Grave Importance Of Customer Relationship Management

Published Date: 02 Nov 2017

Abstract

The purpose of this dissertation is to find out which of the following parameters of CRM, Quality of Service, Service Features, Access to Service and System of Investigation to Complaints is the most important element in Banking Industry of Iran in order to create customer satisfaction. Literature reviews have been chosen based on their information about service quality, CRM benefits to customers, CRM benefits to businesses, customer value , customer satisfaction, different types of CRM and so on.

We have collected information about two Iranian Banks; Karafarin Bank and Eghtesad Novin Bank (ENB) and explained how they have implemented CRM in their Banking procedures.

From parts of different previous researches we have created a model to test the effect of CRM elements in customer satisfaction in Banks of Iran.

To test our model in reality we prepared and distributed questionnaires between chosen samples. After collecting data we conducted multiple regression analysis to test our hypotheses.

The results show that all four elements of CRM, Quality of Service, Service Features, Access to Service and System of Investigation to Complaints all have positive effect on creation of satisfied customers in banks, but among all mentioned elements Quality if Service is first ranked element since its great significance on customer satisfaction. This was also proved by in Literature Review and other researchers’ papers. Accordingly we concluded that as much as Banks try to improve the quality of their offered services to customers then they will gain more satisfied and of course loyal customers.

1.1 BACKGROUND

Nowadays, many business enterprises like insurance companies, hotels and many other service providers are aware of the grave importance of Customer Relationship Management (CRM) and its potential ability in helping them to acquire new customers and keep existing ones and maximize their lifetime value. They know that close relationship with customers will bring long term benefits to them. Accordingly for establishing close relationship with customers companies need strong coordination between IT and management departments.

The methods of companies business are changing rapidly. There are some issues including government regulation, Technology, customers’ behavior & so on that force companies to evaluate their current business practices with customers.

Among all companies across the global there are financial institutions as well which are re-examining how they are meeting their customer's requirements and developing business plans necessary to align them strategically to gain competitive and profitable advantages.

Companies are involved in very tough competition ever. In order to gain more customers and persuade them to stay loyal, most companies try to satisfy customers by being proactive rather than reactive to their requirements. Even they are trying to find new tools and methods to meet the requirements of customers in best proper way.

Companies try to establish good customer relationship by means of giving better services to the customer. They attempt not only to attract customers, but also work hard to build long term relationships with all business partners including suppliers, customers, employees and distributor. Firms are determined to meet expectations of each stakeholder.

Marketing procedure involves “exchange” relationship between parties. The parties must have the ability to communicate with each other by means of different instruments.

1.2 CUSTOMER RELATIONSHIP MANAGEMENT

When companies started competing to each other, the issue of Customer Relationship Management (CRM) became the center of attention.

Although considerable investments in CRM applications have been done, but still there is lack of researches that demonstrate the benefits of such investments for each corporate. Customers are the most valuable assets of the companies. At the present time people are the most important element in business environment. So every action related to customers will be important to enterprises. One of these actions is implementing CRM system. No institute can accomplish significant business success in the absence of successful CRM implementation.

Nowadays focus has moved from the seller to the customer, therefore the one who dominates the market without any doubt is customer.

The existing business atmosphere differs from business environment of the past and the competition plays special role in gaining success.

The most important factors that can be distinguished between competitors are quality, delivery time, and delivery cost of goods or services along with added value.

The added value is conveyed through a constant and secure connection with the customer.

One of the major tools & steps for creation of value added is CRM. Companies use CRM to communicate with customers, attract and make them loyal to the company.

Today competition between companies has been increased and from the other side the demand and expectation of consumers also have been increased. Therefore new technologies are necessary to be used in order to help to companies for connecting customers to retrieve all the information of them, rapidly. This technology is called customer relationship management system.

The successful implementation of this technology, CRM, will help companies to achieve to the vital purpose of business which is retaining customers & creating competitive advantages by outperforming.

CRM is a strategy for collecting more information about the needs of customers and establishing relationships with them.

Having good relations with customer are success keys in business. In other words CRM is constant way to identify satisfy customers and to keep their customers (Leo, 2005).

CRM methodology enables the organization to understand the customers' needs and behavior better. It introduces reliable processes and procedures for interacting with customers and developing stronger relationships with them. The process helps organization in assimilating information about customers, sales, marketing effectiveness, responsiveness, and market trends. Then this information is used to give insight into behavior of customers and value of retaining those customers. The whole process is designed to reduce cost and increase profitability by holding on to the customer loyalty.

A simple installation and integration of the software package doesn't ensure success. It has to be absorbed into the system. Employees have to be convinced about its positive attributes, and then they have to be trained. The existing business processes have to be modified. The company has to decide what kind of information is to be collected about the customers, what is to be done with the information, and prioritize this accumulated information. The company must drill into this database of its customers and ascertain their buying patterns, product preferences, the potential for add on sales etc.

A good strategy will be integrating every area of touch point with customers like marketing, sales, customer service, and field support. This is achieved with the combination of the people, process, and technology in the business.

1.4 PROBLEM STATEMENT

There are two types of research problems, those which are related to states of nature and those which relate to relationships between variables. At first stage the researcher specifies the problem he wants to study, it means he must decide the general area of interest or aspect of a subject-matter that he would like to inquire into.

Initially the problem may be stated in a broad general way and then the ambiguities, if there are any. Then, the feasibility of a particular solution has to be considered before a working formulation of the problem can be set up.

