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  A Customer Relationship Management Roadmap: What Is Known, Potential Pitfalls, and Whereto GoAuthor(s): William Boulding, Richard Staelin, Michael Ehret and Wesley J. JohnstonSource: Journal of Marketing, Vol. 69, No. 4 (Oct., 2005), pp. 155-166Published by: American Marketing Association Stable URL: http://www.jstor.org/stable/30166558 . Accessed: 14/09/2013 11:37 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at  . http://www.jstor.org/page/info/about/policies/terms.jsp  . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact support@jstor.org.  .  American Marketing Association  is collaborating with JSTOR to digitize, preserve and extend access to  Journal of Marketing. http://www.jstor.org This content downloaded from 194.214.27.178 on Sat, 14 Sep 2013 11:37:39 AMAll use subject to JSTOR Terms and Conditions  DUKE THE Fl JA ECHO( 1 OF BUHNESS TERADATA CENTERfOr CUSTOMER RELATIONSHIP MANAGEMENT at DUKE UNIVERSITY William Boulding, Richard Staelin, Michael Ehret, & Wesley J. Johnston A Customer elationship Management oadmap: What s Known, otential itfalls, and Where o Go The goal of this preface s to describe how the special section on customer relationship management CRM) was developed. In May 2003, Richard Staelin, Executive Director f the Teradata Center for Customer Relationship Management at Duke University, roposed that Journal f Marketing JM) publish special section. The proposal included ctivities hat were designed to promote nteractions mong marketing cademics and practitioners; he goal was to stimulate dialogue and new research on CRM. I found the proposal attractive ecause CRM is a broad-based topic that nterests many marketers. fter xtensive discussion, the American Marketing ssociation (AMA) and the Teradata Center formally greed to cosponsor the special section. Subsequently, here was a con- ference on Relationship Marketing nd Customer Relationship Management cochaired by Michael Ehret, Wesley Johnston, Michael Kleinaltenkamp, nd Lou Pelton) that took place at Freie Universitat erlin n the summer of 2003;1 a conference n Customer Management cosponsored by the Marketing cience Institute nd the Teradata Center) that was held at Duke University n March 2004; and two special sessions on CRM that were featured t the AMA Winter ducators' Conference held in San Antonio, ex., in February 005. The conferences provided many opportunities or ialogue, and the response from marketers who attended these events was enthusiastic. also invited ichard taelin and William oulding Executive Codirector f the Teradata Center) to work with me as consulting ditors for he special section, and they greed. A call for papers requested that uthors submit heir manuscripts o JM by May 2004. The consulting ditors nd I evaluated every ubmission with he assistance of an expert panel that ncluded Leonard Berry, ohn Deighton, Michael Ehret, Christian GrOnroos, unil Gupta, Wayne Hoyer, Wagner Kamakura, Wesley Johnston, Donald R. Lehmann, Charlotte Mason, Carl Mela, Scott Neslin, Roland Rust, Michel Wedel, and Valarie Zeithaml. All submissions underwent M's standard double-blind eview process, and members of JM's editorial eview oard served as reviewers. would ike o express my ppreciation to everyone who participated n the development f the special section. The culmination f our work ogether s a set of nine articles nd two essays that dvance the science and practice of CRM. I hope that hese articles tim- ulate new intellectual iscoveries. -Ruth N. Bolton This article ntroduces he ten articles hat ppear n this pecial ection n customer elationship anage- ment CRM). An overarching oal of this rticle s to provide he eader with roadmap hat laces these rticles William oulding s professor nd Associate ean e-mail: B1 duke. edu), nd Richard taelin s Edward nd Rose onnell rofessor f usi- ness Administration e-mail: staelin@duke.edu), uqua chool f Busi- ness, uke niversity. ichael hret s Assistant rofessor f Marketing, Freie Universitat erlin e-mail: ichael.ehret@wiwiss.fu-berlin.de). Wesley . Johnston s CBIM oundtable rofessor f Marketing, epart- ment f Marketing, eorgia tate niversity e-mail: esley@gsu.edu). The uthors hank uth olton or er nsights, uidance, nd upport n shaping his rticle nd he pecial ection nd he uthors f he rticles in he pecial ection or heir ontributions. hey lso hank he eradata Center or ustomer elationship anagement t Duke niversity, he American arketing ssociation, nd Journal f Marketing or heir up- port or his pecial ection. in the ontext f the CRM