CRM in the Modern Organization

Wei-chung Chang
Department of Management Information System, National Chengchi University,
4F,No.30-1,Ln.315 , Sec 2, Shih-pai Rd, Taipei City 11267, Taiwan ROC
wcchang@nccu.edu.tw

Yuchau Cheng
Assistant Manager, WZC International Co., Ltd
4F, No.34, Ln.27, Sec.4, Jen-Ai Rd., Taipei City 106, TAIWAN ROC
pen0325@hotmail.com

ABSTRACT
With the changing in each generation, supply and demand in business behavior has
been adjusted nowadays and no longer as parallel as it used to be. The enterprises do
not merely lay their emphasis on their productions and qualities anymore. Instead, to
adopt the notion which satisfied their customers has become one of the trends as well
as rules at the moment. Besides this, with the development of information technology
and the application of modern management technique, the enterprises’ operation has
also becomes far more effective and accurate. Based on this transition, the idea of
conventional marketing would be improved. The enterprises do not focus on their
products and regard them as substance which are copied and produced on large scale,
but turn their concernment into the techniques of marketing and customer services.
The process that divers the key point from product toward customer is the main
reason that drives CRM (customer relationship management) crucial and being
utilized broadly.

This Study starts form searching and discussing the definition of CRM. Through the
describing of the relationship between CRM and RM (relationship marketing), one
can understand how the evolvement from the one to another. Right after that, two
cases are selected to be analyzed. A comparison of different approaches to CRM
implementation by these two organizations would be presented in the same section.
Following that, the key issues which are emerged from the analysis and the supported
recommendation would be discussed and proposed in the final paragraphs.

Keywords: CRM, RM, comparison of Cases

 WHAT IS CRM AND HOW IT HAS EVOLVED FORM RELATIONSHIP
MARKETING?
What is CRM? In order to understand that, the quickest way is to look up the
definitions from different references. Brent Frei, President and CEO, Onyx Software
presented the definition of CRM as follows ； ‘ It is a comprehensive set of processes
and technologies for managing the relationships with potential and current customers
and business partners across marketing, sales and service regardless of the
communication channel’(Greenberg ,2001, CRM at the Speed of Light).

From this definition, one can learn that CRM is a specialized subject which effects the
enterprises’ marketing, sales and service related to customers in different field
including potential customers, current customers and business partners. Surely, it is
insufficient to realize CRM completely by only studying one definition. Here is a
different one that quoted as below.

‘A business strategy to select and manage customers to optimize long-term value.

CRM required a customer-centric business philosophy and culture to support effective
marketing, sales and service processes. CRM applications can enable effective
Customer Relationship Management provided that an enterprise has the right
leadership, strategy and culture.’ (Robert Thompson, President, Front Line Solutions
Inc- from CIM Guru.com , Source: Greenberg, 2001, CRM at the Speed of Light)

Again, the president referred to marketing, sales and service processes as well in the
definition. Instead of “managing the relationships with customers”, this definition
attaches more importance on customer, and announces CRM required a “customer-
centric business philosophy and culture”. Furthermore, he regarded CRM as a
“business strategy” to “select” and manage customers to optimize “long-term value”.
One can associate this passage with many theories and notions related to CRM such
as Relationship Marketing, 80/20 Law and customer loyalty. In which of these related
notions, Relationship Marketing is especially be considered as a source of CRM.
“The practice of relationship marketing has been greatly facilitated by several
generations of customer relationship management software that allow tracking and
analyzing of each customer's preferences, activities, tastes, likes, dislikes, and
complaints. For example, an automobile manufacturer maintaining a database of when
and how repeat customers buy their products, the options they choose, the way they
finance the purchase etc., is in a powerful position to develop one-to-one marketing
offers and product benefits.”(http://en.wikipedia.org/wiki/Relationship_marketing)
‘Customer relationship management (CRM) is a comprehensive business and
marketing strategy that integrates technology, process and all business activities
around the customer’ (Anton 1996, Anton and Hoeck 2002, cited by Feinberg and
Kadam 2002) . This definition is the shortest one above all in this article, however, the
main ideas discussed in the previous paragraph are involved here. It is interesting to
notice that the definition emphasized the concept of “integration”. The definitions can
be formed as a figure. The main concept can be conceived more easily by seeing the
figure below.

