Knowledge Management (KM) with focus on CRM


By

N. Priya
MBA, MPHIL
Lecturer
Shirdisai Engg. College
Bangalore
 


INTRODUCTION:

As Peter Drucker defined "Information is data endowed with relevance and purpose".

To effectively implement a CRM solution it is very important to identify real knowledge about different types of customers (Viz. Most valued customers, Most growable customers, Below zero customers) from plethora of internal and external data, figures, surveys, etc. A straightway technique is to create a data warehouse, thereafter information which is required to effectively implement principles of CRM, could be mined out of this data warehouse.

Marketing, sales after-sales people would be knowledge workers. Front office could be more productive if they could utilize customer knowledge. Knowledge Management (KM) is about embracing a diversity of knowledge resources, like legacy systems, existing data warehouses, portals, websites, customers, suppliers, partners, external marketing research agencies and cultivating the knowledge where it resides.

Metrics, ROI, Balance Scorecard method, benchmarking are some of the common technique of KM system evaluation. KM implementation is the key to CRM.

It's a proven fact that 80% of an organisation revenues come form 20% of its customers, it becomes imperative to design CRM solutions keeping in mind these most valuable customers and to leverage 80% non structured data of about 20% of these most valuable customers.

Just as more tangible corporate assets like computer systems have a finite shell life, so too does knowledge, it must be available at the right time to be able to act upon it. Retaining tacit knowledge (derived from experiences, data and documents) means retaining the individual, which is invariably not possible. It is possible to generate explicit knowledge from tacit knowledge, but it's a complex exercise. The key ingredient of this exchange is face to face sharing of knowledge or virtual environmental tools like Lotus Notes, which can facilitate tacit knowledge exchange. Hence for tacit knowledge exchange text mining is very useful and important. There are ways to do text mining, like search engines, web solutions, text analysis tools, etc. The key to successful customer KM is personalization, i.e. how to extract the knowledge that is pertinent to the user and translate it into a format that is easily understood. The choice of Customer Knowledge Management (CKM) architecture should have a layered approach. Existing systems should be seamlessly linked with the proposed layer. The choice for CKM system could be Web (Enterprise information portal) or a packaged solution such as Lotus Notes, Microsoft solution.

Role of CRM in the Context of SCM

In the context of SCM, where alliances and partnerships are keys to success, CRM plays an important role in building long-term relationships. Apart from the end-users, it involves internal employees, channel members and other external entities such as advertising agencies and consulting organisations. The success of relationships depends upon sharing of savings from the supply chain, which may be reinvested to further enhance its efficiency, and sustain the competitive advantage.

The supply chain of tomorrow will look like a virtual organisation, seamlessly integrated through sharing data and savings as well. The bonding between partners will be closely held by CRM practices.

ERP and CRM

Like ERP, CRM solutions focus on automating and improving business processes, albeit in front-office areas such as marketing, sales, customer service, and customer support. Whereas ERP implementation can result in improved organisational efficiency, CRM aims to provide organisational effectiveness by reducing sales cycle and selling cost, identifying markets and channels for expansion, and improving customer value, satisfaction, profitability, and retention. provides the backbone, resources and operational applications to make organisations more efficient in achieving these goals.

Consumer Life Time Value

Quantifying the "value" of customers is absolutely essential in regain management. In fact, the percentage of profit a company makes from continued sales to its own customer base is consistently higher than the profit made on original sale.. Each of the customers then delivers an income stream and the stream of profit far exceeds the value of original purchase. Income streams contribute cash flows in terms of years for any single product.

Regain Strategies:

  • Customization
  • Differentiation Strategies
  • Conclusions

    Relationship marketing is emerging as a new area of focus for service firms in India. But these are mainly based on some loyalty programs and investments in technology for enhancing the capability of databases. Managers should ensure that while investing in databases, technology, human resources and relationship marketing programs, attempts should also be made to develop milestones, which help them sustain these initiatives. These milestones become benchmarks against which future programs get evaluated. Measurement metrics get developed over a period of time when one starts collecting information about customers, their buying patterns, usage behavior, referrals, etc and start linking them to the marketing programs.  

    References

    * Gruen, T. W. (1997), 'Relationship Marketing: The Route to Marketing Efficiency and Effectiveness', Business Horizons, November December,

    * Sheth, J. N. and Parvatiyar, A. (1995) 'Relationship Marketing in Consumer Markets: Antecedents and Consequences', Journal of the Academy of Marketing Science

    * Jagdish And Sheth, Atul Parvatiyar, G Shainesh, 'CRM Emerging Concepts, Tools and Applications'

    Websites

    www.crmassist.com
    www.crmguru.com
    www.crmfoundation.com
     


    N. Priya
    MBA, MPHIL
    Lecturer
    Shirdisai Engg. College
    Bangalore
     

    Source: E-mail March 23, 2011

              

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