization and customers in the system
- The ability of the process to link to different geographical regions
- Personalization of the customer service ability of the process
- The problem-solving ability of the process
Customer Information Quality
While implementing e-CRM, the organizations assess the quality of customer information based on certain parameters. These include honesty, output timeliness, applicability, reliability, awareness, completeness, and relatedness of the processed information. Organizations can use the following methods to evaluate customer information quality:
- Database Management System (DBMS)
- Information effectiveness
- Proper classification of information
- Predicting customer needs
Technology System
The organizations can evaluate the technology system for e-CRM based on the functional specifications of the system, such as:
- Resource exploitation
- Resource reliability
- Response time
- User-friendliness
- Data Accuracy
- Data reliability
- Comprehensiveness
- User contact ability
- Documentation quality and ability
Together, these factors support each other to ensure a successful e-CRM implementation in organizations.
Vendor Solutions in E-CRM
e-CRM solutions are designed and developed to enhance customer satisfaction, improve customer loyalty and increase profitability. Customers prefer simple, straightforward, honest, and consistent interaction with the organization. Considering this, user-friendly vendor solutions can be categorized into three types.
Let us now discuss these three vendor solutions in detail.
- Customer-facing CRM Applications
- Customer-touching CRM Applications
- Customer-centric CRM Applications
Customer-facing CRM Applications
In this category, customers directly use applications to interact with the organization. These e-CRM applications help in automating information flow along with supporting the employees in sales and service. One such application is the Interactive Voice Response (IVR) system. This is an automated telephony system that uses a computer to interact with customers for acquiring information and route calls to appropriate personnel.
This system can respond to users with pre-recorded or dynamically generated audio responses to guide them on how to proceed further. An IVR system uses a combination of voice and keypad input selection to provide appropriate responses in the form of voice mails, fax, telephonic conversations, or e-mails.
Customer-touching CRM Applications
In this category, customers interact directly with an application. They use interactive computer programs to find solutions, rather than interact with people in the organization. These include self-service activities, such as Frequently Asked Questions (FAQs), personalized web pages, and e-mails.
Customer-centric CRM Applications
These applications are also referred to as CRM analytics. They use Business Intelligence (BI), such as data mining and online analytic processing, to evaluate and gain insights into their customers, products, markets, and operations. For example, data warehousing, mining, and reporting help organizations in achieving one-on-one targeting of customers and delivering personalized deals to increase sales and improve customer relationships.
Metrics for Evaluating E-CRM
To evaluate the success of e-CRM implementation, an organization can use certain criteria based on customer satisfaction and operational performance. However, it is difficult to evaluate tangible returns on resources extended to plan, develop, implement, and operate e-CRM. Therefore, the organizations assess the intangible benefits of e-CRM.
- Customer loyalty
- Customer Acquisition and Retention
- Channel Management
- Operational Excellence
- Service Quality
- Value Enhancement
- Effectiveness of Processes
- Innovation of Operation
- Service Improvement
- Competitiveness
- Trust
- Efficiency
To evaluate an organization’s financial performance, the most important criteria are:
- Cost reduction
- Increase in revenues
- Value of stock
In traditional models, customer satisfaction is assessed through surveys or grievances and complaints registration systems. Nowadays, web technologies used in e-CRM enable organizations to get prompt feedback after an interaction, in minimum time. Customer satisfaction leads to customer loyalty, which is another criterion for evaluating the success of e-CRM.
To assess the success of e-CRM, organizations need an evaluation tool that can assess both tangible and intangible elements. e-CRM metrics follow the principle of a cause-and-effect relationship between e-CRM activities and their effect on business objectives. The steps for evaluating e-CRM are as follows:
- Determine the objectives and goals of CRM.
- Find inter-relationships between CRM activities and business goals.
- Analyze the outcomes of the inter-relationships to identify the effectiveness of CRM.
- Decide perspectives and metrics in the evaluation method based on the customer-centric evaluation.
- Analyze the effectiveness of CRM based on the evaluation results.
Quite often, many organizations consider the implementation of e-CRM an expensive investment project. Hence, it is important to evaluate the actual effectiveness of e-CRM as a function of customer satisfaction. This can be done by evaluating the organization’s CRM objectives against the changes brought about by e-CRM.
