Customer Relationship Management Alignment and Performance
MOVING TOWARD E-BUSINESS: CUSTOMERRELATIONSHIP MANAGEMENT ALIGNMENTIN MALAYSIAN SMALL BUSINESSNorshidah Mohamed (Presenter)International Business School, Universiti Teknologi Malaysiahttp://www.ibs.utm.myMurni Mahmud, Abdul Rahman Ahlan, Umar AditiawarmanInternational Islamic University MalaysiaRamlah Hussein, Nor Shahriza Abdul KarimPrince Sultan University, Kingdom of Saudi ArabiaInternational Conference on Ebusiness and EgovernmentIzmir, Turkey 27-28 April 2013
2OUTLINE• Introduction• Literature review• Research methodology• Findings• Conclusion
3INTRODUCTION• Customer Relationship Management (CRM)• Relates to sales & marketing strategy• The process of acquiring, retaining andgrowing profitable customers on serviceattributes that customers would value andcreate loyalty to the organisation (Brown,2000).
4RESEARCH AIMDevelop a research model on CRM alignment andinvestigate the impact of CRM alignment onperformance.
6CRM ?– process (Day and Van den Bulte, 2002)– strategy (Parvatiyar and Sheth, 2001)– capability (Peppers, Rogers and Dorf, 1999)– technological tool (Shoemaker, 2001)– Other organizations simply view CRM as ahelp desk or call center.What is CRM alignment?
7CRM ALIGNMENT ?Conceptualize CRM alignment as:• Business – IT strategic alignment• CRM process – IT alignment
8BUSINESS-IT ALIGNMENT• The latest annual survey on IT industry in 2010shows that business and information technology(IT) alignment (BIA) is still among the top five oftop management concerns
9BUSINESS-IT ALIGNMENT ..cont’Alignment is sometimes used differently in the BIAliterature. Terms include:• Fit (Venkatraman, 1989; Chan, 1992; Hendersonand Venkatraman, 1993)• Harmony (Luftman, 1993)• Bridge (Ciborra, 1997)• Fusion (Smaczny, 2001)
10BUSINESS-IT ALIGNMENT ..cont’• Integration (Weill and Broadbent, 1988)• Linkage (Henderson and Venkatraman, 1993)
11CRM PROCESS-ITALIGNMENT• Refers to processes on customer-facing level(Reinartz et al. 2004)• Involves coordination of information – thusIT-enabled• Key aspects in relationship management e.g.initiation, maintenance & termination.
12BENEFITS OF CRM?• Boulding et al. (2005) argued that thebenefits of CRM applications are perceiveddifferently across industries.
13BENEFITS OF CRM –SOME SUGGESTIONSRichards and Jones (2008) suggested CRM:• improves pricing• increases customer satisfaction and loyalty through better customerservice• enhances product development and differentiation throughcustomization/personalization• enhances ability to create long-term relationships and customersegmentations• improves customer acquisition and retention• motivates employees to foster customer relationship• reduces administrative and operational cost• enhances decision-making process• improves knowledge sharing among the selling companies
14BALANCED SCORECARD• Based on four perspectives : financial,customer, internal business process andlearning and growth (Kaplan and Norton 1992;1996)• Examples of studies using BSC for CRM includeKim et al. (2003) and Kim & Kim (2008)
15HYPOTHESESH1: CRM performance is positively related toorganizational performanceH2a: CRM process-information technology (IT)alignment is positively related to CRMperformanceH2b: CRM process-IT alignment is positivelyrelated to organizational performanceH3a: Business-IT strategic alignment is positivelyrelated to CRM performance
16HYPOTHESESH3b: Business-IT strategic alignment is positivelyrelated to organizational performanceH4: Business-IT strategic alignment is positivelyrelated to CRM process-IT alignment
19CONTEXT OF STUDY• Malaysian small and medium enterprises (SME)• Malaysia’s SME has fewer than 50 employeeswith turnover of below RM25 million• In 2009, SME in Malaysia account for about99% of total business establishments (552,849)and contribute to 31.2% of the nation’s GrossDomestic Product (GDP).
20CONTEXT OF STUDY .. cont’• SME have provided 56% to total employmentand 19% exports of the country (SME annualreport).• Total survey questionnaires distributed: 300
21SURVEY INSTRUMENTSOURCESConstructs Source of constructs anditems used in the researchBusiness-ITalignmentCRM process-ITalignmentCRM performanceKearns and Sabherwal (2007);Viaene et al. (2007)Reinartz et al. (2004); Chen andChing (2004)Kim et al. (2003); Chen andChing (2004)
22SURVEY INSTRUMENTITEMSBusiness-IT alignment1. Our strategic IT plan is well-aligned with the organisation’s mission, goals, objectives and strategies.2. Our strategic IT plan contains quantified goals and objectives.3. Business and IT management processes are strongly integrated.4. We prioritise major IT investments by the expected impact on business performance.CRM-IT alignment1. IT in our organisation supports us in tracking of prospects. (initiate)2. IT helps us to identify different offers for prospects based on prospects’ economic value. (acquire)3. In our organisation, IT supports us in identifying customers lost to competitors. (regain)4. IT helps us determine which of our customers are of the highest value. (maintain)5. IT supports two-way communication with our customers. (retain)6. IT helps us in tracking customers and the incentives for them if they intensify their business with us.(cross-sell / up-sell)7. IT helps us in tracking current customers and the incentives for them when they acquire new potentialcustomers. (referral)8. IT supports us in tracking non-profitable, low value or problem customers. (terminate)
23SURVEY INSTRUMENTITEMS .. cont’CRM PerformanceIn our organisation, IT has helped us improve in:1. Customer satisfaction. (customer)2. Customer loyalty. (customer)3. Customer retention. (customer)4. Increased return on investment (ROI) on IT-enabled CRM processes. (financial)5. Tremendous reduction in customer transaction cost. (internal business process)6. CRM process innovation and product / service innovation. (learning & growth)Organisational performanceIn our organisation, IT has1. Return on investments (ROI).2. Profitability3. Competitiveness4. Sales revenue
25PROFILE OF SMEIndustry Frequency PercentageAutomotive 8 3.5Manufacturing 7 3.1Direct selling 39 17.3Travel and hospitality 6 2.7Professional services (legal, accounting etc.) 71 31.4Information and communication technology 12 5.3Others (retail etc.) 80 35.4Missing 3 1.3Total used for analysis 226 100
26PROFILE OF SME .. cont’• The minimum number of employees was one,maximum was 150, and average was 15.• Minimum duration in business, was fewer thanone year, maximum was 33 years and averagewas four years.
31CONCLUSION• The research explores and proposes a model toaid researchers and practitioners alike ingaining insights into CRM alignment and itsimpact on performance.• The research has proposed a researchinstrument and model for CRM alignment.• The instrument has shown reliability while themodel demonstrated relationships in theMalaysian SME context.
32CONCLUSION• For researchers, the results provide astarting point for future researchopportunities.• For practitioners, the research provides aninsight into the components of CRMalignment and impact of CRM alignment.Future research areas include examiningantecedents of CRM alignment andconfirming the research model.
33ACKNOWLEDGEMENTThe research is supported by theFundamental Research Grant SchemeMinistry of Higher Education Malaysia(504/RES/G/14/3/2/2 FRGS).