A critical evaluation of CRM (Customer Relationship Management)

The era in which marketers have increasingly acknowledged the importance of customer’s retention has seen as the evolution of related models and strategies. Increasingly, customer retention has needed greater emphasis in the company strategies due to the environmental changes and globalization occurring in the markets.

The area of relationship market is very important and is main issue at the time of tough competition in the market. Various factors like internet and advanced technology has give rise to the attention and awareness among the customers to access a far greater choice of services and products offer to them. The analysis of the strategy of Customer Relationship Management has become an indispensible part of the organisations in the market management. This area is of great importance in the management strategies as customer are the key factors for the organisations in any field and there is great importance related to the customers as they are the determinants of the success of an organisations and has to be managed good relationships with them in order to gain competitive advantages in the market. The existing market needs the managers with all the knowledge to deal the customers. For this purpose there are many researches are going to be on in the relation to this subject, by realising the important of this area in tem market the companies become aware to the facts that how crucial is the managing relationships with their customers.

The person reason behind adopting the area of research for the dissertation is that in today’s market customer are take as ‘God’ and each and every area of marketing and management is based on the dealing, satisfaction and retention of the customers. Without customers there is no market and no management. So it is mandatory for everyone to have the in-depth knowledge about the management and dealing of customers. Without having the proper study of customer relationship within the market is tea without sugar. For the personal reason I have the greater interest in the dealing with the customers and in order to get the proper knowledge regarding the management of relationship with them it would be very helpful to understand the nature of customers and hoe it could be managed healthy relationships with them to make them happy and satisfied.

2.1 Aim

The aim of this dissertation is to critically evaluate the strategies of Customer Relationship Management. It also seeks to explore the difference between the concepts of ‘Relationship Marketing’ and the concept of ‘Customer Relationship Marketing’.

3. Preliminary Review of the Literature

Introduction

A compelling business case and success stories continue to attract business interest and investment in customer relationship management (CRM). The CRM software market is expected to increase from $7 billion in 2000 to $23 billion in 2005, even though conventional wisdom is that 30 to 50 present of CRM initiatives fall short of meeting company objectives, while another 20 present actually damage customer relationships (AMR Research 2002). A seemingly myriad of challenges, conditions and circumstances contribute to the ultimate success or failure of a CRM initiative. Before investing scarce resources in such a risky technology innovation, corporate leadership is calling for a means of decreasing the sphere of uncertainty surrounding CRM. The adoption phase (Rogers, 1995) of a technology based innovation such as CRM is where decision-making and planning activities are conducted to address “whether, why, and how” to implement the innovation (Markus & Tanis, 2000:189). Occurring at project inception, the associated problems or shortcomings of this phase are multiplicative, and can exert a toxic effect on the ensuing innovation process. Although decisions made during this phase are critical to the eventual success or failure of a CRM initiative, there is a paucity of research exploring these adoption issues (Markus & Tanis 2000).

2. Business value, complementarity and alignment

When considering a CRM initiative, executives ultimately want to know the impact on organizational performance – that is, the likely business value of the initiative. This is typically measured via the return on investment (ROI) metric. However, determining the economic value of an innovation, especially one enabled by technology, has posed major difficulties to researchers and practitioners for several decades. Recent literature on business value suggests complementarity as a key determinant of organizational performance (see Barua and Mukhopadhyay 2000 for a summary). Two activities or factors are complementary if the benefits of doing more of one increase by doing more of the other (Milgrom and Roberts, 1990).

Organizational alignment is concerned with the level of agreement between complementary constituent parts (e.g. people, processes, activities). Alignment research typically falls into either of two basic dimensions: intellectual or social (Reich and Benbasat, 2000). The intellectual dimension, also known in the literature as strategic alignment, centers on the alignment of organizational strategy, structures and planning processes Here, strategy is the focal point such that positive alignment can be achieved when organizational structures and processes support strategy. In contrast, the social dimension concerns the alignment of organizational culture, stakeholder interactions and knowledge of one another’s work domain. In this context, culture is at the nucleus where positive alignment occurs when stakeholders are knowledgeable about each other’s domain areas such that cooperative interaction (as opposed to conflictive) occurs within the bounds of the organization’s norms and values. Other related research underscores the importance of alignment between the intellectual and social dimensions. For example, using general systems theory and chaos theory as the foundation, Semler, 1997) presents a theory of systematic organizational alignment where strategy, structure and culture are complementary. A harmonious agreement of these aspects breeds an internal environment supportive of the organization’s strategy, by eliminating internal barriers to cooperation and performance. The

theory outlines six aspects of alignment (process, reward system, values, norms, performance and environment) that, if in agreement, should result in positive organizational performance. As organizational performance is guided by strategy (Pearce and Robinson 1994), and given that a firm’s leaders develop strategy, it

is the leaders and the roles and processes they prescribe that largely drive alignment.

