Much of the research into CRM implementation tends to
focus either on its alleged failure to deliver business benefits, or the
enabling and disabling conditions that impact on CRM performance.
Sweat,
for example, reported failure rates of between 25 and 80 per cent.
Overly expensive investment in technology — both software and hardware —
is cited as a significant cause of CRM's failure to deliver value.
People issues are also implicated in the failure of CRM
implementations. McKinsey reported that 59 per cent of companies who
were successful in their CRM implementations addressed cultural change
issues compared to 33 per cent of those who failed. More recently, Iriana and Buttle
found that companies that promote an atmosphere of innovation or risk
taking, hence creating a climate for employees to act in the best
interest of customers tend to fare better in their CRM outcomes. But
very little has been published about the deployment of CRM software, and
its impact on company performance. In fact, the whole area is so
under-researched, that it has been earmarked by the Marketing Science
Institute to be a priority research area.
CRM software
Literature in the area of CRM software has tended to centre on software package or vendor reviews, or case studies about its implementation.
One case study into three companies concluded that one of the main
concerns in adopting CRM software is that it is perceived to come in a
'one size fits all' package.
This is fuelled by the fact that vendors tend to have a standardised
view of what relationship management process should be, creating
problems in flexibility and functionality.
Two recent
academic studies have begun to shed light on the impact of CRM-related
technologies on company performance. Based on a sample of 172 US
companies, split 50:50 between goods manufacturers and service
organisations, Jayachandran et al. found that companies with
relational information management processes (ie, they have interactive
customer contact, from which customer information is captured,
integrated and widely deployed and used across the business) tend to
experience better customer satisfaction and customer retention outcomes.
Furthermore, this association is even stronger when the company's CRM
system is capable of front-office activities across the sales, marketing
and service functions.
In contrast, Reinartz et al. found a negative
relationship between CRM technologies and the economic performance of
firms. From a sample of 211 Swiss, German and Austrian companies across
five industries (hospitality, power utilities, financial services and
online retailing), they found that the more sophisticated companies are
in their CRM technologies, the worse is their economic
performance as judged subjectively by key informants. Furthermore, they
found a significant interactive effect in that this negative
relationship was most pronounced when companies were trying to initiate a
relationship with customers (eg, customer acquisition or win-back of
lost customers).
In
relation to our research objectives, it should be noted that these two
studies do not directly evaluate the influence of CRM software, per se, but focus on the much broader issue of CRM-related technologies. Reinartz et al.
chose company performance as their ultimate dependent variable,
measuring this both objectively (using return on assets (RoA) data
reported in the annual accounts), and subjectively (using key
informants' assessments of overall performance, market share, growth and
profitability).
We believe that RoA is influenced by so many variables that it is not a
useful dependent variable for the assessment of CRM-related
investments. Neither of these two studies investigated the effects of
CRM-related technologies on customer acquisition, retention and
development outcomes. Rather, these activities were bundled together. We
believe that customer acquisition, retention and development are
strategically important business objectives in their own right, and
merit assessment.
Finally, both these studies have chosen different ways of conceptualising and operationalising similar constructs. Jayachandran et al.
use 42 items to measure CRM technologies, while their dependent
variable is a composite index of customer satisfaction and customer
retention. Reinartz et al. measure CRM-related technologies using only four items, with the dependent variable being company performance.
In summary, we are not aware of any academic study that looks at the performance of CRM software per se,
rather than more broadly defined CRM technologies. Neither can we find
any work that focuses on software's role in management of the customer
lifecycle stages of acquisition, retention and development, user
satisfaction with software return on investment (ROI) and the software's
impact on business performance. Our aim is to fill this knowledge gap.
Further more information about this articles, please you check on Journal of Database Marketing & Customer Strategy Management
By Lawrence Ang & Francis Buttle
Repost by Acarre Community Media
By Lawrence Ang & Francis Buttle
Repost by Acarre Community Media
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