Professional Documents
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MASTER'S THESIS
IN MEMORY OF THOMAS...
Publishing this thesis has been marked with a shade of sadness and grief. A few weeks after
its defense and final corrections, Thomas Kwaku Obeng, co-author and friend, decided to
go back to his country of origin, Ghana, where he encountered a tragic accident that lead
to his death.
Thomas was a wonderful person always willing and ready to help, considered of others
needs, with very high moral values and a good friend. We shared many working hours
and also many common ideas and interests. We spoke a lot about future plans and
expectations. He valued knowledge and education and his wish was to serve his
community and contribute to its development. This is why he hurried back. As Robert
Opoku, one of his close friends stated: no amount of words could persuade him to stay.
It has taken a while to assimilate the absence of Thomas. This is why the publication of
this thesis comes in so delayed, almost a year after it was completed. This final step
towards concluding what we started together will never be treasured in my heart as much
as the invaluable process of writing, investigating and growing where we both
participated.
Still, this publication is the clearest testimony of how cultural, ethnical and geographic
differences only have helped to enrich the process of personal growth and how close
friendships can be established within different peoples and nations while bringing hope to
humanity.
There is no dignity and honor in anything than to serve your community
Thomas Kwaku Obeng. 2003
Karla Loria R.
ii
ABSTRACT
This master thesis, prompted mainly by the much publicized questioning of most
Customer Realtionship Management (CRM) initiatives, was to gain a better
understanding of CRM implementation in service companies. CRM has been approached
by both academics and practitioners from divergent perspective and literature appears to be
inconsistent and highly fragmented. The objective then is to unravel the major reasons,
benefits, components and key factors of CRM implementation.
To achieve the purpose of this thesis, a case study involving two Swedish service firms that
have been implementing CRM were studied. Findings from the study show that service
companies enjoy some benefits by implementing CRM as well those in the process of
rolling out a full CRM initiative.
The theory is contradicted when firms show a different mix CRM components as they
unconsciously see CRM as a technology solution. Another finding is that service firms are
radically re-engineering their business processes and are strategically using CRM
technology to capture a complete view of the customer.
Finally, findings have shown that for CRM implementation to be successful and thus
achieve corporate objectives. The right mix of CRM components and all the key factors,
strategy, leadership and integration need to be given due attention by service firms.
iii
ACKNOWLEDGEMENTS
The twenty weeks of meticulous and hard work contributed to the completion of this
master thesis, a requirement for the E-MBA program at the Division of Industrial
marketing, Lule University of Technology. Writing a thesis of this nature has indeed
broadened our knowledge and at the same time involved many challenges.
The successful completion of this thesis would not have been possible without the
support, encouragement, cooperation and assistance from many individuals who
contributed in diverse ways to the conduct, compilation and the quality of the thesis. As a
result, we would like to express our sincere thanks to first and foremost to the Heavenly
father, for the strength and protection throughout the study. Our next gratitude and
appreciation goes to our Supervisor sa Wallstrm, PhD. for her assistance, guidance
patience and professional touch with which she guided us through this exercise. She
provided us encouragement, direction and constructive suggestions which contributed in
no small way to the quality of this thesis. Please, accept our humble thanks.
We are also grateful to all family members, friends and loved ones who in many ways
contributed and supported us both physically and spiritually. To you we say thanks.
We cannot ignore the support from other members at the division of Industrial Marketing
and E-Commerce who in one way or the other guided us.
Last but not the least, we want to thank the two managers of the service companies that
opened their doors for us in a special way, allowing us to use their companies as case study
for this thesis. We owe you a great deal of gratitude.
Karla Loria R.
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Table of contents
1. Introduction .................................................................................................................i
1.1 Background ...........................................................................................................2
1.2 Research Problem..................................................................................................4
1.3 Outline of the Thesis .............................................................................................6
2. Literature Review........................................................................................................7
2.1 Customer Relationship Management (CRM).........................................................7
2.2 Benefits of CRM ...................................................................................................9
2.2.1 Customer Value ............................................................................................ 11
Types of Customer Value....................................................................................... 12
2.2.2 Customer Satisfaction .................................................................................... 13
2.2.3 Customer Retention and Loyalty .................................................................. 14
2.3 Components of CRM.......................................................................................... 14
2.3.1 Technology................................................................................................... 15
2.3.1.1 Functional categories of CRM Technology........................................................ 16
Collaborative CRM .................................................................................................. 17
2.3.2 CRM infrastructure....................................................................................... 18
2.3.2 Business process............................................................................................. 21
2.3.3 People........................................................................................................... 21
2.3.4 The Right Mix of CRM Components .......................................................... 22
2.4 Implementation.................................................................................................... 23
2.4.1 Key Factors of the CRM implementation...................................................... 23
2.4.1.1 Strategy....................................................................................................... 24
2.4.1.2 Leadership ................................................................................................... 24
2.4.1.3 Integration within the organization .................................................................. 28
3. Frame of Reference ................................................................................................... 30
3.1 Research Problem and Research Questions.......................................................... 30
3.2 Delimitation......................................................................................................... 31
3.3 Frame of Reference ............................................................................................. 32
3.3.1 Emerged Frame of Reference........................................................................ 33
4. Methodology............................................................................................................. 34
4.1 Research Process.................................................................................................. 34
4.2 Research Purpose................................................................................................. 34
4.3 Research Approach .............................................................................................. 35
4.3.1 Qualitative and Quantitative Research Approach........................................... 35
4.4 Research Strategy................................................................................................. 36
4.4.1 Sample selection ............................................................................................ 37
4.5 Data Collection.................................................................................................... 38
4.6 Criteria for Quality Measurement......................................................................... 41
5. Empirical Data Presentation ....................................................................................... 43
5.1 Case One: Lnsfrskringar ................................................................................. 43
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Table of Figures
Figure 1: Outline of the thesis..........................................................................................6
Figure 2: The integrated framework for customer value and CRM performance ............ 12
Figure 3: Components of CRM and implementation model ......................................... 15
Figure 4: Analytical CRM ............................................................................................ 17
Figure 5: Integrated Customer data on a data Warehouse .............................................. 19
Figure 6: Developing the right mix of people, process, and technology ......................... 23
Figure 7: Integration of Customer relationship and customer leadership management..... 25
Figure 8: Motivation elements of the Integrated CRM-CRL model ............................. 27
Figure 9: 360-degrees view of the customer .................................................................. 30
Figure 10: Emerged Frame of reference for this study .................................................... 33
Figure 11: Relevant situations for different research strategies ........................................ 36
Figure 12: CRM components as assessed by Lnsfrskringar ......................................... 46
Figure 13: Organizational Chart HSB-Norr .................................................................. 48
Figure 14: Organizational Chart HSB-Norr .................................................................. 51
Figure 15: Developing the right mix of people, process, and technology ....................... 55
Figure 16: CRM components as assessed by Lnsfrskringar ......................................... 55
Figure 17: Developing the right mix of people, process, and technology ....................... 59
Figure 18: CRM components as assessed by HSB-Norr ................................................ 59
Figure 19: Comparison chart of values assessed to the CRM components....................... 63
Figure 20: Comparison chart of values assessed to the CRM components....................... 68
vii
1. Introduction
In this first chapter, we set up the basis to our area of research. An introduction and general
background are provided in order to describe the area in which the study is conducted and further on,
justify the importance of the specific research that has been performed. Finally, the research problem
will be clearly stated followed by the outline of the thesis.
As a result of globalisation of businesses and the evolving recognition of the importance of
customer retention, market economies and customer relationship economics, there has
been a change in mainstream marketing (Grnroos, 1997). Kevin and Yen (2003) explains
that over the past few years, there has been a shift in relationship literature from focusing
on the benefits of long-term relationship for companies to the benefits that accrue to
customers. Because of this it is becoming evident that companies fundamentally have to
change the way in which marketing is done i.e. a fundamental shift from managing a
market, to managing a specific customer (Bose, 2002). Establishing relationship with a
customer is to attract the customer and to build the relationship with the customer so that
the economic goals of the relationships are maintained (Grnroos, 1997).
Kotler (2000) maintained that it has been the practise by firms to devote greater attention
and marketing effort to attracting new customers rather than retaining existing ones. This
is the base for relationship marketing (RM), which came as an answer to the transactional
or traditional marketing approach. Transaction marketing used to emphasise the concepts
of the 4Ps of marketing: product, price, place and promotion that focused only on
attracting businesses, but not so much in retention (Gummesson, 1999). Chen and
Popovich (2003) stated that it has been well acknowledged and recognised that retaining
firms existing customers is more profitable that attracting new ones. As a result,
relationship marketing was developed on the basis that customers vary in their needs,
preferences, buying behaviour and price sensitivity. Bose (2002) added that firms in no
distant future will be driven more and more by individual customer preferences.
Over time there has been a gradual move in marketing thought and practice from mass
marketing market segmentation niche marketing micro marketing mass
customization personalization. The twenty first century marketing thought and effort is
pushing for smaller and smaller groups of consumers as market targets. Increasing
competitiveness in the international economy is forcing the organizations to place larger
emphasis on building valuable customer relationships.
CRM builds on the philosophy of relationship marketing that aims to create, develop and
enhance relationships with carefully targeted customers to maximize customer value,
corporate profitability and thus shareholders value (Frow and Payne, 2004). The goal then
is to improve the customer's experience of how they interact with the company, which
hopefully, will turn into more satisfaction, which might lead to more loyalty, and finally,
to and increase in profit. (Chou et al, 2002). Kotorov (2003), while referring to the roots
of CRM mentioned that in the past, many speculated whether CRM would turn out to
be just another buzzword; one more term to add to the managerial dictionary that would
soon fade away. Bull (2003) adds to this thought stating that it is no longer good enough
just to say that you are customer focused, but it matters what you do. Customer
relationship management (CRM) is of vital importance to organizations and it requires
customer- centric business approach to support effective marketing, sales and service
processes (Carolyn et al, 2003)
The service industry is growing and dominating world economy. According to UK office
for national statistics, the service industry can be categorised into financial, transport, retail
and personal service (Jick, 1999). According to Wallstrm (2002), the service sector
comprises a wide range of companies including banks, insurance companies. She explains
that the service sector employs more and more people, for example nine out of ten new
jobs opportunities are created within the service sector in Sweden. Swedish Institute
(2004) maintained that service sector accounted for 75 percent of all employees in 2003.
