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By Shan L. Pan and Jae-Nam Lee

Applying detailedknowledge ofthe customerto a largerbusinessdomain.

USING E-CRM FOR A UNIFIEDVIEW OF THE CUSTOMER

What has changed is the new competitiveadvantage needed for managing customer rela-tionships online via the Internet. Companiesneed the ability to track and manage Internet-based e-commerce events that may demandimmediate, personalized response irrespectiveof conventional operating schedules. In partic-ular, most companies are confronted with anincreasingly sophisticated customer base thatdemands a higher level of immediate serviceacross multiple access channels. To satisfy cus-tomer needs, companies have to maintain con-sistency across all interaction channels (such asthe Internet, email, telephone, Web, fax, andso on) and across all areas of a company a cus-tomer interacts with (including sales, service,marketing, and other fields).

To overcome this challenge, many organi-zations are considering adopting the conceptof electronic Customer Relationship Manage-ment (e-CRM). This concept and practiceprovides the ability to capture, integrate, anddistribute data gained at the organization’sWeb site throughout the enterprise. In spite ofthe growing popularity, very little is knownabout this concept as a strategy as well as anenterprisewide application. Our goal is toenhance the existing knowledge of the e-CRM trend by providing useful guidelinesfor the efficient integration of e-CRM. Wedepart from the point of view that the key tosuccessfully managing customer relationshipslies in the ability to integrate existing CRMprocesses with e-CRM applications.

The emergence of e-commerce has changed many aspectsof existing businesses and generated new companies withnew business models, business opportunities, andprocesses. Existing companies are being challenged torethink the most basic business relationship—the onebetween an organization and its customers. Despite mediahype about the Internet changing the rules of engagementwith customers, it hasn’t changed the underlying fact thataddressing customers’ needs leads to sustainable profit.Specifically, e-commerce practice has not replaced theneed for human contact at key points in sales, marketing,and customer support.

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The Emergence of e-CRMIn order to fully understand how a unified view ofthe customer can be achieved through the strategicuse of e-CRM, we must make a distinction betweenthe terms CRM and e-CRM. We consider CRM anapproach or business strategy providing seamlessintegration of every area of business that touches the

customer—namely marketing, sales,customer service and field support—through integration of people,process, and technology. On the other

hand, taking advantage of the revolutionary impactof the Internet, e-CRM expands the traditionalCRM techniques by integrating technologies of newelectronic channels, such as Web,wireless, and voice technologies,and combines them with e-busi-ness applications into the overallenterprise CRM strategy. Inother words, what the traditionalCRM delivers can be consideredonly a fraction of an e-CRMsolution, as shown in Figure 1.

The traditional CRM has limi-tations in supporting outside mul-tichannel customer interactionsthat combine telephone, the Inter-net, email, fax, chat, and so on.Unlike the traditional CRM, thecurrent e-CRM solution (front-office suites) supports marketing,sales and service. Integrationbetween CRM systems and Enter-prise Resource Planning (ERP)systems is becoming more common [4]. The integra-tion of all channels across all areas in the company iscritical.

With the advancement of Web-based technology,market dynamics are driving companies to adopt

e-CRM. A fundamental motivator is the speed andunparalleled cost-effectiveness of the Internet are mak-ing the implementation of e-business possible and rel-atively cost-effective. Customer retention has replacedcost-effectiveness and cost-competitiveness as thegreatest concern of business executives today—it costsapproximately five to ten times more to acquire newcustomers than to retain established customers. It’sgoing to take more than Web interactions to keep thecustomer brand-loyal. Furthermore, over the last fewyears, the speed of change in the business arena,including deregulation, has also made rapid adoptionof new technologies and flexible business strategiesbasic requirements for businesses.

Organizations have reengineered many aspects oftheir businesses, automated their back-office proce-dures, streamlined their organizations, revised theirproduct or service offerings, and invested in market-ing activities. At the same time, they also face anincreasingly complex marketplace with a high degreeof competition and new entrants challenging for mar-ket share. With new channels (the use of Internet)and online and offline markets becoming increasinglyavailable, technological advances have also opened upa new world of e-business opportuni-ties. As a result of these changesoccurring, customers are betterinformed, more demanding, andlikely to be less loyal as their expecta-

tions are increasing faster than businesses (traditionalas well Internet-based) can deliver.

