CRM and ICT

By | February 9, 2018

CRM can be viewed as an extension of relationship marketing (RM), a marketing paradigm that focuses on satisfying customers’ needs through the development of close personal relationships, interactions, and social exchanges between the business and its customers, with ICT. Enhancing the business’s competitive response to continually changing markets lies at the core of RM (Zineldin 2000). CRM expands upon this concept with its emphasis on information management (Peppard 2000) and draws upon ICT to further enhance its strength and capabilities. By taking advantage of advanced computing power and high-speed communication networks over the Internet, CRM allows businesses to quickly learn about and consequently better respond to their customers’ needs and expectations with innovative customized products and services (Peppers and Rogers 1999). Also, advances in ICT have pushed database and data storage capabilities into the terabytes, facilitating the collection and retention of customer information. Thus, ICT is pivotal to CRM performance.

ICT covers the technological means for handling information and aiding communications. It involves information and communication channels as well as hardware and software used to generate, prepare, transmit, and store data (NORAD 2002). Generally, marketing applications of ICT in CRM fall into two general categories: (1) marketing process automation and (2) marketing intelligence. Marketing process automation concentrates on building information distribution ef- ficiencies through the use of ICT. It often involves the use of database systems to collect and store customer and sales data, and the subsequent generation of reports for marketing analysis and planning. The use of ICT in electronic data interchange (EDI) and Internet technologies has helped improve fundamental channel management and communication efficiencies between organiza- tions in sharing information to coordinate their activities.

In contrast, marketing intelligence entails knowledge discovery techniques, such as online analytical processing (OLAP), data mining, and intelligent agents, programs that search for infor- mation over a broad range of data sources, and focuses on gaining greater insights into customer behavior and market opportunities. Consequently, ICT has gained greater attention in marketing intelligence. Continual advances in technology will lead to further enhancements of CRM.

CRM Elements and ICT

The three CRM elements identified in this study include market orientation, mass customization, and IT investment (profile). ICT plays key roles in the functions of these elements. The sections that follow discuss each element.

Market Orientation. Market orientation is defined as the organizationwide generation, dissemina- tion, and response to market intelligence and is characterized by multiple departments sharing information about customers and engaging in activities designed to meet their needs (Kohli and Jaworski 1990). These activities focus on creating and satisfying customers through a continuous needs assessment (Deshpande and Farley 1998). In contrast to product-driven marketing, which concentrates on pushing end-products into the market through the promotion of quality at low prices, market orientation focuses on detecting and quickly fulfilling customer needs. Prior stud- ies suggest that market orientation practices have positive impacts on business performance and new products and are critical to achieving customer-centric value creation and profitability.

Market-sensing and customer-linking activities are two key cross-functional processes linked to market-driven organizations (Day 1994) that underlie the customer- and competitor-focus motiva- tion of a business (Deshpande et al. 1993; Day 1994; Han et al. 2001). Customer focus seeks to provide the right product to the right customer at the right time and place through the right channel in the right amount and at the best price. Appearing distant and unattainable in the past, it has become more readily achievable with current ICT. For example, retailers such as Wal-Mart are capable of collecting sales and inventory data in real time through point-of-sale (POS) systems and barcodes imprinted on all merchandise, and immediately enacting decisions that may affect the entire organization (i.e., price changes, reordering, store operations, etc.). Thus, customer data can be continuously collected and immediately examined to identify customer preferences, and used to quickly predict changes in market trends. Using insights gained into their preferences, habits, and behavior, a business can further enhance its relationships with its customers.

Using ICT-enabled intelligence gathering methods, a competitor-focus maintains vigilance on developments in the market and impending threats, such as new product offerings, horizontal strategic alliances between competitors, or vertical alliances within distribution channels. Using this information, a business can launch a preemptive strike to counteract or dampen the effects of a threat or its competitors’ actions. It could also use the information to reevaluate its market segmenting and targeting tactics to better position itself. For both market- and competitor-focus orientations, ICT enables quicker and more efficient intelligence gathering and responses, and consequently leads to better focused marketing strategies.

 

Mass Customization. The objective of mass customization is to provide every customer with prod- ucts and services specifically tailored to fit his/her needs. Customization creates a business’s great- est competitive advantages, as competitors cannot easily duplicate, imitate, or provide substitutes for its offerings. This involves having easy access to customer information to more precisely target market segments and identify customer buying behaviors within the segments. However, an organization’s success with customization hinges on its ability to integrate its customers’ feedback into its production processes (Pitta 1998). Customization entails a cost in flexibility and speed (Dewan 2000), especially since the goal is to reach a one-to-one marketing level with products and services that take into account personal differences and perfectly meet a customer’s needs. With today’s ICT, mass customization is more achievable and feasible. Individual customer preferences and behavior can be retained in massive data warehouses and analyzed with a variety of data mining techniques to create customer-centric solutions (Kalakota and Robinson, 2001).

 

IT Investments. Continual advances in IT have spurred changes in the way business is conducted, opened new opportunities, and offered new means for gaining competitive advantages (Venkatraman 1994; Scott Morton 1991). A business’s IT investment reflects its commitment to IT and incorpo- rates a vision of its expectations from IT. It typically involves developing an IT architecture that defines the organization’s capabilities, and supporting it (IT architecture) with an IT infrastruc- ture that covers hardware, software, applications, and people. Together, they represent a master plan and draw a profile of the types of ICT the business chooses to support its business activities. Two important goals of IT investments are to facilitate information sharing through IT integration and to empower people with information and knowledge (i.e., improved decision making). As it applies to CRM, IT investment focuses on integrating and coordinating business activities, open- ing dialogs with customers to share information, enabling CRM practices, and developing em- ployee skills to benefit the business from CRM. Overall, greater IT investments favorably influence the business performance of an organization.

Partnership Quality

 

Partnerships enable a business to open channels of communication to its customers. Therefore, partnership quality involves building customer satisfaction, trust, and commitment between a business and its customers. It results through two-way communication and a willingness to learn from customers. The satisfaction [i.e., the differences among expectations, conformation, and performance (Oliver and DeSarbo, 1988)] and added value that customers receive through trans- actions and interactions often characterize partnership quality. Oliver and DeSarbo (1988) exam- ined several potential determinants of satisfaction and found five significant satisfaction-process theories: (1) expectancy disconfirmation, (2) assimilation theory, (3) equity theory, (4) attribution theory and (5) performance. A study conducted by Jones and Suh (2000) empirically tested trans- action-specific satisfaction, overall satisfaction, and repurchase intentions. Their findings suggest that overall satisfaction directly influences repurchase intentions and moderates the relationship between transaction-specific satisfaction and repurchase intentions. Thus, partnerships between a business and its partners and customers are critical for fostering satisfaction, as they facilitate interactions and the exchange of information and knowledge.

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