Grnroos (1997) said there has been compelling interest in services in many parts of the
world and in different functional areas.
Advances in information technology especially the rapid growth of the Internet usage,
improved production capabilities, demanding customers and accelerated flow of capital
across political boundaries create business opportunities and fuel competition as well
(Rodie and Martin, 2001). According to them, the service sector is considered as one of
the most challenging and competitive landscape, and like all businesses services firms face
some degree of competition. The ability to view all customer interactions and information
is essential to providing the high quality of services that todays customers demand and
service firms that want to be successful in the knowledge economy must implement a
comprehensive CRM integrated solution that involves all departments, working as a team
and sharing information to provide a single view of the customer (Yusuf, 2003)
1.1 Background
The goal of relational marketing is the focus on customer loyalty (Asuncion et al, 2002),
and CRM is becoming the foundational cornerstone of profitable financial success
(Galbreath and Rogers, 1999). Customer satisfaction, understood as the meeting of the
customers expectation is related to delivering high customer value (Kotler, 2000).
Customers who result of successful relationships have far more potential for loyalty as they
are often prepared to pay a premium price for a range of reliable goods or services
(Newell, 2000). Once these customers are recruited they are less likely to defect, provided
they continue to receive quality service. Relationship Marketing emphasises that customer
stickiness (retention) can substantially reduce marketing cost and contributes to firms
profitability because it is always cheaper to retain a customer than to acquire a new one
(Khalifa et al 2002).
Customer relationship management appeared as a new concept at the climax of the
Internet boom (Kotorov, 2003). It changed both the CRM market and customer-related
business requirements of all sizes of companies (Chou et al, 2002). During the early 90s
providers of CRM solutions were offering products that accentuated the automating and
term for methodologies, software, and usually Internet capabilities that help an enterprise
manage customer relationships in an organized way.
This same fragmentation of opinions reflects when it comes to implementing Customer
relationship management. Creating a CRM solution for most companies is generally a
matter of complex integration of hardware, software and applications and it also requires a
careful analysis of business processes. The implementation of CRM impacts on a number
of functions within an organisation including sales, IT, operations, marketing and finance.
Bradshaw and Brash (2001) asserted that implementing CRM is certain to involve the use
of new technologies. Most companies are enthusiastic about implementing CRM, but the
work involved to bring such a system to reality demands an enormous deal of varied
knowledge, project management and a meticulous plan (Bose2002). Thus, CRM failure
rate was estimated to be between 55 percent and 75 percent in 2001 (Kotorov, 2003). Up
to this point, it has been suggested that people, process and technology are key concepts to
consider for the implementation of CRM (Chen, Popovich. 2003). The study of what
they imply and how they are being approached by different companies becomes relevant
in order to increment success of CRM implementation in the future.
As customers become more and more sophisticated and products more and more
commoditized, service becomes dominant. Customer retention is critical and this requires
loyalty which is brought about by great service, trust and, to different degrees,
personalization (Abbott, 2001).
A whole new world of demands has risen and business rush into the implementation of
the Customer relationship management. This comes as an answer to a most competitive
environment, availability of new technologies and naked survival; therefore, the study of
the elements that determine success becomes more relevant. Even though the level of
satisfaction with CRM implementation has not shown the best results, companies keep
investing enormous amounts of money in the hope that this will bring them a strategic
advantage. This research will focus on the experience that service companies have had so
far.
The
research
problem
can
then
be
stated
as
follows:
To Gain a better understanding of CRM (i.e. Customer
Relationship Management in Service Companies
Chapter Two
Literature Review
Chapter Three
Research Problem, Research Questions and Frame of
Reference
Chapter Four
Methodology
Chapter Five
Empirical data Presentation
Chapter Six
Data analysis
Chapter Seven
Findings, Conclusions and Implications
reference which shows the conceptualization of the various variables and which also forms
the basis for answering the three research questions is presented in this chapter. Chapter
four highlights a description of the methodology which has been used to conduct this
study. Chapter five looks at the empirical data collected from the two service companies
for this study. In the sixth Chapter the empirical data will be analyzed with theory to
discern commonalities and differences both within-case and across-case. In chapter seven
which is the final chapter, the result of the research will be made and presented by
answering the research questions posed in chapter three. Also, findings and conclusions
will be clearly stated and finally implication for practitioners/management, theory and
future research will be presented in this chapter.
2. Literature Review
The previous chapter provided the background and the problem discussion of the area of this study and
the research problem: To gain a better understanding of CRM (i.e. Customer Relationship
Management) implementation in service companies. We now present the theoretical review chapter,
which sole aim is to provide relevant literature in the field of our study.
that touch customers (Chou et al, 2002). They further stated that CRM is a notion
regarding how an organisation can keep their most profitable customers and at the same
time reduce cost, increase in values of interaction which then leads to high profits.
The modern customer relationship management concept was shaped and influenced by
the theories of total quality management (Gummesson, 1997) and by new technological
paradigms (Zineldin, 2000). There is however, a perceived lack of clarity in the definition
of customer relationship management, although all accepted definitions are sharing
approximately the same basic concepts: customer relationships, customer management,
marketing strategy, customer retention, personalisation (Zineldin 2000).
However, while academics debate the subtitles of various definitions, the practitioners
have developed a wealth of applicative papers analysing the concrete challenges and
opportunities of implementing the systems (Bacuvier et al. 2001).
CRM, in some firms, is considered as a technology solution, consisting of individual
databases and sales force automation tools and sales and marketing functions so as to
improve targeting effort. Peppers and Rogers (1999) argued that other organisations view
CRM as a tool, which has been particularly designed for one-to-one customer
communications, which is the function of sales, call centres or the marketing departments.
Accordingly, Frow and Payne (2004) added that CRM stresses two-way communication
from the supplier to customer and from the customer to the supplier to build the customer
over time. The two-way communication has been enhanced greatly by advances in
technology particularly the Internet.
In term of information technology (IT), CRM means an enterprise-wide integration of
technologies working together such as data warehouse, web site, intranet/extranet, phone
support system, accounting, sales, marketing and production. Kotler (2000) assured that
CRM uses IT to gather data, which can then be used to develop information acquired to
create a more personal interaction with the customer. In the long-term, it produces a
method of continuous analysis and refinement in order to enhance customers lifetime
value with the firms
Goldenberg (2000) believes that CRM is not merely technology applications for
marketing, sales and services but rather when it is successfully implemented; it enables
firms to have cross-functional, customer-driven, technology-integrated business process
management strategy that maximises relationships. Chin et al (2003) stated that due to
many technological solutions available for CRM automation, it is often misconstrued as a
piece of technology. But they maintained that in recent times many companies have
realised the strategic importance of CRM, and as a result, it is becoming a business valueeffort rather than technology-centric effort.
Using information technology as an enabler, CRM strategy leverages key functional areas
to maximise profitability of customer interactions (Chen and Popovich, 2003). It has been
recognised that technological advancements and innovations, keen competitive marketing
environment, coupled with the Internet are the main drivers that promote one-to-one
initiative. Through CRM, firms are able to understand the drivers of present and future
customer profitability which makes it possible to appropriately and proportionately
8
allocate firms resources to all functional areas that affect customer relationship (Chou et al,
2003).
For customers, CRM offers customisation, simplicity and convenience for completing
transactions irrespective of the kind of channel of interaction used (Gulati and Garino,
2000). Many businesses today realise the importance of CRM and its potential to help
them achieve and sustain a competitive edge (Peppard, 2000). This view was further
boosted by Bose (2002) that as a result of changing nature of the global environment and
competition, firms cannot compete favourably with only minor advantages and tricks that
can easily be copied by competing firms. The implementation of CRM is an enabled
opportunity to rise above minor advantages with a real focus on developing actual
relationships with customers. Firms that are most successful at delivering what each
customer want are the most likely to be the leaders of the future.
3. Reduced cost of sales: The costs regarding selling are reduced owing to existing
customers are usually more responsive. In addition, with better knowledge of
channels and distributions the relationship become more effective, as well as that
cost for marketing campaign is reduced.
4. Higher Customer Profitability: The customer profitability will get higher since the
customer wallet-share increases, there are increases in up-selling, cross-selling and
follow-up sales, and more referrals come with higher customer satisfaction among
existing customers.
5. Increased Customer retention and loyalty: The customer retention increases since
customers stay longer, buy more and buy more frequently. The customer does also
often take initiatives which increase the bounding relationship, and as a result the
customer loyalty increases as well.
6. Evaluation of customers Profitability: A firm will get to know which customers are
profitable, the one who never might become profitable, and which ones that
might be profitable in the future. This is very important since the key to success in
any business is to focus on acquiring customers who generate profit and once a
firm has found them, never let them go (ibid)
Curry and Kkolou (2004) refer to the major benefits and reasons for adoption of CRM
which include: customers from the competition will come to prefer your organization; a
simplified, customer-focused internal organization will simplify the infrastructure,
shrinking the workflow and eliminating non-productive information flow; and profits will
increase from more/more satisfied customers and a more compact, focused company.