Figure 1. the concept of CRM

The most important tool in executiveing CRM is information technology. Yet, IT is

only one of the assistant. CRM is neither equal to IT nor a software. Figure 2, the
CRM Pyramid, clearly explained this notion.

Figure 2. CRM Pyramid (Greenberg ,2001, CRM at the Speed of Light)

 A COMPARISON OF DIFFERENT APPROACHES TO CRM
IMPLEMENTATION BY DIFFERENT ORGANIZATION

Case one: Fubon Financial Holding Co., Ltd.

The first case which is selected is Fubon Financial Holding Co., Ltd. It belongs to
Fubon financial service group, which is one of the biggest financial service
corporations in Taiwan. Fubon Securities, Fubon Bank, and Fubon Life converted
their shares to Fubon Financial Holding Company at the same time when the holding
corporation was established in 2001. At the moment when it was first found, the
company faced a crucial challenge. Most of the business divisions lack of the strategy
of cross selling and incorrectly paid their attention on their products rather than
customers. Since customers’ data was scattered in each subsidiary, the company had
difficulty doing an integrate evaluation when they were doing marketing and
customer analysis. Each subsidiary did things in their own way and did not consult
with each other or even with the head office, so that the company lost their customers’
loyalty and profit rapidly.

For ensuring IT system supports their development of business effectively, the

company decided to set up a database warehouse for all of the information and
materials from customers. Based on this, the company adopted CRM system to
integrate varies communication channels and improve their marketing, sale and
services. The scheme included three integrations, which were customer information,
the processes of marketing and selling channel.

Case two: Citibank Taiwan (Citigroup)

As the time Citibank first entered in Taiwan, the local banks had been running there
for ages and had occupied superior positions. As a result, Citibank had no priority of
developing more branches at that moment. If Citigroup decided to open more
branches for attracting customers, they must invest a good deal of fortune and keep
losing profit. In the light of the difficult situation, Citibank Taiwan executed the
strategy of CRM instead. The analyst believed that the competitive capability of
branches in the financial industry decreased dramatically. What the customers wanted
was a bank who can offer their service anywhere and anytime. On the other hand,
compare with conventional banking services that have various channels, to establish a
call centre would be more suitable for the customers’ requirement and cheaper than
founding new branches. Based on these considerations, Citibank Taiwan originated
call centre in Taiwan and established the Internet services according to the marketing
research to supplement the defects of lacking branch. The intelligent services of the
call centre include 24-hour Citiphone Banking, 24-hour ATM Banking, and agency
receipting card bills at convenient stores etc.

Comparison
These two cases are all talk about financial industry. Both of them are one of the
biggest financial companies in Taiwan and adopt CRM and software successfully.
Their CRM schemes are all executed and advanced by their leaderships, who are
insightful and fully understand how to build a CRM system that suit their own
enterprise most. Additionally, to place importance on operating sophisticated
Information Technology is one of their distinguish features that makes the enterprise
successful. Although there are so many similarities between them, they still have
different plan while using CRM project. Owing to Fubon Financial Holding Co., Ltd.
have numerous branch where can do various business for customers, their CRM
emphases the importance on integrating point to point. By the agile commutation and
interchange, the customer can acquire more benefit. On the other hand, as Citibank do
not have many branches in Taiwan, the company then strengthens the function of call
centre in order to support this insufficiency.

A discussion of key issues found during our research

Citibank Taiwan (Citigroup) regards the services of call centre as a main
communicating channel. The customers can solve most of their problem and deal with
most of their business simply by making a phone call. Moreover, the centre integrates
the business of marketing, so that they can provide the information to the administrant
of the bank and offer a recommendation to the customers at the same time. The 24-
hour Citiphone Banking is a new route, which integrates each service functions. The
call centre not only provides the basic inquire about marketing, but also deal with a
fixed deposit and fund and foreign exchange etc., which become a whole new mode
of service that connects market and demand. Generally speaking, it would be a defect
for a bank which running their business without many branches. However, to one’s
surprise, the manipulation of integrating call centre and customer services centre has
been considered as a model which every bank imitates. As for the case of Fubon
Financial Holding Co., Ltd., the horizontal communication and interchange as well as
adopting of information technology make the enterprise successful. The corporation
with express delivery improves the operation of supply chain. Not only increase the
speed and efficiency, but also decrease the cost. Besides this, by the integrated
service, the accumulation and instruction of knowledge and experience become far
more convenient. The quality of service can be controlled in a certain level. It would
not be different even if the staff or division is changed.

