Ethics in Functional Areas of Business-Customer & Vendor Relationship Management

 According to Paul Greenberg, author of CRM at the Speed of Light, to dissect the meaning. The author calls it “….a philosophy and a business strategy, supported by a technology platform…designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value.….It’s the company’s programmatic response to the customer’s ownership of the conversation.” Complications arise when people forget those last five words that emphasize CRM is a “conversation” that the customer owns.

Customer Relationship Management (CRM) deals with the processes and systems that support business strategies to build long-term and profitable relations with customers (Ngai et al. 2009).

CRM systems are mainly composed of three parts, marketing management, sales management, service management and technical support management. The core content is mainly to increase the degree of automation of all aspects through continuous improvement and management of corporate sales, marketing, customer service and support related business processes, to improve efficiency, reduce costs and improve service, expand sales, increase revenue and profits, and improve enterprise competitiveness.

The ethical foundation of a company is important to the way a company is perceived by customers and peers alike. It is also a source of pride and self-respect for the company itself. While appropriate business ethics may be subjective, depending upon the context of your business, some basic principles of ethics will apply regardless of the type of business you operate. Ethical business relationships are less often a matter of legal compliance as they are of conscious self-governance by individuals and businesses

CRM allows a business to have a dialogue with its customers, thus creating an opportunity to solve problems expediently, identify needs, and increase customer satisfaction and revenue. It’s the company’s eyes and ears to the marketplace. CRM is about how the firm treat the customer, what the firm offer the customer, how it talk with the customer, how it creates systems to improve our interactions with the customer

 

The pharmaceutical companies (USA)have done a stellar job of exploiting CRM. Before 1994, they spent less than $50 million a year in direct-to-consumer marketing, but in 2000 they spent nearly $2.5 billion. Above and beyond blanketing the broadcast and print media with advertising, pharmaceutical companies are using CRM to hone their marketing messages to specific doctors and patients.

Three basic Principles of CRM are:

1. Treat customer Individually, Personalization.

2. Acquire and retain customer Loyalty through Personal Relationship.

3. Select “good” customer instead of “bad” customer based on Lifetime Value.

Reasons for adopting CRM are:

•      “It is less costly to retain a customer than to find a new one”

•       Pareto’s Principle: 20% of a company’s customers generate 80% of its profits.

•      A typical dissatisfied customer tells 8 to 10 people about his or her experience.

The typical CRM issues involve the following:

•      Customer Privacy

•      The personalization process requires identification of each individual customer and collections of demographic and behavioural data.

•      Ethical Dilemma Personal and Private sphere

Whether banks and other lenders were using customer data to market sub-prime mortgages to at-risk borrowers that led to the crisis of 2008 in US markets?. Banks, it is argued, were using their detailed knowledge of customers to sell them products which were not the best for them but actually likely to harm them financially. In cases like these, companies are at a significant information advantage compared to their customers; it is up to the company to use this advantage ethically.

In addition to obtaining and storing CRM data responsibly, companies have an obligation to use it for the purpose for which it was obtained. Sharing customer data with other companies, for instance, can be a useful part of CRM, but selling on customer information or allowing other companies to use it for their own purposes represents a violation of the relationship between company and customer. Most companies take pains to make it clear to their customers that they do not resell or share customer information.

Therefore, the customer should be notified about  their personal information is collected and will be used for specific purposes. They should be able to decline to be tracked. They should be  allowed to access their information and correct it. They should also be  protected from unauthorized usage.

CRM could be at junction of B2B or B2C ; but one firm should have  a company-wide code of conduct to which all employees, directors, vendors and suppliers must adhere. And also have a formal Supplier Code of Conduct that articulates the firm’s expectations with respect to human rights and labor, health and safety, the environment, business conduct and ethics. When retailers and suppliers know that an organization lives by a principled code of conduct--and follows the policies that result from that code—the firm is  able to build a business relationship on a foundation of trust.

CRM has four basic dimensions: Customer Identification, Customer Attraction, Customer Retention and Customer Development. With properly laid out systems and procedures adequately supported by technology, the firm offers only products that are wanted by the customer, thereby reducing promotional expenses and at same time increasing its market share. However, customer privacy and accuracy of information collected goes hand in hand in this task.

 

– Promotions and advertisements of products and services must be true to the actual offering.