There are companies that adopt CRM systems just because it is the most advanced
technology and they think they have to have it since their competitors have it (Chou et al,
2002). Some statistics that motivate this behavior are resumed as follows:
By Paretos principle, it is assumed that 20% of a companys customers generate
80% of its profits
In industrial sales, it takes an average of 8 to 10 physical calls in person to sell to a
new customer, 2 to 3 calls to sell to an existing customer
It is 5 to 10 times more expensive to acquire a new customer than obtain repeat
business from existing customer. For example, according to Boston Consulting
Group (Hildebrand, 2000), the cost to market to existing web customer is $6.80
compared to $34 to acquire a new web customer
A typical dissatisfied customer tells 8 to 10 people about his or her experience
Source (Paul Gray and Jongbok Byun, centre for research on information
technology and organization, University of California, March 2001)
Getting to "know" each customer through data mining techniques and a customer-centric
business strategy helps the organization to proactively and consistently offer (and sell) more
products and services for improved customer retention and loyalty over longer periods of
time. Peppers and Rogers (1999) refer to this as maximizing "lifetime customer share",
resulting in customer retention and customer profitability.
10
11
However, it is only with the advent of powerful systems that they are able to quantify and
track customer profitability, and forecast customer lifetime value at the level of the
individual customer. Previously, companies could only say that customers of a certain type
were likely to be more commercially attractive; now they can pinpoint the individuals
who are the most attractive customers. These are the customers with whom it is vital to
retain long-term relationships. One American retail bank carried out a customer profiling
and targeting exercise using data mining techniques. The impact on direct mail campaigns
was dramatic. Campaign costs fell by one third and response rates doubled the number of
new accounts increased by 33% and the profitability of these new accounts by the same
amount. Defection rates fell by 5% and the lifetime value of these new customers grew by
an estimated 20%. By combining an understanding of customer purchasing drivers and
customer profitability, companies can tailor their offerings to maximize the overall value of
their customer portfolio (www.cranfield.ac.uk, 2004)
Types of Customer Value
It is suggested that it is impossible to create sustained value for a firms shareholders unless
value is being created for its customers. In fact, they suggest, service has been enhanced
because, through the use of technology, the customer can now deal with the firm in a
much more convenient way. Access is available through several channels and is guaranteed
24 hours a day, seven days a week. (Bristol Group, 2004) This then raises a fundamental
question about the type of value companies should create for their customer. For example,
Kotler (1997) argued that customer value can be understood in terms of product value,
service value, employee value, and image value. However, this approach is largely derived
from the standpoint of a firm not that of customers, or at least not totally customer based.
The broad theoretical framework developed by Sheth et al. in Chi et al 2004) was
somewhat different in that they suggested five dimensions of value from the customer's
perspective (social, emotional, functional, epistemic, and conditional) as providing the best
foundation for extending the value construct. However, it is worth noting that not all
these dimensions have equal significance at any time, although they are related in some
sense. As a result present study, therefore, posits that customer value can be better
understood in terms of four key dimensions, each of which may play a different role in the
customer perception process and thus contribute differently to the performance of CRM.
The next figure illustrates the types of value that a customer can experience.
Figure 2: The integrated framework for customer value and CRM performance (Chi et al,
2004. p117)
12
Functional value refers to the utility derived from the perceived quality and expected
performance of the product or service, and perceived sacrifice refers to the loss derived
from the product or service due to the increment of its perceived short-term and longterm costs. Functional value pertaining to the customers acquisition and use of the
product is generated by price, convenience, access or technology. Unfortunately,
competitors can most easily duplicate functional value (Bristol Group, 2004). Customers
are becoming more value-oriented and are not simply influenced by high quality or lower
price and value for money represents, therefore, the simplest and most easily copied form
of functional value. Thus, creating functional value offers a fleeting competitive advantage.
(Bristol Group, 2004).
Social value refers to the social utility derived from the product or service. Emotional value
refers to the utility derived from the affective states that a product or service generates.
Barnes (2004) has noted that emotional value is much more lasting form of value which
elicits an emotional response from customers. It is less easily duplicated by the competition
and generally contributes to less emphasis on price. When a firm employs qualified,
friendly, helpful employees value is created every time a customer is made to feel
welcome, important and valued. The creation of such emotional value for customers is
fundamentally different from the creation of functional value through price reductions,
increased convenience and technology. Both forms of value are important. However,
genuine customer relationships cannot be formed on the basis of functional value alone.
Customer relationships require an emotional connection with the firm if they are to
thrive. The emotional value is the more lasting, yet the more difficult to create. A reliance
on technology alone will not do it. (Barnes, 2004)
taken care off and resolved and may even be 95 percent if the complain receive quick
response and action. (Kotler, 2000)
Bateson and Hoffman (2002) noted that firms must put in place effective tactics for
retaining customers and subsequently making them loyal. They mentioned tactics such as
maintenance of proper perspective, remembering customers between calls, building
trusting relationships, monitoring the service delivery process, responding swiftly to
customers in need and provision of discretionary effort. According to them despite that
every customer is important, firms must not retain certain customers if they are no longer
profitable, abusive to the extent of lowering the morale of employees, reputation is so bad
that it tarnishes the image and reputation of the company should the firm associates itself
with that customer.
14
Figure 3: Components of CRM and implementation model (Chen and Popovich 2003, p. 676)
2.3.1 Technology
Davenport and Short (1990) stated that information technology (IT) for a very long period
of time been seen and recognised as an enabler to make firms radically re-engine their
business process if they want to achieve dramatic efficiency and improvement in
performance. CRM, to many is synonymous to information technology and in most cases
the core of it.
The push towards better CRM technologies is a natural result of the search for businesses
for greater productivity and efficiency in customer-facing operations like sales, marketing,
customer service and support (Greenberg, 2004). The rapid rate at which CRM
technologies are evolving gives businesses many tools which can enable them to enhance
customer relationships. According to Trepper (2000) CRM technologies are designed to
automate sales and service functions, aggregate customer information into data warehouses
and data marts, and manage collaborations with customers through an expanding number
of interaction points.
Hammer and Champy (in Chen and Popovich 2003) emphasised that information
technology assists and supports business process re-engineering , thus facilitating work
practice changes and adopting innovative ways that link a company with its customers,
suppliers and other stakeholders. Chen and Popovich (2003) argued that CRM application
is capable of leveraging innovations in technology to gather and analyse customer data
patterns, interprets customer behaviour, develop predictive models, respond with timely
and effective customised communications, and deliver product and service value to every
individual customer.
15
Peppard (2000) suggest that technological advances in global networks, convergence and
improved interactivity, are key and critical to e-business and CRM growth. The core
functionality of a CRM product is its ability to maintain a single, cohesion view of the
customer for the customer-facing functions of sales, services and marketing (Trepper
2000). This view is shared by Eckerson and Watson (in Chen and Popovich 2003) that the
use of technology can make companies enhance and optimise their interaction with
customers by creating an integral view of customers to learn from their past interactions to
optimise future ones.
It is also important to note that technology does play a significant role in CRM efforts, by,
among other things, seamlessly linking front (e.g. sales) and back office (e.g. logistics)
functions to provide for the efficient and effective management of interactions across
different customer touch-points (e.g. Internet, direct mail, sales call etc.) Chen &
Popovich (2003). CRM technology enables firms to harness the power of database, data
mining and interactive (e.g. Internet) technologies to collect and store unprecedented
amount of customer data, build knowledge from the data, and disseminate the resulting
knowledge across the organization (Bose, 2002). Thus, it seems that both over and
underestimating the role that technology plays in CRM initiatives can have detrimental
effects on firms relationship management efforts.
From a customer's perspective, effectively identified and implemented technology can help
companies directly match customer desire for customization in the products and services
they seek and provide personalized after-sale service and support based on customer profile
data. From a business standpoint, technology can help identify the most valuable customer
relationships and equip employees with abundant and relevant information about those
customers in order to provide more effective sales and service. In effect, CRM technology
can integrate the enterprise, fostering an environment of shared customer knowledge and
focusing the right employees on serving the right customers. (Galbreath; Rogers, 1999)
2.3.1.1 Functional categories of CRM Technology
CRM technology has been categorised into three distinct areas. The categorisation is
meant to help better understand how a CRM strategy and technology can provide such
all-inclusive architecture that is focused on serving the customer. (Reynolds, 2002).
Collaborative CRM
Reynolds (2002) describes collaborative CRM as the interfaces such as e-mail,
conferencing, chat, real-time applications, which facilitate the interaction between a
company and its customers, as well as within the business itself when dealing with
customer information. Collaborative CRM stresses two-way communication instead of
one-way communication.
Operational CRM
This, also known as front-office CRM, involves the areas where direct customer
contact occurs. (Kahlifa, 2004). The automation of integrated business process that
16
involves front-office customer touch points such as sales, marketing and customer service
through many interconnected channels of delivery, including the integration between
front and back office, as well as order management, customer service, marketing
automation, sales-force automation and field service. (Trepper 2000). A typical example is
when sales is automatically pulls data out of inventory systems or customer services
automatically calls up a customers billing records. (Reynolds, 2002)
Analytical CRM
It is also known as back-office or strategic CRM and involves understanding the
customer activities that take place in the front office (Kahlifa, 2004). It usually involves
analysis, modelling and evaluating data in a data warehouse or various data storehouse to
create a mutually beneficial relationship between a company and its customers (Reynolds,
2002). Greenberg (2004) states that analytical CRM is the capture, storage, extraction,
processing, interpretation and reporting of customer data to a user. Analytical CRM
enables businesses to target high-value customers and put together marketing campaign
that are totally relevant to these people in terms of cross selling, product development or
addition of services. Data is often stored in a data warehouse, which can be described as a
large repository of corporate data (Dyche, 2002), which then give the company
information that allow them to provide value to their customer. Hence, it is crucial to
capture the right data, a process that must be done with great customer care and
understanding (Newell, 2000).
The figure below shows an example of this.
