Discuss the four basic steps in the implementation of the CRM process in a business-to- business environment

Answer 1

Step 1: Segment the Customer Base by Profitability. Most firms allocate direct materials, labor, and overhead costs to customers using a single allocation criterion, e.g., pounds of product purchased during a particular time period. However, firms today are beginning to use techniques such as activity-based costing to more accurately allocate costs to customers based on the specific costs of servicing a customer's orders based on how, how much, what, and when a customer orders. Normally, a cost-to-serve (CTS) model is developed for each customer. These CTS models are very much like an income statement for the customer.

Step 2: Identify the Product/Service Package for Each Customer. This step presents one of the most challenging activities in the CRM process. The goal of this step is to determine what each customer segment values in its relationship with the supplier. This decision is usually based on feedback from customers and sales representatives. The challenge here is how to "package" the value-adding products and services for each customer segment. One solution is to offer the same product/service offering to each customer segment, while varying the product quality or service levels.

Step 3: Develop and Execute the Best Processes. In Step 2, customer expectations were determined and set. Step 3 delivers on those expectations. Organizations many times go through elaborate processes to determine customer needs and set target performance levels, only to fail when it comes to executing on those customer promises.

Step 4: Measure Performance and Continuously Improve. The goal of CRM is to better serve the different customer segments of the supplier organization, while at the same time improving the profitability of the supplier. Once the CRM program has been implemented, it must be evaluated to determine if (1) the different customer segments are satisfied and (2) the supplier's overall profitability has improved.