The value creation process in customer relationship management payne

the value creation process in customer relationship management payne

Adrian Payne & Pennie Frow To develop a process-based conceptual framework for CRM .. value creation process) is well developed in the marketing. Cover for Customer Relationship Management The book backs up these five processes - strategy development, value creation, channel and media integration . An explanation on how CRM can be applied within the companies through CRM such as the strategy development process, value creation.

Academy of Marketing Conference, Cardiff, July The Role of the Value Proposition. Academy of Marketing ConferenceLiverpool, July A Typology and Conceptual Framework. A Service Profit Chain Perspective. Academy of Marketing Conference,Coventry, July Designing collaboration within a service system. A Framework for Collaborative Engagement. Towards a Conceptual Model. Evolution, Development and Application in Marketing.

The Role of Value Propositions. Re-examining our Mental Models. Otago Forum 2, Otago, 9 December Extending the value proposition in the context of stakeholders and service dominant logic. Diagnosing the Brand Relationship Experience. Payne A CRM strategy: Payne A Customer relationship management - from strategy to implementation: Payne A CRM and multi-channel integration challenge. Relationship Marketing Colloquium, Kaiserslauten.

Institute of Logistics Convention, Birmingham. Extensions to the Six Markets Model. Australian and New Zealand Marketing Academy. The Marketing Book - 7th Edition, Routledge, p.

Addressing the Dark Side.

the value creation process in customer relationship management payne

Baker M, Hart S ed. Achieving Excellence in Customer Management. Payne A Relationship marketing. To identify alternative perspec- strategicviewpoint, CRM is notsimplyan IT solutionthat tivesofCRM, we considered definitions anddescriptions of is used to acquireand growa customer base; it involvesa CRM froma rangeof sources,whichwe summarize in the of profoundsynthesis strategic vision; a corporateunder- Appendix. We excludedother,similardefinitions fromthis standing of the nature of customer value in a multichannel list.

For thisreason,we willbenefitfromadoptinga relevantstrategic CRM defini- reviewthedefinitions intheAppendixwithspecialattention tionfortheirfirmandensuring itsconsistent use throughout to theiremphasison technology.

What is Value Chain? Value Chain Definition, its Management and Analysis - AIMS Lecture

We examinedtheCRM litera- Perspective rowly and tacticallyas a particulartechnology solution, ture,synthesized aspectsof the variousdefinitions intoa wide-ranging technology; and customercentric. Theseper- draftdefinition, andthentesteditwithpracticing managers.

As ourresearchprogressed, we wentthrough severalitera- One organizationwe interviewed, which spentmore tions. At this extreme, CRM is definednarrowly and tacticallyas a par- CRMis a strategic approach thatis concerned withcreat- ingimproved shareholder valuethrough thedevelopment ticulartechnologysolution e. We call ofappropriate relationshipswithkeycustomers andcus- thisCRM "Perspective 1.

Kutnerand Crippsthoughsomewhatbroader,also marketing strategiesandIT tocreate profitable, long-term fallintothiscategory.

the value creation process in customer relationship management payne

In anotherorganization thatwe interviewed, the term CRM provides enhanced opportunities to use dataand CRM was used to referto a wide range of customer- information to bothunderstand customers andcocreate orientedIT and Internetsolutions,reflecting Stone and valuewiththem. Thisrequires a cross-functionalintegra- Woodcock's definition.

Thisrepresented CRM "Per- tionofprocesses, people,operations,andmarketing capa- bilitiesthatis enabledthrough information, technology, spective2," a pointnearthemiddleofthecontinuum. For example, Sue and Morinp.

Kale supports thisviewand develops a "basic model, which contains a set of 7 basic arguesthata criticalaspectofCRM involvesidentifying all a databaseof customer strategicprocesses that take place between an enterprise components: To addressthischallengeof adoptinga thedatabase;giventheanalyses,decisionsaboutwhichcus- freshapproachto CRM processes,we aimedto identify tomersto target;toolsfortargeting thecustomers; how to the build relationships withthe targetedcustomers;privacy keygenericprocesses relevantto CRM.