– Honesty and transparency in financial transactions and accounting procedures.

– The company’s values must reflect a commitment to high standards of customer service and also fair practices for its employees.

– Promises made to customers at the time of making a sale must be kept at all costs.

– Each person in a company is the representative of the company even before and after working hours.

Look at these companies how they were creating databases for CRM

 

3Com had created a global database from their global operations storing records of e-mails, contacts, and locations.

Taylor Made, a golfing equipment company, gathered more than 1.5 million golfers’ names, together with addresses and even vacations and birthdays

.Borders, the bookseller, prior to its collapse in 2011, collected all of its customer information into a single database and sent emails tailored to each customer’s reading interests.

Thomas Holidays, a British tour operator, gathered information about individual expenses from customers which enabled them to discover which customers were more profitable (Winner 2001, p.92-97).

 

Several CRM softwares are available in the market today. One needs to  find the best CRM software for your unique business needs while recognizing the true customer relationship management systems leaders who help make your decisions possible.

 

 

CRM systems compile data from a range of different communication channels, including a company's website, telephone, email, live chat, marketing materials and more recently, social media. They allow businesses to learn more about their target audiences and how to best cater for their needs, thus retaining customers and driving sales growth.  CRM may be used with past, present or potential customers.

Precautions inCRM Process

Encrypt any personal information that consumers give to your company over the internet. You can do this by installing a Transport Layer Security (TLS) or a Secure Socket Layer (SSL) in your website. TLS and SSL protocols identify your website from a customer's computer, via a certificate of authenticity. The programs tell the customer's computer to encrypt the information it is sending with a certain language that the host computer can understand. Customer information sent from a remote computer to the hosted company computer will be transmitted in a scrambled language that is indecipherable to hackers. Contact a TLS or SSL provider to get the scripts and software (see Resources).

Black out any important identifying information, like credit card numbers or social security numbers, before filing paperwork in archives.

Create employee log-ins for company computers. Do not let people who haven't been screened by your security to log-in on the computers or access any databases. Create passwords on protected files so that users who illegally gain access to the system will still not be able to access sensitive information.

Files that are particularly sensitive should be kept on a machine that cannot be accessed on a network. Put the computer and the backup files in a locked room that can only be opened by people with the authorization to read the information. If the information is sensitive enough to warrant it, you can install a locking mechanism that only responds to a numbered code or a specific biometric fingerprint (see Resources.)

Separate groups of customers. If you have one large database with lots of customer information, and it gets hacked, all the information is compromised. If you have separate databases for groups of customers, along with their personal and financial information, you won't lose it all if security on one section is breached.

Create a code to identify customers. Instead of typing a customer's name on important documents, just enter her code number. This makes it more difficult for a criminal to identify that customer, even if he gains access to her paperwork.

Ask employees to sign confidentiality agreements. These will put employees on notice that if they give out business or customer information, they run the risk of a lawsuit.

 

Without customers, firms do not have a relationship to manage. The remote IT team of the firm who never communicate with customers  also exist because of the customers. All relationship including that of customers is about communication and trust. Therefore the systems and procedures should allow for more communication and trust building in the business relationships. Whether traditional or modern marketing means, the fundamental purpose is to meet customer needs, enhancing customer satisfaction is the fundamental aspect of business survival.

There is a famous 80-20 rule in Marketing, 20% of enterprise customers create 80 % of the profits, the 20% of those customers are old customers in business, and they are also the enterprise loyal customers. The so-called loyal customer is the one who have a higher preference and loyalty to corporate or product brands. Loyal customer is difficult to move to the products of other companies, even for the price of competitive products, promotional activities and other means, they always reject everything which reduces the competitive pressure of enterprises and brings good economic benefits for enterprises. Furthermore, a rule 250 also illustrates the problem. A consumer's life circle owns 250 friends and relatives, he can influence 25 to buy directly

Therefore, if the company cultivated a loyal customer, the customer can affect 25 people, yet, which can affect 25 people among 25x250 persons. Customer satisfaction can make old customers repeat purchase, recommend others to buy, while new customers can reduce development costs. A company developing a new customer is 6x costlier than maintaining an old customer. Therefore, cultivating loyal customers through customer satisfaction is the key competitive advantage of enterprise creation.