The formulation of a general topic into a specific research problem, thus, constitutes the first step in a scientific enquiry. Essentially two steps are involved in formulating the research problem. First understanding the problem thoroughly, and second rephrasing it into meaningful terms from an analytical point of view.

The researcher must at the same time examine all available literature to get himself acquainted with the selected problem. He may review two types of literatureâ€"the conceptual literature concerning the concepts and theories, and the empirical literature consisting of studies made earlier which are similar to the one proposed. The basic outcome of this review will be the knowledge as to what data and other materials are available for operational purposes which will enable the researcher to specify his own research problem in a meaningful context. After this the researcher rephrases the problem into analytical or operational terms i.e., to put the problem in as specific terms as possible. This task of formulating, or defining, a research problem is a step of greatest importance in the entire research process. The problem to be investigated must be defined unambiguously for that will help discriminating relevant data from irrelevant ones. Care must; however, be taken to verify the objectivity and validity of the background facts concerning the problem.

In fact, formulation of the problem often follows a sequential pattern where a number of formulations are set up, each formulation more specific than the preceding one, each one phrased in more analytical terms, and each more realistic in terms of the available data and resources.

With regards to our topic and CRM issue actually some researches have done different researches to figure out the precise role of CRM implementation in managing customers and its contribution to customer satisfaction.

Although through the marketing processes and using information systems researchers have developed theories about the effect of CRM applications, but there are limited information about the effect of CRM application on creation of customer satisfaction in different industries.

This thesis poses the research question, what is the effect of CRM applications on creation of satisfied customers in Banking Industry by focus on Iranian Banks?

Nowadays, financial institutions don’t only try to savings and lending loans, but also are forced to learn the advanced and modern rules and tools to provide convenience environment for their customers and satisfy their needs.

Once a bank develops and sustains a solid relation with its customers, its competitors cannot easily replace them and therefore this relationship provides for a sustained competitive advantages. (Gilbert & Choi, 2003).

CRM system is implemented to create boosted interactions with customers by gathering comprehensive information about their need through using different information technologies. CRM is the most important system that its precise implementation can provide many benefits both for the customers and to the business. Banking Industry has huge number of customers and to fulfill their customer requirements and create satisfaction; most of the banks implement CRM system. This thesis tries to identify whether CRM elements are helpful in the banking sector to create satisfaction in customers or not, if yes, then which element is the most important one and has the highest contribution in creation of satisfaction in customers.

1.5 Research Question

The thesis will try to reply to this question that:

“Whether the implementation of Customer Relationship Management in Banking Industry of Iran has any impact on Customer Satisfaction or not?”

In other case do deployment of elements of CRM in financial institutions of Iran has any impact on customer satisfaction or not.

1.6 Research Purpose

The purpose of writing this thesis is to describe and analyze the effects of elements of customer relationship management on customer satisfaction.

Through this dissertation I will try to discuss how banks keep existing customers by creating customer satisfaction. In an environment with increasing competition, more and more literature brings up the fact that companies have started using loyalty programs and customer clubs.

Our guess is that the enterprises have started understanding the importance of taking care of their customers.

Expectations of relations between the satisfied customers and other variables are the most important reasons for the increased interest in the companies to make their customers satisfied. For example, it is expected that a satisfied customer will come back to the same company next time when a purchase is on his mind. One might assume that a satisfied customer tells his friends and colleagues about the advantages of his supplier, so called positive word to mouth. Throughout the research we want to sketch the customer relationship management elements and analyze if these elements have any contribution in creation of satisfied customers in banks of Iran or not?

Hereby in this study we consider CRM elements as Independent Variables & Customer Satisfaction as Dependent Variable.

CRM Elements

Independent Variable

Dependent Variable

Service Features

Customer Satisfaction

Access to Services

System of Investigation to Complaints

Quality of Services

Hypotheses:

“Service Features” element of CRM has positive contribution in creation of customer satisfaction.

“Access to Services” element of CRM has positive contribution in creation of customer satisfaction.

“System of Investigation to Complaints” element of CRM has positive contribution in creation of customer satisfaction.

“Quality of Services” element of CRM has positive contribution in creation of customer satisfaction.

Limitation:

I have chosen to delimit my dissertation to the bank sector because it is an important service sector and it’s very vital for this sector to implement strategies in order to gain customers, make them satisfied and also loyal to their banks. In Iran there are obstacles to collect data from in charge persons in Banks. From the other side there is lack of information as well. So I have only examined the CRM activities of three banks. Lack of enough time also was another obstacle for having extended research.

Exploring and investigating research problem, building and approving research model, preparing and distributing questionnaire, collecting data from banks and customers and analyzing and documenting the results in a limited amount of time all caused some limitations in the scope and size of current research.

At the meantime application of CRM in Iranian Banks is a new and novel issue, in which is one of the causes of difficulties in collecting data.

Because of the importance and effects of CRM in banking sector, I limited my research to this sector, because I believe that banks put more efforts in keeping their customers than any other sector. Because losing a customer for a bank, compared to a private customer, generates a higher loss for that bank because it will need more investment to gain lost customers. So the focus will be on Banking Industry of Iran.

Research Design:

When the research problem is conveyed in clear cut terms, respectively research design is prepared by the researcher and the conceptual structure within which research would be conducted will be stated. The preparation of such a design facilitates research to be as efficient as possible yielding maximal information. In other words, the purpose of research design is to provide for the collection of pertinent indication with minimal expenditure of effort, time and money. But how all these can be achieved depends mainly on the research purpose.