It is not difficult to discover from these two cases that, no matter a young company
that has just entered the market or an old enterprise that has occupied the market for
ages, CRM strategy can be operated properly without problems and enhances the
business into the position of leadership. In addition, the marketing technique of
product orientation has replaced by customer orientation gradually, which means that
the market would be more and more customized. A financial service that offers their
customer 7 days for a week and 24 hours for a day would be a trend in the future.
How to run a 24 hours Banking Service in the condition that no capitalized cost added
or even to reduce the capitalized cost would be a great challenge to the enterprises.
For providing the customers’ requirement and surviving the competition, the
enterprises must adjust themselves to fit any changing of market constantly. As a
result, CRM strategy and IT software must be operated with a good flexibility.
Otherwise, the strategy would be fail and the enterprises would be fall in a risk of
losing profit or extinguishment.

Supported recommendations
There are many recommendations for who are considering CRM implementation.
Firstly, for the case of Fubon Financial Holding Co., Ltd., the company can strength
the function of call centre to achieve the cost saving. According to the internal
evaluation in Citibank, the average of cost for each customer in different business can
be formed as follows. The customer go to the branch would cost the bank NT$100,
using Citiphone banking cost NT$50, using ATM machine cost NT$20, use telephone
automatic system costNT$10 , use the Internet banking cost NT$5.
(http://www.hermes.com.cn/wmag/wmag36.htm ).

Based on this analysis, one can understand that the cost for the Internet banking for a
bank would be cheapest. However, the development of the Internet has not reached a
high level, the customers might not used to it or might not feel convenient to use it. It
turns out that telephone banking system becomes the most effective channel for both
the customer and enterprise with a high growing rate. Therefore, the one who are
considering saving the expense can refer to this technique. Secondly, Citibank Taiwan
is ought to increase some branches in the important locations. Since the telephone
banking and the Internet banking have the problems of security, the customers are still
used to deal the important business at the branch in person. Yet, compare with Fubon
Financial Holding Co., Ltd. Who have 121 branch, the services for eleven branches
for Citibank are far more less than the general bank. The customer would feel
convenient if there are branches located in some important positions. Thereafter, the
bank would receive more profit and increase more business from doing that.

Lastly, with the thriving of virtual approach, a call centre not only provides the
services for customers but become an integrated channel of communication, which the
customers rely on. However, since the database and systems are likely to be
centralized in a unitary place. The system would be destroyed or paralysis once the
centre encounters a natural disaster such as earthquake, tsunami, flood, typhoon and
an attack by terrorism. The China Trust Bank’s database and telephone system was
destroyed by a typhoon in the date 17th of Sep.2001.

From Citibank’s investigation, the cost of Internet banking for a bank is lower than
the other. Additionally, all of the Internet services are automatically. The service
would not be limited in a certain object, time and place. Also, the safety of dealing
business and the rate of popularization for using the Internet would be enhanced
gradually in the future. So the Internet banking would be developed rapidly soon. To
the financial industry that insists their quality of service, the similar disaster can be
avoided by dispersing or duplicating their important database and system. Thus, to
ensure the safety and completeness of their information and prevent the
communication route with the customers from breach would be the purpose for the
enterprise.

CONCLUSION
Nowadays, the competition of financial industry in Taiwan has become more and
more intense. With the opening of the market, the foreign financial enterprises would
take part in Taiwanese market gradually. The various new information and idea are
imported into this island and implemented by the industries. Although these two cases
are the one the author familiar with, the references are difficult to be found and
utilized in this country. There are great deal of related information can be searched
from looking up the Internet. Despite of some immature articles, one can not only
learn the great quantity of ideas and latest information but understanding the react by
the mass from the Internet. This study starts from discussing the definitions and
theory of CRM. Following the studying of the two cases, how the CRM strategies are
considered and operated in an enterprise become more practical and clear. Even if this
Study focuses the analysis of financial industry, with the support of software, CRM
strategy can be certainly applied to different enterprises and solve the diverse
problems for them.
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CASE
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