IIPM

Desk Project

On

Impact of Auto CRM solutions in the Telecom Industry

Subject: Information technology

Submitted To: Submitted By:

Prof. Robin Thomas Bhavin RaykaIIPM,Ahemedabad. FW/9-11/ISBE/FIN

ABSTRACT

Customer Relationship Management (CRM) is specific software that allows a company to measure and control contacts with customers. CRM can be used for controlling contacts with a customer either by phone, fax, mail and e-mail. The data collected can be used for research and analysis of the customer relationship.

The Customer Relationship Management is the procedure that is crucial for every business. As the customer is the most important part of the business, the CRM is the procedure that analyzes the contact with the customers in a call center for example.

There are four important characteristics that CRM system may offer you:

1. First it will track and report every interaction with a customer, describing the customer's purchase, interest or demand. It will report also the changing needs of the customer and the way your business reacts effectively to them. 2. Furthermore, the CRM will be a universal instrument for collecting data about the service requests, order entry, satisfaction and billing. 3. Third, the CRM will be able to measure the performance of the business on the basis of internal benchmarks.4. Last the CRM will facilitate the working processes by emphasizing on the positive and exclude the negative practices in your customer relations center.

Benefits of CRM

A CRM system may be chosen because it is thought to provide the following advantages:

Quality and efficiency Decrease in overall costs Decision support Enterprise agility Customer Attention Challenges

Excellent customer service is about being aware of customer needs and reacting to them effectively. CRM helps you to understand, anticipate and respond to your customers' needs in a consistent way, right across your organization.Practicing Customer Resource Management requires an efficient and integrated internal business system. Many businesses benefit from the organizational discipline CRM imposes, as well as from the technology itself.CRM will help your business if you view it as a set of tools that let you do more more for, and get more from, your customer.

CRM can:

Develop better communication channels Collect vital data, like customer details and order histories Create detailed profiles such as customer preferences Deliver instant, company-wide access to customer histories Identify new selling opportunities

How can you measure CRM benefits?

CRM benefits can be measured and quantified. Using CRM applications can lead to increases in revenue from:

Reductions in operating costs - it cost around £25 to handle a customer call via a call centre but only £2 via a website

A higher percentage of cross-selling due to offering a single point of contact with your company

More success in attracting new customers and closing deals faster, through quicker and more efficient responses to customer leads and customer information

Simplification of marketing and sales processes by understanding customer needs

Better customer service - through improved responsiveness and understanding that builds customer loyalty and decreases customer "churn

Successful development, implementation, use and support of customer relationship management systems can provide a significant advantage to the user, but often, there are obstacles that obstruct the user from using the system to its full potential. Instances of a CRM attempting to contain a large, complex group of data can become cumbersome and difficult to understand for an ill-trained user.

Additionally, an interface that is difficult to navigate or understand can hinder the CRM’s effectiveness, causing users to pick and choose which areas of the system to be used, while others may be pushed aside. This fragmented implementation can cause inherent challenges, as only certain parts are used and the system is not fully functional. The increased use of customer relationship management software has also led to an industry-wide shift in evaluating the role of the developer in designing and maintaining its software. Companies are urged to consider the overall impact of a viable CRM software suite and the potential for good or harm in its use.

Complexity

Tools and workflows can be complex, especially for large businesses. Previously these tools were generally limited to simple CRM solutions which focused on monitoring and recording interactions and communications. Software solutions then expanded to embrace deal tracking, territories, opportunities, and the sales pipeline itself. Next came the advent of tools for other client-interface business functions, as described below. These tools have been, and still are, offered as on-premises software that companies purchase and run on their own IT infrastructure.

Poor usability

One of the largest challenges that customer relationship management systems face is poor usability. With a difficult interface for a user to navigate, implementation can be fragmented or not entirely complete.