Figure 4: Analytical CRM (Khalifa, M., 2004, Doctoral CRM course material, Lule University
of Technology)
Collaborative CRM
Collaborative CRM involves any CRM function that provides a point of interaction
between the customer and suppliers. It focuses on facilitating interactions between
customers and the companies (Trepper, 2000). Reynolds (2002) describes collaborative
17
CRM as the interfaces such as e-mail, conferencing, chat, real-time applications, which
facilitate the interaction between a company and its customers, as well as within the
business itself when dealing with customer information. Collaborative CRM stresses twoway communication instead of one-way communication. For example, technologies like
the electronic communication is used to facilitate relevant, timely and personalized
interaction with the customer (Greenberg, 2001)
the understanding of customers and their purchasing patterns. The application of data
warehouse according to Chen and Popovich (2003) can provide the following benefits to
an organisation:
1. accurate and more rapidly access to information to facilitate responses to questions
from customers
2. quality of data and filtering to eliminate bad and duplicate data and
3. customer profitability analysis, customer profiling and retention modelling is
enhanced and facilitated because data is extracted, manipulated and drill down
quickly.
Figure 5 depicts a typical data Warehouse fully integrated
Figure 5: Integrated Customer data on a data Warehouse (Khalifa, M., 2004, Doctoral CRM
course material, Lule University of Technology)
Sharp et al (2004) added that when ERP is implemented successfully, it could be used to
manage and integrate all the business functions within an organisation. ERP has the ability
to facilitate the flows of information between all supply chain processes both internal and
external in an organisation. The further stated that ERP allows companies to have full
integration of the various departments and it has been described as the information
infrastructure that can perform almost everything from entry to sales to orders to
customers.
Internet Technology
Kotler (2000) says the Internet is a network that connects users to an amazingly large
information highway and in recent times business transactions over the internet are at a
much higher volume. Kotler noted that there is considerable growth in the amount of
Internet financial transaction in the areas of insurance sales, home banking, stock trading,
but stress that though the Internet population is growing, the cyberspace population is
gradually becoming more mainstream and diverse.
Internet technologies are making sweeping changes in the software industry and almost
every class of software application is incorporating Internet functionality as a core feature
and this is also true in CRM applications. Companies are using Internet technologies to
build a stronger relationship with their customers by improving customer service,
increasing sales efficiency cycle and the development of more effective marketing
programmes (Chou et al, 2002). In this regard, they again stated that CRM provides a
new opportunity for Internet service firms, and as such Internet service firms are coming
out with strategic initiatives to offer their clients CRM solution.
Gilbert et al (2003) postulated that the Internet is experiencing a striking evolvement and
provides the underpinning for electronic mail, the World Wide Web (WWW) and
electronic commerce. They further argued that the Internet has been propagated as a nearperfect market, which provides an unparallel transparency beyond the capabilities of
conventional media. This perspective was further boosted by Mols (2000) that the
application of the Internet has led to the belief that it will have weighty impact on the way
service firms such as insurance companies, law firms, distributors and financial service firms
will do business in the future. Mols added that the Internet is believed to change the way
and manner firms interact with their customers and thus the way they initiate, develop and
terminate relationships with them.
Kotler (2000) mentioned that the Internet has potential benefits like buyers convenience,
information and few hassles, lower cost to marketers, relationship building tool that can
accrue to both the firm and the customer. In the view of Mols (2000), the Internet has
made the market become more transparent, leading to increased price competition in
business that offers easily comparable services and which are unable to build significant
switching barriers or close relationships with customers. Advances in Internet technologies
have greatly enhanced the flow of dialogue, and the capture, interpretation and
dissemination of information. Internet technologies enable the development and
20
2.3.3 People
While both technology and business processes are both critical to successful CRM
initiatives, it is the individual employees who are the building blocks of customer
21
relationships. (Chen and Popovich, 2003). The people component is the most difficult
component given the sensitivity of users to change. CRM systems, which support and/or
automate integrated customer processes, often, imply changes in the way users do their
day-to-day jobs. Users who have not properly understood the reasons for the change, who
do not participate in formulation of the change, who do not receive sufficient information
about the change, or who do not get sufficiently trained on the change will often be
adverse to that change. The story of "the rotten apple spoiling the lot" is relevant here
since negative feedback can substantially harm a CRM system's success (Goldenberg,
2002). An organisations customer management, people need to be recruited, managed,
developed and motivated within a supporting structure. Commitment from top level
management is a requirement and crucial to the success of CRM. As a result customercentric management requires top management support and commitment to CRM
throughout the entire CRM implementation (Chen and Popovich 2003)
CRM projects require full-time attention of the implementation project team with
representatives from sales, marketing, manufacturing, customer services, information
technology, etc. (Chen and Popovich 2003). In addition, project teams require not only
sponsorship by top management but also a project champion that can persuade top
management for continuous change efforts (Al-Mashari and Zairi, 1999). In general,
project teams assist companies to integrate their core business processes, combine related
activities, and eliminate the ones that don't add value to customers.
CRM initiatives require vision and each and every employee must understand the purpose
and changes that CRM will bring. Re-engineering a customer-centric business model
requires cultural change and the participation of all employees within the organization.
Some employees may opt to leave; others will have positions eliminated in the new
business model. Successful implementation of CRM means that some jobs will be
significantly changed. Management must show its commitment to an ongoing companywide education and training program. In addition to enhancing employee skills and
knowledge, education boosts motivation and commitment of employee and reduces
employee resistance. Additionally, management must ensure that job evaluations,
compensation programs, and reward systems are modified on a basis that facilitate and
reward customer orientation. After all, how people are measured will determine their
behavior. (Chen and Popovich, 2003).
By rethinking the quality and effectiveness of customer-related processes, many
organizations began to eliminate unnecessary activities, improve outdated processes, and
redesign activities that had failed to deliver the desired outcomes. Then, by re-creating the
process through an understanding of the capabilities of the technology, the outcomes were
more predictable and the promises for a meaningful ROI more substantial and realistic.
The metrics for success became the improved effectiveness in serving the customer
(www.darwinmag.com).
According to Limayem (2004) for CRM to be successful and thus achieve its intended
purpose, the components must be 70 percent people, 20 percent process and 10 percent
technology
technology
10%
process
20%
people
70%
Figure 6: Developing the right mix of people, process, and technology (Limayem, M., 2004,
Doctoral CRM course material, Lule University of Technology)
2.4 Implementation
The implementation of CRM impacts on a number of functions within an organization
including sales, IT, operations, marketing and finance. Bradshaw and Brash(2001) also
asserted that implementing CRM is certain to involve the deployment of new
technologies that requires a re-examination of business process which should lead
technology decisions. Still, many companies have difficulty in implementing an effective
CRM program because they allow software vendors to drive their approach to customer
management, or retrofit a customer strategy to match the CRM technology they have
purchased (Rigby et al. in Jerry and Romano 2003). Bradshaw and Brash (2001) further
noted that CRM applications must not only integrate functionally at the front office but
also integrate with back office functions such as manufacturing and billing.
CRM is a new management concept that relies heavily on technology and process
automation to create its environment. However, Galbreath and Rogers (1999) affirm that
to create such an environment will entail change. Change in processes. Change in people.
Change in technology. Change in management styles. Change in the overall way a
business looks at and conducts business with its customers. Introducing this level of change
into any business can create turmoil among employees if not introduced and implemented
carefully and with purpose and this therefore require a kind of leadership to spear head all
these (Galbreath and Rogers (1999).
23
relevance of the need for effective leadership, sourcing, targeting and evaluation within
CRM strategies (Bull 2003). In the ensuing paragraphs discussion on strategy, leadership
and integration as key factors of CRM implementation will be made.
2.4.1.1 Strategy
Strategy is defined as an overall plan for deploying resources to establish a favorable
position (Grant in Bellenger et al 2004). CGI Group Inc. (2004) noted that CRM
initiative launched without a strategy can lead to a failure. Simply stating We are going to
do CRM is not a strategy. A CRM strategy needs to clearly define how a firm will be
viewed and manage all touch points with your customers and should also define how you
plan to achieve results. Jill Dyche, Partner and Co-founder: Baseline Consulting Group
noted that many CRM strategies are really nothing more than an intellectual exercise
intended to Kick off a CRM program and that strategy view of CRM is more apt and
useful as a means for the company to define its overarching objectives
(www.crm2today.com) According to Crosby (2002), CRM must begin with a business
strategy which drives the organization and business processes that in turn are enabled by
the use of information technology.
The strategic view of CRM emphasizes the fact that resources destined for relationship
building and maintenance efforts should be allocated based on customers lifetime value to
the firm (i.e. estimated net profits over the cause of the relationship; (CRM Guru, 2003,
IT Directory.com, 2003). This view thus suggests that all customers are not equally
valuable and that maximum profitability can only be achieved when available resources are
invested in customer relationships that provide a desired level of return (Ryals, 2003). The
implication that stems from this strategic perspective of CRM is that firms must
continually assess and prioritize customers based on their expected lifetime value, if they
are to build long-term profitable customer relationships. Those who define CRM as a
strategy also tend to stress that it enables firms to build the right type of relationships
with each individual customer, which in some instances, implies not to build one at all
(Verhoef & Donkers in Amalia et al 2003). The strategic view of CRM is not on how
relationships are developed and maintained, but also, on how building the right type of
relationships that can have a substantial positive impact on corporate profitability. Hence,
it has been argued that customer relationships should be treated as a portfolio of assets or
investments that needs to be actively managed to maximize profitability (Ryals, 2003).
2.4.1.2 Leadership
Galbreath and Rogers (1999) pointed out that CRM environments, by nature, are
complex and require organizational change and a new way of thinking about customers and about a business in general. Creating such an environment requires more than
adequate management of the customer relationship or new technologies, it requires new
forms of leadership as well. Because leaders monitor the external environment of an
organization they are often the best placed to set the vision or strategic direction of CRM
projects. In addition, leaders are influential in the authorization and control of
expenditure, the setting and monitoring of performance and the empowerment and
motivation of key personnel (Pinto and Slevin in Galbreath and Rogers 1999).
