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A Roadmap For CRM Success: In Light of the Technology CSFs

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A Roadmap For CRM Success: In Light of the Technology CSFs
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  JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF M@RKETM@RKETM@RKETM@RKETINGINGINGING M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (JMIJMJMIJMJMIJMJMIJMMMMM) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011    JM ACADEMY OF IT & MANAGEMENT Page 181 A ROADMAP FOR CRM SUCCESS: IN LIGHT OF THETECHNOLOGY CSFS Muhammad Tahir Jan Faculty of Economics and Management Sciences KENMS,International Islamic University Malaysia IIUM  Azura Omar Faculty of Economics and Management SciencesKENMS, International Islamic University Malaysia IIUM  Osman M. Zain Faculty of Economics and Management SciencesKENMS, International Islamic University Malaysia IIUM  Kalthom Abdullah Faculty of Economics and Management SciencesKENMS, International Islamic University Malaysia IIUM  Abstract:   The primary objective of this paper is to develop a conceptual  framework that depicts the impact of technology related critical success factors(CSFs) on customer relationship management (CRM) success, namely, customer  satisfaction. This paper uses a qualitative methodology that comprises of acomprehensive literature review of academic researches. Evidences from theextant literatures have suggested that four main technology CSFs; sales forceautomation, data warehousing & data mining, the internet, and call centres will  positively affect customer satisfaction. It is also revealed that trust and privacy play the role as mediating variables between technology CSFs and CRM success.Given that this paper is a conceptual paper, there is need to embark on empirical data gathering to validate the conceptual model presented. The paper suggest that in order to satisfy the customers and make the CRM strategy work effectively, there is a need for the organisations to consider the technology CSFsbecause it works as an enabler of the whole CRM process. This paper primarilyconceptualise a model that would assist in determining the impacts of technologyCSFs on CRM success. It generally provides the organisations with CRM focus,by complementing recent works that have been conducted on the role of technology CSFs in achieving CRM success. It concluded by proposing a model  for future testing. Keywords : Customer Relationship Management (CRM), CRM success,technology CSFs. Intro^u]tionIntro^u]tionIntro^u]tionIntro^u]tion n today’s business environment, which is characterised by an increasingly stiff competition,the battle to win the customers is getting tougher day by day. Everyday new companies enter the market to compete with the already existing companies. This situation was totally differentin 1960’s where the main focus of business was on selling products (Anshari et al. , 2009; Fox &Stead, 2000; Mendoza et al. , 2007). As competition increases, companies now faced the two-prongchallenges of having to acquire the customers and to maintain long term relationship with them. I    J   M   I   J   M   M    M   A   R   C   H ,   2   0   1   1 ,   V   O   L   U   M   E  -   1   I   S   S   U   E   3   ©   J   M    A   C   A   D   E   M   Y   I   S   S   N  :   P  r   i  n   t   2   2   3   0  -   7   0   1   X   :   O  n   l   i  n  e   2   2   2   9  -   6   1   2   3  JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF M@RKETM@RKETM@RKETM@RKETINGINGINGING M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (JMIJMJMIJMJMIJMJMIJMMMMM) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011    JM ACADEMY OF IT & MANAGEMENT Page 182 The two challenges have created customer-centric businesses (Berg, 2000; Mendoza et al. , 2007).Over the years, more and more organisations are becoming customer-centric (Liu & Zhu, 2009). Inmarketing, such a trend has galvanised huge interest in the research area known as customer relationship marketing or CRM. Marketers use CRM as the means to manage relationship with thecustomers where the focus is on enhancing customer satisfaction (Lemon et al. , 2002; Rust &Zahorik, 1993). It is widely suggested that this propensity is a new paradigm of marketing (Avlonitis& Panagopoulos, 2005; Bhaskar, 2004; Chan, 2005; Chang & Ku, 2009; Chen et al. , 2009; Chen &Popovich, 2003; Lenskold, 2004; McGovern & Panaro, 2004; Anshari et al. , 2009; Payne & Frow,2004; Zablah et al. , 2004). Additionally, other researchers (see Chang & Ku, 2009; McGovern &Panaro, 2004) noted that CRM can be regarded as a business strategy with an aim of gatheringinformation about customers and then utilising that information to better managing relationships withthem so as to optimise long-term value. For Finnegan and Currie (2010), CRM is a process that aimsto bring