Customer Relationship Management In Education

Educational institutions worldwide are undergoing fundamental shifts in how they operate and interact with their “customers”: students, alumni, donors, faculty members, and staff members. Kotler and Fox (1995) state that “the best organization in the world will be ineffective if the focus on ‘customers’ is lost. First and foremost is the treatment of individual students, alumni, parents, friends, and each other (internal customers). Every contact counts!” The concept of Customer Relationship Management (CRM) is an exciting one, especially as the education market becomes more competitive. Deregulation and a blurring of the boundaries, coupled with increased competition on the international front are forcing institutes to reconsider the mechanisms they use to attract and retain suitably qualified prospective students and forge relationships with corporate clients. Similar to ERP, CRM solutions focus on automating and improving processes, although the focus is on front office areas, such as recruiting, marketing, customer service, and support. In this paper, we present CRM as internal business processes—in areas such as finance, grants management, student information, enrollment, inventory management, and human resources—and freed them from some of the minutia found in day to day operations.

1.    Introduction:    Education is one of India’s prime Industries. While its contribution to nation building is well known and widely reported, its importance in terms commercial value is less appreciated. Education industry is estimated to be more than Rs. 20,000 crore and this figure is more than the size of the domestic software industry or the automobile industry. Apart from being among the largest sectors, education sector is also among the fastest growing sectors of the country. With the enviable combination, of large size and high growth, no wonder education sector is among the most attractive industry sectors in the country today.
During the mid-1980s and the late 1990s, many colleges and universities began restructuring and reengineering their operating processes to cut costs and become more efficient while responding to increased competition. Yet these organizations also realized that building the in-house technology necessary to achieve these goals was expensive, difficult, and time-consuming. As a result, many turned to enterprise resource planning (ERP) applications. These applications helped them automate and optimize their internal business processes—in areas such as finance, grants management, student information, enrollment, inventory management, and human resources—and freed them from some of the minutia found in day-to- day operations.
The focus is currently shifting from improving internal operations to concentrating more on customers. Higher education customers are demanding more attention and immediate service—that is, “Internet time.” Proactive institutions are now adjusting their practices by refocusing their efforts externally. Because of the need to concentrate more on customers, many institutions are once again turning to technology—this time to customer relationship management (CRM) software. Similar to ERP, CRM solutions focus on automating and improving processes, although the focus is on front office areas, such as recruiting, marketing, customer service, and support. CRM goes several steps further than ERP by helping institutions maximize their customer-centric resources.

2.    What Is CRM ?: Before we begin to examine the conceptual foundations of CRM, it will be useful to define what CRM is. A narrow perspective of customer relationship management is database marketing emphasizing the promotional aspects of marketing linked to database efforts. Another narrow, yet relevant, viewpoint is to consider CRM only as customer retention in which a variety of after marketing tactics is used for customer bonding or staying in touch after the sale is made. Shani and Chalasani define relationship marketing as “an integrated effort to identify, maintain, and build up a network with individual consumers and to continuously strengthen the network for mutual benefit of both sides, through interactive, individualized and value-added contacts over a period of time”.

CRM is both a business strategy and a set of discrete software tools and technologies, with the goal of reducing costs, increasing revenue, identifying new opportunities and channels for expansion, and improving customer value, satisfaction, profitability, and retention.

CRM software applications embody best practices and employ advanced technologies to help organizations achieve these goals.CRM focuses on automating and improving the institutional processes associated with managing customer relationships in the areas of recruitment, marketing, communication management, service, and support. CRM takes a very customer-centric view of the entire customer life cycle, which means that a CRM business strategy places the customer at the center of the organization’s universe.
From the perspective of the customer, a CRM business strategy allows interaction with the college or university from a single entity that has a complete understanding of their unique status. In the case of a student, this might be seen through the interaction with and between the admissions, registration, financial aid, student accounts, and housing offices. For a faculty or staff member, a CRM business strategy would optimize interaction with departments administering benefits, payroll, staff training, information technology (IT), or facilities. From the perspective of the college or university, the CRM business strategy provides a clear and complete picture of each individual and all the activities pertaining to the individual.