landscape. We suggest 1 propo- sitions bout what s known bout CRM and the potential pitfalls nd unknowns hat irms ace n the mplementation of CRM. We also provide ix recommendations or urther CRM research. We organize ur discussion round hese themes efore ffering oncluding omments. What Is Known About CRM Before ssessing what s known bout CRM, we begin by placing he ield f CRM in the verall ontext f marketing thought.2 any years go, economists ntroduced he con- cept of value maximization, hereby firm maximizes 1This onference as cosponsored y the AMA Relationship Marketing pecial nterest roup. 2Space onstraints orce s to ake 40,000-foot erspective n the field. hus, we do not provide n exhaustive eview f the CRM iterature, uch ess he elevant arketing iterature. (c) 005, American arketing ssociation Journal f Marketing ISSN: 022-2429 print), 547-7185 electronic) 155 Vol. 9 October 005), 55-166 This content downloaded from 194.214.27.178 on Sat, 14 Sep 2013 11:37:39 AMAll use subject to JSTOR Terms and Conditions  profits nd consumers aximize tility. oday, we have the concept f CRM. Theorists n this rea still mphasize irm performance nd customer alue, though hey lso talk about he dual creation f firm nd customer alue Payne and Frow 2005; Rogers 005; Vargo nd Lusch 2004). The question we raise is whether he field's focus on CRM sheds light on the understanding f customer nd firm behavior r whether t ust creates more heat. Many ven- dors argue that CRM requires paradigm hift n firm behavior. f this s true, RM is truly really ig new dea. However, thers ontend hat he oncepts f CRM are not fundamentally ifferent rom what conomists ut forward many ears go. If this s so, the following uestions rise: Is CRM anything ther han repackaging f basic market- ing deas that ave extended nd built n the classic eco- nomic aradigm? hould CRM be viewed imply s one of many argon-laden ads that have come and gone in the business world? r s a third xplanation ossible? Namely, does CRM represent he volution nd ntegration f mar- keting deas and newly easible nd cost-effective echnolo- gies? In this view, CRM is neither fad nor a paradigm shift. fter bserving he development f the CRM field, we offer he following roposition: P1: CRM s the utcome f he ontinuing volution nd nte- gration f marketing deas nd newly vailable ata, ech- nologies, nd rganizational orms. To support his proposition, we briefly ocument his evolution. One of the srcinal ig ideas in marketing s that or firms o stay n existence, hey hould not focus n selling products ut ather n fulfilling eeds Levitt 960). Thus, drill manufacturer s in the usiness f providing customer a hole, nd a railroad ompany s in the business f provid- ing transportation. his is a key component f CRM because the mphasis s not on how to sell the product ut rather n creating value for the customer nd, in the process, reating alue for he irm staying n existence). n other words, t s a process f dual creation f value. Levitt (1969) introduced he concept f the augmented roduct, stressing hat onsumers re interested n the total buying experience, ot ust the ore product. gain, CRM relies n this oncept ecause t tries o find he pecific lements f the xchange rocess hat roduce alue o the ustomer. Bagozzi (1974) refocused eople's attention n the actual xchange rocess y reiterating he undamental co- nomic oncept hat n exchange ccurs nly when oth ar- ties perceive hat hey re receiving alue. Almost en years later, erry 1983) shifted he mphasis o the relationship between he company nd the customer. t the time, his interest as in the ervice ector nd the need for he er- vice organization o attract ustomers nd then maintain nd enhance hese ustomer elationships. n the basis of his ideas and related onceptual work Arndt 979; MacNeil 1978; Morgan nd Hunt 994), he oncept f building ela- tionships as expanded o several ifferent omains, uch as industrial uyer -seller elationships Dwyer, churr, nd Oh 1987) and channels f distribution Gaski 1984). Others adopted he dea of building elationships nd extended t conceptually n various ways Boulding t al. 1993; GrOn- roos 1994; Gummesson 987; Webster 002). This body f literature iscusses oncepts hat re relevant o CRM, such as the influence f prior xperience n future ustomer expectations, he different reatment f each customer, nd the value of ong-term elationships. Concurrently, ther marketing cholars turned heir attention o the ore apabilities f the irm hat were neces- sary o develop nd maintain ood customer elationships. In some sense, his was a formalization f the oncept nd processes