“Research design is the plan and structure of investigation so conceived as to obtain answers to reach questions. The plan is the overall scheme or program of the research. It includes an outline of what the investigator will do from writing hypotheses and their operational implications to the final analysis of data. A research design expresses both the structure of the research problem and the plan of investigation used to obtain empirical evidence on relations of the problem”. (Cooper & Schindler, 2003) In fact, the choice of research design must be appropriate to the subject under investigation. “A good research design will ensure that the information collected will be consistent with the objectives of the study and that the procedures regarding data collection is accurate and efficient.” (Cooper & Schindler, 2003)

7- RESEARCH METHODOLOGY

Research methodology is a collective term for the structured process of conducting research.

According to Clifford Woody research comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating data; making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis.

There are many different methodologies used in various types of research and the term is usually considered to include research design, data gathering and data analysis..

Part of the research methodology is concerned with the how the research is conducted. This is called the study design and typically involves research conducted using questionnaires, interviews, observation and/or experiments.

The term research methodology, also referred to as research methods, usually encompasses the procedures followed to analyze and interpret the data gathered. These often use a range of sophisticated statistical analyses of the data to identify correlations or statistical significance in the results.

The basic types of research are as follows:

Descriptive vs. Analytical: Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. In analytical research, on the other hand, the researcher has to use facts or information already available, and analyze these to make a critical evaluation of the material.

Applied vs. Fundamental: Applied research aims at finding a solution for an immediate problem facing a society or an industrial/business organization, whereas fundamental research is mainly concerned with generalizations and with the formulation of a theory.

Quantitative vs. Qualitative: Quantitative methodology is the type by which you test the significance of your hypothesis, in other words you answer the words: How much? Is there a relationship? Quantitative methods tend to be systematic and use numbers. However, Qualitative methodology is the type by which you are depending on your observations and descriptions. It is subjectively and descriptive, no facts.... This kind of method is used to assess knowledge, attitude, behavior, and opinions of people depending on the topic of your research. In quantitative research the aim is to determine the relationship between one thing (an independent variable) and another (a dependent or outcome variable) in a population.

Conceptual vs. Empirical: Conceptual research is that related to some abstract idea(s) or theory. It is generally used to develop new concepts or to reinterpret existing ones. On the other hand, empirical research relies on experience or observation alone, often without due regard for system and theory. It is data-based research, coming up with conclusions which are capable of being verified by observation or experiment. In such a research it is necessary to get at facts firsthand, at their source, and actively to go about doing certain things to stimulate the production of desired information.

Considering the above explanations, my research is Quantitative Research since its purpose is finding relationship between variables in a population. From the other side we know Quantitative research designs are either descriptive (subjects usually measured once) or experimental (subjects measured before and after a treatment).

My thesis is a descriptive study because it establishes only associations between variables. In a descriptive study, no attempt is made to change behavior or conditions, researcher measures things as they are. In an experimental study researcher takes measurements, tries some sort of intervention, then takes measurements again to see what happened.

From another point of view there are two main research methods to use when approaching a research and they are called induction and deduction. Induction means starting the research from reality, then building up a theory based on the data collected from reality. Deduction means starting with already existing theories and from these formulates hypotheses, and then tests these hypotheses in reality (Saunders et al, 2003).

My approach is induction since I began to collect real data from our sample. Then with collected data I tested my designed research model to see whether formulated hypotheses are true or not. Then I can build up the theory in order to apply it to reality.

My research process includes:

Formulating the research problem;

Developing the hypothesis;

Preparing the research design;

Extensive literature survey;

Collecting the data;

Execution of the project;

Analysis of data;

Hypothesis testing;

Interpretation , Conclusion & Generalizations

Data Collection is an important aspect of any type of research study. Inaccurate data collection can impact the results of a study and ultimately lead to invalid results. Data collection methods for impact evaluation vary along a continuum. At the one end of this continuum are quantitative methods and at the other end of the continuum are Qualitative methods for data collection. (http://www.worldbank.org/poverty/impact/methods/datacoll.htm )

In Qualitative researches the most commonly used data gathering methods can be classified in three broad categories:

in-depth interview

observation methods

document review

In Quantitative researches typical data gathering strategies include:

Experiments/clinical trials.

Observing and recording well-defined events (e.g., counting the number of patients waiting in emergency at specified times of the day).

Obtaining relevant data from management information systems.

Administering surveys with closed-ended questions (e.g., face-to face and telephone interviews, questionnaires etc). (http://www.achrn.org/quantitative_methods.htm)

Quantitative research is concerned with testing hypotheses .

According to Zikmund (2000) and Sounders et al. (2009, p. 256) there are two approaches for collecting data : one is primary and the other one is secondary data collecting. Primary data mostly are collected through observation, interview, and questionnaire. Secondary data is the information collected from the studies that have been done previously and it possible to collect these data from libraries or Internet.

Sounders et al. (2009, p. 360) declares that questionnaire is one of the most widely used techniques for collecting data within the survey strategy and since each respondent answers the same set of questions, it is an efficient technique of gathering responses from a large sample.

Considering the nature of investigation, objective and scope of the inquiry, financial resources, available time and the desired degree of accuracy I have used Quantitative data collection method to collect data, since as we explained above Quantitative research is concerned with testing hypotheses. From other point of view for this study, primary data is one of the used methods in this study because my research strategy is survey & I used questionnaire as a tool to collect the primary data in this research. I distributed questionnaires between clients of banks & also managers in selected bank branch

The second method that I used for collecting data in this research is secondary data. I collected data through available documents in library; including books, papers, magazines (local and international) as well as electronic documents in internet.