We examinedtheliterature to identify crite- issues;and metricsformeasuring thesuccessof theCRM appropriate ria forprocessselectionbutfoundlittleworkin thisarea, program. This gap in the by Srivastava, literature vani,andFahey ,whoestablishfourprocessselection suggeststhatthereis a needfora new systematic criteriaformarketing andbusinessprocesses. We chosetheir process-basedCRM strategy framework. Synthesisof the workas a starting diverseconceptsin theliterature on CRM and relationship pointforthe identification of process selectioncriteriaforCRM.

The criteriatheseauthorspro- marketing intoa single,process-basedframework should providepracticalinsights to helpcompaniesachievegreater pose are as follows: First,theprocessesshouldcomprisea smallsetthataddressestaskscriticalto theachievement of successwithCRM strategy development andimplementation. Second,each processshouldcon- tributeto the value creationprocess. Third,each process Interaction Research shouldbe ata strategic ormacrolevel. Fourth, theprocesses Conceptualframeworks and theoryare typicallybased on needto manifest clearinterrelationships.

In thisresearch,we integrated a a panelof 34 highlyexperienced CRM practitioners, all of synthesisof the literaturewithlearningfromfield-based whomhadextensive experience in theCRM andIT sectors. The and representation international experience managersfrom sourcesforthesefield-based insights,whichincludeexecu- nine countriesattended;most of themhad international tivesprimarily fromlarge enterprises in the business-to- experienceand academicqualifications degreeor equiva- businessand business-to-consumer sectors,includedthe lent.

In the firstpartof theworkshop, which involvedsmall following: However,theyalso proposed andIT rolesincompanies inthefinancial services sector; two further criteria: First,each processshouldbe cross- 'Interviewswithsixexecutives fromlargeCRMvendors and functional in nature,and second,each processwould be with five executivesfromthreeCRM and strategy consideredby experienced practitionersas beingbothlogi- consultancies; cal andbeneficialto understanding anddevelopingstrategic 'Individualandgroupdiscussions withCRM,marketing, and CRM activities.

the value creation process in customer relationship management payne

Thisviewwas supported bothbythe globaltelecommunications and globallogistics. Six work- seniorexecutiveswe interviewed shopswereheldineachcompany. We thendis- Our literaturereviewfoundthatfewCRM frameworks cussed these tentativeprocesses interactively with the exist;thosethatdid werenotbased on a process-oriented groupsofexecutives.

Professor Adrian Payne

We thenused theexpertpanel of experienced CRM executives whohad assistedin thedevel- StrategyDevelopmentProcess This processrequiresa dual focus on the organization's opmentof the processselectionschemato nominatethe businessstrategyand its customerstrategy.

How well the CRM processesthattheyconsidered important andto agree two interrelate affectsthe success of its fundamentally on thosethatwerethemostrelevantand generic.

The businessstrategy processcan standing commencewitha reviewor articulation of a company's As a resultof thisinteractive method,fiveCRM pro- cessesthatmettheselectioncriteria wereidentified; all five vision, especiallyas it relatesto CRM e. Next, the industryand competitiveenvironment were agreedon as important genericprocessesby more should be reviewed. Subse- of theseas key Porter shouldbe augmented by morecontemporary quently,we receivedstrongconfirmation Christensen; Slaterand Olson approaches e.

Customer Strategy We thenincorporated thesefivekeygenericCRM pro- Thisinitial Whereasbusinessstrategy is usuallytheresponsibility of cessesintoa preliminary conceptualframework. AlthoughCRM requiresa cross- functionalapproach,it is oftenvestedin functionally based previouslynoted companies and executivesfromthree Whendifferent CRM consultingfirms.

Participantsat severalacademic roles,includingIT and marketing. Withevolvingversionsof theframework, we combineda Customerstrategy involvesexaminingtheexistingand synthesis of relevant literaturewith field-based interactions potentialcustomer base andidentifying whichformsofseg- the involving groups.