The importance of usability in a system has developed over time. Customers are likely not as patient to work through malfunctions or gaps in user safety, and there is an expectation that the usability of systems should be somewhat intuitive:

An intuitive design can prove most effective in developing the content and layout of a customer relationship management system. Two 2008 case studies show that the layout of a system provides a strong correlation to the ease of use for a system and that it proved more beneficial for the design to focus on presenting information in a way that reflected the most important goals and tasks of the user, rather than the structure of the organization. This “ease of service” is paramount for developing a system that is usable.

In many cases, the growth of capabilities and complexities of systems has hampered the usability of a customer relationship management system. An overly complex computer system can result in an equally complex and non-friendly user interface, thus not allowing the system to work as fully intended. This bloated software can appear sluggish and/or overwhelming to the user, keeping the system from full use and potential. A series of 1998 research indicates that each item added to an information display can significantly affect the overall experience the user.

Fragmentation

Often, poor usability can lead to implementations that are fragmented — isolated initiatives by individual departments to address their own needs. Systems that start disunited usually stay that way: siloed thinking and decision processes frequently lead to separate and incompatible systems, and dysfunctional processes.

A fragmented implementation can negate any financial benefit associated with a customer relationship management system, as companies choose not to use all the associated features factored when justifying the investment. Instead, it is important that support for the CRM system is companywide. The challenge of fragmented implementations may be mitigated with improvements in late-generation CRM systems.

Business reputation

Business reputation has become a growing challenge. The outcome of internal fragmentation that is observed and commented upon by customers is now visible to the rest of the world in the era of the social customer; in the past, only employees or partners were aware of it. Addressing the fragmentation requires a shift in philosophy and mindset in an organization so that everyone considers the impact to the customer of policy, decisions and actions. Human response at all levels of the organization can affect the customer experience for good or ill. Even one unhappy customer can deliver a body blow to a business.

Some developments and shifts have made companies more conscious of the life-cycle of a customer relationship management system. Companies now consider the possibility of brand loyalty and persistence of its users to purchase updates, upgrades and future editions of software.

Additionally, CRM systems face the challenge of producing viable financial profits, with a 2002 study suggesting that less than half of CRM projects are expected to provide a significant return on investment. Poor usability and low usage rates lead many companies to indicate that it was difficult to justify investment in the software without the potential for more tangible gains.

Security concerns

A large challenge faced by developers and users is found in striking a balance between ease of use in the CRM interface and suitable and acceptable security measures and features. Corporations investing in CRM software do so expecting a relative ease of use while also requiring that customer and other sensitive data remain secure. This balance can be difficult, as many believe that improvements in security come at the expense of system usability.

Research and study show the importance of designing and developing technology that balances a positive user interface with security features that meet industry and corporate standards. A 2002 study shows, however, that security and usability can coexist harmoniously. In many ways, a secure CRM system can become more usable.

Researchers have argued that, in most cases, security breaches are the result of user-error (such as unintentionally downloading and executing a computer virus). In these events, the computer system acted as it should in identifying a file and then, following the user’s orders to execute the file, exposed the computer and network to a harmful virus. Researchers argue that a more usable system creates less confusion and lessens the amount of potentially harmful errors, in turn creating a more secure and stable CRM system.

Technical writers can play a large role in developing customer relationship management systems that are secure and easy to use. A series of 2008 research shows that CRM systems, among others, need to be more open to flexibility of technical writers, allowing these professionals to become content builders. These professionals can then gather information and use it at their preference, developing a system that allows users to easily access desired information and is secure and trusted by its users.

As per the objectives laid down in the telecom policy, the Indian government liberalized the Telecom sector by allowing private sector participation for both basic and value-added services. Change in economic thinking coupled with lack of resources to upgrade and invest in infrastructure forced this policy change. As an initial and immediate result of privatization, the private players were given licenses to provide Cellular Services initially in four metro cities and subsequently, they were given licenses to operate in 19 cities apart from the four metros. As for the Basic Services, the government in the beginning, decided to adopt a duopoly strategy, by allowing only two players to operate in a telecom circle, of whom one is the private player other than the existing government owned service provider. Despite the government making several concentrated efforts through the Five-year plans, to provide good communication system to the people of the country, due to increasing population, non-accessibility to remote rural areas and non-availability of adequate resources, the national tele-density stood at 1.1 in 1995-96, which was far from the global average of 12 at the same period.

