Effects of CTA on Relationship Strength and Relationship Performance

Not only does CRM technology adoption provide a medium for market orientation to influence relationship strength and relationship performance, CTA also predicts

relationship strength itself. That is, the two dimensions of CTA, customer knowledge and CRM usefulness provide valuable information and processes to benefit relationship building through trust and communications. Customer relationship orientation (CRO) did not appear to moderate the effect of CTA on relationship strength or relationship performance. Although the exploratory phase indicated that some customers have expectations from CRM implementation (CXP) (see Appendix A2, Q9), the survey results indicate that any such expectations do not play a significant role in the moderation of the CTA effect on relationship strength or relationship performance.

6.3.1. Relationship Strength

Trust is an essential attribute of relationships (Narayandas & Rangan, 2004;

Sirdeshmukh et al., 2002), and is enhanced by two-way communications (E. Anderson & Weitz, 1989). The positive significant result of testing H4: The greater the level of CRM technology adoption within a firm the greater the overall relationship strength with customers provides further support for the prevailing view that trust and

communication are necessary for strong relationships between suppliers and customers (Berry, 1995; Duncan & Moriarty, 1998; Dwyer et al., 1987; Fontenot & Wilson, 1997; Geyskens et al., 1998). An interpretation of this result is that, independent of the firm’s market orientation, CRM technology provides a platform from which to collect and communicate relevant information between suppliers and customers, thus helping to build trust between the two parties. CRM technology applications collect customer data from multiple sources and can provide a complete view of the customer. The customer knowledge (CKN) and CRM usefulness (USF) dimensions provide a significant conceptual and tangible linkage between CTA and relationship strength. In particular, this aspect of CRM technology provides the capability for supplier – customer

interaction consistency, relevancy and appropriateness (Zablah et al., 2004).

Reinartz, Krafft, and Hoyer (2004) recognized that consistency in the CRM process aids the identification and measurement of valuable customers. Consistency in actions and information can build and enhance levels of trust and relationship strength more generally (Pan & Lee, 2003; Rheault & Sheridan, 2002). Relevancy is an aspect of communication which is favoured by customers (Ansari & Mela, 2003; Postma & Brokke, 2002; Thorbjornsen, Supphellen, Nysveen, & Pedersen, 2002). The right mix of communications can help develop and maintain trust in a relationship (MacDonald & Smith, 2004). Contractual, goodwill and competence trust is enhanced by a firm’s knowledge, appropriate behaviour and communications; knowing what is required, delivering to the contract, and informing the customer accurately, credibly and

completely is a fundamental requirement and basis of trust (Sako, 1992; Tellefsena & Thomas, 2005).

This means that CRM application developers, CRM system implementers and CRM users need to highlight and make use of the fact that CRM technology can help provide appropriate levels of relevance and consistency to relationships. CRM technology is a powerful medium for collecting, analysing and communicating relevant and useful

customer information. Through the consistent, relevant and appropriate use of customer knowledge relationships can be developed and improved.

6.3.2. Relationship Performance

Performance has multiple definitions, evidences considerable multidimensionality and is itself influenced by a number of external factors (Dess & Robinson, 1984; Venkatraman & Ramanujam, 1986). Therefore it is not completely surprising that H5: The greater the level of CRM technology adoption within a firm the greater the relationship performance was not supported and that CTA did not significantly influence relationship performance directly. Reinartz et al. (2004) for example found that the level of CRM technology did not significantly improve economic performance through the CRM process. The results from this study demonstrate however that CTA does work through relationship strength to positively influence relationship

performance. This is most likely due to the impact of trust and communication on the relationship satisfaction, loyalty and retention dimensions of relationship performance (Garbarino & Johnson, 1999; Moorman et al., 1993; Morgan & Hunt, 1994; Selnes, 1998). CRM technology provides the basis for interaction consistency, relevancy and appropriateness of behaviour and communication. Data from the exploratory interviews, particularly the customer perspective, lend weight to the interpretation that the CRM technology adds value to relationship strength and relationship performance by

incorporating and enhancing not only trust building and communications functionality, but more importantly dependability and consistency (see Appendix A2, Q14, Q16, Q17 and Q22). It is the dependability (goodwill trust) dimension which contributes a higher level of relationship satisfaction, hence improved customer retention and loyalty (Bhattacherjee, 2002; Gounaris, 2005; Sako, 1992; Tellefsena & Thomas, 2005).

That H6: The greater the level of relationship strength the greater the relationship performance was found to be significant is consistent with other studies and provides support for developing trust, commitment and strong communication channels in order to improve business and relationship performance (Z. G. Li & Dant, 1997).

6.3.3. Moderator and Control Factors

Neither of the two moderator variables, customer relationship orientation (CRO) and customer CRM expectation (CXP), included in the research model had a significant influence on CRM technology adoption’s impact on relationship trust or relationship

performance. Contrary to existing studies the non-significance of H7: The greater the level of customer relationship orientation the greater the CRM technology adoption effect on (a) relationship strength and (b) relationship performance indicates that the orientation of the customer towards relationships may not be all that important to maintaining B2B relationships (Ganesan, 1994; Jayachandran et al., 2005; Kapoulas et al., 2004). This implies that a customer’s predisposition to a supplier relationship does not materially affect CTA’s impact on the supplier – customer relationship. However, the raw data were highly skewed (e.g., x¯ = 6.63, SD = 0.82) indicating that the majority of customers considered themselves relationship oriented and hence this dimension of relationships needs to be examined more thoroughly in future research (see Appendix A9.2 for additional detail).

Similarly, the results from testing hypothesis H8: The greater the level of customer CRM expectation the greater the CRM technology adoption effect on (a) relationship strength and (b) relationship performance was found to be non-significant. These results indicate that any pre-formed customer expectations, based on either previous experience or supplier promises, does not influence CTA’s affect on customer relationship strength or performance.

Although market turbulence (MT) and technological turbulence (TT) have been shown to interact significantly with key variables in marketing studies investigating MO and business performance, this was not the case in this study (e.g., Pelham, 1999; Pulendran et al., 2003). Hypothesis H9: The greater the level of market turbulence the stronger the market orientation effect on CRM technology adoption was found to be non-significant, indicating that MT does not moderate the effect of MO on the adoption of CTA. This is somewhat counter intuitive; one would expect that high customer churn or a more volatile and competitive environment would positively influence the effect of MO on the adoption of business practices aimed at reducing customer churn and dealing with volatility. One interpretation of this result is that firms do not understand the potential application of CRM technology to add value to business relationships in a turbulent market environment. On the other hand firms may simply consider a turbulent market environment as normal.

Neither of the two versions of hypothesis H10: The greater the level of technology turbulence the stronger the (a) market orientation effect on CRM technology adoption, and (b) the IT management orientation effect on CRM technology adoption provided

significant results. The lack of technology turbulence, across a variety of industries, to moderate MO and ITMO suggests the application of new technology itself does little to influence the general adoption of CRM technology.