together diverse pieces of information about customers, sales, marketing effectiveness,responsiveness and market trends. Critically, CRM may help the businesses gain detailed insight intothe behaviour of the customers.In today’s marketplace, information gathering and utilisation have affected the advancement of technology. The use of technology, combined with the right human resources, can increase customer satisfaction. Technological advanced has been linked to the improvement in services, more effectivecross-selling of products, faster closure of sales, and so on (Blattberg et al. , 2001; Cho et al. , 2002;Reichheld, 1996; Yen & Gwinner, 2003). In short, technological advances have done wonders to themarketing activities and processes.Critically however, all of these do not happen by simply buying CRM software and installing it. For organisation to successfully use technology to enhance CRM activities, it is essential for them tounderstand the kind of customer information required and above all, the organisation must have theknowledge to use that information in a way that would create or enhance customer satisfaction. Bull(2003) emphasised on the accurate implementation of CRM in order to maximise customer satisfaction. But, it is a crucial process and getting an impression of applying CRM to any contextsuccessfully stand little empirical evidence (Bull, 2003). Further, Pan et al. (2007) explain that thereare factors that contribute to the successful implementation of CRM, called Critical success factors(CSFs). Many studies have been conducted in the past decade on CRM and identifying the CSFs for CRM (e.g. Almotairi, 2009; Avlonits & Panagoupoulos, 2005; Hart et al. , 2004; Kennedy & King,2004; Mendoza et al. , 2007; Anshari et al. , 2009; Tellefsen & Thomas, 2005; Xu et al. , 2002;Finnegan & Currie, 2010; Mendoza et al. , 2007; Pan et al. , 2007; Ranjan & Bhatnagar, 2008), this paper also contributes to the limited literature on CSFs for CRM. Literature review The impact of buyer and seller relationship has long been regarded as a key to effective marketing byscholars. In one of the earliest research looking into the impact of relationships in marketing,McGarry (1951, 1953) argued that the bond of mutual interest between buyers and sellers wouldreduced the marketing costs by 10 to 20 percent. The logic behind this argument is that, if markets areable to meet the needs of the customers, they would be able to retain customers rather than having tospend money and effort to acquire new ones (Reichheld, 1996). In 1974, Bagozzi further   JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF M@RKETM@RKETM@RKETM@RKETINGINGINGING M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (JMIJMJMIJMJMIJMJMIJMMMMM) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011    JM ACADEMY OF IT & MANAGEMENT Page 183 conceptualised this idea by suggesting that marketing activities is an exchange processes between the buyer and the seller and that relationships between the two parties are extremely important. Berry(1983) proceeded to coin the concept of “relationship marketing”. Following the introduction of thisnew idea, “relationship marketing” and “customer relationship” concepts have gained significantinterest in both the business and academic thinking (Crosby, 2002).Initially, the focus of “relationship marketing” is to obtain information about the customers’ preferences. As more and more parties began to subscribe to relationship marketing, the concept hasevolved to include the creation of long term profitable relationship with customers. According toOsarenkhoe and Bennani (2007), this evolution led to the creation of CRM. CRM complements therelationship marketing by combining technology with business processes in order to understand thecustomers from the perspective of who they are, what they do, and what they are like (Couldwell,1998). Besides building relationship with customers, CRM has two more critical objectives of increasing customer satisfaction and facilitating customer retention (Galbreath, 1998).Arguably, it can be suggested that CRM is a concept that may also be rooted in sales automation andcall centre operations. This concept of CRM has been around since the mid-1990s (Osarenkhoe &Bennani, 2007) when it was thought that merging customer data from the field (sales) with call centreinteractions would result in more informed interactions with the customer. This concept resonatedwith user organisations and soon mergers and acquisitions gave rise to a host of software vendors, allclaiming to have an integrated set of capabilities that became known as CRM (Osarenkhoe &Bennani, 2007). CRM aims at lowering the costs by enhancing the satisfaction level of the customers by providing them what they need, keeping them for a longer time rather than every time acquiringthe new ones (Reichheld, 1996). It is also