Internet marketing possibilities of CRM within the UK Small Enterprises

Internet marketing possibilities of CRMwithin the UK Small EnterprisesLisa Karen Brown, Deemple Tailor, Philip Seltsikas,University of Surrey, UK{l.k.brown, d.tailor, p.seltsikas}@AbstractThis paper details an ongoing research study centred on the impact of theInternet Marketing within Small and Medium Enterprise’s (SMEs) in theUnited Kingdom (UK). It addresses the need for and development of, Criti-cal Success Factors (CSF’s) to facilitate Internet Marketing and its accep-tance by those SMEs with little or no knowledge of marketing, the Internetor of Customer Relationship Management (CRM). Internet marketing as amethod of marketing communications seeks to encompass the absoluteessence of CRM and consequently extends beyond how a company en-gages with its customers or the systems it deploys. Internet based relation-ships and interactions with customers, through means such as InternetMarketing have already been adopted by numerous small firms as haveother methods of customer interaction. However, a comprehensive under-standing of CRM may go beyond the limitations of many SMEs (for exam-ple knowledge, cost, and expertise required to implement and operate) asthe term CRM, may confuse the SME as to what it actually means. Thispaper attempts to investigate the role of Internet Marketing within SMEs asan integral part of CRM and highlights the potential problems facing SMEs,when engaging in such activities through the existing literature. It also ar-gues for the need for a ‘tangible’ and ‘valuable’ set of CSF’s, specifically forSME owner/manger when entering their decision making process.1 IntroductionRapid t e chnological change has continually influenced the constructs of various as-pects of how business is conducted. Commercial activities (Shaw et al.1997) including marketing and supplying amongst several others, have been transformed thanks to the capabilities of new information technology (IT). The advent of the Internet into commer-cial and social arenas has e nabled new forms of information access and exchange across business to business (B2B), business to consumer (B2C) and customer to cu s-tomer (C2C) boundaries. Over the last two decades, Small and Medium Enterprises (SMEs) from across industrial sectors and geographical locations have increasingly been challenged with integrating networked systems and resources with heterogene-ous functional business areas. One of the functional areas of the business which has not been disqualified (if there are any!), from this Internet based phenomenon, is the Marketing function (Marketing; the management process for identifying, anticipating and satisfy customer needs profitably (CIM, 2003)).However, many UK SMEs remain ill educated of the organisational potential of the Internet and probably even less informed of the potentials of Customer Relationship Management (CRM) applications and solutions. CRM facilitates the use of systems to provide enterprises an integrated view of prospects and customers as a channel for in-teractive marketing, sales automation, and customer service and support (Sibel Sys-tems, 2005). CRM may further be described (iptv, 2005), as a set of methodologies, software, and usually Internet capabilities that can help an enterprise manage cus-tomer relationships in an organized way. It includes all business processes in sales, marketing, and service that are associated to the customer. CRM tends to be deployed to deal more specifically with the integration of all business functions. But are SME’s aware of these capabilities? Surprisingly, SMEs may fail to see CRM as an integrated approach to identifying, acquiring, and retaining customers (Dver, 2004). By enabling organizations to manage and coordinate customer interactions across multiple chan-nels, departments, lines of business, and geographies; CRM facilitate organizations to maximize the value of every customer interaction and drive superior corporate per-formance. Therefore, deploying CRM methodologies and solutions may be an attrac-tive proposition for many SMEs to consider. There were over 4 million SMEs in the UK producing 40% of GDP, (SBS, 2004; Dixon et al, 2002) with an annual turnover of ap-proximately one trillion pounds in 2003. These SMEs e mployed 12 million people, which accounted for some 55% of the private sector workforce.Nonetheless, the UK SME sector still lags behind leaders such as Sweden and Ger-many in terms of Internet connectivity internationally. Broadband coverage in the UK in 2003 remained inconsistent with only 1% of SMEs with broadband access. Moreover, despite research showing the p ositive impacts of broadband on SMEs (International Benchmarking Study, DTI, 2003), access levels mirrored the digital divide effect in so-ciety as a whole with larger firms and those organisations based in London and the South E ast more likely to be key beneficiaries of broadband. This paper investigates the Internet and Internet