2012

Warwick Business School

[INFORMATION SYSTEM] Word Count: 1498

Content Introduction…………………………………………………………………………………………..…p.2 The Landscape of the Airline Industry in 2004……………………………………...………………..p.2 Background of KLM Royal Airline…………………………………………………………………....p.2 Defining Customer Relationship Management System……………………………………………….p.3 Strategic Alignment of CRM system in KLM: The Mean to Achieve the End ……………………..p.4 4 Propositions that can reflect the usefulness of CRM……………………………………………......p.4 Proposition1: A Developed Vision and Strategy……………………………………………...p.4 Proposition2: The Positive Impact of CRM Strategy to CRM Information, CRM Technology and CRM Processes ……………………………………………………………...p.5 Proposition3: Impact of Information, Technology and Processes on Organizational Collaboration and Valued Customer Experience..…………………………………………...p.7 Proposition4: Positive Impact of Valued customer experience, Organizational Collaboration on Metrics ………………………………………………………………………………………p.8 Conclusion……………………………………………………………………………………….………p.8 Appendix…………………………………………………………………………………………………p.9 Bibliography……………………………………………………………………………………………p.11

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Introduction In the field of business studies, information system (IS) is said to be one of the most significant components that adds value to the products, services and the companies. To achieve these, IS ranging from knowledge management to ERP are introduced. This is essay will illustrate the significance of CRM through the case study of KLM and it is believed that to a large extent, the CRM can bring success to a company if it can be used appropriately. The Landscape of the Airline Industry in 2004: The consumer-focused airline industry in the year2004 was undergoing a period of hardship due to the economic downturn and the increasing oil price. However, there were lots of opportunities could be found in this competitive industry such as the increased purchasing power, industry deregulation, improved technology, disintermediation and commoditization occurred. According to IBM Instituted for Business Value, only by adopting a consumer-centric approach can the airline corporate survive from the competition. (IBM, 2004) To achieve this, CRM can be seen as a good way out. Background of KLM Royal Airline: In response to the challenges, KLM strived for cost and differentiation advantages. Through an extensive cost-cutting programme (not by CRM), the cost base was reduced by Euro650 million. In addition, the KLM executives decided to differentiate the company ‘from its competition by offering a superior customer experience at every interaction point with its customers.’ (Viaene & Cumps, 2005, p. 544) Since then, an attempt to infuse the CRM into the KLM Circle of Contacts (Appendix 1) to achieve this objective was made. As a result, the net income KLM was improved from -Euro416millions to Euro24millions (KLM Royal Dutch Airlines, 2004).

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Defining Customer Relationship Management System To start with, it is believed that the purpose and components of CRM has to be discussed. CRM can be defined from different approaches ranging from a narrow IT-oriented definition to a broad customercentric definition. (Payne, et al., 2005) According to recent researches, there is a convergence of the above definitions and Roger concluded that CRM is now aiming at creating both firm and customer value. (Roger & Martha, 2005) In addition, CRM has shifted the focus to retaining and building relationships (Reinartz, et al., 2003). Through appropriate adoption of CRM and the customer-centric approach, the firm performance can be further developed (Boulding, et al., 2005). In order to achieve this objective, the Executives of KLM developed the CRM with the following components.

(Peelen, et al., 2006, p. 5)

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Strategic Alignment of CRM system in KLM: The Mean to Achieve the End As mentioned, the ultimate goal of KLM was to differentiate itself in to a customer-centric