Executive summary

The purpose of this research is to explore and examine the experience and perception of management and employees to know about the importance, implementation of customer relationship management (CRM) system in German organization. For better understanding of the topic, a literature review of the past and relevant research about CRM perspectives is going to be taken place, in addition the findings would be compared with the literature review to know about the similarities and differences between the two. This research is taken the account case study analysis of two German organizations. Mainly the data is taken from the seven days visit to Bremen City of Germany. Where the trend of being innovative seen in Beluga shipping and DB schenker logistics use information technology to support its huge network of frights transport. After the analysis of findings, the conclusions and recommendation are given on the bases of potential pitfall and success of CRM system help in increase the value for both customer and organization.

1. Introduction

In today’s business environment, it is very important to understand the consumer’s behaviour as it shapes the market trends. They are well aware, more educated, and more serious in demanding for product and services that they require and they are well aware of the technology and comparing the products. It is imperative for the organisation to understand and share their internal customer knowledge and then combine it with new information about their customers in order to compete in the market and to achieve the future success. The basic three steps in marketing process is to understand the market place, designing marketing strategy in order to customer driven and making up marketing program, which leads to the forth and most important step, is to build a profitable customer relationships, ( kotler & Armstrong, 2006). In order to establish such relationship it is most important to understand Customer relationship management (CRM) which is concept of modern marketing reforms. Kotler 2006, customer relationship management is the overall process of building and maintaining profitable customer relationship by offering superior customer value and satisfaction which means deals with all the aspects of attaining, maintaining and growing customer needs (kotler & Armstrong, 2006). Although customer care is always being given importance in the commercial activity, the new model of Customer relationship management known as CRM is very essential for organization in adapting a customer focused structure, which can maximises the potential value of customers expectations from the company and get the opportunity of making business strategy on the basis of information obtain from customer (Kenneth, 2002).

The research describes the various aspects, like customer focus strategy, reforms needed to current customer business processes, change management and constant progress in developing and implementation of CRM system. The research further describes the present literature on CRM, benefits and possible barrier to CRM system in the context of German organization, analyzing the observation during the visits to companies in Bremen.

AIM

The aim of the research is to evaluate the importance, implementation of Customer relationship management system.

Objectives

To understand the key definition of CRM.

To explore the importance of developing CRM in an organization

To analyze the benefits of Information process on CRM framework.

To examine the framework and literature of CRM and compare it to the companies visited in Bremen.

2. Literature review

2.1 CRM perspectives

In the business environment customer plays important role and considered to be top priority. This statement is much more reliable, strong and applicable to today’s world than it was before. The organization success is fairly depends on their ability to facilitate customer constantly, fulfil all their specific needs of product and service. This concept is understood by studying customer relationship management (CRM) where it’s all about to locating, obtaining and retaining customer.

Gartner considered CRM as mostly recognized customer and sales oriented strategy which includes advance technology to manage, mechanize, and bring success in to business processes mainly sales activities, but also involve those of marketing, customer service and technical support. The overall objectives is to attract more customer from the market, look after them and looking after existing customers, attract former clients back into the fold, and minimize marketing and client service costs (Gartner 2009). While Buttle, F. (2009) considered CRM as nothing more than relationship marketing, but also by manipulate customer to continue possible communication to increase customer consistency, maintenance and ultimate goal is to develop long term relationships. There is a great need of CRM because of rapid development of marketing and technology which goal is to understand the customer and to achieve enduring success in the competitive business environment. As CRM is present in mostly business operation, Peelen, E (2005) believes that CRM is very influential tool for both business to business and business to consumer environments, but it has been underestimated.

Due to the great exploitation of information technology, seller community and expert community, has great interest in CRM. The two terms CRM and relationship marketing used interchangeably in academic area (Parvatiyar & sheth, 2001). CRM is a comprehensive strategy and process of attaining, retaining, and create association with the selected customer help to build superior value to the company and the customer (Parvatiyar & sheth, 2001). Many marketing efforts considered to be used for customer retention which helps in customer attachment which can be achieved by staying in touch with customer after the sale is made, Vavra (1992).

CRM is going beyond existing of literature because it “require a cross functional combination of processes, people, operations and marketing capabilities that is possible through information technology and applications” (Payne and Frow, 2005). In fact CRM goes ahead of customer focus, CRM not include only to make relationships and a system usage for collection and analyzing data it also involves in the integration of all these activities throughout the firm, connecting these activities to both firm and customer value. This enhance the capability of firm to enlarge this integration along the value chain, and development for the integration of these activities across the network of firm, these pool resource customer value while building shareholder value of firm, (Boulding, Staelin , Ehret & Johnston 2005).

