The link between strategic CRM systems and revenue in the South African cellphone industry

Abstract

The increase in globalisation and disruptive technologies has created narrower margins between industries. Organisational agility and innovation have become strategic enablers for survival in highly competitive markets which require constant evolution in products and services to appeal to the target markets. These developments can only be achieved by deeper understanding of these factors while building and maintaining mutually beneficial and sustainable relationships between a business and its customers. With the introduction of CRM (Customer Management Relationship) applications, businesses have become customer-centric, channelling energy and resources to customer loyalty and retention. There is a mutual benefit where meaningful relationships are nurtured and developed with the provision of appropriate products and services for customers which in turn provides a return on investment for business. Customer Relationship Management has become a major strategic driver that enables business to remain competitive and have a transient advantage. It is essential for business today to have effective CRM systems and tools that use data mining techniques as a foundation. By employing models developed from past research and using the work of various authors as a foundation, a fundamental conceptual model for the South African cell phone industry was developed for the purpose of this study. Application of this model facilitated a critique of existing strategy while clearly outlining areas for development in the case study company. The initial phase was an analysis the organisation’s strategy to determine its relevance and alignment to CRM. Data mining classification, segmentation and association functionalities were used to gain insights from customer information regarding service type (voice or data) preferences and frequency of use by geographical area. This process also revealed market share information that could be affected by external factors such as economic conditions. Efforts to grow revenue with notable returns by the company under review are also revealed, and areas of concern are highlighted. These customer insights allowed for calculation of revenue growth per area based on product use with the assumption value for ARPU (Average Revenue Per User) based on historical industry data. Ranking of the best and worst areas based on revenue, sales and service type was assessed by geographical area. The study’s foundation rests on evidence of successful CRM strategy implementation. The study concludes that this success is attributable to effective CRM systems that are aligned with customer centric business objectives. This needs to be driven by top management down through the business to be successful. With all these factors taken into consideration, this study concludes that strategic CRM application can increase business revenue in the South African cell phone industry.