3.1 Intellectual dimension

3.1.1 Strategy. A highly competitive global marketplace places pressure on firms to reduce costs, while simultaneously differentiating themselves through improvements in customer service to gain revenues. The underlying premise of CRM is: If a firm improves upon how it manages relationships with its customers, the result will be evidenced as an increase in firm productivity and customer satisfaction, leading to better financial performance. However, firms must avoid viewing CRM as the solution to competitive pressures. CRM is much more involved – a CRM initiative should be conceived of as a corporate strategy. The customer-related capabilities of a firm are at the heart of assumptions regarding customer satisfaction, productivity, and the firm’s financial performance. According to marketing theory, to be successful an organization must aim all of its efforts at satisfying its customers, at a profit – that is, managing customer needs profitably. This means that organizations must create, deliver, and communicate customer value more effectively than their competitors. Organizations that succeed at such are described using terms such as market driven, customer-centric, customer-focused, or customer oriented. Day (1999:5) suggests that such market-driven

organizations are marked by “a superior ability to understand, attract and keep valuable customers,” and he identifies three specific components of market orientation: (1) an externally oriented organizational culture with a focus on added value; (2) distinctive capabilities in market sensing, relationship building, and strategic thinking; and (3) a configuration that enables the entire organization to anticipate and respond to changing customer and market conditions (pp. 6-7). Kohli and Jaworski (1990) provide further specification, defining market orientation as the organization-wide generation of market intelligence, dissemination of the intelligence across departments, and responsiveness to it. Concerning IT innovations, Kwon and Zmud (1983) find that top management support is a key, recurring success factor. Management support can be defined as” the widespread sponsorship of an innovation”. Successful implementation of an innovation has been found to occur when top management exhibits commitment to change (in our context, the CRM initiative) as well as commitment to the (CRM) implementation effort. Support is evidenced through commitment of resources such as time and money for education and training of employees, assignment of key employees throughout the innovation process, and money to purchase the technology and support the multiyear implementation effort. Kwon and Zmud state that successful IT implementation is more likely to occur when sufficient organizational resources are initially directed toward motivating the implementation effort and then to sustaining it. The literature also consistently points to the importance of a champion of the innovation effort. To qualify as a champion, an employee must be a upper level, highly respected individual who actively supports and promotes the innovation, providing information, material resources, and political support. As an aid to success, it is important that the same champion sees the innovation effort through to completion. In a recent field study, firms undertaking CRM projects with a dedicated high-level champion were twice as likely to report that their project was doing at least better than expected (Yu 001). Leadership styles are a key factor when embracing a new initiative such as CRM. Nguyen-Huy (2001) identified four change management leadership styles, including: commanding; engineering; teaching; socializing; or hybrid. No one type is inherently superior to another. Much depends on the styles that have brought success in the organization’s past. Also, successful change leaders have utilized one style during an initial stage, and changed to a different style in a later stage. For example, a commanding style may be important at the outset of a project, to communicate that top management is serious and committed to the change, whereas a more collaborative style may be successfully used during implementation. In the context of CRM, little research

has been done to examine the change management leadership styles utilized, or to analyse under what conditions a particular change management leadership style is likely to be effective.

3.1.2 Structure. The innovation literature suggests that a firm with a flat, decentralized structure, as opposed to a centralized hierarchical structure, is most likely to support the development of innovative ideas. However, with regard to implementing the innovation, a centralized structure has been shown to be most effective. In terms of an IT innovation, structural factors pertain to the compatibility of the system with the organizational design (e.g., centralization, decentralization, organic), the authority hierarchy, reporting relationships and the like. ERP and CRM efforts revolve around business processes. Effective CRM must integrate and support the business processes that create customer experiences. These business processes span the organization, including the customer-facing business processes of marketing, sales, and customer service. However, back-office business processes such as accounting, purchasing, production, and logistics are also involved. The significance of this logical integration of customer related knowledge cannot be under-estimated. It poses a major challenge to organizational readiness.

4. Research Questions

RQ1. What are the critical issues that have to be discussed in the customer relationship management initiatives?

RQ2. What problems have to be faced during the adoption of CRM initiatives?

RQ3. What is the scope of CRM for different type of organisations?

RQ4. Is Customer Relation Management is taken as the appropriate for all kind of organisations?

4.1 Research Objectives

As the emerging discipline the CRM needs great deal of assistance in the theoretical area. The area of customer relationship management is very important for the

To identify the main issues of Customer Relationship Management

To critically analyse the literature of the CRM

To examine the facets of the customer welfare and to retain them for long term

To explore how CRM succeed and fail.