2.2The importance of CRM

In one of customer think corporation survey, 68% customer leave due to poor services provided by companies show in appendix 1. The key to success is to create strong and long term relationship with customer. CRM is an important tool to generate benefits for both customer and sellers. They treated every customer specially and try to get the appropriate information about the usage of their purchase which makes firms to increase their sales and also increase customer loyalty. Furthermore CRM also helps in making the sale processes very easy and simple which help sales staff to deal faster.

There is great opportunity for the organization to cross selling and up selling to customers which are loyal to firms through CRM. This helps the organization to develop the quality and better relationship with customers which also improve customer satisfaction, hence gained customer loyalty.

Research suggests that new customer cost organization 4 to 8 times more than existing customer, Cannie and Caplin (1991) also suggest that keep customer for life time is better than sale at one time. With the help of CRM organization is capable to predict customer behaviour during purchases of product and services; with the support of IT by using different ways of communication with customer and stored it in business database. As there is rapid change in the customer behaviour, the most sensible way is to keep track of customer change and persuade them properly is to build supportive and collaborative relationship with customer (Sheth & Sisodia, 1995). CRM also creates very useful knowledgeable platform and processes between companies and their customer as past study proves that CRM is very powerful competitive tool in improving success of companies and their customer.

2.3 How CRM system works for organization

CRM Framework

The theoretical frameworks are based on the combination of previous literature, experience and common sense (Eisenhardt, 1989). There are many different inspirations which result in different development, but it is not possible that one successful CRM framework is suitable for every business sector (Duane, 2009). Many researchers suggested that integrated framework should be on the basis of conceptualization and should be process oriented (Payne, 2005, Dous2005, Parvatiyar, 2001 in Appendix 2).

Payne et al, (2005) develop a framework for CRM on five generic processes, which are, (1 the information management process, (2The multichannel integration process, (3 the value creation process, (4 the strategy development process and (5 the performance assessment process.

After this framework given by Payne, an effective CRM is now to support and give value to the wide number of customers and employees; CRM has to support wide range of roles, channels and devices.

Mainly, CRM activity will involve in the collection of customers, suppliers, partners and relevant data thorough multiple channels of way like web, phone, email, fax etc, (the multichannel integration process) and using Knowledge management(KM) approaches to transform the collected data in to the useful information for making business decisions (the information management process). Vision and objectives of company must be identified clearly (the strategy development process) than to transform it in to the different business programs and processes that gives mutual benefits to customer and business (the value creation process).

The next step of CRM process cycle is to create the interaction with customer in order to maximize commercial exposure and return (the integration process). Finally progress is needed to be checked to look for any failure and helps to keep track the configuration of goals, resources and results (performance assessment process).

2.3.1The information process

The fundamental to the successful implementation of CRM strategy requires flawless customer centric process, which is supported by integrated technology throughout the enterprise and also its supply chain which give right information at right time (Radcliffe, 2001). In supporting the statement that technology solutions support CRM, CRM must be flexible, customizable, connivance, cost effective and speed of operation, it must match the requirement of business. However, CRM tool is just a addition to CRM strategy, proper strategy and outstanding implementation is essential for a success of CRM (Parvatiyar, et. Al. 2001)

2.3.2The strategy development and the value creation process

The strategy development process shall include basic steps of strategy formation, decision making and implementation. Bell (2000) points out that understanding the present allows people to attain an orienting perspective to provide a basic for moving forward. Hence, the strategy formation for CRM shall be based on the company mission and objective with taking into consideration the value creation for customer, employees and investors. Then, decided on the long term plan and operating plan based on the objectives set. Finally, take necessary action to effect implementation.

The value-creation process is built on the capabilities and motivation of the company’s employees to develop product and process innovation according to customer needs; to identify existing and potential customer profitability for decision on customer acquisition and customer retention activities; and the organization’s value to customers, and the basis of its valuation by shareholders. At this point, KM participate an important roles by putting the information processing power of technology to anticipating or predicting customer needs.

2.3.3The multichannel integration

The multi-channel integration process plays important roles to transform business strategy and value creation into value-adding interactions with customers. Those include all pre-sales communications, sales interaction, post-sale service and support with customer. At the present, there are many means of communications available in the market such as internet, direct mail, ground sales force and telephony; or a hybrid channel model which involves multiple channels. Therefore, for the company it is important to work on individual channel roles and tailoring them according the targeted customers segments needs instead of trying to capture all customer needs like provide “Everything to Everyone Everywhere”.