mplied y the three s (i.e., customer, om- pany, nd competitor) nalysis. s a result, oncepts uch s market rientation Kohli and Jaworski 990; Narver nd Slater 1990), market ocus Day 1994), and market-based learning Vorhies nd Hunt 2005) were developed that emphasized he establishment f good information ro- cesses and capabilities within he firm o understand he needs nd wants f customers, hus making irms more ffi- cient nd effective n managing ustomer elationships. n addition, here was an evolution rom roduct, r brand, management o customer management Sheth 2005) and from roduct ortfolio management o customer ortfolio management Johnson nd Selnes 2004). These transitions were due n part o work n the rea of brand quity, hich recognized hat quity esides n the minds f consumers (Keller 1993); this hifted he ocus of ttention rom rands and products o customers. With hese developments n marketing s a backdrop, there was an explosion of customer ata in the 1980s. Although ome attempts ere made to organize hese data for nalytic urposes, many firms were overwhelmed y this nslaught f potentially seful nformation. n anticipa- tion f hardware nd software olutions o these ata prob- lems, eppers nd Rogers 1993) introduced he oncept f one-to-one arketing, nd Pine 1993) introduced he on- cept of mass customization. endors apitalized n these ideas with ardware nd oftware olutions nd began sing the erm RM to refer o the ollection f data and activi- ties surrounding he management f the customer -firm interface. hese CRM solutions nabled firms o acquire, warehouse, nd analyze data about ustomer ehavior nd company ctions more asily. Using these data and analy- ses, firms egan to focus on acquiring new customers; retaining heir urrent ustomers i.e., building ong-term relationships); nd enhancing hese relationships hrough such activities s customized communications, ross- selling, nd the segmentation f customers, epending n their alue o the irm Payne nd Frow 005). mplementa- tion of these CRM solutions lso required irms o have a customer elational rientation Jayachandran t al. 2005; Srinivasan nd Moorman 005) and to have processes n place to collect, nalyze, nd apply he cquired ustomer information Jayachandran t al. 2005). Thus, he uestion s, What s new bout CRM? On the basis of our preceding iscussion, t could be argued hat CRM is the relabeling f a mixture f different arketing ideas in the extant marketing iterature. owever, we believe hat RM represents n evolution eyond repack- aging of existing deas. Specifically, e posit that CRM goes beyond xtant iterature ecause t requires cross- functional ntegration f processes, eople, perations, nd marketing apabilities hat s enabled hrough nformation, 156 Journal f Marketing, ctober 005 This content downloaded from 194.214.27.178 on Sat, 14 Sep 2013 11:37:39 AMAll use subject to JSTOR Terms and Conditions  technology, nd applications- Payne and Frow 2005, p. 168). ndeed, RM goes beyond customer ocus. Not only does CRM build relationships nd use systems o collect and analyze data, but t also includes he ntegration f all these ctivities cross the firm, inking hese ctivities o both firm nd customer alue, extending his ntegration along he value hain, nd developing he apability f nte- grating hese ctivities cross he network f firms hat ol- laborate o generate ustomer alue, while creating hare- holder alue for he firm. P2: The field f CRM has begun o converge n a common definition. Payne nd Frow 2005) document umerous efinitions f CRM in the iterature see their Appendix). hese defini- tions range from RM as the mplementation f specific technology olutions o a holistic pproach f managing customer elationships hat imultaneously reates oth us- tomer nd firm alue. This plethora f definitions as caused some confusion. arvatiyar nd Sheth 2001) note that prerequisite or n emerging ield o coalesce nto n established ield s for he discipline o establish n accept- able definition hat aptures ll the major aspects of the concept. ayne nd Frow ttempt o provide uch defini- tion. t s possible o quibble bout he pecific ording, ut we agree with he basic elements f their efinition. pecif- ically, RM relates o strategy, he management f the dual creation f value, he ntelligent se of data nd technology, the cquisition f customer nowledge nd the diffusion f this nowledge o the ppropriate takeholders, he evelop- ment f appropriate long-term) elationships ith pecific customers nd/or ustomer roups, nd the ntegration f processes cross he many reas of the firm nd across he network f firms hat collaborate o generate ustomer