Customers of e-businesses are making the mostimpact as they are given more product or serviceoptions while the cost of switching has been reduced

CustomerData

CRM

Data Warehouse- Customer Information- Transaction History- Products Information

Transaction Analysis- Customer Profile- Past Transaction History

Target Marketing- Static Service- One-way Service- Time and Space Limits

WebHouse- Customer Information- Transaction History- Products Information- Click Stream- Contents Information

Transaction Analysis- Customer Profile- Past Transaction History

Activity Analysis- Exploratory Activities (Navigation, shopping cart, shopping pattern, etc.)

1-to-1 Marketing- Real Time Service- Two-way Service- At Any Time- From Anywhere

e-CRM

Analysis ofCustomer

Characteristics

CustomerService

Figure 1. Thedifferencesbetween CRM and e-CRM.

Figure 2. The conceptual

relationship among key e-CRM

applications.

InformationIntegrationApplication

CustomerAnalysis

Application

CampaignManagementApplication

Real-TimeDecision

Application

PersonalizedMessaging

Application

ContactHistory

CustomerProfile

TransactionHistory

AccountHistory

ExternalData

AnalyticalIntegration

MarketingDataMart

Reporting

CampaignOperation

CampaignManagement

Data Mining

Direct Mail

Email

Internet

Phone/Fax

ContactManagement

Ad hocAnalysis

Reporting

Outbound

Inbound

Sales Force

Services

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drastically with competitors only a mouse-click away[1]. It was estimated by Forrester Research that B2Ce-commerce in the U.S. will grow from $38.8 billionin 2000 to 184.5 billion in 2004 [5]. With the avail-ability of the Internet, unprecedented opportunitiesare now available for building sales and increasing rev-enue streams by expanding geographic scope, reduc-ing operating costs, improving procurement,productivity, and supply chain efficiency.

The final driver is the application of real-time and

interactive customer interactionchannels such as the Web, email,ATMs, call centers, and wireless

devices to the customers’ nonelectronic activity intoday’s fast-changing business environment. In particu-lar, wireless technology has emerged as a new channelfor accessing the Internet and will have a large effect oncustomer interaction.

Key Applications of e-CRMCompanies understand that e-CRM has significantpotential, but they face the challenge of building therequired technology infrastructure quickly and cost-effectively. An easily predictable reaction is to buyoff-the-shelf applications, cobble together a databaseof Web traffic and online purchase information, andlaunch an e-CRM initiative [2].

One of the fundamental requirements of a success-ful e-CRM solution is the challenge of consolidatingall customer-related information into a single view[7]. In order to achieve this, it is necessary to create amultichannel input stream that can take informationfrom any of the recognized customer interfaces anduse it to populate the single view. It could then facili-tate the sharing of information between channels andmeaningful cross-channel dialogue with customers.This forms the basis for intelligent handling of future

customer interactions and enables the creation of per-sonalized service offerings.

Moreover, e-CRM can enable companies of all sizesand across all industries to offer one-to-one relation-ships to customers. E-CRM applications have thepower to create an enormous amount of value byallowing companies to collect, organize, and dissemi-nate a wealth of customer information. The e-CRMconcept is designed to understand who the customersare and the products that are of interest to them—only then is it possible to provide them with the prod-ucts and services they want. A more sound approachis to install a comprehensive software platform of thefollowing five applications that together enable the e-CRM business process (see Figure 2). Equipped withsuch infrastructure, companies can continually createsignificant customer value, automating the “who,what, when, where, and how” of sales and marketing.

The information integration application consolidatescustomer data and information from differentsources—transactional systems, call centers, Web sites,and ERP systems—into integrated customer-centricinformation. This application allows companies toidentify and respond in a timely manner and accu-rately to their customers whether customers purchaseproducts through a physical store, a call center, or aWeb site. For the most part, an incomplete view ofcustomers reduces their loyalty and trust [3, 6]. Devel-oping an information integration application requiresmultiple data models and database architectures forintegration with other back-end information systems.Since the application is dynamic, producing entitiesthat have to keep up with every customer’s interactionwith the company, the speed and accuracy is crucial forenabling a true value exchange with customers.

The customer analysis application measures, pre-dicts, and interprets customer behaviors, enablingcompanies to understand the effectiveness of e-CRMefforts across both inbound and outbound channels.The integrated customer information is used to builda business campaign strategy and assess results. It alsobuilds predictive models to identify the customersmost likely to perform a particular activity such aspurchase an upgrade from the company. This segmentselection process improves response rates and cam-paign effectiveness and lowers campaign costs byreducing the size of the original target segment. Gen-erally, there are three major types of customer analysisapplications: online analytical processing, data min-ing, and statistics.