24
Management attention tends to be focused more on profit than customers, which probably
explains why organizations are more reluctant to measure critical dimensions of the value
creation process not directly reflected in the financial accounting. There are also likely to
exist other constraints in the form of limited management resources, whereby priority is
given to technical development, the system being too detailed to produce simple
performance measures and a lack of internal expertise resulting in limited sources for
obtaining accurate data on CRM to improve internal knowledge (Curry and Kkolou,
2004).
While CRM environments improve business performance, initiatives undertaken in this
new management field require sound leadership as well. customer relationship leadership
(CRL) is a recommended approach to bridge the gap between a CRM vision and its
reality so as to head the charge and rallies an organization around CRM (Galbreath and
Rogers, 1999) Leadership in CRM implementation is very critical in three distinct aspects
and this is explained by the three key components of customer relationship leadership
(CRL) Model that are necessary in order to align an organization to better fulfill the goal
of effective CRM. They are: technology; organizational environment; and atmosphere of
innovation.
The figure below illustrates the critical areas that management, and for that matter
leadership, required for a successful CRM implementation.
Technology
CRM is a new management concept that relies heavily on technology and process
automation. As a result the customer relationship leader must be technologically inclined.
If leaders do not vigorously pervade the entire organization with information technology,
then this will strongly hinder front-line staffs ability to ensure effective management of
customer relationships. (Galbreath and Rogers, 1999).
Companies are entering a new era in which total customer care transitions from slogan to
reality, a reality enabled by advancements in infrastructure technology that connect the
various systems and databases associated with managing the customer from "cradle to
grave". In doing so, front-line employees are being empowered through more up-to-date
and comprehensive information.
25
In the perspective of the customer, technology can help companies directly match
customer desire for customisation in the products and service they seek and provide
personalised after-sale service and support base on customer profile data., technology, from
the viewpoint of the company can enable it identify customers which are most valuable
for relationships. It will also equip employees with rich, abundant and relevant
information about customers for effective marketing. The customer relationship leader
must admit and accept the fact that for CRM to be successful and beneficial, the CRM
technology is given strategic orientation. Effective leadership is a requirement in making
sure that CRM technology becomes functional, well integrated and ultimately embraced
by the entire organisation so that the overall success is driven along (Galbreath and
Rogers).
Organisational Environment
Haapaniemi (1998) has noted that keen competition, coupled with the fast nature of
internationalization are some of the factors pushing firms to be more flexible, fast-moving
and placing the customer at the centre of their business. The new organisational
environment creates a challenge for the modern leader to ensure that all teams act in
cooperation with each other and congruously with the vision and mission of the larger
company. (Galbreath and Rogers, 1999). To this end leaders must make sure that a
conducive environment for CRM is created which will allow employees to act locally and
think globally.
It is necessary that leadership must accomplish and facilitate a shared vision. Vision should
not be imposed, because front-line employees will likely dismiss it as another heavyhanded management tactic. Also, creating an environment of action and learning is to
move decision making down the hierarchy to a local, customer level. This is called frontline empowerment, but Senges (in Galbreath and Rogers 1999, pg 167) call it "localness"
instead, because of its accurateness. He says, Localness means unleashing people's
commitment by giving them the freedom to act, to try out their own ideas and to be
responsible for producing results. "It is abundantly clear that rigid authoritarian hierarchies
thwart learning, failing both to harness the spirit, enthusiasm and knowledge of people
throughout the organization and to be responsive to shifting business conditions"
A conducive atmosphere of action and learning ensures higher retention rate of most
skilled and talented staff. In CRM definition, using the right employees on the right type
of customers will be critical to realise the vision of CRM (Galbreath and Rogers, 1999).
They further noted that employees at the localised environment develops personal
relationships and are in a better position to serve customer needs.
Atmosphere of innovation
It has been stated by Michael Porter that innovation can enable a firm to have a strategic
superiority. To be able to put in place an innovative environment requires entrepreneurial
thinking. It is the responsibility of the customer relationship leader to bring that
innovation and encourage all employees to accept it (Galbreath and Rogers, 1999). A
leader in the process of building innovative environment should also recognise that such
26
innovation is built in accordance with the way the firm is structured and organised. The
leader must lead the workforce, putting teams in place and ensure cohesion at work place.
(Galbreath and Rogers, 1999). This is illustrated below.
Figure 8: Motivation elements of the Integrated CRM-CRL model (Galbreath and Rogers,
1999, p.169)
Motivating CRM
In the implementation of CRM, the customer relationship leader (CRL) must consider
motivation as central and critical. This is because even though the best technology can be
deplored, a conducive and innovative working environment created, if employees are not
well motivated, very little will be achieved (Galbreath and Rogers, 1999). As a result they
further said it is important that leaders should not stand back and watch from afar. And
that is why it has been stated that even the greenest lawn need almost daily watering. To
this end, leaders need to adhere to a firm set of behaviour and values.
Challenge the process
Galbreath and Rogers (1999) noted that leaders must always challenge the process by
putting up questions like what is the reason for doing this? The leader must look for
customer and employee value in the processes that the company employees. However,
Galbreath and Rogers (1999) explains that leaders must not have the notion that customers
are created equally, but rather they must find out the true value of unsatisfied customers.
Blind loyalty to sub-standard customers can be a mental stumbling block to many
organisations.
Inspire a shared vision
If a vision is shared it becomes attractive image of the future which enables employees also
develop their own visions. The customer relationship leader must create an environment
that helps employees feel a part of the team and a vital contributor in making sure that the
vision is realised. A shared vision inspires the future and if it is shared then it becomes a
27
strategic tool enables a company retain and boot the morale of the best work force
(Galbreath and Rogers (1999).
Enable others to act
Localness is a critical and important aspect of CRM. But allowing others to act means
that they need to be trained and coached about it. This helps to restore confidence in
front-line employees when attending to boost customers. When others are allows to act
they feel motivated. Galbreath and Rogers (1999) mentioned that making others to act
indicate an informational feature leadership. The leader must not only keep its employees
informed but also but seek feedback from customers.
Model the way
In CRM the leader must lives and breathes the vision of the company almost on daily
basis. The leader must interact with customers, and develops understanding of their needs
as well. The leader in the process of modelling the way develops a framework that enables
the firm to listen to customers. As stated by Jack Welch of General Electric, effective
leader personally take time with customers and listen to them (Galbreath and Rogers.
(1999).
28
3. Frame of Reference
In this chapter, the research questions will be developed based on the literature review and the research
problem (i.e. to gain a better understanding of CRM (i.e. Customer Relationship Management)
implementation in service companies.) and the delimitations of the study will be stated. Further, the
chosen relevant theories will be assessed and we will be used to develop the emerged frame of reference.
30
3.2 Delimitation
As discussed in previous chapters, there are many different definitions of CRM; however,
for this study we have chosen to understand CRM as a management approach that enables
organizations to identify, attract and increase retention of profitable customers. This is
done, as mentioned, by managing relationships with them and achieving a 360 degree
view of the customer within a context of an enterprise-wide, customer-driven,
technology integrated, cross functional organization.
This study is also delimited by other factors:
it will only focus on the companys perspective of CRM implementation. The
opinion and appreciations of the final customers will not be considered.
It will also focus on the general concepts, factors and benefits of CRM; it does not
intend to be a study of specific technologies applied to the CRM implementation
so theories regarding this area will not be regarded.
31
32
Figure 10: Emerged Frame of reference for this study (own source)
33
4. Methodology
This chapter will describe the research methods used in this study. It will also describe the research
process, the research purpose, research approach, research strategy, sample selection and data collection,
qualitative data analysis and criteria for quality measurement( validity and reliability) of the research
will be discussed.
34
35
approach. Another reason is the fact that there is lack of understanding and divergent
perspective about CRM implementation which supports the chosen approach to be of
qualitative nature. This study is not intended to make generalisations but it is aimed at
developing a comprehensive understanding of the various variables of CRM
implementation.
Form
of
research
question
Experiment How, why
Survey
Who,
what,
where,
how
many, how much
Archival
Who,
what,
analysis
where,
how
many, how much
History
How, why
Case Study How, why
Requires
control
behavioral events
Yes
No
over Focus
contemporary
events
Yes
Yes
No
Yes/No
No
No
No
Yes
on
Figure 11: Relevant situations for different research strategies (Yin, 1994, p.6)
There is no need to control behavioral events in this research which experiment strategy
emphasizes, this rules out experiment as a research strategy. The proposed research will be
focusing on contemporary issues so historical cannot be an appropriate option. Survey and
analysis of archival records are advantageous when the research goal is to describe the
incident or prevalence of a phenomenon or when it is to be predictive about certain
outcome (Yin, 1994). This left us with only one research strategy, which is case study.
Case study, as a research strategy is defined as an inquiry that investigates a contemporary
phenomenon within its real-life context, when the boundaries between phenomenon and
context are not clearly evidenced and which multiple sources are evidenced and used (Yin,
1994). Case study research emphasises detailed contextual analysis of a limited number of
events or conditions and their relationship. The researcher who embarks on case study
36
that which ever case selection strategy used, the underlying principle that is common to
all of these strategies is selecting information rich cases, that is cases worthy of in-depth
study. Saunders et al (2000), has noted that once a researcher has chosen a suitable
sampling frame and established the actual size of the sample, determining the most
appropriate sampling technique to obtain representative sample is very important. Purposive
or judgmental sampling allows the researcher to use its judgment to select cases that will best
enable the researcher to answer the research questions in order to achieve the objectives
(Saunders et al, 2000). Since the CRM concept is quite new and it is still evolving, not
many companies have implemented it. In order to answer the research questions, we
needed to identify institutions that were familiar with the concept and had been using it.
We then visited several service companies and asked directly to their representatives about
this. After having an opinion on a number of them, we then chose to focus on the ones
that seemed to be most involved with the concept and who would actually be able to
share with us their experience and opinions. Any other technique, rather that judgmental
sampling would not have served our purpose to collect relevant information regarding this
topic.
38
mentioned above, one of the most important information source in case studies (Yin,
1994).