2.3.4 Performance Assessment process

The performance assessment process covers the very important task of monitoring, CRM indicators is connected to the set objectives; which helps managers in making of plans ,taking decisions and guide ongoing daily activites. Kaplan & Norton (2001) pointed out that since the traditional financial measurement tools such as balance sheets, profit and loss statement and cash flow statement are introduce to measure the activities like strong versus poor indicators, companies started implementation of very different method of measurement based on their internal decision making style.Kellen (2002) recommended a comprehensive CRM measurement frameworks which includes point of view from a verity of different business unit. The CRM measurement framework includes brand building, customer equity building, customer-facing operations and leading indicator measurement.

2.3.5 CRM global management

There are many large internationally oriented companies which are today trying to become global by integrating their worldwide operations. To accomplish this they are seeking helpful and concerted solutions for global operations from their sellers instead of just engage in transactional activities with them (Parvatiyar & Sheth, 2001).such customers make it very essential for marketers interested in many global business to adopt CRM programs, mainly global account management program (Yip & Madsen 1996).Global account management (GAM) is theoretically similar to national account management programs a part from (GAM) have to be global in scope and thus more complex. To mange customer relationship management around the world there is essential need of external and internal partnering activities, this also includes the partnering across a firms worldwide organization.

2.4 Barrier to CRM

CRM is considering being helpful tool for achieving organization goals, but when applying CRM concept and technologies to business operation needs through commitment. Depends on business to business type and how far they want to expand their application ,management has to find out the possible problem come across in the process of before ,during and after implementing these application.

Here are some problems cited by Ramsay (2003) which are followings.

2.4.1 Lack of definition

The rapid change in business environment, CRM is enclosed with new ideas, concepts, new technology, new methodologies, and constantly developing. As a result many companies are having difficulties in acquiring new technology, and also unsure about where to start. Management is not sure about how to approach CRM and how that affect the different phases of company’s operation.

2.4.2 Poor leadership

The team which are in leaders of CRM efforts are mostly functional heads who often do not have enough strategic plan or perspective experience of CRM. They are strictly being measured according to their specific activities within their functions. While the main focus should be on the company’s overall strategies. One other factor is that most of CRM program are implemented projected base on general technical-requirements focus instead of business need focus. As mention earlier that CRM is strategic process that helps companies in understanding customer needs. So, companies can improve their processes to provide these needs to their customer (Oracle, 2006).

2.4.3 Insufficient help from CRM vendors

CRM vendors are the ones who provide the new tools for organizations. Most of the time they only pointed out those CRM aspect which are involved in the product rather than focus on main important factors of CRM in lot of business areas. There are some vendors who would convince the customer by implementing CRM system, than the customer can solve all the problems which are facing by them currently.

3. Germany

Germany is the world most famous second populous nation and Europe’s largest economy .Germany country itself is very strong position in its region in terms of economical, political and in defence organization. German economy is the fifth largest economy in the world in PPP terms – is a leading exporter of machinery, vehicles, chemicals, and household equipment and benefits from highly skilled labour force(www.cia.gov).germany is among world’s largest and technologically advanced producers of iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics, food, beverages, metal fabrication, shipbuilding, machine building, textiles and petroleum refining. In all above services and manufacturing account is the dominant share of German economic activities, raw materials and semi manufactured goods make a large portion of imports. Germany is democratic federal parliamentary nation, made up of 16 federal states in which Bremen is main port and tenth largest state of Germany.

4. Bremen

Bremen city population 551,600, capital of the state of Bremen, located North West of Germany along with Weser River .the state or Bremen was formed in 1947 by combining the two main parts Bremen and Bremerhaven both are the main port of state as well, where Bremen covers 325 square kilometres and Bremerhaven covers 80 square kilometres. Bremen is Germany’s largest port after Hamburg and its commercial and industrial center trading in cotton, wool, tobacco and copper. The city of Bremen products include ships, aircraft, steel, machinery, electrical equipment, textiles, beer and foodstuff, specifically roasted coffee. Bremen has employed about half of workforce working in commerce, transportation and service sector. The shipyard was one of the largest employers closed in 1996. It is the oldest port city of German. Bremen strongly depended on industry sector of 83% in the economy.

5. Methodology

This research mainly focuses on the importance implementation of CRM system in context to German organization.acoording to this, case study approach is adopted which enables the researcher in understanding and to pose question related to what happen, how thing work in CRM system and why (yin, 2003).the above literature review helps researcher in the different aspects of CRM system, potential pitfall and where to go during the implementation of CRM system in organization.