2.7 Validity and Reliability

When researchers research they must take the two concepts of validity and

reliability into consideration. A research must have high validity, meaning

that a research must measure what it is suppose to measure. The reliability

must also be high, meaning that a research has to be done in a reliable way.

There is a relation between these two concepts, and therefore researchers

must take both concepts into consideration and they cannot focus only on one

of them (Saunders et al, 2003).

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2.7.1 Validity

Validity means having control of the credibility. There are two main types of

validity, internal and external. The internal validity signifies the degree of

credibility, and means that the questions in the interview should be asked in

line with the purpose of the dissertation. External validity means that the

research is conducted only on the appointed group of respondents. External

validity also involves how applicable the conclusions of the research are on a

general level4.

2.7.1.1 Internal Validity

Our model (see chapter four) is based on the theories (see chapter

three) and these theories are used to explain the variables in the

model.

Face validity: This term is part of the internal validity and is used to

measure the immediate impression of the research. This is a

subjective impression, people can give their opinions on the research,

they can say if the research is meaningful3.

The face validity of this dissertation is that we want to study in what

way banks try to create customer loyalty. The results can later be

compared with how the customers perceive the measures of the

banks. From the research we hope to find what factors are important

for banks in general in order to keep customers and make them loyal.

We tested our model in reality, and to get higher validity and receive

relevant and detailed information we used personal interviews. When

interviews are used there is a chance that the interviewers will

influence the respondents with their own values. We were aware of

this fact and did not try to influence the people we interviewed.

4 http://writing.cobstate.edu/

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During interviews, certain facts can be omitted by the interviewee

because of the integrity of the company. We tried to get higher

validity by interviewing people who are working within the research

area. To increase the validity further, we based our interview

questions on our model. The tutor looked through the questions

before the interviews and contributed with comments and guidance.

When using interviews it is also possible to ask resulting questions

and by this receive more relevant information. We tried to increase

the validity by minimising the time pressure. When we called the

respondents for the first time we explained how long the interviews

would last, approximately one hour. By using personal interviews we

had the opportunity to improvise, discuss and explain the questions

during the interview. This reduced the risk of having

misunderstandings. Our basic questions were e-mailed to the

respondents a couple of days before the interviews took place. The

respondents in each company could have given us excessively

positive answers because they want their company to appear in the

best possible way, but we were aware of this since it could have

affected the validity in a negative way.

2.7.1.2 External Validity

We believe that this research will show how most banks try to create

customer loyalty. Through our interviews we hope to find out how

banks see customer loyalty and how they try to create it. Even if the

banks use different measures when creating customer loyalty, we will

see what factors the banks find important. These factors should be

relevant to banks in general. We interviewed banks to provide

services for most customers. These banks have offices in large areas

of Sweden and also outside Sweden. We chose one savings bank that

represents most of the smaller banks, one commercial bank that

represents most of the larger banks and one foreign owned bank to

represent foreign owned banks. We chose not to interview any niche

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banks because we do not believe they represent banks in general as

they are specialise in small areas of the market5.

2.7.2 Reliability

Reliability means that a research is done in a reliable way. Two different

researches with the same aim and with the same methods will show the same

result if no changes are made to the population (Svenning, 1997). To get

higher reliability, the authors were present during the interviews. A tape

recorder was used as an aid because we did not want to miss any relevant

information. In case of a technical problem, we also took notes during the

interviews. Directly after the interviews, while we still had a good picture in

our heads, we listened to the tape and summarised the material. To avoid

influencing the interviewee, we tried to be as neutral as possible and let the

interviewee speak freely. The same questions were given to all the

respondents. To strengthen the reliability, we constructed two questionnaires.

One that was e-mailed to the respondents in advance (see appendix B), and

one more detailed one for ourselves with additional questions and examples.

We wanted the respondents to speak openly and not be influenced by our

alternatives and examples. When analysing the result from the interviews we

tried to be as objective as possible (Saunders et al, 2003).

Literature Review

Customer Relationship Management Systems

CRM is a new term given to an old concept that emphasizes the importance of relationships in transactions between individuals and it’s not simply a buzzword or business jargon. The foundations of modern business began with the exchange system, in which goods were traded between people on the basis of mutual value. Consequently mutual value was the basis for every transaction that took place in a bazaar. The repetition of these transactions developed into long-term supply and demand relationships between the individuals concerned.

CRM is an information technology industry term that helps a company to organize and manage customer relationships. For instance, if a marketing department conducts a campaign, all of the information about the customers and the program should be available to sale staff, representatives and technical support team of the company. The concern is to distribute the same information to all related departments inside and outside of a company.

CRM is the formation, expansion, maintenance and optimization of long-term relationships between customers and organizations. Successful CRM tries to understand the needs and integrate them with the organization’s strategy, people, technology and business process.

In BT Consulting Julian Garrett (2001) believes that CRM is “The creation of mutual exchange of value between organizations and their customers where both parties recognize that value”, however, for the organization, that value can be measured in terms of revenue, repeat business, referrals and the longevity of a customer relationship.

For the customer, the value does not only lie in the product or service itself but also in their experience as a customer of a particular organization.

CRM is a kind of process and a corporate mission that tries to find better methods to boost the customer experience. It means looking for making the customer interface with sales, Customer Support, Technical Support, Accounting, etc. more friendly, knowledgeable and efficient. Naturally retaining customers is more profitable than replacing them and finding new customers.

Leading organizations use CRM as a class of front-line business applications in order to gain and retain long-term, profitable customers.