The type of interview adopted in this study was face-to-face interviews (also referred to as
personal interviews). Face-to-face interviews have several advantages, e.g. it allows
opportunity for the respondent to freely respond and reveal attitudes and feelings; makes it
possible for probing further and has a higher rate of participation.
(www2.edu.org/NTP/interviews.htm). E-mail was used to make appointments, and
confirm the dates and time for the interviews as well as to send information about the
study (interview guide) developed based on theory prior to the appointments. When it
came to choosing the person to be interviewed, here again we applied the purposive
sampling because it was very important to get hold of a knowledgeable, well informed,
involved and well positioned person within the institution who could have a good
understanding of the company, its strategies and processes. Therefore we contacted people
in management and top management positions, asked for their consent and interest to
participate in the interview, sent them a previous guide to orient the discussion (see
Appendix 1) and finally set the date and time for the meetings.
The actual interview(face-to-face) was conducted by the two of us (Karla and Thomas)
and on the average the two interviews lasted one and half hours with the Marketing
Manager in charge of Private insurance at Lnsfrskringar and the Managing Director of
HSB. The interview was conducted in English since the respondents were very fluent and
could express themselves well in English. In the process of the interviews, a mini disk
recording device was used to record the two interviews which were in the form of
informal conversation. Also, we took personal notes of certain issues of great interest and
importance. Even though an interview guide was sent to the respondents some days
before the interview, the whole interview took the unstructured form as the respondents
were allowed to tell their own stories with intermittent questions and certain clarification.
After the interview, the recorded conversations were transcribed word-by-word and were
compared alongside the notes taken during the interview by us. We also sought
clarification of any part that was unclear and all these took place within 48 hours.
Qualitative Data Analysis
Data analysis consists of examining, categorizing, tabulating, testing or otherwise
recombining both quantitative and qualitative evidence to address the initial propositions
of a study (Yin 2003, p.109) Miles and Huberman (1994) define qualitative data analysis
as consisting of three concurrent flows of activity: data reduction, data display, and
conclusion drawing and verification. Data reduction, data display, and conclusion
verification were described - as interwoven before, during, and after data collection in
parallel to make up the general domain called "analysis" (Miles and Huberman, 1994). In
this view, the three types of analysis activity and the activity of data collection itself form
an interactive, cyclical process.
Pattern matching: For qualitative data analysis, one of the most desirable strategies is to use a
pattern-matching logic (Yin, 1994). Such logic compares an empirically-based with a
39
predicted pattern. In this process, when similar results happen and for predictable reasons,
the evidence produced is seen to involve the same phenomena described in the theory,
and is called "literal replication". In contrast, when the qualitative data analysis produces
contrasting results, but also for predictable reasons, it is called "theoretical replication".
Other strategies used are the explanation building, where the goal is to analyze the
qualitative data by building an explanation about the situation. (Pacitti, 1998); and the
ttime series analysis which essential logic is the match between a trend of data points
compared with a theoretically significant trend specified before the onset of the
investigation, versus some rival trend, also specified earlier, versus any trend based on some
artefact or threat to internal validity. (Yin 1994) He noted that interpreting the data when
the mixed method is used, the following steps are recommended:
look for patterns of agreement - across data sources, by mediating variables, with
literature, with experience;
look for contradictions - across data sources, by mediating variables, with
literature, with experience;
try to resolve contradictions - through alternative plausible explanations for a
finding, by re-examining the data, by collecting specific data to test an alternative
hypothesis;
identify the most important findings - rank and organize them; and
present the findings simply - through charts and tables, selected photos or videos
that illustrate an important point.
Yin (2003) adds two additional specific techniques of analyzing case studies. They are:
1. The logic model, which deliberately stipulates a complex chain of events over
time. The events are staged in repeated cause-effect-cause effect pattern, whereby a
dependent variable (event) at an earlier stage becomes the independent variable
(causal event) for the next stage
2. Cross-case synthesis: comparing two or more cases within a multiple case study or
across single case studies.
In this study, the pattern matching technique will be used to compare data from previous
studies/theories presented in the theory chapter and later chosen for supporting the
research questions formulated. Also, a cross-case synthesis will be used to compare data
from the two cases selected. This is done by looking at the similarities, contradictions and
new information that each company provides in contrast with the one stipulated in the
chosen theories and also in contrast with each other as their experience, results, processes
and timing has been different. The first step after the interviews was then to organize the
information according to the research questions and then compare it as described above.
40
41
information was organized according to the structure of the research questions together
with the notes that were handwritten. These notes were compared, discussed and cross
checked before writing the final text of the empirical data collection chapter by the two
interviewers. Unclear information and doubts were also addressed by a phone
conversation with the interviewees to make sure everything was being interpreted
correctly. This process was all done within 48 hours of each interview to ensure that the
events were fresh in the minds of both interviewees and interviewers. All these were done
with the aim of enhancing the reliability. Lastly, reliability was enhanced because both
respondents from the two service companies were very fluent in English and had no
problem understanding the questions and expressing themselves well.
42
43
adapted it to the local environment. The manager interviewed was not part of the
conception of the CRM process but has been an active part of its implementation and
operation during the last couple of years.
The manager stated the following as main internal reasons that drove the company to
adopt and implement CRM:
They wanted to bring together the entire customers knowledge that the company
had; their view of the customer was scattered and this made their operations slow
and inefficient.
There was a need for better contact and a more Professional way to target the
customers efficiently from the customers point of view, more personalized.
They were in need of a better internal control over customers activities, concerns
and interests in order to serve them better.
There was a need to attract the right kind of customers to the company. This is
more profitable customers.
Lnsfrskringar expected several tangible benefits from the CRM process regarding the
companys operations implementation. According to the manager, they are already
recipients of benefits like the following:
The new system gives the company a more professional look overall.
They are able to know more precisely the wishes and desires of their customers.
They are enabled to up-sell their products by personalizing the offers to the
customer.
They can categorize the customers based on profitability and growth potential.
They are enabled to control, track and follow up the customers activities at the
institution as well as the customer mobility.
Lower costs for claims (better customer selection)
Lower costs for retaining the customers.
Duration (retention) has improved
Efficient and more professional customer relation that reflects in customer
satisfaction according to studies performed.
Ability to keep track of customers history
Customers are more profitable
The economic result in the company is improving
Improved sales between parts of the company (bank, private insurance, company
insurance etc)
Better control over fraud (customers that just tend to take advantage of the system)
Benefits that the company has been able to provide to their final customers include:
Customers are more satisfied due to the improved and personalized attention
(Lnsfrskringar has the most satisfied customer index according to the studies
performed).
They can receive answers to their concerns promptly since the agent has access to
their information as Lnsfrskringar clients without regard of the department they
call or visit (bank, insurance).
44
They provide a bonus system called lansbonus which gives the customer
discounts based on the number of products the customer has and the longevity of
the customer (how long they have been customers).
Low insurance rates
They can access information online 24/7
Lnsfrskringars manager also mentions that there has been a trend from younger
customers (under 40) in the past years to move around from one company to the next
expecting to take advantage of special promotions. This is a problem because it forces
them to sell and re-sell the same product to the same person year after year. Customers
that leave usually come back as soon as the promotion in the competitors side is over, but
this still generates a cost to the company. For this reason, they have now been taking
advantage of the benefits that they have gathered from their CRM abilities to target
customers better while seeking and promoting loyalty. At this point, the manager
describes his satisfaction level with the CRM process as a very good and prognosticates
that their main focus for the coming times will be increasing customer profitability (more
products per customer) and loyalty.
According to the manager interviewed, once the company started using CRM, the whole
company was affected and probably it showed mostly once the new CRM technology
started operating. He calculates that the investment for the whole system has been in the
range of 500 million Swedish crowns (nation wide). As it was described, a basic CRM
solution package was bought from an American company, Sibel, in the year 2000 and has
been continuously readapted to fit their needs. This system came to operate as a
framework, uniting all the other individual systems that operated before. The old systems
somehow lie underneath the new; but with the new one, the company is now able to
access and exchange information from the different departments. The new system allows
them also to process the information and assess different tools to improve customer service
such as a potential rate that is now assigned to each customer depending on demographic
information and other considerations. This also allows them to operate better marketing,
sales and other efforts, have a better control, not only in terms of activities of the customer
at the company but also of the agents who provided the service.
Processes in the company were also redesign and adapted to the new technology and
mindset. There was a complete realignment in the way things were done and a general
integration of the information within the company. The manager stated as well that the
process itself didnt face any resistance from the staff, but it did take some time to adapt to
the new technology since the new systems were not easy to operate. The new CRM
system is complex. Getting it to run smoothly has taken a lot of time due to the fact that it
operates under a different logic, so the learning process presented a problem bigger than
expected, the Marketing Manager said. However, through education and clearly telling
them what the benefits and effects would be in terms of better view and more satisfied
customers the staff has been able to get the system in place. Once the staff was able to
adapt, they agreed that it would have been extremely difficult for them to manage their
customers without this system and they all feel satisfied as well.
45
When explaining the effort in terms of assigning resources like time and money, the
manager assessed them as follows:
15%
15%
70%
people
process
technology
This mix is probably not the right one, according to the manager since people should
probably be higher. He explained that in reality there is a very short period to get
things running and therefore, it becomes learning by doing process and people adapt to it in
that way
The manager stated that leadership has been very crucial because of the way that
Lnsfrskringar is set up. Common agreement and financial and logistical support from all
24 companies was indispensable to stir the change specially facing a huge monetary
investment. The formal implementation decision of a CRM system came then directly
from the top management in the year 2000, but for many years they had wanted a system
that provided a 360 degree view of the customer.