CRM consists of three components:
i.    Customer
ii.    Relationship, and
iii.    Management
i.    Customer: The customer is the only source of the company’s present profit and future growth. However, a good customer, who provides more profit with less resource, is always scarce because customers are knowledgeable and the competition is fierce. Sometimes it is difficult to distinguish who is the real customer because the buying decision is frequently a collaborative activity among participants of the decision-making process .Information technologies can provide the abilities to distinguish and manage customers. CRM can be thought of as a marketing approach that is based on customer information. In education system our customers are students, alumni, donors, faculty members, and staff members. The customer lifecycle is made up of three core processes: - Customer Acquisition, Customer Retention and Customer Development (see fig 1 below)
ii.    Relationship: The relationship between a company and its customers involves continuous bi-directional communication and interaction. The relationship can be short-term or long-term, continuous or discrete, and repeating or one-time. Relationship can be attitudinal or behavioral. Even though customers have a positive attitude towards the company and its products, their buying behavior is highly situational. For example, the buying pattern for airline tickets depends on whether a person buys the ticket for their family vacation or a business trip. CRM involves managing this relationship so it is profitable and mutually beneficial.

iii.    Management: CRM is not an activity only within a marketing department. Rather it involves continuous corporate change in culture and processes. The customer information collected is transformed into corporate knowledge that leads to activities that take advantage of the information and of market opportunities. CRM required a comprehensive change in the organization and its people.






3.    Drivers for CRM Application: Competition for customers is intense. From a purely economic point of view, firms learned that it is less costly to retain a customer than to find a new one. The oft-quoted statistics go something like this:
1.    By Pareto’s Principle, it is assumed that 20% of a company's customers generate 80% of its profits.
2.    In industrial sales, it takes an average of 8 to 10 physical calls in person to sell a new customer, 2 to 3 calls to sell an existing customer.
3.    It is 5 to 10 times more expensive to acquire a new customer than obtain repeat business from an existing customer.
4.    A typical dissatisfied customer tells 8 to 10 people about his or her experience.
5.    A 5% increase in retaining existing customers translates into 25% or more increase in profitability.
In the past, the prime approach to attracting new customers was through media and mail advertising about what the firm has to offer. This advertising approach is scattershot, reaching many people including current customers and people who would never become customers. For example, the typical response rate from a general mailing is about 2%. Thus, mailing a million copies of an advertisement, on average yields only 20,000 responses.
Another driver is the change introduced by electronic commerce. Rather than the customer dealing with a salesperson either in a brick and mortar location or on the phone, in electronic commerce the customer remains in front of their computer at home or in the office. Thus, firms do not have the luxury of someone with sales skills to convince the customer. Whereas normally it takes effort for the customer to move to a competitor’s physical location or dial another 1-800 number, in electronic commerce firms face an environment in which competitors are only a few clicks away.

4.    Why Implement a Higher Education CRM Business Strategy? : Higher education is in much the same position with CRM as it was in with ERP—just far enough behind the commercial sector to gain from the lessons learned and the maturation of the technology. Departments and offices work as separate entities in many colleges and universities today. Faced with divisional boundaries, it is often very difficult for these different institutional functions to focus on their customers in a coordinated fashion. By providing a common platform for customer communication and interaction, CRM solutions aim to eliminate the organizational stovepipes that hamper proactive customer interaction. CRM applications are also designed to increase the effectiveness of staff members who interact with customers or prospects. The use of CRM applications can lead to improved customer responsiveness and a more comprehensive view of the entire “cradle-to-grave” customer life cycle. CRM solutions that tie directly into ERP systems are particularly powerful because institutions can take customers through a closed-looped set of well defined steps and processes to satisfy their needs. Whereas CRM applications provide the framework for embodying, promoting, and executing best practices in customer-facing activities, ERP provides the backbone, resources, and operational applications to make organizations more efficient in achieving these goals.
Most exciting of all is CRM’s ability to promote and enable e-business, which is the seamless, Web-based collaboration between an institution and its customers, suppliers, and partners. CRM applications track and manage interactions and transactions with various customers across multiple channels, including the Web. For institutions with a high degree of personal interaction, such as admissions recruiters or development officers, CRM can extend these channels to the Web by providing a framework for managing the interactions and transactions. CRM can also enable purchase of products or services on-line, and provide Web-based services and support, all personalized for the individual customer.