CRM is not only a Sales Force Automation (SFA) and customer service, but also is about a comprehensive approach that provides continuous coordination between sales, customer service, marketing, field support and other customer-touching functions. CRM integrates people, process and technology in order to take full advantage of relationships with all customers.

The idea of CRM is that it helps businesses use technology and human resources gain insight into the behavior of customers and the value of those customers. If it works as hoped, a business can: provide better customer service, make call centers more efficient, cross sell products more effectively, help sales staff close deals faster, simplify marketing and sales processes, discover new customers, and increase customer revenues. It doesn't happen by simply buying software and installing it. For CRM to be truly effective, an organization must first decide what kind of customer information it is looking for and it must decide what it intends to do with that information.

In CRM projects, following data should be collected to run process engine: 1) Responses to campaigns, 2) Shipping and fulfillment dates, 3)Sales and purchase data, 4) Account information, 5) Web registration data, 6) Service and support records, 7) Demographic data, 8) Web sales data. (Semih Onut , Ibrahim Erdem,)

In literature, many definitions were given to describe CRM. The main difference among these definitions is technological and relationship aspects of CRM. Some authors from marketing background emphasize technological side of CRM while the others considers IT perspective of CRM. From marketing aspect, CRM is defined by [Couldwell 1998] as “a combination of business process and technology that seeks to understand a company’s customers from the perspective of who they are, what they do, and what they are like”. Couldwell, C., 1998, A Data Day Battle, Computing, 21 May, 64â€"66.

Technological definition of CRM was given as “the market place of the future is undergoing a technology-driven metamorphosis” [Peppers and Rogers 1995]. Peppers, D., & Rogers, M., 1995, A New Marketing Paradigm, Planning Review, 23(2), 14â€"18.

CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer related data and enabled by information technology. CRM is a ‘ core business strategy ’ that aims to ‘ create and deliver value to targeted customers at a profit ’ . This clearly denotes that CRM is not just about IT. CRM ‘ integrates internal processes and functions ’ . That is, it allows departments within businesses to dissolve the silo walls that separate them. Access to ‘ customer-related data ’ allows selling, marketing and service functions to be aware of each other’s interactions with customers. Furthermore, back-office functions such as operations and finance can learn from and contribute to customer-related data.

Access to customer-related data allows members of a business’s ‘ external network ’ â€" suppliers, partners, distributors â€" to align their efforts with those of the focal company. Underpinning this core business strategy is IT: software applications and hardware. Historically, most companies were located close to the markets they served, and knew their customers intimately. Very often there would be face-to-face, even day-to-day, interaction with customers where knowledge of customer requirements and preferences grew. However, as companies have grown larger they have become more remote from the customers they serve.

CRM influences customer experience, and that is of fundamental strategic significance. CRM is an information industry term for methodologies, software and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.http://whatis.techtarget.com/defi nition/0,289893,sid9_gci213567, 00.html . Accessed 29 November 2005.

Customer Relationship Management (CRM) refers to the methodologies and tools that help businesses manage customer relationships in an organized way. For small businesses, customer relationship management includes:

- CRM processes that help identify and target their best customers, generate quality sales leads, and plan and implement marketing campaigns with clear goals and objectives;

- CRM processes that help form individualized relationships with customers (to improve customer satisfaction) and provide the highest level of customer service to the most profitable customers;

- CRM processes that provide employees with the information they need to know their customers' wants and needs, and build relationships between the company and its customers.

Customer relationship management tools include software and browser-based applications that collect and organize information about customers. For instance, as part of their CRM strategy, a business might use a database of customer information to help construct a customer satisfaction survey, or decide which new product their customers might be interested in. http://sbinfocanada.about.com/cs/marketing/g/crm.htm

Customer relationship management (CRM) is a business strategy to select and manage the most valuable customer relationships. CRM requires a customer-centric business philosophy and culture to support effective marketing, sales, and service processes. CRM applications can enable effective customer relationship management, provided that an enterprise has the right leadership, strategy, and culture.

THE CUSTOMER RELATIONSHIP MANAGEMENT PRIMER, Third Edition August 2001, By Bob Thompson

CRM is an integrated information system that is used to plan, schedule and control the pre-sales and post-sales activities in an organization. CRM embraces all aspects of dealing with prospects and customers, including the call center, sales-force, marketing, technical support and field service. The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behavior. CRM aims to provide more effective feedback and improved integration to better gauge the return on investment (ROI) in these areas.

http://www.pcmag.com/encyclopedia_term/0,2542,t%3DCRM&i%3D40485,00.asp

CRM is a business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behavior that satisfies customers and implementing customer centric Processes. http://www.12manage.com/methods_customer_relationship_management.html

Customer relationship management (CRM) is a widely implemented model for managing a company’s interactions with customers, clients, and sales prospects. It involves using technology to organize, automate, and synchronize business processesâ€"principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients to return, and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments. Measuring and valuing customer relationships is critical to implementing this strategy. http://drupal.org/node/1287756

CRM, or Customer Relationship Management, is a company-wide business strategy designed to reduce costs and increase profitability by solidifying customer loyalty. True CRM brings together information from all data sources within an organization (and where appropriate, from outside the organization) to give one, holistic view of each customer in real time. This allows customer facing employees in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strategies to competitive positioning tactics. http://www.destinationcrm.com/Articles/CRM-News/Daily-News/What-Is-CRM-46033.aspx

Once thought of as a type of software, CRM has evolved into a customer-centric philosophy that must permeate an entire organization. There are three key elements to a successful CRM initiative: people, process, and technology. The people throughout a company-from the CEO to each and every customer service rep-need to buy in to and support CRM. A company's business processes must be reengineered to bolster its CRM initiative, often from the view of, How can this process better serve the customer? Firms must select the right technology to drive these improved processes, provide the best data to the employees, and be easy enough to operate that users won't balk. If one of these three foundations is not sound, the entire CRM structure will crumble.