He mentioned that the company is the only one in Europe that combines the particular
mix of products that they offer and this made the CRM decision even more urgent. It was
indispensable to integrate the individual data systems in order to operate well and compete
in the industry. They were able to see CRM as a requirement of a successful business
conduct to serve the customer better, attract and select better customers and target better
their campaigns. The manager believes that recognition of the customer is the main
thing and believed that the CRM system provides them with this strategic tool. He
added that integrating the customer information was indispensable since the agents were
not able to handle the customer well: information should be available to all; otherwise
the customer would have had to be transferred from one department to the other. The
integration of all systems of the various functional units has enabled the company to have a
complete view of the customer which in the past was not possible. An employee in the
banking section can know about an insurance customer and be in a better position to
serve the customer well he noted.
46
47
At this time, HSB has also submerged into very aggressive building objectives. New
production of apartments in Lule is also a priority for them and this is now handled by
the technical department.
CRM at HSB-Norr
Customer Relationship Management (CRM) has not been fully implemented yet at HSB
but the company is in the process of implementing it within the shortest time possible.
According to the VD, the process has consisted of 1 year of planning and 6 months of
implementation so far. However, HSB has gone through most of the various stages of
CRM implementation by way of restructuring the entire business process, handling the
people component and implementing some of the technology. The company, as the VD
explained, had the need for different systems and IT solutions since they are capable of
collecting more information about the customers for the purpose of serving them well.
The total investment in the CRM implementation process (including only technology and
the new experts hired for this purpose) is in the range of the 2 million Swedish crowns
(locally).
The VD stated the following as main reasons that drove the company to adopt and
implement CRM:
New members of the boards started changing the stable/unquestionable position
that HSB had in the past
The demands of customers were changing towards tailored-made and personalized
solutions; the normal one-size-fits-all contracts were no longer enough.
Competition was becoming very keen
They considered that there was a need to strengthen trust and generate new
relations with the boards.
HSB-Norr considered to have the right timing, environment and resources to face
the change
Internal benefits already mentioned as a result of the ongoing CRM process:
Improved contact with the customers
48
Benefits that the company has been able to provide their final customers include:
Personal contact from the representatives and top management
Improved communication channels
Improved after-sales services
Provision of market information that affects the BRF (finances, regulations, taxes)
Education and training for the board members
HSB meets the customer when they are available.
Customers feel now that they are part of the development of the company, as their
thoughts are heard and implemented.
Local presence supported by the whole organization
One-stop shopping
State of the art technology in providing services
HSB apartments usually generate a higher price in the market
Internet technology available 24/7 with information and services like online
invoicing and reports among other.
At this point, the VD for HSB-Norr describes his satisfaction level with the CRM process
as a very good and prognosticates that their main focus for the coming times will be to
improve the way in which the relations have been handled to obtain trust and loyalty
from their existing customers. The year 2005 will be then focused on the existing
customers and later (relationship improvement and retention) and, in 2006, they will
move more aggressively to expand their market share.
In terms of the organization, HSB-Norr was restructured almost completely. After the
companies were merged 3 years ago, 80% of the management team was also changed. So,
from having managers with an average age of 60+ the company moved to managers with
an average age of 32. Only this part of the change was already hard to assimilate for the
organization. Now, the company is faced with the implementation of new processes, new
ways of working, new mentalities. A lot has happened at the same time; some have
adapted quickly and for some it has been harder to understand. Another important aspect
is that during the years, HSB has acquired a quite strong position on the market. This has
also been a reason of resistance since it makes it hard to convince people to change when
things are going fine.
The changing process has not been an easy one for the organization to adapt to. To some
degree, everyone has been involved in making it happen but sometimes with a measure of
49
resistance. The staff has all been provided with seminars and meetings where the new
vision has been exposed to them and overall it has shown good results. An example of
resistance to the process was the sales team in their beginning stage. They used to be
managers of an administrative area before with people reporting to them. Now, all
administrative tasks were reassigned so they could focus a 100% of their time to three basic
processes: time to market, time to customer and time with customer. The resistance
came because they perceived the change as a loss of power but just after having the process
operating for 6 months, the team has shown to be extremely successful. The results are
already showing and they are very satisfied themselves. Another example that has been
hard to deal with is the people in what today is the front desk. Their tasks will also be
reorganized so that they can pay unconditional attention to the customers concerns. This
has created some resistance because so far, they have felt that the most important part of
their job is the administrative one (dealing with the paper work, etc) and they have had a
negative perception of the task of attending customer issues. They feel it is less important
and to some degree, they have though that the customer just comes to interrupt their job.
So, they havent received so well the idea of letting go of the administrative area and
attend the customer first, they have felt a bit underestimated and, as the VD described,
probably a bit less indispensable. The way in which this process will be structured is the
task for the next two weeks. The VD has the confidence that once it starts operating, the
staff will be able to perceive the benefits and adapt to the change.
The changes have also required dealing with the organizational cultures. The VD
explained that they work in a very vast area (from Skellefte to Kiruna) and the cultures
tend to be very different. So one of the first things they had to attend was to somehow
merge the general culture and establish a common vision for the company. Now, relations
is the key word. At the same time, reorganizing the company and the different processes
was a priority. Since May 2004 a sales organization was established with 6 people who
were already part of the staff at HSB. Their functions were reassigned and a team leader
was hired to guide them, train them and inspire them in their new task. The biggest
change in this area has been the perspective towards the consumer: they dont come to
us, we go to them and meet them outside the office assured the VD, and they also have
to produce a 5 year tailored plan for each customer depending on their present situation
and how the future looks like.
Another area that has faced a big change is the front desk, as described previously. HSB
now intends to have a service center and move from individual agents dealing with
administrative and customer service functions, to a team of people that works under a
front and back-office structure. They should then be able to have access to much more
information, deal with unique contract agreements, as opposed to the one-size fits all
contract, and a new IT system that can provide them with a better understanding of the
customer. Other examples of processes and activities that have changed within the
company are: the bank that HSB operated before was sold, a new insurance company
started offering services since October and the real estate broker that has been working for
HSB until now will soon be outsourced. She will still work with the HSB name under a
franchise agreement.
50
HSB-Norr has also attended the need for new technology to support the CRM process.
For the organization, a new switchboard will come in place this month that will connect
all service centers in the different cities. A new CRM IT system will be fully functional
before next summer comes to provide the staff with updated and complete information on
the customers. So far the investment on this system has been in the range of the 2 million
SEK and is expected at least to duplicate. In terms of the final customers, they already
have access to features like web invoices, email consulting and communication, general
information on services, reports and ordering services online. This has facilitated the task
of the sales team and made the communication with the boards much more efficient
When explaining the effort in terms of assigning resources like time and money, the VD
stated that 50% of the effort has been put into the process, 40% into people and 10% into
technology. He conceded that even though money spent on technology is quite high, this
will not yield any benefits if people and process are not given serious attention and effort.
10%
40%
50%
people
process
technology
At HSB-Norr the whole CRM implementation process is being led and coordinated by
the VD. He states: overall I am the one leading the effort, stirring the changes. But for
the specific things, he has assigned project managers. One person with IT infrastructures,
another sales, the service center, etc. The VD added that as a leader, my job is to
motivate the employees and set the agenda and the direction in which we should move.
Management then takes the decision as of what to do and the staff decides how they will
do it. The employees are big parts of making the process happen.
The implementation of CRM as explained by the VD is strategic in its perspective at
HSB-Norr. Despite the notion that the company over the years has generated a lot of
revenue and is quite wealthy, it is looking now into the future. According him, the
strong economy today can be the biggest enemy tomorrow as fat lions do not hunt He
believes that the changes currently taking place aim to strengthen the company and
maintain good figures in all the years to come. Right now, the changes are being done
under a positive atmosphere but according to the VD, if changes dont take place now,
they will be forced to take place in the future under much more stressful conditions. The
51
efforts would be then focused on survival instead of growth. So, implementing CRM in
the company is crucial.
Some strategic decisions based on the CRM concept that have been already implemented
are to take care of the customers personally and give them tailor made services, change the
focus from a passive company to a company that reaches the customer to meet their needs
and hears their concerns, taking cultural differences into consideration and providing them
with top of the line quality. As far as the company is concerned, it has been strategically
important to categorize the customers depending on their size and profitability as well.
The integration within the company has been a major concern, as mentioned before.
Bringing together the processes, the different offices, the cultural differences, and
improving the overall function of HSB-Norr as one and only team. In the near future,
concluding the process of implementing the necessary IT systems will bring a better and
more global support to the whole CRM process. This intends to be done within the nest
6 months.
6. Analysis
This chapter contains an analysis of the empirical data presented in the previous chapter. In the
analysis, the empirical data will be compared with the theories presented in the frame of reference and
some support theories, all derived from the literature review. The analysis will follow in the same
structure as the research questions and research problem. We begin with a within case analysis of
Lnsfrskringar AB, thereafter a within-case analysis of HSB. Finally, a cross-case analysis will
follow where the cases will be compared against each other in order to detect and examine common
patterns and anomalies.
52
According to previous studies, CRM does not have a high satisfaction level among the
managers and CRM projects tend to be unsuccessful, but as Kotorov (2003) describes,
there is a handful of companies that have proven the opposite. Lnsfrskringar is one of
them, since the manager stated to have a high satisfaction level with CRM after its
implementation.
the employees, telling them clearly what the benefits and effects would be in terms of
better view of the customer; more satisfied customers and therefore, more satisfaction for
themselves. Lnsfrskringars manager also used incentives for the staff and stated that
they have been able to get the system in place.
According to Limayem (2004) the right mix of CRM components in terms of effort
should be 70% people, 20% process and 10% technology. This is illustrated in figure 15.
technology
10%
process
20%
people
70%
Figure 15: Developing the right mix of people, process, and technology (Limayem, M., 2004)
15%
15%
70%
people
process
technology
However, this was not the case at Lnsfrskringar, as illustrated in figure 16. In assessing
values to the mix of components in terms of time and money, the manager explained the
effort in the terms shown below. This clearly demonstrates that they still consider CRM as
a technology tool that will enable them maintain long term- relationship with their
customers.