The change of government paved way for reforms in the sector and the New Telecom Policy (NTP) of 1999 was initiated to overcome the flaws in the telecom policy announced in 1994, and to go with the Supreme Court recommendations to allow unrestricted entry in the telecom sector. The primary objective of the NTP was to increase the national tele-density to 15 by the year 2010. This meant installation of 130 mn more lines at an estimated expenditure of about Rs.5000 bn from the year 2000 to 2010. This investment requirement could not have been met by DoT alone. In order to meet the investment targets, it was imperative that multiple players be allowed to compete in the market. 

Entry of Private Players During the monopoly service provider regime, where only one government owned telecom service provider existed, the market forces of demand and supply were controlled by the monopoly service provider. The demand was very high, not adequately matched by the supply of telephone lines. Telephones were not given on demand and people had to wait for a telephone connection for years. Reports reveal that the waiting time in the pre-privatisation era was more than a year, in some areas the waiting time was more than 5 years. Lack of adequate investments in capacity improvement and exchange automation also contributed to this long waiting time. Another factor that contributed to this was the huge demand for telephone service in a 100-crore populated country. For one telephone service provider to cater to the communications requirement of the entire country was an uphill task.

Subsequent to the announcement made in the NTP 1999, the government started issuing licenses to multiple private service providers to provide services in each telecom circle. The private service providers started their operations in the year 2000. Thus, the sector that was characterized by a monopoly market structure slowly moved into a competitive environment, with multiple players offering a variety of services. The competitive environment is also witnessing a change in the preference patterns of the consumers, which is evident from their acceptance of private products in the last four years. Thanks to privatisation, the telecom industry of India is now witnessing a gradual and steady shift from a monopoly market to a competitive market. The market witnesses multiple service providers, providing

the basic as well as value-added services to the subscribers. Privatisation of the sector and the subsequent multiple entry of private service providers into the market, have made the state owned telecom players wake up to reality and realize the importance of satisfying a customer. BSNL and MTNL had lost 2 million fixed line subscribers as on December 2003, and the PSUs are pulling up their sleeves to fight the competition. 

The industry is experiencing a transformation from being a monopoly market to a competitive market. When there is monopoly, the customers are left with no choice but to accept whatever is given by the monopoly service provider, but in a competitive environment, consumers can exert their preferences and the service providers need to map the consumer expectations and match them with their product and service delivery in order to sustain in the market. The market, now with private players and a competitive environment, has necessitated the re-structuring of the functions of players. With liberalization and subsequent demonopolisation in the telephone segment, the scene has changed. The competitive environment has stolen a big share of subscribers from DoT. With privatisation in the Indian Telecom industry, the most excited are the consumers, who are emerging as kings in the market, as is the case with any market in a competitive environment.

Need for CRM in Telecom Sector  The beneficiaries of the competition being consumers, the telecom players in today’s environment are required to design and deploy customer-centric strategies not only to grab a share in the market but also to sustain in the market in the long-run. The players have realized the importance of constant service-quality delivery to the customers for long-run sustainability. Customer relationship signifies identifying the needs of the customers and stretching out ways and means to satisfy them. To be precise, it means achieving high customer profitability—customer revenues over and above customer costs, which demands matching customer expectations with customer satisfaction. The high cost of customer acquisition is making today’s businesses understand the importance of retaining the customers for long-run sustainability. 