It's a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. After all, good customer relationships are at the heart of business success. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends.

If customer relationships are the heart of business success, then CRM is the valve the pumps a company's life blood. As such, CRM is best suited to help businesses use people, processes, and technology to gain insight into the behavior and value of customers. This insight allows for improved customer service, increased call center efficiency, added cross-sell and upsell opportunities, improved close rates, streamlined sales and marketing processes, improved customer profiling and targeting, reduced costs, and increased share of customer and overall profitability.

For CRM to be truly effective, an organization must convince its staff that change is good and that CRM will benefit them. Then it must analyze its business processes to decide which need to be reengineered and how best to go about it. Next is to decide what kind of customer information is relevant and how it will be used. Finally, a team of carefully selected executives must choose the right technology to automate what it is that needs to be automated. This process, depending upon the size of the company and the breadth of data, can take anywhere from a few weeks to a year or more. And although some firms are using Web-based CRM technologies for only hundreds of dollars per month per user, large companies may spends millions to purchase, install, and customize the technology required to support its CRM initiative

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.

Following provides a definition of each of the five major perspectives on CRM, outlining implications for CRM success that become particularly salient when CRM is defined in terms of one of the individual perspectives.

Perspective

Description

Implications for CRM

Process

Buyerâ€" seller relationships

develop Over time and must evolve.

CRM success is contingent upon a firm’s ability to detect and respond to evolving Customer needs and preferences.

Strategy

A customer’s lifetime value

Determines the amount and kinds of resources that a Firm invests in a particular relationship.

CRM success requires that firms continually assess and prioritize customer relationships Based on their relative lifetime profitability.

Philosophy

Customer retention (and hence profitability) is best achieved through a focus on relationship building and maintenance.

CRM success requires that firms be customer centric and driven by an understanding of customers’ changing needs.

Capability

Long-term, profitable relations result Only when firms are able to

continuously adapt their behavior towards individual customers.

CRM success is contingent upon a firm’s possession of a set of tangible and intangible resources that afford it the flexibility to change its behavior towards individual customers on an ongoing basis.

Technology

Knowledge and interaction

management technologies

represent the key resources

firms need to build long-term,

profitable customer relationships.

CRM success is primarily driven by the

functionality and user acceptance of the

technology firms implement in an attempt to build customer knowledge and manage interactions.

Table 2-1: Dominant perspectives on CRM

Source: (Zablah et al. 2004b)

3.1 Why is CRM Necessary?

Several companies are turning to customer-relationship management systems

and strategies to gain a better understanding of their customer’s wants and

needs. Used in association with data warehousing, data mining, call centres

and other intelligence based application, CRM allows companies to gather

and access information about customers’ buying histories, preferences,

complaints, and other data so they can better anticipate what customers will

want. The goal is to instil greater customer loyalty.

Other benefits include:

􀂉 Faster response to customer inquiries.

􀂉 Increased efficiency through automation.

􀂉 Deeper understanding of customers.

􀂉 Increased marketing and selling, opportunities.

􀂉 Identifying different customers.

􀂉 Identifying the most profitable customers.

􀂉 Receiving customer feedback that leads to new and improved products

or services.

􀂉 Obtaining information that can be shared with business partners.

3.2 CRM Implementation Strategy

For successful CRM, it is very important for the Organisations to have a good

CRM strategy as they plan to implement CRM within their organisations. As

CRM is about creating a competitive advantage by being the best at

understanding, communicating, delivering and developing existing customer

relationships in addition to creating and keeping new customers, similarly

customers have changing needs as their lifestyles alter, the development and

provision of products or services that continuously seek to satisfy those needs

is good CRM.

CUSTOMER REALTIONSHIP MANAGEMENT (CRM) IMPLEMENTATION

A BEST PRACTICES PERSPECTIVE AND A PROPOSED MODEL

© European Centre for Total Quality Management Report No. R-02-01 January 2002 18

Mission statement will focus greater attention on how to deliver customer

satisfaction and organisations will begin to structure themselves around

customer segments and not product lines. A good CRM strategy will take the

business vision and apply it to customer base by asking the questions:

􀂉 What products and services are we offering now and in the future?

􀂉 The products that we are offering are in what market?

􀂉 What are the customer groups for these product and services?

􀂉 Which of these are of most value to the organisation? In terms of

spend? In terms of reliability? In terms of profitability? In terms of

growth potential?

􀂉 What additional needs do the most valuable customer group have?

Additional products? Additional services?

􀂉 What different ways can we be doing business to deliver to our

customers better?

3.3 Designing a CRM Strategy

According to CRM (UK) Ltd, a successful customer relationship management

strategy will address four key areas of the business: Strategy, People,

Technology and Processes. They call this combination of elements the COGWheel Processâ„¢ (illustrated in Figure 2 below).

The handle of the process is the "driver" of the corporate strategy that gives

the "direction" to the company. In turn, the strategic direction moves the two

"enablers": people and technology. The "interaction" of those elements is

the business processes that sit behind successful customer relationship

management.

3.4 Creating Customer Value

Intelligent data analysis provides the mechanisms for managing meaningful

relationships with the customers. Data analysis can direct the design of

marketing communications, the management of quality service delivery,

establish a basis for ongoing dialogue, the development of quality products

and a number of other outcomes that translate into long term profitable

relationships with the only source of sustainable revenues: customer

revenues.