The campaign management application uses the datawarehouse to plan and execute multiple, highly tar-geted campaigns over time, using triggers that respondto timed events and customer behavior. For example, a

Identify all existingCRM processes within

the organization

Formulate an e-CRMvision and strategy

Secure top management support

Refinement

Refinement

Feedback

Choose appropriatetechnology partners

Evaluate current IS andCreate new metrics

Step 1

Step 2

Step 3

Step 4

Step 5

Figure 3. Managementsteps for e-CRM.

retail campaign may present a high-profit customerwith a birthday gift or send an email message promot-ing various specials if the customer has been silent forseveral months. Furthermore, because customers areincreasingly reachable through diverse communica-tion channels, successful e-CRM requires an applica-tion that reaches customers wherever they are located:at home, at work, or while traveling. Hence, this appli-cation enables the integration of multichannel com-munications with individual customers, and in turnincreases the likelihood of customer retention withhigher customer switching costs.

The real-time decision application coordinates andsynchronizes communications across disparate cus-tomer touch-point systems. It contains business intel-ligence to determine and communicate the mostappropriate message, offer, and channel delivery inreal time, and support two-way dialogue with the cus-tomer. Hence, an effective real-time decision applica-tion promotes information exchange between thecompany and every customer. Generally, to gain con-fidence in their product purchases, customers willinteract with several vendors to get relevant informa-tion, conduct comparative analysis, and then decidewhich products to buy. In this case, a real-time deci-sion application effectively provides appropriatevalue-added features and functionality. It is achievedby integrating with the four other applications.

The personalized messaging application deliverseither text or HTML pages, scaled to support veryhigh volumes, using an automated mechanism toanswer responses and drive recipients to Web pagesthrough traceable URLs embedded within messages.For example, a company might include three trace-able URLs within a particular email message and beable to monitor success at driving an individual cus-tomer or prospect to one, two, or all three sites, andin which order. Since personalized attention and ser-vice were labor-intensive with high costs, most com-panies provide personalized attention to a smallnumber of selected customers. But recent technologymakes it possible to personalize products and servicesfor a large number of customers in a cost-effectivemanner. To achieve one-to-one service, it builds cus-tomer profiles and enables customized product andservice offerings based on the information integrationapplication. The approach of this application can beclassified into three major categories: rules-based, col-laborative filtering, and inference model [4].

To reap maximum benefits of e-CRM systemimplementation, integration is needed between front-office applications such as office productivity applica-tions (including word processors or spreadsheets) andback-office applications such as database manage-

ment, ERP systems, mail servers, fax servers, helpdesk systems, and so forth. Other needs include hav-ing e-CRM integrated with the company’s portal site,intranet, and extranet. In addition to integration withWeb-based technologies, part of the overall e-CRMsolution can include a wide variety of telephonyequipment to receive and manage inbound and out-bound calls, automatic call distributors, interactivevoice response systems, predictive dialers, faxmachines, and paging systems.

Management Steps for e-CRM Integration Managerially, if one is not careful, e-CRM projectscan encounter one of the following problems:

• Strong vendor offerings exist within the broadCRM categories of sales, service, and marketing.CRM evolved with different vendors carving outtheir own niches in complete isolation from eachother;

• Initial CRM efforts were hampered by the lack ofa single view of the customer and have resulted ina separate and uncoordinated customer-interac-tion environment. Many CRM offerings willyield only tactical improvements; and

• Lack of a single customer-centric data warehousehas caused any addition of more customer touchpoints to worsen the problem.

To overcome the problems identified, we have somerecommendations for organizations considering imple-menting e-CRM or are already managing e-CRM. Thefollowing five management steps are needed for effec-tive e-CRM implementation (see Figure 3).

Identify the existing CRM processes within theorganization, both online and offline. Knowledgeof these detailed business processes is important, as itwill provide answers to what specific business benefitsare sought from the customer relationship manage-ment strategy. When conducting an audit to under-stand some of the existing CRM processes, it is crucialthat the implementing organization takes a customer’sview rather than a marketer’s perspective.

Formulate an e-CRM vision and strategy. Thesecond step is to formulate an overall e-CRM vision.To do this, it is important to establish an e-CRMstrategy and its specific objectives. These objectivesare best generated and built upon the existing CRMprocesses. A well-articulated strategy providesunequivocal direction to employees selecting anddeploying e-CRM applications.