Customer Relationship Management (CRM) aims at narrowing the gap between the company and its customers. In Telecom Sector, CRM plays a vital role in not only bringing the customers close to the company, but also in identifying the changing behavioral pattern of the customers. In technology-dynamic markets like telecom, an efficient CRM system is essential, since the customer attrition is high due to the presence of close substitutes and near-zero switching costs. The book aims at throwing light on the CRM practices commonly followed in the telecom sector and their applicability to several aspects of the service delivery process.

Section IIndian Telecom Industry: A Prospective View This section consists of three articles that comprehensively cover the past, present and future of the Indian Telecom Industry. The first article, “Indian Telecom: Growth and Transition” is by N M Shanthi. The article presents a comprehensive note on the path of growth and trends and transitions in the Indian Telecommunication scenario. It provides a picture of the important events that transformed the Indian Telecom Sector dating from 1851 to 2004. It analyses the status of Indian telecom industry by providing vital figures and statistics on various economic indicators in the telecom segment—pre and post privatization. It provides an insight into the sector under five headings: Telephone Network, Teledensity, Village Telephones, Foreign Direct Investment and Role of Private Players. It also presents an overview on global telecom scenario and India's position. 

The second article, “Seven Telecom Trends for 2005” is by Kushan Mitra. The article throws light on the growth prospects of the industry for the year 2005. The emphasis given to the value-added services as an important revenue earner for the service providers is also analysed in the article. It presents an analytical insight into the segments that will experience growth, like mobile telephony, mobile instruments, wire lines, WLL services & broadband. It also covers the trends in regulations and a note on state Access Deficit Charges (ADC) in 2005. 

The last article in this section, “The Changing Phase of Indian Telecom Industry: What Lies Ahead” is by Krishna Chaitanya V and N Madhuri. The article maps out the future of Indian Telecom Industry. It provides an insight into the Indian telecom industry, in comparison with 13 countries around the world in terms of number of subscribers, in figures and graph. It also analyses the regulatory developments in the segment, the demand supply gap and also the competitive scenario in the industry. The future growth opportunities and challenges are discussed under separate headings. In the concluding remarks, the prospective picture of the Indian Telecom for the year 2010 is also analyzed. 

Section IICRM in Telecom: Concepts  The section covers the CRM concepts for Telecom Sector through 10 articles, which talk about the need and effectiveness of CRM in Telecom sector and also throws light on contemporary concepts like Churn Management.

 “Successful CRM: Turning Customer Loyalty into Profitability”is by Bob Thomson. The article emphasizes the importance of CRM and effectiveness of CRM as a profitability booster. It also explains the most-valid considerations for CRM through a series of cases from the service industry in USA. It further analyses the causes for shortfalls in the CRM success and suggests a successful deployment option.

 “Building Successful CRM” is by Prof. R K Gupta. The author suggests a customer-driven business model for CRM by iterating to think the model as a “Loyalty Machine”. The article throws light on 17 key issues governing customer loyalty. 

 “Customer Retention and Acquisition for Telecommunications”is by Michael Meltzer. The article explains as to why customer retention is more important than customer acquisition. The author states how billing acts as an essential part of CRM, how smarter acquisitions help in saving costs and how problems with pre-pay phones are solved through effectively managing the marketing mix.

 “Essentials of a Good CRM Model for Telecom Industry” is by Prof. Sriram Rajan. The article examines the pointers for a good CRM Model and a CRM Model suiting the organizational and market requirements is also discussed in detail. It then moves on to study the present scenario of the mobile telephony in India, and also presents an overview on churn and reasons for churn in the telecom segment.

  “CRM in Telecom: Best Practices in Action!” is by N Chandra Kumar. The article discusses the best practices adopted by leading vendors in the process of designing a CRM solution, addressing specific problems faced by the Telcos. 

 “Churn Management Solutions Key to Telecom Bottom Lines”is sourced from Express Computer. The article discusses the Churn management imperatives for Indian telcos. It presents a comparison between the churn rates in various countries in the Asia-Pacific. It explains the factors influencing churn and also the impact of churn on profitability motives of the telcos. 