The management of customer value is a cyclical process that has four key

steps (Figure 3).

Source:

Source: CRM (UK) LTD/ SECOR Consulting 2001

The management of customer value is a cyclical process that has four key

steps (Figure 3).

􀂉 Stage 1: Define The Customer Actions

􀂉 Stage 2: Determine The Customers Expectations

􀂉 Stage 3: Stage 3: Design The Customer Value Model

􀂉 Stage 4: Deliver Customer Value Model

3.4.1 Stage 1: Define The Customers Actions

The first stage in creating customer value is to understand the customer base.

Analysis of existing data can provide information about segmentation,

behavioural characteristics, profitability and churn rates that create an

understanding of the customers.

3.4.2 Stage 2: Determine The Customers' Expectations

Although it is difficult to manage, expectations are often the cause of

dissonance that results in loss of customers. Understanding the needs and

wants of customers with regards to the organisations service delivery levels

and product quality is essential if ongoing, mutual value relationships are to

be established and endure.

3.4.3 Stage 3: Design Customer Value Model

The combined understanding of customers' behaviour, needs and wants, the

customer value model will seek to deliver value in the most cost effective

manner. Defining the customer journey, performance measurements and

product offerings will all be critical at this stage.

3.4.4 Stage 4: Deliver Customer Value Model

Implementing the integration of systems, processes, service providers,

business technology and infrastructure in addition to the creation of

measurement systems to monitor progress.

CUSTOMER REALTIONSHIP MANAGEMENT (CRM) IMPLEMENTATION

A BEST PRACTICES PERSPECTIVE AND A PROPOSED MODEL

© European Centre for Total Quality Management Report No. R-02-01 January 2002 21

3.5 Road Map For Implementing CRM

McKinlay et al (2001) propose that a roadmap for implementing CRM is a

strategic plan that identifies how an organization can meet and exceed its

customers' needs. This includes, but is not limited to, assessing how the

sales, marketing and service entities work together to:

1) Gain insight from their customers (e.g. purchase history, desired

products/services;

2) Produce valuable offerings/products (e.g. personalized product), and;

3) Provide the ultimate customer experience (e.g. multiple touch-points,

360 degree view of the customer).

The figure 4 provides a "line of sight" that links the business strategy to

customer expectations, and is described in the following pages. Following

these steps can ensure that the company meets its CRM goals.

[Source: Accenture 2001]

As illustrated above, developing a CRM Roadmap involves aligning an

organization's business strategy with its prioritised CRM capabilities. For

example, if a company's business strategy is to develop products faster to

gain unique market positioning, the capabilities that the company needs to

master should be aligned with that strategy, and might include:

􀂉 Leveraging customer information from the service process (e.g.

integrating customer feedback during service calls with the marketing

department)

􀂉 Effectively managing product mix (measure success by campaign), and

􀂉 Effectively managing sales channel strategy (eliminate conflict between

distribution channels).

5.0 “TEN” Key Steps For Successful Implementation of CRM

Headlines abound with news of CRM application failures with failure rates as

high as 80% being reported. At the same time, technology application

providers continue to sell CRM as the ultimate solution for business success.

CRM, when approached correctly, has the potential to significantly improve

business results. If approached incorrectly, it can result in spend of

considerable sums of money on expensive technology applications without

ever seeing any tangible benefits.

Figure 7 - Proposed Model of CRM Implementation

The following parameters will help ensure that even if the organisations CRM

initiatives don't amount to "salvation", they will yield significant, positive

impacts for the business. The following 10 parameters are selected after

thorough and in-depth research study (carefully comparing) of many different factors discussed and argued by many different experts & Gurus in their

publications, articles, white papers and journals regarding the successful

implementation of CRM within different organisations.

Customer Relationship Management (CRM) is defined in many ways by many researchers.

Dyche’ (2002, p.4) in his book defines CRM as: The infrastructure that enables the delineation of an increase in customer value, and the correct means by which to motivate valuable customers to remain loyal - indeed, to buy again.

According to Jiang (2003), : providing customers with a good experience however and whenever they choose to contact the organization is a key part of managing relationships with them.

Bradshaw and Brash (2001), Ovum (an independent research and consulting company): A management approach which enables organizations to identify, attract and increase retention of profitable customers by managing relationships with them.

Ling and Yen (2001) as: CRM comprises a set of processes and enabling systems supporting a business strategy to build long term, profitable relationships with specific customers. The key objective of CRM is to enhance customers’ value through better understanding of each individual customer’s needs and preferences (Ling and Yen, 2001).

Perspectives of CRM Definition:

1. "CRM is a relationship orientation, customer retention and superior customer value created through process management" ( Ryals & Knox, 2001).

2. “A philosophy of doing business that will affect the entire enterprise” (Newell, 2003).

3. “CRM refers to the idea that the most effective way to achieve loyalty is by proactively seeking to build and maintain long term relationships with customers” (Zablah et al., 2004b).

4. "CRM is a customer-centered enterprise management mode, which discovers the customers’ value

and satisfies their requirements to realize the interaction between enterprise management and customers" (Huang & Wang, 2009).

5. "CRM is a customer-focused business strategy that aims to increase customer satisfaction and customer loyalty by offering a more responsive and customized services to each customer " (Croteau & Li, 2003).

Volume 1, Issue 1, July 2011

6. "Is a strategy used to learn more about customer's needs and behaviors in order to develop stronger relationship with them" (Gupta & Lehmann, 2003).