Marketing within SMEs as an integral part of CRM and high-lights some of the current issues for SMEs, through existing literature within the field. It also argues for the need for a ‘tangible’ set of C ritical Success Factor’s, that are of ‘ac-tual value and use’ to the SME owner/manger in terms of facilitating their decision mak-ing process. The research put forward forms part of an on-going doctoral research pro-gramme analysing the impact of Internet Marketing within SMEs in the UK.2. Why is CRM important to any Organization?The management of customer interactions across multiple communication channels (including the web, call centres, field sales and other network s) is a central concern for many organisations, especially those operating several lines of business and often with customers who utilise the services of one or more of these business lines. The aim therefore, is to ensure conducting business with customers is an easy process for both parties, without jeopardising the customer experience and to provide and portray a uni-fied organisation that is able to deal effectively with customers at every point of contact. As with the technological implementation, there are certain advantages and disadvan-tages. Still, the benefits of CRM, it may be argued, are much more clear and tangible than with other technologies and include factors such as; streamlining business proc-esses, provides sales and marketing staff with clear and complete customer informa-tion as well as ultimately allowing organisations to establish much sought after profit re-lated customer relationships and a reduction in operating costs. Other benefits include; shortening of sales cycles, increase in key sales performance, revenue per customer; increase in campaign response times and marketing driven revenue; increase in cu s-tomer retention and request fulfilment times, amongst other things. Overall, across all sectors and industries access to effective CRM is imperative as a strategic motivation for company growth and possibly survival; based on the notion that effective CRM cre-ates more loyal and satisfied customers which can consequently lead to repeat busi-ness and an overall increase in company and brand recognition.Types of CRM software may include; Sales Force Automation (Contact management - Contact management software stores, tracks & manages contacts, leads of an enter-prise.Lead management - Enterprise Lead management software enables an organi-zation to manage, track & forecast sales leads. Also helps understand and improve conversion rates.) eCRM or Web based CRM (Self Service CRM - Self service CRM (eCRM) software e nables web based customer interaction, automation of email, call logs, web site analytics, and campaign management. Survey Management Software - Survey Software automates an enterprise's Electronic Surveys, Polls, Questionnaires and enables understand customer preferences).Customer Service(Call Centre Soft-ware and Help Desk Software). Partner Relationship Management(Contract Man-agement Software- Contract Management Software enables an enterprise to create, track and manage partnerships, contracts, agreements. Example: Upside Software, Accruent Software, diCarta, I-Many). Distribution management Software2.1Impact of technology on the SME marketing capabilitiesContact with potential and existing customers no longer requires communication via traditional marketing channels as Marketers now have the means of accessing hugely diverse populations and organisations and can target niche markets on a global scale. The implications of the SME ignoring this convergence of IT and telecommunications, suggests they may fail to anticipate change and as a consequence, stagnate and per-ish if they do not add value to their offerings and obtain and maintain a competitive ad-vantage within not only the market place, but in the virtual market space. From a mar-keting perspective, the Internet represents one of numerous tools of the total marketing efforts available, as many SME investments may be in traditional bricks-and-mortar outlets, personal contact through field sales or telemarketing, and conventional adver-tising and communication methods.3. The role o f the Internet in CRM – The case for Internet marketingwithin the SMEThe contribution of SMEs to the UK economy has been noted within the literature (Curran/ Blackburn, 2001; Storey, 1994; Bolton Report, 1971) as has the Impact of IT and relationship management on small firms. The effect of the implementation of elec-tronic functions on a small firm has become a critical issue not only in terms of the in-fluence on practices but also on academic research (Liao et al. 2004). SMEs are now more aware of the i m portance of knowing their customers better. However the utilisa-tion of CRM capabilities to facilitate and manage such customer relationships and knowledge has not demonstrated an increase in strategic significance. The successful adoption of IT enabled CRM can seek to redefine the traditional