The data for case study analysis was collected very short period of time which includes the 7 days visit to two main city of German state which is Bremen and Bremerhaven .there are some presentation arrange by the individuals representing their companies and there is interview session as well. The main two companies are chosen for findings is beluga and DB schenker. Mainly the data is collected from the company websites and during the interview session, informal communication with staff members and managers of organization the notes are made which helps researcher in relate the practical experience and observation with the literature review. The structure of CRM System is studied by using different articles ,books, academic journals .research papers and internet web pages which is relate back to data .Silverman (1998) stated that researcher should focus on what people do and what they say they do. These combined approaches give researcher a useful help in generating that data which is rich in detail and high in rigidity (Miles and Huberman, 1994).

6. CRM in terms of German context

The customer is main focus of every business and it is also been noticed in over visit to organization in Bremen is how their overall objectives of the companies fulfilling the needs of their customer. The presenter of Beluga, DB schenker and hansaflex also give evidence of complete satisfaction for their customer. Mostly of these organizations providing best services benefits to their clients.

The beluga shipping was founded by presented and CEO Niels Stolberg in 1995, they working as a simple cargo operator during that time. From the very start off beluga shipping focus to create solid and fast rising niche market project and working on controlled heavy-lift cargo. The beluga group, consisting of main business, beluga shipping GmbH, beluga chartering GmbH and beluga fleet management GmbH & co .offering to their customer a complete expert service worldwide, beluga is always in coordination with customer in every step of project planning and successful understanding .the beluga chartering involves the expertise of every cargo which closely work with transport engineering and operation department. They know exactly which ship is suitable for which cargo and also ensuring of continues employment of fleet. The beluga core service fleet management is responsible for fleet support, quality management, ship management, technical management with crewing and recruitment and planning of beluga cadets (management of sea academy) and supervision of new building projects is also in list of fleet management expertise. Beluga shipping managed strategic focus of how, flexibility and expansion, which make them the leading international specialist of heavy shipment of sensitive, bulky cargo which is difficult to handle. Due to the experienced experts at beluga shipping Gmbh that helps in achieving the demands of customer worldwide on the basis of modern fleet and advance technology, which involve the use for more than 70 multipurpose heavy lift cargos carries. These also ensure there is one ideally suited vessel is available for the respective specific challenge.

Deutsche Bahn AG was founded in 1994; today it is world’s leading operators of passenger and logistics companies in 150 countries. The company rail activities in Germany are its core business.

DB schenker is combination of transport and logistics activities of (Deutsche Bahn) employing more than 91,000 staff spread across around 2,000 locations. DB schenker is one of the leading global integrated logistics service providers and has a leading goods transport rail network at its disposal. Having its dense network DB schenker is operating in one of the world most important economic region, in air and ocean transport, in European land transport, in contact logistics as well as in supply chain management. With the help of this very special goods transport rail network company claim to provide quick and efficient solutions for the most varying of client requirements both with regards to trade and industry.

7. Main findings

The presenter of beluga is much inspire from the company CEO work and the current setup business they have .Beckhusen explained how they managing the relation with customer while operating in the niche market of project and heavy lift cargo. As CRM makes itself necessary tool for business because it differentiate an organization among the competitor with the useful knowledge resource about product and also the ability to quick identifying and find solutions to customer’s problems (Nguyen, sheriff, and Newby,2007). Beluga presenter explained the knowledge about the product like, specialized in heavy lifting cargo and continues innovation for example, the continued expansion of the fleet capacity, to make vessel which can fulfil the demand of super heavy cargo uplifting possible.currenty the vessels in their fleet 69 units with the capacity of 800 tons and more ,than strategic target for the end of 2012 is 75 units, these new vessels will be equipped with cargo handing gear which can lift a combinable load of up to 1400 tons on the most powerful units (it’s called Beluga P-class ).

Db scheker presenter claimed that the huge network of rail service help in supporting the main dominant area of their business operation. Europeanization provides enormous opportunities for the railways. DB Schenker Rail getting advantage and has already made tremendous effort not only on the production but also on service side, customer focus is good example for better processes. Having no1 position in rail freight to maintain strong relationship with customer the CEO of DB Schenker rail Hedderich, explains that the expansion of rail fright helps to sustain that relationship and to attract new customer, “which requires integrated planning across all the companies and across national border, in those countries where we find partner with strong performance, we work together with them”. Putting customer in mind and work continually fulfilling the needs of customer Hedderich, also answer to the question about is customer will go along u current strategy? “That restructuring is something that many of our customers wanted because the quality of cross-border transport in many cases leaves something to be desired”. Like Phelon (2004) define CRM by saying that “customer leverage is an art”.