7. "An enterprise approach to understanding and influencing customer behavior through meaningful communications in order to improve customer acquisition, customer retention, customer loyalty, and customer profitability" (Swift, 2000).

8. "CRM is the strategic use of information, processes, technology, and people to manage the customer’s relationship with a company across the whole customer life cycle" (Kincaid, 2003).

9. "A process to compile information that increases understanding of how to manage an organization's relationships with its customers" (Zikmund et al., 2003).

10. “Resources destined for relationship building and maintenance efforts should be allocated based on customers’ lifetime value to the firm” (Ryals, 2003).

11. "CRM is a strategic approach concerned with created improved shareholder value through the development of appropriate relationships with key customer and customer segment" (Payne, 2006).

12. "CRM is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer. It involves the integration of marketing, sales, customer service, and the supply-chain functions of the organization to achieve greater efficiencies and effectiveness in delivering customer value" (Parvatiyar & Sheth, 2001).

13. “CRM is a key business strategy in which a firm needs to stay focused on the needs of its customers and must integrate a customer-oriented approach throughout the organization” (Liou, 2009).

14. "CRM is a strategic approach for systematically targeting, tracking, communicating, and transforming relevant customer data into actionable information on which strategic decision-making is based" (Karakostas et al., 2005).

15. "CRM is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them." (Tarokh & Ghahremanloo, 2007).

16. "CRM is an enterprise-wide integration of technologies working together , such as data warehouse, web site, intranet/extranet, phone support system accounting, sales, marketing, and production" (Bose, 2002).

17. "CRM is a technology or software solution that helps track data and information about customer to enable better customer service" (Peppers & Rogers, 2004).

18. “CRM is leveraging technology to engage individual customers in a meaningful dialogue so that firms can customize their products and services to attract, develop, and retain customers” (Campbell, 2003).

19. "CRM is an enabling technology for organizations to foster closer relationships with their customers" (Hsieh, 2009).

20. “CRM is the complex of software and technologies, automating and performing business processes in the following areas: sales, marketing, service, and customer support” (Urbanskienė et al., 2008).

21. "CRM is the philosophy, policy and coordinating strategy mediated by a set of information technologies, which focuses on creating two way communications with customers so that firms have an intimate knowledge of their needs, wants, and buying patterns". (Lun et al., 2008).

22. “CRM is a managerial strategy that helps organizations collect, analyze, and manage customer related information through the use of information technology tools and techniques in order to satisfy customer needs and establish a long term and mutually beneficial relationship” (Hung et al., 2010).

CRM Objectives:

In this section organizations’ objectives for CRM will be explained in order to present different views of the issue. Several authors have theorized and defined the CRM objectives as below:

• Objectives by Wilson, Daniel, and McDonald: Wilson et al. (2002) claim that CRM objectives are to increase business opportunities by: improving the process to communication with the right customers, providing the right offer for each customer, providing the right offer through the right channel for each customer, and providing the right offer at the right time for each customer. Wilson, Hugh; Daniel, Elizabeth and McDonald, Malcolm (2002). Factors for success in customer relationship management (CRM) systems.Journal of Marketing Management, 18(1), pp. 193â€"219. http://oro.open.ac.uk/15952/2/SFsFinalSept01.pdf

• Objectives by Greenberg: Greenberg (2001) proposes the following objectives for CRM: increased revenue, improve global forecast and pipeline management, improve win probability, Reduce cost of sales, increase sales representative productivity, and promote sales representative retention. Greenberg, P. (2001) "CRM at the speed of light", Berkeley, McGraw-Hill.

• Objectives by Bayon, Gutsche, and Bauer: Bayon et al. (2002) state that organizations should view following objectives for CRM: closed-loop marketing, better information for better management, and expand marketing channels through the Web. Bayon, T., Gutsche, J. & Bauer, H. (2002) 'Customer Equity Marketing: Touching the Intangible', European Management Journal, 20, 213-222.

• Objectives by Ryals and Knox: according to Ryals and Knox (2001) , the CRM objectives for service applications are: service reduces costs and increases profitability, service improves service delivery, service helps organizations to delight customers, and service helps organizations differentiate their product.

Ryals, L. & Knox, S. (2001) 'Cross-Functional Issues in the Implementation of Relationship Marketing Through Customer Relationship Management.' European Management Journal, 19:5, 534-542

• Objectives by Kim, Suh and Hwang: Kim et al. (2003) for categories of objectives for CRM: customer knowledge, customer interaction, customer value, and customer satisfaction. Kim, J., Suh, E. & Hwang, H. (2003) 'A Model for Evaluating the Effectiveness of CRM using the Balanced Scorecard', Journal of Interactive Marketing., 17:2, 5-19

TYPES OF CRM

Several researchers have presented different views about which types comprise a best CRM consideration. For instance, Reynolds (2002) in her book presented three different types of CRM i.e. operational, analytical, and collaborative CRM. These three different types were also presented in the recent work of (Minna and Aino, 2005). Similarly, Dyche’ (2002, p.13), in his work emphasized more on operational and analytical CRM. However most recently, Buttle (2009, p.4) in his book presented strategic CRM as a fourth type of CRM. In general, these all types of CRM are important because they all have a common objective which is to deliver CRM successfully within the organizations. Therefore, in this section we present and discuss all four major types of CRM.

Operational CRM

Analytical CRM

Communicational CRM

Strategic CRM

3.3.1. Operational CRM:

According to Dyche’, (2002, p.13) Dyche’, J. (2002) “The CRM Handbook, A Business Guide to Customer Rela