value. In addition o theoretical evelopment, prerequisite or the pplied development f CRM is that t should demon- strably nhance irm erformance. his s a necessary ual- ity n the valuation f any firm r marketing ctivity e.g., Lehmann 004; Rust t al. 2004). With his n mind, ote that t s not necessarily widely eld belief hat he mple- mentation f CRM activities eads to firm alue. To this end, onsider he numerous rticles hat ppear n the busi- ness press e.g., Rigby, eichheld, chefter 002; Whiting 2001). Nonetheless, e propose he following: P3: Companies ave developed roven RM practices hat enhance irm erformance. Eight f the ten rticles n this pecial section irectly address his proposition. hese articles se different ea- sures f performance n many ifferent ontexts, nd they use various esearch methods. owever, ll eight rticles demonstrate hat CRM activities an enhance irm erfor- mance. or a field hat as come under ttack or not meet- ing his bjective, e believe hat his s a powerful esult. Using a case study pproach, yals 2005) shows hat one of the business nits he studied was able to achieve 270% increase n business unit profits above target) y implementing everal straightforward RM measures. Using multifirm cross-sectional) atabase, rinivasan nd Moorman 2005) show hat irms hat nvest more n CRM activities nd echnology ave greater ustomer atisfaction. Using another multifirm atabase, Mithas, Krishnan, nd Fornell 2005) show that he use of CRM applications s associated with ncreased ustomer nowledge, hich n turn s associated with reater ustomer atisfaction. sing yet another multifirm atabase, Jayachandran nd col- leagues 2005) show that firm erformance easured n terms f retention nd customer atisfaction s greater or firms hat have good relational nformation rocesses n place. Cao and Gruca 2005), Lewis 2005), Thomas nd Sul- livan 2005), and Gustafsson, ohnson, nd Roos (2005) all use data collected within single irm ver ime. Cao and Gruca, ewis, nd Thomas nd Sullivan se data from oth the irm nd ts ustomers o develop pecific RM applica- tions o increase he firm's erformance. ao and Gruca center heir ttention n acquiring he right ustomers; Lewis provides process that dentifies nd considers dynamic ustomer ehavior, hus nabling pricing cheme that ncreases ong-term rofits; nd Thomas nd Sullivan develop decision upport ystem sing n enterprise ata- base that llows he irm o modify ts ommunication es- sage depending n where articular ustomers ive and how they hop. n each case, the uthors how how firm rofits can be increased. Gustafsson, ohnson, nd Roos (2005) examine ustomer ehavior ver ime nd show that ome of the ntermediate elationship erformance easures hat emerge rom he business-to-business iterature e.g., satis- faction, alculative ommitment) irectly nd positively influence ctual behavior n the form f retention ithin business-to-consumer etting. We must mphasize our points here. First, he eight empirical rticles n this special section demonstrate he positive mpact f CRM in a wide variety f ndustry et- tings. hus, uccess with RM is not ontingent n being part f a particular ndustry e.g., financial ervices). ec- ond, we note hat ll of the pplication rticles re narrow rather han omprehensive. hus, hey ind ocal improve- ments n profits. e can only peculate bout what ould be accomplished with a more comprehensive ystems approach; e also express ome oncern hat ocal solutions can sometimes e suboptimal n the ong run. Third, nly Ryals's 2005) study irectly measures oth he costs and the revenues ssociated with he CRM activities o assess overall profits. ewis (2005) and Cao and Gruca 2005) examine profits, ut because of data unavailability, hey must make ssumptions bout osts o generate hese num- bers. All the other tudies se proxies or profits. ecause several f the tudies se customer atisfaction or heir er- formance easure, t s of nterest hat Gustafsson, ohnson, and Roos (2005) show that ustomer atisfaction s nega- tively ssociated with bserved ustomer hurn, hus pro- viding trong vidence hat ustomer atisfaction s a useful precursor f downstream utcomes. owever, t is impor- tant o note hat his ame research ndicates hat atisfac- tion s not the only predictor f downstream erformance measures. This eads to a fourth bservation bout CRM activities and firm erformance. ayne nd Frow 2005) emphasize that ne major lement n any CRM system s the measure- A CRM Roadmap 157 This content downloaded from 194.214.27.178 on Sat, 14 Sep 2013 11:37:39 AMAll use subject to JSTOR Terms and Conditions
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