In this chapter, the research questions will be developed based on the literature review and the research problem (i.e. to gain a better understanding of CRM (i.e. Customer Relationship Management) implementation in service companies.) and the delimitations of the study will be stated. Further, the chosen relevant theories will be assessed and we will be used to develop the emerged frame of reference.
3.1 Research Problem and Research Questions
Customer relationship management (i.e. CRM) has become a number one focus as today’s competitive markets are getting more saturated and aggressive. The marketing model is changing from the product-centered stage to the customer-centered stage. Customers are demanding a different relationship with suppliers than the traditional sales model (Xu, Yen, Lin and Chou, 2002). According to Hamel and Pralahad (1994), the objective is to amaze customers by anticipating and fulfilling their unarticulated needs. This can be done by implementing CRM. This study intends to reach into the CRM implementation process and therefore a research problem has been stated as follows:
To gain a better understanding of CRM (i.e. Customer Relationship Management) implementation in service companies.
Based on the literature review three research questions can be developed which now will be:
Research Question One:
How can a firm’s major reasons and benefits of implementation of CRM be described?
This question intends to expand into the motives that companies have to implement CRM. It is considered to be relevant to understand what drives companies into the change and to what extent the benefits assessed by the theory are experienced and expected.
Research Question Two:
How can the components of CRM implementation (i.e. people, process and technology) be described?
CRM is a complex concept often understood in diverse ways. Still, the process of implementing it will affect the organization as a whole in different degrees. Therefore, looking into its components is expected to give a light into these areas and how they have been balanced out in the companies studied.
Research Question Three:
How can the key factors of CRM implementation (i.e. leadership, strategy and integration) be described?
CRM implementation also involves several key factors. This question intends to look into the specific factors that have been mentioned to enhance the success of CRM.
3.2 Delimitation
As discussed in previous chapters, there are many different definitions of CRM; however, for this study we have chosen to understand CRM as a management approach that enables organizations to identify, attract and increase retention of profitable customers. This is done, as mentioned, by managing relationships with them and achieving a 360 degree view of the customer within a context of an enterprise-wide, customer-driven, technology integrated, cross functional organization.
This study is also delimited by other factors:
• it will only focus on the company’s perspective of CRM implementation. The
opinion and appreciations of the final customers will not be considered.
• It will also focus on the general concepts, factors and benefits of CRM; it does not intend to be a study of specific technologies applied to the CRM implementation so theories regarding this area will not be regarded.
3.3 Frame of Reference
A frame of reference according to Miles and Huberman (1994) explains, either graphically or in narrative form, the main things to be studies-the key factors, constructs or variables and the presumed relationship between them. Consequently, a frame of reference presents the theories and models that are most suitable for the research problem and it also describes how the theories are related to each other.
There are three main areas of study in this project which intends to gain a better understanding of CRM implementation: i.e. the benefits of CRM, the components and the key factors of implementation. Several variables have emerged from the theory presented in order to facilitate the comprehension and measurement of these areas.
Concerning the benefits of CRM, these are understood to be the ones that derive from the implementation and use of CRM in a specific company; in other words the gains that results from implementing CRM. Swift (2001) and Curry and Kkolou (2004) summarizes these benefits in terms of cost reduction and/or profitability, customer satisfaction and loyalty, Sheth et al. (1991) and has stated the benefits in terms of value creation; these will be considered as the main variables within benefits of CRM implementation. For the purpose of this study, we have chosen to understand customer value as a customer perceived preference for, and evaluation of, products attributes, attribute performances, and consequences in terms of the customer’s goals and purposes Woodruff (in Chi et al 2004). Different kinds of value creation will also be assessed (Chi et al, 2004). We intend to identify the value that service firms deliver to customers as a result of CRM. Customer satisfaction according to Kotler (2000) has to do with a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance in relation to his or her expectation. For the purpose of this study, and considering the delimitations, customer satisfaction will be assessed by identifying what the companies perceive as their customer’s response to their CRM efforts and their own opinion of internal satisfaction
with the implementation of CRM. Retention and loyalty are feelings that create an
individual's overall attachment to a product, service, or organization and will be understood as such in this study. They will be measured by identifying the length of time customers have been with a service firm, the number of products they hold according to the company’s records, the mobility tendencies to other companies and how the CRM implementation has affected these aspects. The increase in profitability of the customers, understood as customers who provide the best possible return, will also be identified by their mobility and number of products and response to sale efforts and overall growth that the companies have identified as a result of CRM implementation.
When it comes to the components of CRM, we have chosento refer to people, process and technology since Goldenberg (2002) sustains that integration makes or breaks the CRM system. People will be considered to be the individual employees who are the building blocks of customer relationships. (Chen and Popovich, 2003). Process is referred as a collection of tasks or activities that together result in a desired business outcome (Hammer, 1996). The relevance of this component is also described by Goldenberg (2002).
achieve dramatic improvements in organizational performance (Davenport and Short, 1990). The identification of these components and the description of how they have been affected by the implementation of CRM will be of interest in this project. Also, Limayem's (2004) assessment of the mix of these components will be used to analyze how the companies have balanced out the CRM implementation efforts.
Finally, several key factors of CRM implementation have been identified and chosen for this study as they are repeatedly mentioned by different authors. Strategy is defined as an “overall plan” for deploying resources to establish a favorable position (Grant, 1998) and has been referred to as an appropriate response to the changes that CRM implies within a
company (Kotorov, 2003; Crosby (2002). Leadership is to be considered as the
management skills required for creating an environment and rally an organization around the CRM implementation process, defining a CRM vision that serves as a guideline is a key issue according to Lindgren (2004). We will then look at the role of the people in leadership positions within the companies and study their involvement, participation and roll towards the CRM changes (Pinto and Slevin, 1987, Galbreath and Rogers, 1999).
Integration, understood as the incorporation of all departments of service firms acting cohesively and providing a holistic view of the customer with the purpose of serving the customer better (Chen and Popovich, 2003) is also a key factor to be addressed as a variable in this research.
3.3.1 Emerged Frame of Reference
The figure below presents the research variables used in the research questions and the chosen operational definitions. It summarizes the benefits (research question one) as a result of the implementation process of CRM which includes the consideration of the components (i.e. people, process and technology, research question two) as well as the key factors to be studied (i.e. strategy, leadership and integration, research question three). All this in the effort to answer the research problem (i.e. To gain a better understanding of CRM).