CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS AND ORGANIZATIONAL CHANGE

By | February 9, 2018

 

INTRODUCTION

 

Relationship building and management, or what has been labeled as relationship marketing, is one of the leading approaches to marketing (Grönroos 1994). Practitioners as well as academics suggest that customer relationship management (CRM) provides an actual platform for the operational manifesta- tion of relationship marketing (Plakoyiannaki and Tzokas 2002; Goodhue et al. 2002).

Recent studies show that the movement to customer relationship management is gaining mo- mentum (Goodhue et al. 2002; Morris et al. 1998; Romano and Fjermestad 2001–2002), but still, after several years of implementing information technology to support relationship marketing, up to 55 percent of all CRM projects do not produce results (Rigby et al. 2002; Starkey et al. 2003). The high risk of failure has motivated many researchers to study CRM success (Bose 2002; Bhatia 1999; Yu 2001; Peppard 2000; Abbott et al. 2001; Fjermestad and Romano 2003; Chin

 

  1. 2003). Some studies suggest that in order to succeed in one’s CRM effort, one should hit multiple targets at the same time. In their recent survey, Goodhue, Wixom, and Watson (2002) found three important targets: applications, infrastructure, and transformation. The authors main- tain that “organizational transitions are the most disruptive and difficult CRM targets to reach.” According to another survey by CRM Forum (Rigby et al. 2002), the majority of responders pinned the failure of their CRM programs on the lack of adequate change management. These studies suggest that if a company fails in transforming the organization and its processes (market- ing, sales, and customer service) to become more “customer focused,” the investment in the CRM system might not pay back in the long run. Gartner, Inc. predicted that worldwide spending on CRM would reach $76.5 billion in 2005, up from 23.26 billion in 2000 (in Starkey et al. 2003). Consequently a high financial risk is involved in a CRM effort.

Even though managers of CRM should lead and execute intentional change, the feasibility of “managing change” is increasingly being questioned (Balogun and Jenkins 2003). Change can- not be reified as something “done” to individuals, since individuals play intrinsic roles in shaping change outcomes. It is the assumption about controllability that informs perhaps the most endur- ing of organizational change management metaphors, that of unfreeze-change-refreeze (Lewin 1952). According to change management perspective, change is treated as a discrete event to be managed separately from the ongoing process of organizing. Focusing only on change manage- ment issues would leave out the issues of change emerging from the unpredictable interaction between IT and its human and organizational users (Markus and Robey 1988). We argue that it is as important to investigate issues of change that emerge unpredictably as it is to investigate those that have been planned ahead. We therefore decided to explore the phenomenon of change in the context of CRM in more detail. Our research question is: Which kinds of both emergent and planned change events may occur in an organizational context during a CRM implementation? Furthermore, we are interested in how the organization in our case dealt with the various change events in order to secure a successful outcome of their CRM effort.

In order to get deeper insight into organizational change, we chose to investigate the phenom- enon qualitatively and selected one case company for a thorough investigation. Instead of select- ing a more positivist research method, we believe that an exploratory approach would help bring forth factors of change that otherwise might not be revealed.

The chapter is organized as follows. First, we develop the theoretical background for our research. We define the core concepts and describe the results of earlier research into IS support- ing relationship marketing and into organizational change. Based on our literature review we introduce a research framework, which we have used as lenses in analyzing the results of our empirical findings. We then describe our case and the research methodology undertaken in detail. Finally we present our research results, conclusions, and implications for future research.

 

PRIOR RESEARCH INTO CRM AND ORGANIZATIONAL CHANGE

 

Relationship Marketing

 

During the past five to ten years there has been a growing interest in studying the economics of long- lasting customer relationships (Romano and Fjermestad 2001–2002). Long-term relationships where both parties over time learn how to best interact with each other lead to decreasing relationship costs for the customer as well as for the supplier or service provider. Grönroos (1994) defines relationship marketing as follows: “Marketing is to establish, maintain, and enhance relationships with custom- ers and other partners,  at  a profit,  so that the objectives  of the parties involved  are  met. This is

 

 

achieved by mutual exchange and fulfillment of promises.” Copulinsky and Wolf (1990) define relationship marketing from a different angle, stressing the role of IT as a “process where the main activities are to create a database including existing and potential customers, to approach these customers using differentiated and customer-specific information about them, and to evaluate the life-term value of every single customer relationship and the costs of creating and maintaining them.” This definition includes the role of IT in supporting the relationship marketing processes.

 

Customer Relationship Management

 

Starkey and Woodcock (2002) define customer relationship management as being a business phi- losophy: “CRM is an IT-enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the ‘voice’ of the customers in order to deliver long-term superior customer value, at a profit, to well identified existing and potential customer segments.” In the definition by Rigby, Reichheld, and Schefter (2002), “CRM aligns business processes with customer strategies to build customer loyalty and to increase profits over time,” the words technol- ogy and software are absent. However, evidently CRM is seen as the bundling of customer strategy and processes, supported by the relevant software, for the purpose of improving customer loyalty and, eventually, corporate profitability. In this definition, which we have adopted for our research, we can observe the underlining of the alignment of all three components: business strategy (i.e., relationship marketing strategy), processes which support this strategy, and IT.

The IT component of CRM or the CRM technical architecture can include many applications, performing both analytical and operational functions. In our study we have adopted the CRM technical architecture from Goodhue et al. (2002).

On the analytical side, a data warehouse typically maintains historical data that support ge- neric applications, such as reporting, queries, online analytical processing, and data mining, as well as specific applications, such as campaign management, churn analysis, propensity scoring, and customer profitability analysis. On the operational side, data must be captured, integrated, and stored from all in-bound touch points, including the Web, call centers, sales force, and ATMs. This data may be augmented with external demographic data. Current data can be maintained in an operational data store that supports operational applications, such as email, direct mail, telemarketing, and customer support. An additional example of an operational application is sales pipeline management. The purpose of a sales pipeline is to manage all sales activities, especially those related to sales opportunities and offers. A sales pipeline helps sales management to fore- cast the probability of future sales. It produces data to the analytical side as well.

Leave a Reply

Your email address will not be published. Required fields are marked *