The framework went through a con- mentation are mostappropriate.

the value creation process in customer relationship management payne

This involves Thisconceptualframework illustratestheinteractive set decisionsaboutwhether a macro,micro,or one-to-one seg- of strategicprocesses thatcommenceswith a detailed mentation is approach appropriate Rubin The conceptthatcompetitive advan- ties and the fundamental economiccharacteristics of the tage stems from the creation of value forthe customer and Internetcan enable a muchdeeperlevel of segmentation forthe businessand associatedcocreationactivities the thanis affordable in mostotherchannels e.

In summary, thestrategy literature. For largecompanies,CRM activitywill involve processinvolvesa detailedassessment ofbusi- development collectingand intelligently usingcustomerand otherrele- ness strategy and the development of an appropriate cus- vantdata theinformation process to builda consistently tomerstrategy. This shouldprovide the enterprise with a superiorcustomerexperienceand enduringcustomerrela- clearerplatform to on which develop and implement its tionships themultichannel integration process.

The itera- CRM activities. The circulararrowsin the The value creationprocesstransforms the outputsof the value creationprocessreflectthe cocreationprocess.

We strategydevelopment process into programs that both now examinethe key componentswe identified in each extractand delivervalue. The threekey elementsof the process.

The Value Creation Process in Customer Relationship Management - Semantic Scholar

As with our prior work, we used the interaction whatvalue the value creationprocessare 1 determining researchmethodin the identification of these process companycan provideto itscustomer; 2 determiningwhat components. Value vision choice granularity and Strategy Process Business Strategy Strategy Customercustomer Development competitive characteristics?

The valuecreationprocess involvesa processof cocreationor coproduction, maximiz- is a crucialcomponent of CRM becauseit translates busi- ingthelifetimevalue of customer desirable segments. The value the customerreceives fromthe organization drawson theconceptof thebenefitsthatenhancethecus- tomeroffer Levitt;Lovelock However,thereis Multichannel IntegrationProcess now a logic, whichhas evolvedfromearlierthinking in business-to-business and servicesmarketing, thatviewsthe The multichannel processis arguablyone ofthe integration customeras a cocreatorand coproducer Bendapudiand mostimportant processesin CRM becauseit takestheout- putsof thebusinessstrategy and value creationprocesses Leone ; Prahaladand Ramaswamy; Vargoand themintovalue-addingactivitieswithcus- and translates Lusch These benefitscan be integrated in theform tomers.

However,thereis onlya smallamountofpublished of a value proposition e. The multichannel inte- thecustomer's needs,andthetotalcosttothecustomer over on grationprocessfocuses decisions about what the most thecustomer relationship lifecycle Lanningand Michaels appropriatecombinations of channelsto use are; how to Lanning's laterworkon value propositions ensurethatthecustomerexperienceshighlypositiveinter- reflectsthe cocreationperspective.

However, a more actionswithinthosechannels;and whena customerinter- detailedsynthesis of workin thisarea is neededin further actswithmorethanone channel,howto createand present research. To determine whether thevalueproposition is likelyto resultin a superior customer experience, a companyshould to quantifytherelativeimpor- Channel Options undertake a valueassessment tancethatcustomersplace on the variousattributes of a Today,manycompaniesenterthemarketthrough a hybrid product.

Analyticaltools such as conjointanalysiscan be channelmodel Friedmanand Furey; Moriartyand used to identify customers thatsharecommonpreferences Moran thatinvolvesmultiplechannels,suchas field in termsof productattributes. Such tools mayalso reveal sales forces,Internet, directmail, businesspartners, and substantial marketsegments withserviceneedsthatare not telephony.

There are a growing number of channels by fullycateredto by the attributes ofexistingoffers. Through an iterativeprocess, we categorizedthe many channel The Value the Organization Receives and Lifetime optionsintosix categoriesbroadlybased on thebalanceof Value physicalor virtualcontact see Figure2.

Theseinclude 1 sales force,includingfieldaccountmanagement, service, Fromthisperspective, customer valueis theoutcomeofthe of the ofimproved and personalrepresentation; 2 outlets,includingretail coproduction value, deployment acquisi- includ- tion and retention and the of effective utilization branches,stores,depots,and kiosks; 3 telephony, strategies, traditional telex, and call center Fundamental to thisconceptof cus- ing telephone, facsimile, channelmanagement.