Secure top management support. After existingCRM processes are identified and an e-CRM vision

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and strategy is formulated, the next step is to securetop management support for this project. Executivesponsorship helps the project to have higher visibilityand buy-in across all departments and functionalities.While most recognized the importance of securingtop management’s support in major information tech-nology projects including e-CRM, there is no single,effective approach. Every organization has its own ITculture and must custom tailor a strategy for sponsor-ship from top management according to its own cir-cumstances. Top management can act as a projectsponsor as well as a project champion in the imple-mentation process of e-CRM.

Choose appropriate technology partners. With somany e-CRM vendors in the marketplace offering var-ious capabilities in their products and services, choos-ing the best technology partner becomes an importantchallenge for organizations implementing e-CRM.This is difficult as some of the vendors provide excel-lent product capabilities including flexibility in theirapplications, customizability, and scalability. Thus, toselect the right e-CRM vendor requires staying focusedon the company’s business objectives and carefullyscreening product offerings using those criteria thatbest match the business processes and overall e-CRMvision of the organization.

Evaluate current information systems and createnew mechanisms and metrics to monitor andimprove the process. Once the vendor has been deter-mined, the organization needs to evaluate currentinformation systems to decide whether a new systemis required. Some of the questions to ask include: dothey each fit in with your overall e-CRM strategy?Identify critical areas that require immediate attentionand plan to replace any systems that don’t fit. Fur-thermore, to more completely understand current sys-tems the information flows between front- andback-office applications should be assessed. On theother hand, developing new performance measures isa necessary condition not only to speed adoption andincrease overall return on investment, but also tocheck the performance of the customer relationshipmanagement and improve it.

Provision of the Next Step We recognize that e-CRM is not the single answer toattracting and retaining customers, nor are e-cus-tomers the only valuable customers. The Internet isnot the only point of contact with customers; somecustomers still prefer the telephone or face-to-facecommunications. Customers should not be seg-mented based on the assumption they will predomi-nantly choose the one point of contact with yourbusiness. Customers will require multiple points of

contact such as Web sites, contact centers, salespeo-ple, and so on. They will expect a consistent experi-ence from one contact point to another. Therefore,the next step of the e-CRM application is actuallyintegration with other points of contact, leading to asingle view of the multichannel interactions includ-ing internal personnel as well as external customers.

To build e-CRM applications effectively, organiza-tions should execute their implementation in phases,as this scenario provides several advantages. A funda-mental advantage of breaking down the implementa-tion into sizeable phases is that the entire endeavor ismade much more manageable both in terms of com-plexity and costs. Another advantage is that thisarrangement allows the effect of the e-CRM initiativeto be demonstrated phase-by-phase so that appropri-ate analysis and subsequent fine-tuning can be per-formed for subsequent phases. Finally, there exists amyriad of e-CRM systems offered by different appli-cation vendors. A major consideration in decidingwhich e-CRM system to adopt depends largely on thecompatibility of the system with the existing businessprocesses, software, and hardware infrastructure in theenterprise.

Web-based CRM applications provide integratedmarketing, sales, e-commerce, and customer supportservices to the enterprise through a single, customizedWeb interface. To be truly effective, an e-CRM infra-structure must provide internal personnel with a sin-gle view of the customer, regardless of how they areinteracting with the company and which e-CRMapplications they are using.

References1. Business Week. The “click here” economy. (June 22, 1998). 2. Coopee, T. E-CRM calls customer king. InforWorld 22, 26 (June 26,

2000). 3. Keen, P.G.W. E-CRM: The new ERP. Computerworld 34, 28 (July 10,

2000). 4. Kraft, K. Loyalty on the line. Intelligent Enterprise 3, 17 (2000).5. LaRow, M. The five engines of e-CRM. Computer Technology Review,

(Aug. 2000). 6. Riggins, F.J. and Rhee, H.S. Toward a unified view of electronic com-

merce. Commun. ACM 41, 10 (Oct. 1998). 7. Storey, V.C., Straub, D.W., Stewart, K.A., and Welke, R.J. A conceptual

investigation of the e-commerce industry. Commun. ACM 43, 7 (July2000).

Shan L. Pan (pansl@comp.nus.edu.sg) is an assistant professor inthe Department of Information Systems of School of Computing at theNational University of Singapore.Jae-Nam Lee (isjnlee@cityu.edu.hk) is an assistant professor in theDepartment of Information Systems at the City University of HongKong.

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