5.    The modules within CRM for Education: The modules within CRM for Education will reduce many administrative costs faced by educational establishments by improving procedures, increasing productivity, streamlining operational processes and improving the flow of information throughout the organization.
The modules within the CRM for Education application will include
1.    Enquiries Management: tracking initial enquiries from new students, commercial businesses, schools and all other forms of potential business opportunities.
2.    Marketing Management: forms for correspondence tracking (letters, e-mail, SMS etc) and literature\prospectus fulfillment procedures.
3.    Contact Management: classification and organizational view on all an institution's activities and contact with third party organizations.
4.    Events\Campaign Management: activities such as open days and other general institution events are controlled at attendee level with room booking, car parking allocation and on-line status reporting as standard.
5.    Students Union\Clubs and Societies: individual details of student unions, clubs and other societies can be shared across the institution.
6.    Alumni and Lifelong Learning: provides a rich source of vital information for selective contact with all past students.
7.    Help Desk Management: as well as traditional help-desk functions, the system can be extended to other operational areas where discrete communities require a centrally managed help-desk service.

6.    An Example of CRM in Higher Education:Emerging CRM processes and technologies will drive the growth of new types of resources and services. The following example highlights the opportunity to implement a CRM business strategy to support the student during the admissions and recruitment process.
Marketing and campaign management processes and applications can support both targeted admission recruitment and fundraising. For example, the institution may have an enrollment goal to recruit out-of-state students and minorities and to increase the number of students pursuing health careers. An institution would target specific groups, using data analysis to determine which prospects are most likely to apply and why. A personalized mailing campaign would then be launched using both e-mail and traditional mail. Within each mailing, prospects would be given a personal identification code for access to the university. All prospects not responding by any channel (Web, e-mail, phone, fax, or other) would be sent follow-up e-mails.
A prospect receives the e-mail three days before the receipt of the paper letter. The prospect then activates the hyperlink and is linked to the university’s recruitment Web page. The prospect is requested to enter his or her personal identification code and then is linked to a personalized home page and portal. The Web page is customized, based on interests known from the search data. For example, if the prospect is interested in sports or band, links to the university’s athletic department or music club Web pages are provided. Or if the prospect listed health as an occupational choice, there are links to health departments’ Web pages. Finally, there are standard links provided to all prospective students, such as admissions application procedures and forms, financial aid information, and scholarship search programs. The prospect navigates through the site, completes an electronic inquiry card, and requests information on physical therapy programs and financial aid. The university then monitors the prospect’s responses and initiates follow-up communications, as appropriate.

7.    The Impact of CRM on the Higher Education Enterprise (knowledge based): Emerging CRM processes and technologies will drive the growth of new types of resources and services. Within the higher education enterprise, much of this new functionality will be focused in the student area. This exciting new level of student-related functionality and performance will have an impact on students as well as on the administrative staff and management, the faculty, and the institution as a whole. A look at each of the areas affected follows.
i.    Students: Today’s systems have little to offer students, particularly the new breed of technology-savvy students who want to be more in control of their learning environment. Today’s students demand a higher level of access to information about their options, their performance, and their future. They also demand that technology resources be an integral part of their learning experience. The standard for access to faculty and student services will change as students come to expect virtual access to faculty and student services resources. The old ways of interacting with students will become untenable—like expecting them to line up for hours when instead they can choose an institution that can meet their needs on their own terms, on their schedule, with virtual support systems.