First,itis necessaryto determinehowexisting and e-commerce, includinge-mail,theInternet, and interactive potential customer varies profitability acrossdifferentcus- tomersand customersegments.

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Second,theeconomicsof digitaltelevision;and 6 m-commerce, includingmobile telephony,short message serviceand textmessaging, wire- customer acquisitionandcustomer retentionandopportuni- less applicationprotocol,and 3G mobile services. Some ties for cross-selling,up-selling,and buildingcustomer to maximize channelsare now beingused in combination advocacymustbe understood.

How theseelementscon- tributeto increasingcustomerlifetimevalue is integralto commercial exposure and for return; example,thereis col- valuecreation. For example, Reichheld and colintegrates telephony Sasser identify thenetpresent value improve- profit mentof retaining customers, and Rustand Zahorik Integrated Channel Management and Rust,Zahorik,and Keiningham outlineproce- Managingintegrated channelsrelieson theabilityto uphold duresforassessingthe impactof satisfaction and quality thesamehighstandards different acrossmultiple, channels.

More recently, researchhas emphasizedcustomer definesan outstanding customerexperienceforthatchan- and Deighton; Hogan,Lemon, nel, theorganization can thenworkto integrate thechan- equity e. Thisconceptis nowbeingembraced relatively analysis,creditscoring,and cus- campaignmanagement in industry by companiessuch as TNT, Toyota'sLexus, tomerprofiling.

Oce, and Guinness Breweries,butithas yettoreceivemuch in theacademicliterature. However,a uses to supportall thoseactivitiesthatinvolvedirectinter- company'sabilityto executemultichannel suc- integration facewithcustomers, includingSFA andcall centermanage- is cessfully heavilydependent on theorganization's ability ment.

Back officeapplicationssupportinternal administra- to gatherand deploycustomerinformation fromall chan- tionactivitiesand supplierrelationships, nelsandto integrate itwithotherrelevant information. A key concern Information ManagementProcess aboutthe frontand back officesystemsofferedby CRM vendorsis thattheyaresufficientlyconnected andcocoordi- The information management processis concernedwiththe natedto improvecustomer and workflow.

The keymate- rial elementsof the information management processare Gartnersegmentsvendorsof CRM applicationsand CRM thedatarepository, whichprovidesa corporate memoryof serviceprovidersinto specificcategories Radcliffeand IT customers; systems, which include the organization's Kirkbyand Greenberg and Jacobsen computerhardware,software,and middleware;analysis provide detailed reviews of CRM vendors'products.

The tools; and frontofficeand back officeapplications, which key segments for CRM applicationsare Integrated CRM the support many activities involvedin interfacing directly and Enterprise ResourcePlanningSuite e. The CRM serviceproviders andconsul- The datarepository tantsthatoffer implementation support specializein thefol- providesa powerful corporatememory of customers,an integratedenterprisewidedatastorethatis lowingareas: In largerorganizations, it maycomprisea datawarehouse Agosta; Swift management, organization design, training, human and relateddata martsand databases.

Professor Adrian Payne

Thereare twoforms resources, and so forth e. The latterstoresonlytheinformation integration e. The needforcomprehensive and scalableoptions has createdscope formanynew productsfromCRM ven- anyinconsistenciesbetweendatabases. However,despitetheirclaim to be "completeCRM IT Systems solutionproviders," fewsoftware vendorscan providethe fullrangeof functionality thata completeCRM business Information technology systemsreferto thecomputer hard- strategyrequires.

Often,technologyintegrationis required ofsharingrelevant customer andotherinformation beforedatabasescan be integrated intoa data warehouse through- out the enterprise and "replicating the mindof the cus- and useraccess can be providedacrossthecompany.

The Value Creation Process in Customer Relationship Management

The organization's capacityto scale forfunctional or product-centered departments and activi- existingsystemsor to plan forthemigration to largersys- ties.

Furthermore, data analysistoolsshouldmeasurebusi- temswithout disruptingbusiness is operations critical. This kindof analysisprovidesthebasis for theperformance assessment process. Analytical Tools The analyticaltools thatenable effective use of the data warehousecan be foundin generaldata-mining packages Performance AssessmentProcess and in specificsoftware applicationpackages.