To examine the CRM strategy for the Tesco Plc

To draw conclusion and suggest some recommendations for the company

Word Guide 200

5. Research Plan / Methodology

Research methodology is mainly split into three parts i.e. research perspective, research design and collection of data. These three phases of methodology collectively formed the clear description about the importance and need of the research methods.

Research Perspective

From the view point of Saunders et al (2003) for the research to be conducted there must be an appropriate choice of research perspective. This dissertation is a case study approach which is most suitable for the topic of CRM in the industry. This help to examine the research topic in depth and provide the required information for the plotting of dissertation. For this there is good chance to know about the efficiency of the company regarding the implementation of the CRM strategy. The case study approach covers the areas like clarification of topic, data processing, collection of data and the conclusion for the research is presented. Following is given the research strategy chosen for the dissertation to be conducted.

Research design for the research design there is a process given by Saunders (2003) known as the ‘Research Onion’. The following figure explains the whole design of the research. For this there are mainly two type of approaches named inductive approach and deductive approach.

Inductive approach

This approach follow the process in there is movement from the specific to general for the formulation of the theory of the research. This approach is widely open and exploratory for the research to be conducted at the first stage.

On the other hand deductive approach is usually follow the process of general to specific and this is totally opposite to the inductive approach. In this approach theory is taken at the first step and then goes to the observations. This approach is taken as the narrow one as there is restriction and binding to the theory chosen.

To conduct the research regarding the dissertation the author decided to go with the inductive approach because the inductive approach is flexible than that of the deductive one and there are more chances of exploration of the topic in the inductive approach.

Data collection methods

Data collection methods is taken as the very crucial part of the research to be conducted as the whole process and phenomenon of the research of dissertation is depend on the methods of data collection used for the purpose to collect relevant data so that there could be access to problem of the research. There are mainly two types of methods are available for the collection of data these methods are Secondary Data Collection Methods and Primary Data Collection Methods.

Secondary data collection methods

Secondary data is that data which is available and already exists. This data is always ready to use. This data usually collected for other purpose of research and is used by the some other sources as this is always free to access and easily available. The secondary data is usually available in forms of qualitative and quantitative both types of data.

In qualitative data there is no numeric and diagrams and facts and figure. This data is totally based upon the theory part. This is mostly used for the formulation of literature review for the research.

On the contrary there is another form of data i.e. Quantitative: this type of data is in the form of numeric and facts and figure. The annual reports of the companies and analysis in the form of numeric presentation is comes under this.

Primary data collection methods

Primary data collection methods are those methods in which the researcher itself collects the data in order to get the relevant data for the research to conduct. This type of data is mostly in the form of qualitative data. The various methods used to collect the primary data are interviews, surveys, questionnaires etc.

For this dissertation there is use of both type of data i.e. secondary data collection and primary data collection. Both data collection methods are equally important and researcher can’t go with alone one for the research. As there is need of in depth and critical analysis of the research problem and so for this there must be both type of data will be used in the dissertation.

In following table there is brief outline for the various methods used in the collection of data with their advantages and challenges.

Limitations of study

The thing is that at this stage the topic of the research is not yet consider in detail. Still there are some limitations that are outlined here.

At first the area in which the research is going to conduct is wide and it became hard to collect the relevant data for the research by the use of data collection methods.

Secondly there is a huge collection of data regarding this topic and they are available in different software of database.

At last it is not easy to get relevant and proper data from the side of interviewee regarding the research area, and sometime these interviews are biased.

6. Ethical Considerations

As this topic of research is related to the customer relationship management the main ethical issue for this is to how to implement the suitable strategy for a company to run this process.

For seeking the development of the research topic for the dissertation I will conduct the instructions provided to us by the college and will also follow the rules of the University accordingly that are provide to me in the available form.

Also regarding the data collection for the research the main source of data collection for the dissertation is the available data i.e. secondary data for the company or organisation. There is no provision of data protection this protection will considered at the time of publishing of the data later on.

As other reliable source for the collection of data for my research is interviews and questionnaires. For this, if there is needed the interview will be recorded after getting the permission the interviewee. For all the process there will be supervision of the supervisor which will provide during the dissertation to be conducted.

There will be appropriate use of participation information during the plotting of the literature review and other parts of the research.

7 Planning and any special resources required

Week1

Week2

Week3

Week4

Week5

Week6

Week7

Week8

Week9

Week10

Week 11

Introduction to aim & objectives

Literature review

Research methods

Data collection

Data analysis

Findings

Conclusion

Recommendations

Setting and submission