 “Predictive Churn Management Solutions for Customer Retention in Telecom” is by N M Shanthi. The article presents an overview on the state of hyper-competition in the mobile segment that is leading to churn and need for CRM to control churn. It discusses the Impact of CRM and Churn management solutions on relationship management in Cellos. It recommends Predictive Churn Models to control Churn and a review on the success of the same when adopted by some telcos in India.

 “The Changing Role of Billing” is by David Stark. The article deals with both vendor and customer perspective, discusses the impact of reorganization, specifically in telecom industry, in the context of billing and CRM. It also analyses the need for responding to customer demands and the challenges faced by the vendors while attempting the same. 

 “A Framework for Measuring Effectiveness of CRM” is by Dr. K Elangchezhian and D Malmarugan. The article talks about two approaches for measuring the effectiveness of CRM- Planned and Event-driven approaches. It throws light on the quantitative methodology to be adopted for measuring effectiveness of CRM, by selecting internal metrics, and arriving at a regression model of best fit. 

 “Status of CRM in India: Findings of a Survey of Service Firms” is by Dr. G Shainesh and Ramneesh Mohan. The article presents the results of a survey done on the status of CRM in four service industries in India: Finance, Hospitality IT and Telecom. The broad objectives of the survey were to determine the approach that is adopted by Indian Service Firms for Relationship marketing, focusing on the beliefs of managers of the service firms as regards the CRM methodologies adopted by their firms. The parameters like Quality Assurance, Customer-centric Business, Employee empowerment, Collection of customer Information are analyzed to understand the process of implementation of CRM among the different sectors.

Section III:

The section pertains to successful application of CRM in the Telecom sector. It documents a total of 6 case studies, out of which three pertain to Telecom companies operating in India and three telcos from around the globe.

The telecom industry has experienced greater fluctuation with regard to customer relations that possibly any other. When telecom was a monopoly industry, customer care was far from a critical success factor. Monopoly (or oligopoly) telecom companies cared more about their delivery networks than achieving a positive customer experience with captive customers. However, in 1984 when AT&T was declared an illegal monopoly by the US government and split apart, the industry was forced to change. The wireless industry was born, new technologies such as CTI (computer telephony integration), IVR (interactive voice response) and real-time bill inquiry appeared, and customer care made a comeback as a requisite process to survive and thrive. While the telecom industry experienced a decline with the dot com bubble at the turn of the century, since the 2003 U.S. economic upswing, communication service providers (CSPs) have again increased their CRM software investments in order to grow customer wallet share and converge services such as triple and quadruple play.  CRM software systems help telecom operators manage and control the single most concern that faces them in the light of increased competition - customer turnover. Customer analytics has become a boom for telecoms and is now a standard part of CRM applications such as Customer Service Management, Call Center Support and Sales Force Automation (SFA). CRM solutions for the telecom industry equip telcos with competitive advantage by providing the tools to identify and retain profitable customers. 

In a Telecom environment, CRM software plays additional, specialized roles beyond the traditional account, contact and activity management. Telecom

CRM systems help manage customer churn by analyzing data collected from other touch-points across functional areas like sales and service. When integrated with transactional data like usage and call patterns, analysis reveals rich insights and intelligence into customer behavior and helps identify and mitigate customer churn.  An increased number of competitors, higher consumer expectations, fast and frequent consumer switching from one supplier to another and a high dependence on economic conditions have converged to result in an increasingly challenging telecom market.  Unlike most other industries, CRM systems in the communications industry battle with established billing vendors for market share. CRM software criteria particularly useful in the communications and media industry include flexible up-sell and cross-sell support, sophisticated multiple party relationship controls, support for sale opportunities over multiple periods (often based on a subscription type agreement), close CRM integration with the sale order fulfillment process, integration with Web 2.0 and social media tools and built-in or integration with content management systems. CRM systems should further empower CSPs to migrate from costly sales and service channels such as call centers to more cost-effective channels such as self service, email, and interactive voice response (IVR) systems.