considered focal to the success of CRM to serve smallsegments through individualisation of a firm’s offerings, a process made possible by theadvancements in information technology (Peppers & Rogers, 1993, 2001; Seybold & Marshak, 1998).In a nutshell, CRM provides management with the opportunity to implement relationship marketingon a company-wide basis effectively by satisfying the customers to the maximum and building longterm relationship with them by deploying technology in a best possible way. However, to reap thereward of successful implementation of CRM, it is necessary to understand those factors which arecritical to its success. Critical success factors The concept of critical success factors (CSFs) is not new; it srcinated in 1960’s when Daniel (1961)for the first time used it in management literature. It gained acceptance when Anthony et al. (1972)and Rockart (1979) emphasised on tailoring CSFs for companies. Since then, it has been used widelyacross disciplines with different names such as strategic factors, key success factors, key result areasand pulse points. CSFs include those few key areas in every organisation where things must go rightto ensure and achieve competitive performance and profitability (Leidecker & Bruno, 1984; Rockart,1979). In milieu of CRM, Eid (2007) included all those factors which ensure the successfulimplementation of CRM, in the definition of CSFs. Many scholars (e.g. Chen & Popovich, 2003; Eid,2007; Finnegan & Currie, 2010; Goldenberg, 2002; Mendoza et al. , 2007) mentioned a series of factors critical to the successful implementation of CRM. In this paper, however, our emphasis is ontechnology related CSFs.  JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF M@RKETM@RKETM@RKETM@RKETINGINGINGING M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (JMIJMJMIJMJMIJMJMIJMMMMM) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011    JM ACADEMY OF IT & MANAGEMENT Page 184 Technology CSFs The impact of technology on the world of business has been substantial. For instance, advancement intransportation technology in the 1800s facilitated international trading between nations. Today,information technology is an enabler to the radically redesign business processes where the focus ison positive improvements in organisational performance and increase in customer satisfaction(Davenport & Short, 1990; Porter, 1987).In terms of CRM, technology factors help to link a company with customers, suppliers and internalstakeholders (Hammer & Champy, 1993). Technological advancement and innovations have enabledcompanies to collect and analyse data on customer patterns, interpret customer behaviour, develop predictive model, respond with timely and effective customised communications, and deliver productand service value to individual customer (Chen & Popovich, 2003; Finnegan & Currie, 2010).Osarenkhoe and Bennani (2007) elabourated CRM from a technological perspective as a set of applications that address the needs of customer-facing functions, which in turn feed a commondatabase that is supported by business analysis tools. The following technology related areas, as theextant literature reveals, are imperative for a successful implementation of CRM.  Sales force automation (SFA): Organisational efficiency can be improved by effectively usinginformation technology and automating certain tasks. While marketing is among one of thosedepartments which adopted information technology before other departments (McLeod & Rogers,1982; Li et al. , 2001), the utilisation of sales force automation (SFA) technologies is a more recent phenomenon. SFA, as a technical innovation, has become very popular in the last decade (Blodgett,1995; Schafer, 1997; Stein, 1998). It has been defined by Morgan and Inks (2001) as the use of information technology by the sales force in selling and administrative activities. SFA offers many potential benefits to the organisation as such as increases in sales effectiveness and efficiency,improved productivity, enhanced customer relations and customer satisfaction, to name a few(Morgan & Inks, 2001; Gondert, 1993; Speier & Venkatesh, 2002; Fisher, 1998). All these scholarsfound the positive impact of SFA on the overall organisational performance, in general, and CRM in particular.Schafer (1997) and Stein (1998) highlighted that apart from the potential benefits of successful SFAthe failure rate is high. However, literature witnesses the positive role of successful SFA on theoverall CRM success and is considered a critical technology related factor (Mendoza et al. , 2007).Due to this reason many researchers has been attracted toward this topic in the recent years (seeKeillor et., 1997; Parthasarathy & Sohi, 1997; Engle & Barnes, 2000; Morgan & Inks, 2001;Effmeyer  et al. , 2001; Pullig et al. , 2002; Speier & Venkatesh, 2002).  