interaction models be-tween a business and their customers and may be regarded as a source of competitive advantage as it enables organisations to explore and use found knowledge about their customers in or to foster l o ng term profitable relationships. But the question remains, are SME’s aware of this? Businesses large or small are faced with inevitable chal-lenges of new IT which can create both risks and opportunities. It is the minimisation of such risks and the maximisation of potential that requires careful reflective research and I.T and business models to be integrated so they can be mutually enhanced by the implementation of new technology or business processes. Internet technology will un-doubtedly remain unremittingly progressive, influencing organisations and how they operate whilst radically re-inventing traditional functional areas of the business. The beginning of the millennium witnessed companies in many commercial settings learn-ing to use the Internet to essentially change the nature of competition in their indus-tries. Operating costs were falling, value chains were being dis-intermediated and the new economy continues to dictate the rules of the old economy. Academics and practi-tioners, alike, believe that the Internet is rapidly changing the nature of individual busi-nesses, of markets and indeed of entire economies in a profound manner (Biswasa/Krishnanb, 2002).The exploitation of Internet technology to support Marketing processes (Fortin et al, 2002, Kiang et al, 2000, Berthon e t al, 1996, Lichtenthal and Eliaz, 2003) has grown considerably in the last decade. For SMEs even the formulation of a base line informa-tion systems strategy (ISS) for incorporating the Internet, can be a formidable task, let alone formulating an IT or e-business strategy, in addition to a marketing strategy. Therefore, creating new relationships via such technology can often be a daunting un-dertaking, especially when traditional methods have prevailed. Marketing using Internet technology can be described as being at the heart of e-Business, adding value to prod-ucts, widening distribution channels, boosting sales and after sales service whilst get-ting closer to the customer and understanding them better. Internet Marketing includes the use of a company website in conjunction with online promotional techniques such as search engines, banner advertising, direct email and links or services from other websites to acquire new customers and provide new services to existing customers that h elp to d evelop the customer relationship and that for Internet Marketing to be successful, there is a necessity for integration with traditional media such as print and TV.3.1 The defining force of CRM – Headache, Challenge or Opportunity for theSME?SMEs want CRM for the same reasons as large companies. They need CRM solutions to assist them with the identification, acquiring and consequent retention of customers as well as to foster loyal and profitable relationship for their organisations. SMEs in es-sence, have the same needs as larger organisations but can’t afford to purchase large general purpose systems that need to be customised and managed by specialist per-sonnel even though CRM can aid SMEs in their analysis of customer relationships, as well as helping them predict the future value of developing associations. Therefore SMEs buy, deploy and implement CRM differently from larger companies and need CRM to help establish process efficiency (Dver, 2004). CRM vendors large and small are racing to address this very specific need of a highly lucrative SME market that has very unique requirements of acquiring and implementing CRM. SME requirements for CRM (Dver, 2004) include; Affordability– for vendors to offer them systems with modular grow as you need options. Or offer other ways such as through applications service provision (ASP) models of renting; or licensing the software; or through the use of value or usage (based upon per seat or unlimited user licensing). Pre-integration – SMEs lack the expertise to obtain merging technologies therefore they often look to CRM solutions that are pre-integrated with their existing systems. Vertical and Multi-Vertical– SME CRM systems are required to be highly vertical to accommodate the often unique data and processes of the SMEs line of business. Vertical businesses gather and use industry specific information that must be reflected in the CRM data-base and the user interface. Customisation, Configuration and Tailoring– SMEs require applications to be customised and tailored to their needs.4. The need for ‘tangible and real’ critical success factors (CSF’s) Knowledge of Information Management can help SME owner/managers gain a deeper insight in the applicability of Internet Marketing and CRM. But how can this add-value for the SME? What kind of CRM applications and solutions are required by the different organizations? And what are the prerequisites that quantify a return of investment? As a