Critical examination of a digital sales platform – opportunities and risks for CRM 1/2
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Alumnus Janik Orth wrote an outstanding master’s thesis in the field of digital sales as part of his master’s degree at the Fresenius University of Applied Sciences in Cologne. The topic: “Critical examination of a digital sales platform – opportunities and risks for CRM”. In the following, the most important results of the thesis will be presented. You can already look forward to part 2! Are you looking for topic suggestions for your bachelor or master thesis? Visit us here and let us inspire you.
A customer-centric orientation of companies is becoming increasingly important for companies to remain competitive due to digitalization. The COVID-19 pandemic has made it more difficult for companies to communicate with customers, making digital communication channels even more prominent and requiring companies to find ways to remain close to their customers.
The goal of the master’s thesis was to investigate and determine the extent to which customer communication, which was severely limited by the Corona pandemic, can be expanded into active and integrated sales communication with the help of digitalization.
In times when the products and services of similar industries are converging, the differentiation of companies via products is increasingly diminishing. This means that companies must differentiate themselves from the competition in other ways, e.g., through special services, sustainable customer relationships, or the use of new forms of customer communication. This scenario was already playing out before the Corona pandemic.
The global, social and economic impacts of the COVID-19 pandemic are drastic. They will/have permanently changed not only societies but also companies. As a result, many companies are trying to address this situation by postponing investments or shifting investments to other industries. In addition, cost-cutting measures can be taken to stabilize companies, which, particularly in the area of marketing and sales, carry the risk of permanently damaging sustainable customer relationships. In the area of sales, customer contact or communication with the customer is particularly important. However, personal contact between people fell away. As a result, companies lose personal proximity to their customers. Before the pandemic, management positions exchanged information about the latest developments in the market on the golf course or in personal conversations; in times of the pandemic, this is only possible to a limited extent. In addition, proven advertising strategies have to be restructured because they are no longer effective. This includes, for example, face-to-face marketing at traditional trade shows. Above all, however, the opportunity to build up personal customer loyalty is eliminated because field sales representatives can no longer visit their customers.
In the wake of the pandemic and the greater digital focus that goes with it, the area of customer relations is also evolving into the digital realm. Leading this change, however, is the digital revolution in business, better known as Industry 4.0, which brings further implications. Today, the focus is on satisfying customer needs and increasing customer productivity. Accordingly, the trend is moving away from product orientation to customer orientation. However, in order to act in a customer-centric way, the integration of CRM is inevitable. Customer Relationship Management can be classified as a sub-area of relationship management and deals mainly with potential customers, current customers and lost customers. Customer Relationship Management is understood as a holistic approach to strategic and operational corporate management. Based on a CRM strategy and defined customer segments, a company manages, integrates and optimizes all interest and customer-related processes across channels and departments. The integration of a CRM system into the corporate strategy entails both opportunities and risks.
Opportunities of CRM
The primary opportunity of a CRM system integrated into a company is the tactical and original goal of CRM, namely to increase sales. In the context of maximizing sales, the aim is to increase first-time and repeat purchases. This effect is to be achieved by CRM measures motivating consumers at the point of sale (PoS) to make an impulse purchase.
In addition, an established CRM system can support sales staff in tapping new market potential. All employees in sales, marketing or service are connected with customers around the clock and can thus identify new sales potential. However, it is important that the information gained is made available to all employees. If this potential to be realized is carefully analyzed and made available to employees and the company, it can be developed in a targeted manner. This can ultimately lead to competitive advantages if these potentials are exploited. The statement by Riedel and Wiesner (2009) that it is essential for companies to differentiate themselves from the competition through professional CRM with the use of new customer communications as well as through the targeted use of the diverse customer data confirms the assumption that a competitive advantage can be achieved through the integration of CRM. It should be noted that the provision of decision-relevant information with the appropriate tools and methods is relevant for differentiation from other companies. This is possible with a CRM system and represents a competitive advantage.
CRM can predict the needs of customers by analyzing their data and information and help companies identify the needs of customers. CRM helps sales to focus on the right, important potentials and increase the closing rate precisely because of this. Accordingly, the right measures can be taken at the right time, which ultimately increases customer loyalty. However, the efficient use of existing resources through the use of CRM is not yet consistently practiced by companies. Companies currently exploit only 65% of the resources available to them.
CRM software systematically records and tracks every sales opportunity so that no sales opportunity goes unused. In addition, standardized processes for tracking sales opportunities can be stored in CRM software so that every employee knows exactly which step in the sales process is next at a glance. In addition, potential customers can be systematically recorded and targeted long before a quotation is created. This increases customer satisfaction, customer loyalty and the likelihood of an actual sale. In addition, cross-selling and upselling potential can be exploited to provide customers with offers that meet their needs. Another important aspect is the time factor. A CRM system helps the sales representative to identify the best possible closing potential. This enables the salesperson to contact the customer at the right time.
In addition to customers and trade, CRM also offers the opportunity to boost the morale and motivation of the company’s own employees. At this point, however, it is essential that management leads by example and demonstrates a high level of commitment. One of the main goals of embedding a CRM system in the company is to support users in their work. With this, however, ease of use should be a given. If this is given, the coordination effort for searching data about the customer decreases and the motivation of the employees increases.
Risks of CRM
The investments and organizational consequences associated with a CRM implementation can become an existential challenge for a company. Due to the expected significant impact of CRM integration across the boundaries of the sales department and the associated intervention in the work processes of employees, companies are uncertain when it comes to CRM investment projects. and the associated intervention in the work processes of employees, companies are uncertain when it comes to CRM investment projects. In addition to the high organizational effort for the sales staff, there is also the technical implementation of such a CRM system. It is possible to program a CRM system by purchasing hardware and other infrastructure. This requires high maintenance and acquisition costs, as well as a high programming effort. However, today, especially for small and medium-sized enterprises (SMEs), CRM systems can be obtained as software-as-a-service (SaaS) from all online providers. This requires neither the company’s own servers nor its own hardware. However, these CRM solutions are not as individual as the independently programmed systems.
In many companies, the CRM system is only used for the operational purpose of managing customer data. This provides a lot of data, but the added value for sales is missing. All CRM systems have the ability to also analyze the data provided, which is what makes effective customer management or campaign management possible in the first place.
The integration of a CRM system into the company requires a reorientation of the strategy from product orientation to customer orientation. There is a need to focus more on customer needs, to understand the customer in detail, and to capture different segments.
This must be communicated internally by the company’s management, as it often means a radical change or rethinking among employees. In order for a change in corporate culture to run smoothly, the project must be discussed by the management level with the employees.
As already mentioned, the integration and use of a CRM system involves a great deal of organizational effort. If, in addition, no added value is recognized among employees and concerns tend to be expressed, this can hinder the planning and implementation process of a CRM system. An existing emotional bond between employees and the company is therefore essential for the implementation of a CRM system. Accordingly, the importance and added value of a CRM system must be made clear to employees in order to counteract the danger of a lack of motivation.