customer relationship management alignment and performance
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MOVING TOWARD E-BUSINESS: CUSTOMER RELATIONSHIP MANAGEMENT ALIGNMENT IN MALAYSIAN SMALL BUSINESSNorshidah Mohamed (Presenter)International Business School, Universiti Teknologi Malaysia http://www.ibs.utm.my
Murni Mahmud, Abdul Rahman Ahlan, Umar AditiawarmanInternational Islamic University Malaysia
Ramlah Hussein, Nor Shahriza Abdul KarimPrince Sultan University, Kingdom of Saudi Arabia
International Conference on Ebusiness and EgovernmentIzmir, Turkey 27-28 April 2013
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OUTLINE• Introduction
• Literature review
• Research methodology
• Findings
• Conclusion
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INTRODUCTION• Customer Relationship Management (CRM)
• Relates to sales & marketing strategy
• The process of acquiring, retaining and growing profitable customers on service attributes that customers would value and create loyalty to the organisation (Brown, 2000).
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RESEARCH AIM
Develop a research model on CRM alignment and investigate the impact of CRM alignment on
performance.
LITERATURE REVIEW
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CRM ?
– 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 a help desk or call center.
What is CRM alignment?
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CRM ALIGNMENT ?
Conceptualize CRM alignment as:
• Business – IT strategic alignment
• CRM process – IT alignment
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BUSINESS-IT ALIGNMENT• The latest annual survey on IT industry in 2010
shows that business and information technology (IT) alignment (BIA) is still among the top five of top management concerns
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BUSINESS-IT ALIGNMENT .. cont’
Alignment is sometimes used differently in the BIA literature. Terms include:
• Fit (Venkatraman, 1989; Chan, 1992; Henderson and Venkatraman, 1993)
• Harmony (Luftman, 1993)
• Bridge (Ciborra, 1997)
• Fusion (Smaczny, 2001)
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BUSINESS-IT ALIGNMENT .. cont’
• Integration (Weill and Broadbent, 1988)
• Linkage (Henderson and Venkatraman, 1993)
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CRM PROCESS-IT ALIGNMENT
• Refers to processes on customer-facing level (Reinartz et al. 2004)
• Involves coordination of information – thus IT-enabled
• Key aspects in relationship management e.g. initiation, maintenance & termination.
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BENEFITS OF CRM?• Boulding et al. (2005) argued that the
benefits of CRM applications are perceived differently across industries.
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BENEFITS OF CRM – SOME SUGGESTIONS
Richards and Jones (2008) suggested CRM:
• improves pricing
• increases customer satisfaction and loyalty through better customer service
• enhances product development and differentiation through customization/personalization
• enhances ability to create long-term relationships and customer segmentations
• 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
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BALANCED SCORECARD• Based on four perspectives : financial,
customer, internal business process and learning and growth (Kaplan and Norton 1992; 1996)
• Examples of studies using BSC for CRM include Kim et al. (2003) and Kim & Kim (2008)
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HYPOTHESESH1: CRM performance is positively related to organizational performance
H2a: CRM process-information technology (IT) alignment is positively related to CRM performance
H2b: CRM process-IT alignment is positively related to organizational performance
H3a: Business-IT strategic alignment is positively related to CRM performance
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HYPOTHESES
H3b: Business-IT strategic alignment is positively related to organizational performance
H4: Business-IT strategic alignment is positively related to CRM process-IT alignment
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RESEARCH MODEL
RESEARCH METHODOLOGY
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CONTEXT OF STUDY• Malaysian small and medium enterprises (SME)• Malaysia’s SME has fewer than 50 employees with turnover of below RM25 million• In 2009, SME in Malaysia account for about 99% of total business establishments (552,849) and contribute to 31.2% of the nation’s Gross Domestic Product (GDP).
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CONTEXT OF STUDY .. cont’• SME have provided 56% to total employment
and 19% exports of the country (SME annual report). • Total survey questionnaires distributed: 300
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SURVEY INSTRUMENT SOURCES
Constructs Source of constructs anditems used in the research
Business-IT alignmentCRM process-IT alignmentCRM performance
Kearns and Sabherwal (2007);Viaene et al. (2007)Reinartz et al. (2004); Chen and Ching (2004)Kim et al. (2003); Chen and Ching (2004)
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SURVEY INSTRUMENT ITEMS
Business-IT alignment
1. 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 alignment
5. IT in our organisation supports us in tracking of prospects. (initiate)
6. IT helps us to identify different offers for prospects based on prospects’ economic value. (acquire)
7. In our organisation, IT supports us in identifying customers lost to competitors. (regain)
8. IT helps us determine which of our customers are of the highest value. (maintain)
9. IT supports two-way communication with our customers. (retain)
10. IT helps us in tracking customers and the incentives for them if they intensify their business with us. (cross-sell / up-sell)
11. IT helps us in tracking current customers and the incentives for them when they acquire new potential customers. (referral)
12. IT supports us in tracking non-profitable, low value or problem customers. (terminate)
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SURVEY INSTRUMENT ITEMS .. cont’
CRM Performance
In 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 performance
In our organisation, IT has
7. Return on investments (ROI).
8. Profitability
9. Competitiveness
10.Sales revenue
FINDINGS
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PROFILE OF SMEIndustry Frequency Percentage
Automotive 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
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PROFILE OF SME .. cont’• The minimum number of employees was one,
maximum was 150, and average was 15.
• Minimum duration in business, was fewer than one year, maximum was 33 years and average was four years.
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RELIABILITY ANALYSIS
Constructs No. of items
Cronbach’s Alpha
Business-IT alignment 4 0.687 CRM process-IT alignment 8 0.798
CRM performance 6 0.639Organizational performance 4 0.682
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CORRELATION ANALYSIS Organizati
onal performan
ce
CRM performan
ce
CRM process
-IT alignment
Business
-IT alignme
ntOrganizational performance
1
CRM performance 0.713** 1
CRM process-IT alignment
0.653** 0.618** 1
Business-IT alignment 0.658** 0.628** 0.695** 1**Correlation is significant at the 0.01 level (2-tailed)
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SUMMARY
CRM PROCESS–ISALIGNMENT
BUSINESS–IS STRATEGIC
ALIGNNMENT
CRM PERFORMANCE
CRM ALIGNMENT
IMPACT OF CRM ALIGNMENT
H4:0.695**
H3a: 0.628**
H2a:
0.618**
ORGANIZATIONAL PERFORMANCE
H1: 0.713**
H2b: 0.653**
H3b:0.658**
CONCLUSION
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CONCLUSION• The research explores and proposes a model to
aid researchers and practitioners alike in gaining insights into CRM alignment and its impact on performance.
• The research has proposed a research instrument and model for CRM alignment.
• The instrument has shown reliability while the model demonstrated relationships in the Malaysian SME context.
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CONCLUSION• For researchers, the results provide a
starting point for future research opportunities.
• For practitioners, the research provides an insight into the components of CRM alignment and impact of CRM alignment. Future research areas include examining antecedents of CRM alignment and confirming the research model.
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ACKNOWLEDGEMENTThe research is supported by the
Fundamental Research Grant Scheme Ministry of Higher Education Malaysia
(504/RES/G/14/3/2/2 FRGS).