result, what are critical success factors for the application of the Internet to Market-ing? The alignment of marketing plans with business plans coupled with the Internet is not an easy task and knowing which the critical areas to manage are will certainly en-hance the success of such efforts (Teo/Ang, 1999). Critical success factors may be de-fined as those factors critical to organisational success; the process of evaluating pro-spective IT systems by comparing system costs with system benefits; a small number of key factors that executives consider critical to the success of the enterprise, where successful performance will assure the success of the organization and attainment of its goals (). With this definition in mind it may be argued there are in-adequate measures for SMEs to benchmark themselves against their competitors in terms of how marketing on the Internet and more importantly, how to utilise CRM appli-cations and solutions in order to sustain competitive advantage. Although there exists large amounts of literature on CSF’s, much of this literature is large organisation based. Relatively few studies exist that specifically focus on CSFs for Internet Marketing and CRM within small firms; however this research attempts to do so. The results should prove constructive in enhancing the existing knowledge on how SMEs can better align their Internet Marketing and CRM plans with their overall business plans, thus aiding increasingly beneficial marketing efforts.5. MethodologyA questionnaire survey will be posted to the sample population will be taken from a da-tabase of SMEs held by the UK Chamber of Commerce and will be sent to the owner/managers or IT executives of the firm (approximately 5000 SMEs across the UK). Items within the questionnaire will be derived from a review of past research litera-ture into small b usiness research and the use of CRM and the Internet within such sized firms in the UK. This will be followed up by telephone calls two to three weeks later. Respondents will be asked to indicate the extent of the importance of various items in influencing their adoption and use of the Internet for marketing purposes. They will also be asked to comment extensively on their CRM planning process and its as-sociated problems to their organisation. The questionnaire survey will be protested on approximately 50 SMEs before distribution to the main survey population. On return, appropriate statistical analysis will be carried out on the results using SPSS. It is from these results that the CSFs will be determined. Jutla et al (1999) attempted to cata-logue the critical success factors (CSF’S) for Internet e-Commerce as being strategic, technical and functional. Strategic CSFs hold benefit to be gained from being first to market, brand establishment, customer focus, targeted marketing, outsourcing and de-velopment of a customer and user community. Technical CSFs are centred on the quality of service items such as response time, transaction throughput, website avail-ability, reliability, video and sound quality. Also includes scalability, the interoperability of technologies and security. Functional CSFs concerned the customer care features including facilitation of product customisation, support for negotiation and access to similar interest user communities.Building on the work of Doherty et al (2003), this research will attempt to critically evaluate the factors they are believed to affect the adoption of CRM for marketing pur-poses within SMEs through the application of multivariate statistical techniques on a large set of questionnaire responses that have been identified through the literature in order to develop specific research objectives. These were;•To derive a number of distinct factors likely to affect the adoption of the Internet and of CRM•To establish current levels of Internet and CRM adoption among the UK’s SMEs for marketing purposes•Explore the nature of the relationship between each of the derived factors and the resultant level of Internet adoption•To evaluate which of the derived factors is most influential in determining the resultant level of adoption based on respondent’s perceptions of facilitators andinhibitors, advantages and disadvantages of Internet and CRM adoption withinthe business function.ReferencesBerthon, Pierre; Pitt, Leyland; Watson, Richard T (1996): Marketing communication and the World Wide Web, in: Business Horizons, Vol. 39, Issue 5, pp. 24-32 Biswas, Abhijit; Krishnan, Ram (2004): The Internet's impact on marketing: Introduction to the JBR special issue on "Marketing on the web—behavioural, strategy and prac-tices and public policy" in: Journal of Business Research, Vol. 57, Issue 7, July2004, pp. 681-684Bolton Report, (1971): The Report of the Committee of Inquiry on Small Firms, Cmnd, 4811, London: HMSOCIM's Definition (2004): “What is Marketing?”in:http://www.cim.c /cim/dev/html/marWha.cfmCurran, James; Blackburn, Robert. 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