Data warehousing and data mining: CRM is a strategic system that collects, integrates, anddiagnoses various customer-related data from different operation systems in departments within anenterprise (Kwok  et al. , 2007). This repository of customer data generated by databases and systemsof a company is available to the business decision makers through an information technology toolcalled data warehouse (Chen & Popovich, 2003; Turban et al. , 2006; Xu et al. , 2002). Generally, thedata warehouse has different databases as a source and offers one gateway of access to the final user, but more specifically, data warehouses extract, clean, transform, and manage large volumes of data  JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF JM INTERN@TION@L JOURN@L OF M@RKETM@RKETM@RKETM@RKETINGINGINGING M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (M@N@GEMENT (JMIJMJMIJMJMIJMJMIJMMMMM) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011) M@RCH, 2011    JM ACADEMY OF IT & MANAGEMENT Page 185 from multiple, heterogeneous systems, creating a historical record of all customer interactions(Eckerson & Watson, 2000). Once the data warehouse is established, the task becomes to make senseof the large amount of data obtained, giving an entry to data mining.Data mining is the process of extracting information from large sets of data through algorithms andstatistical techniques (Feelders et al. , 2000). It is the search for relationships and global patterns thatexist in large databases but are hidden among the vast amount of data (Saraee et al. , 1998). Accordingto Ranjan and Bhatnagar (2008), the whole process of data mining helps firm to analyse customer dataand extract useful information to gain competitive advantage over others. Thus, successfulimplementation of CRM is dependent on the ability of an organisation to gather data about customers(data warehousing) and extract meaning out of that data through data mining techniques. Today,according to Sandoe et al. (2001), the two processes have greatly improved given the advances indatabase technologies. This in turn is expected to have a positive impact on CRM systems, byincreasing the functionality and effectiveness of the systems’ components. The Internet: It is evident that information technology has changed the way of doing businessdramatically over the past decades (Meuter  et al. , 2005). The internet in particular has created newopportunities for businesses and marketers. With the internet, consumers are empowered, in that theycould carry out their own transactions, be responsible for their own satisfaction, shop on their owntime, shop virtually and so on (Bendapudi & Leone, 2003; Meuter & Bitner, 1997). The internet can be used to enhance customer service without much involvement of company’s staff. Manyorganisations are availing the benefits of internet and more specifically self-service technologies(SSTs) for three main reasons - to reduce costs, increase customer satisfaction and reach newcustomer segments (Bitner  et al. , 2002).Barnes (2001) sees the internet as a means of interactions with the customer which offers a number of advantages to the company. The internet has set the stage for a paradigm shift in customer servicesand CRM in that customers’ access to the company and its products are no longer constraints by timeor physical location. Company’s websites play an important role in building a long term relationshipswith those customers who use internet as a platform to contact companies. The convenience to accessthe company at any time and any location could only enhance the relationship of customers with thecompany and hence customer satisfaction (Barnes, 2001; Turban et al. , 2006; Turban, 2004). Call centre: Since 1990s, companies are paying attention to improve their call centres by mixing thetraditional technology (telephone) with modern internet development to gain competitive advantageover others (Wallace & Hulme, 2001). A research by Forrester Research shows that 70% of polledcompanies believe that call centre strategies are crucial to the success of CRM but many companiesface problems in delivering the correct information to their customers, reason might be because of thewide spread information regarding customer in different systems across an organisation (Mendoza et al. , 2007). Mitchell (1998) argued that call centres are the hub of successful CRM strategies and thefulcrum of organisations because of its ability to give quick response to the customer’s queries and itscapability to involve with customers in real time, that is why great research is needed to further understand its impact on CRM (Mitchell, 1998).Call centres have been here for many years but less attention has been given to this area. In the wordsof Prabhaker  et al. (1997, p. 2), “the modern call has been around for about 50 years yet is as current
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