ii.    Administrators: A CRM business strategy for a college’s or universities administrative system would also introduce a true self-service system that empowers the administrative team to rethink the investment of administrative resources in institutional services. By shifting responsibility for information maintenance to students and faculty members, and empowering them to complete relevant processes and securely access vital information, the administrative staff can focus on more productive, rewarding, and satisfying activities—such as making personal connections with students and helping them plan for the future.

iii.    Faculty Members: Today’s systems provide little value for faculty members. In many institutions, there is a complete disconnect between student services and instructional programs. This disconnect is often mirrored in the rift between administrative and academic computing. In the new learning environment, faculty and student services are closely linked, dynamically sharing resources and strategies to enable student learning. Envision a time when faculty members can securely access student learning profiles assembled in the admissions process to prepare custom learning options for students who are having difficulty. Imagine a process whereby a faculty member can make immediate student referrals to key support programs on campus—even when working at home. Finally, with a system that is dynamically linked with students, faculty curriculum planners can develop an accurate picture of which technology resources truly make a difference in student learning.

iv.    Advancement: Fundraising is increasingly important in higher education. The objective is to “sell” the organization’s mission to donors. Success is measured by how often gift-giving solicitation results in “taking an order.” Solicitation is often done by volunteers who view fundraising as sales. In the CRM approach, individualized techniques are applied to prospective donors whose connections to the institution have been established through some other relationship, such as that of an athletic supporter or music lover. The CRM approach identifies, selects, and generates lists of targeted customers with current information to build constituencies that continue gift giving long after they or their sons or daughters have graduated. These donors consider their gifts to be investments in values that are important to them. Furthermore, other people value these donors’ views, making them articulate advocates of the institution. Using CRM, the entire institution, not just a small group of volunteer telephone solicitors, is involved and organized around fundraising. Using technology to know that a donor’s last contribution was used to purchase football helmets is of great value when soliciting donations the next time. The ultimate goal is to entice donors to contribute in the future without direct solicitation.
The Institution CRM delivers a new conceptual and structural framework for directing institutional activities to attract and retain its various customers. Following are ways in which all customers of the institution can benefit from increased access to information and services.
• Students, alumni, faculty members, and staff members can access and update information from any Web enabled device, anywhere in the world.
• The evolution from point-to-point integration between applications to a single institution-wide database with integrated business rules and a workflow process library will blur the distinction between student, finance, alumni, and human resource systems.
• The needs of the customer base become the focus  rather than the rigid process structure that is the focus of today’s systems.
• Administrative systems are seamlessly integrated with instructional computing and communications systems.

Most important is the ability of a truly robust set of institutional processes and tools to bring the entire institution together around its people. The work of higher education should be focused on the people it serves, not on its administrative systems.

8.    Conclusion: Faced with widespread economic, technological, and cultural change, academic institutions are looking to enhance the value and effectiveness of their existing customer relationships, while attracting new and loyal customers. As institutions begin embracing e-business and e-learning, the driving forces behind CRM will become even stronger. The notion of effective customer information management as a productivity issue is being replaced by the need for effective customer management as a competitive advantage. Tomorrow’s systems will go far beyond productivity-related features (such as Web-based student registration) to the development of customer information as a strategic advantage. The concept of students, alumni, faculty members, and staff members as “customers” will become a competitive imperative with profound impact on how colleges and universities attract, retain, and serve customers of all types.

9.    References:
1.    Kotler, P., and Fox, K. Strategic Marketing for Educational Institutions. Englewood
2.    Cliffs, N.J.: Prentice Hall, 1995.
3.    HTTP://PAKISTANMBA.JIMDO.COM
4.    CUSTOMER RELATIONSHIP MANAGEMENT (AUTHORS: Paul Gray Professor, Information Science, Claremont Graduate School and Jongbok Byun, Claremont Graduate School, March 2001)