The rapid increase in the demand for heavy cargo and there is need of technological advancement for best compete in the market, Beluga use the up to date advance technology and also work along with partners to get growth in other potential markets .t( Nguyen, sheriff, and Newby,2007 ) stated that CRM helps in reducing the gap between customer and organization ,contributing to organizational success through customer loyalty, better service , superior information gathering and learning organizational. Beluga follow customer orientation approach, like “we are, where the customer needs us any time” offering 24/7 direct customer approach. Furthermore entrant of new markets like in March 2009 in the oil and gas sectors, Norway offers attractive opportunities for the Beluga fleet. So in order to understand and close view of the local market establish strong personal contacts with customer and also keenly to get involved in regional development in the maritime sector ,Beluga shipping GmbH established a wholly owned subsidiary ,the beluga project (Norway) ,the board of director is constituted by Niels Stolberg (president and CEO of beluga shipping GmbH).the strategy to get closer to potential market helps in attracting new customer ,its increases customer satisfaction and reliability. Like in Asia region, the advantage of local presence, especially in Beijing, is being close the shippers and decision-making centres as well as to the freight forwarding companies and, in particular, being able to offer an extra service to industry through our cargo superintendents in Shanghai,”says Jaap den Hartog, director of Beluga Chartering Department for Asia,(blue line beluga magazine .2008,page 35)

The company can access easily to potential customer information and give possible solutions for customer problems. After successfully settle down and dealing with customer in Norway, Beluga CEO Niels Stolberg says, “thanks to our local presence in Norway, we are able to position beluga fro coming project well ahead of time, we want to integrated our modern hardware and our innovative corporate philosophy into projects as early as possible, giving our customer a reliable transport solution”, Confirmed by sales manager Robert instinsky.

One important feature of CRM “customer selectivity “as research studies reveals that ,all customer are not equally profitable for an individual company (Storbacka,2000).the company therefore must be selective and tailoring its programs and marketing efforts by segmenting appropriate customer for individual marketing programs .in one news service (Oliver Schumacher issued by DB mobility logistics AG potsdamer platz 2, 10785 Berlin,Germany,2009) DB schenker is now leader in innovative air freight concepts. There is service operating by DB Schenker called skybridge service, example offering the unique intermodal solution to the combination of air and ocean freight from Asia to Europe Via Dubai, getting advantage from the low price of ocean fright with the speed of air fright. This combination of air and ocean frights Company get significantly lower cost compared to pure air freight, the offer is very attractive for companies that do not want to sacrifice the time advantage of air fright. DB Schenker is able to successful allocate its resources to those customer to serve its best to create mutual value. In global ocean freight, to giving importance to their customer the local presence of DB Schenker logistics combines the local market knowledge, global expertise, and the strength (2,000 locations in 130 countries) they have in their operating businesses helps to achieving organization goals. They can give useful solution to their local customer problems having in the operation of logistics services.

As we look the above findings both companies working continuously on improving the quality of its products and services. To achieve successfully this, the ability of its customer service departments to response quickly and accurately to enquiries about the customer shipments is essential. As Beluga is working in niche market but the satisfaction of the customer is main priority of business. there is successful implementation of empowerment in organization .as Beckhausen describe her achievement from assistant to director in 5 years is the proof of company has the policy encouraging employees .the main decision is taken by the top management but they also encouraging lower management new ideas to work on it, than the ideas are successfully implemented in organization, this give employees as sense of freedom and encouragement which also helps to improve employee performance.

while in DB schenker the case is different , Janina explained that most of the decision is taken by the top level management, there is no empowerment in organization, like the employees are working on day to day routine job no new ideas are encourage and implemented from the lower management. This will leads to inefficiency in work which will put adverse effect on customer relations with organization. Because employees plays basic role in the delivery of CRM activities, the firm need to give attention to organizational matter related to CRM it is important area of consideration, Data and technology processes and system are essential for CRM activities, in these processes and system without appropriate human interaction the returns on investments in these area is at risk (Boulding, Staelin, Ehret & Johnston 2005).customer can loss trust on company’s ability to deliverer quick and efficient work.

For beluga and db Schenker, logistics is a key competitive quality factor. The factors behind the market success of beluga shipping are following.

Quality and on schedule performance

Precision and reliability

Flexibility

Expertise.

While factors of market success for Db schenker logistics are;

Linking component to the flow of goods.

True sustainable footprint.