55
6.1.3 How can the key factors of CRM implementation (i.e. strategy,
leadership and integration) be described?
Many theories discuss the need that in implementing CRM, certain key factors ought to
be given serious consideration. Crosby (2002), emphasizes that CRM must begin with a
business strategy, which drives the organization and business process. The empirical data
shows that at Lnsfrskringar the management team realized its inability to have a
complete view of the customer before implementing CRM. In accordance with theory by
Pinto and Slevin (1987), management was very crucial due to the huge financial
investment involved and setting the strategic vision of CRM project at Lnsfrskringar.
Also, Lnsfrskringar required a complete support from all the different locations in order
to plan and motivate the change, assign the resources and proceed with the
implementation which shows the strategic orientation and intention of the CRM
implementation concept. So, just as Crosby (2002) stated, CRM begun with a strategic
thought which then lead to the re-design of the business process and the use of new
technology. The Lnsfrskringar claims that as a result, they have a complete view of the
customer. The manager further explained, Our company has been able to build the right
type of customer relationships. This is in line with Verhoef and Donkers (2001) theory
on firms building the right type of customers.
Bradshaw and Brash (2001) discussed the importance of management styles, which Bull
(2003) refers to as effective leadership. This was also confirmed at Lnsfrskringar. Because
of the way the institution is set up, the decision, vision and drive had to come from top
management and then somehow permeate to the rest of the 24 companies involved. This
also supports Senges (1990) concept of localness since the process had to empower the
local offices to make certain decisions. The manager mentioned also that there was a need
to motivate the rest of the staff for the change. This was done by the local leaders and
according to him, turned out to be a very positive experience. This is also in accordance
with the basic principles of CRL (customer relationship leadership) mentioned by
Galbreath and Rogers (1999)
Chen and Popovich (2003) argument for data and information sharing enterprise-wide
was found to be existing at the company. In the words of the manager, information
should be available to all; otherwise the customer would have had to be transferred from
one department to the other. It was also evidenced the way that CRM has changed the
day-to-day work at the company and how the different functions and departments of the
company have integrated and share information, just as Greenberg (2001) sustains. The
integration within the organization was described as a direct result of the implementation of
the IT system.
56
various stages of CRM implementation by way of restructuring the entire business process
and the people component and implementing some of the technology. The definition of
CRM by Goldenberg (2000) could then be recognized and the process has shown already
a clear resemblance to the theory though it is not complete. Furthermore, the lack of a
clear definition of the CRM concept (Kotorov, 2003) is not so perceivable at HSB since
the process was clearly thought before starting the implementation. It did not come out as
a result of the circumstances but as recognition of a need and all the steps have been
clearly thought of. So the implementation at HSB has followed an integral restructuring of
the company and clearly intends to place the customer at the center.
Kotorov (2003) describes a handful of companies that have proven to be successful with
the implementation of CRM. At HSB, even though the process is not complete, the VD
described his overall satisfaction level as very good, since they have already obtained
important benefits out of the implementation process.
technology to bring change in the work process. HSB is about to put in place a new
switchboard of telephone interconnection that will link all service centers at different
cities. Other IT technologies currently in operation, which give access to customers,
include web invoices, emails consulting and communication, online reports and ordering
services online. What is important is that HSB makes effective use of the Internet in this
regard and this supports Peppers and Roger (2000) view of the use of Internet in building
lasting relationships with e-customers by offering services in traditionally impossible way.
IT has then been an enabling tool for HSB to re-design its entire organization and thus
affirms the theory by Hammer and Champy (1993). It must however be pointed out that
even though Goldenberg (2002) emphasizes the need to have all the three components in
place, HSB is yet to put in place a new CRM system. As result confirmation of the extent
of operational and analytical CRM (Trepper, 2000) could not be made. Even though
Goldenberg (2002) warned about shopping for CRM systems, HSB has already purchased
a system from an external company and it intends to be fully functional by the summer.
The business processes at HSB has been reorganised as an important component and has
required a long period of redesigning. According to Goldenberg (2002), taking
inappropriate steps in this area could easily lead to chaos. HSB has been conscientious
about this and has taken a long time to plan and study the optimal way for restructure to
take place. This was considered as the first step of the process. According to the VD, HSB
has restructured almost completely. The changing process at HSB has not been easy for
the company to adapt to and this supports theory about the complexity and difficult nature
of changing business process. Goldenberg (2002) stressed the need to eliminate nonoptimal process and this was found out at HSB.
As noted by Chen and Popovich (2003), HSB has not found it easy to effectively manage
the people aspect of the change CRM implementation requires. The VD explained that
some have adapted quickly and others havent. HSB has project teams working on the
various aspects with leader guiding, training and inspiring them in the new task. This is
supported by Chen and Popovich (2003). Cap Gemini IDC (1999) theory is seen to be in
place at HSB as the implementation team is made up of representatives from sales,
marketing and information technology and customer service. At HSB, to some degree, all
employees have been involved in the process but some with a measure of resistance.
About 80% of management team was changed before the process started and this affected
the whole company environment. After this, many functions and tasks were either
eliminated or re-assigned when the CRM process began; which agrees with Chen and
Popovich (2003). Despite the resistance, management at HSB is using seminars and
meetings to educate the employees, which moves in line with theory. The VDs
explanation of the resistance faced among employees especially the administrative staff is
due to the fact that they perceive administrative functions (dealing with papers) as more
important than attending to customers concerns. This situation of perception of tasks
among the staff was never mentioned in the theory studied.
According to Limayem (2004) the right mix of CRM components in terms of effort
should be 70% people, 20% process and 10% technology. This is illustrated below in
Figure 18 and figure17 show the mix estimated at HSB, which have 50% process, 40%
people and 10% technology.
58
technology
10%
process
20%
people
70%
Figure 17: Developing the right mix of people, process, and technology (Limayem, M., 2004)
10%
40%
50%
people
process
technology
The above figures show that HSB does not consider CRM as centred in technology since
it gives 10% effort to it, which agrees with what Limayem (2004) stated. However, the
effort HSB assign for both people and process fell short of the right mix as demonstrated in
figure above 17.
6.2.3 How can the key factors of CRM implementation (i.e. strategy,
leadership and integration) be described?
The theory by Bull (2003) about CRM implementation factors was evidenced at HSBNorr. CGI Inc. (2004) and Jill Dyches (www.crm2today.com) view of CRM is present
at HSB-Norr since the CRM ongoing process has had and continues to have a strategic
perspective of CRM. Several specific actions support this idea, for example, changing the
focus to have the customer as the center and provide personalized services, considering the
internal cultural differences, categorizing the customers depending on their size and
profitability, among other. This is in tune also with CRM Guru (2003).
Pinto and Slevin (1987) refer to new forms of leadership being required for the CRM
process to take place and at HSB-Norr, this factor was clearly visible not only in the style,
but also in the physical change of the leaders. As it was stated by the VD, before he came
to HSB-Norr, drastic decisions had taken place in terms of changing the management
team. The average age went from 60 to 32 and only this brought a big switch in
mentality, management styles and vision to HSB-Norr. The CRM process begun after this
and thanks to the strategic view and vision, the leaders have been able to implement it
59
with great benefits. All aspects cited by Galbreath and Rogers (1999) when referring to
CRL (customer relationship leadership) were found to be true at HSB also. The
importance of the leaders being technology savvy shows in the efforts to connect back and
front office, the new phone system, the new Internet applications for customers. The need
of building teams to act in cooperation with each other shows in every department and, as
stated by the VD, it is especially successful in the new sales team. And finally, the
atmosphere of innovation has been promoted by integrating all the staff in the
reconstruction of the processes, assignment of the new tasks and product development. To
some extent, Senges (1990) concept of localness is also recognizable since some
functions will be shared and delegated to the local offices around Norrbotten. Finally, it is
important to mention also that the decisions regarding CRM have been launched directly
by the VD and top management team who have also been an active part of the process
and have had cooperation of team leaders in some areas.
Integration within the organization has also been a key concept for HSB-Norr, as stated by
the VD and in accordance with Greenberg (2001). The route of bringing together the
three companies that HSB-Norr was divided into, as well as integrating the functions of
the departments, bringing together some tasks by geographical area, the integration of the
front and back office functions into an all rounded service centre (which is now ongoing)
and finally the intention of installing an IT system that will integrate all functions and
locations.
60
61
makes or breaks a CRM system. Empirical findings show that the two service companies
have all the three aspects in place and were given various degree of attention.
Lnsfrskringar has fully integrated its IT systems. Both companies recognize information
technology as a support tool in the process redesigning. According to the manager
interviewed at Lnsfrskringar, their new CRM system bought from Siebel is driving the
company into high level of performance. Even though HSB is yet to fully implement the
technology aspect of CRM components, it has a firm belief that the implementation of
the IT system that will take place in a 6 month period, will bring a complete change in
the work processes. This assertion is supported by Davenport and Short (1990). Although
HSB is still in the process of rolling out a full CRM system, the idea of putting in place a
new telephony switchboard to connect all their offices, which also forms part of the
companys CRM technologies evidence its intention to leverage technology to bring the
desired change at the work place.
Lnsfrskringar has fully integrated both operational and analytical CRM which makes it
possible for them to have a complete view of customers. This supports Greenberg 2004).
However, this could not be confirmed at HSB. Collaborative CRM noted by Trepper
(2000 on the other hand was evidenced in both companies though the use of Internet
technology, and other touch points. Giving customers the possibility of accessing
information online, contacting agents through phone and E-Mail are some examples of
this. Another commonality is that the two companies use their CRM systems to better
manage their customer relationships and therefore this affirms Pepper and Rogers (2000).
In both cases, the Internet was seen to have been put into effective use in building lasting
customer relationships. Also, both companies admitted that the CRM system is complex
because as the manager of Lnsfrskringar explains it incorporates a lot of data and as
noted by the VD at HSB that changing the process at HSB has not been easy to adapt.
In this area it is good to mention that both companies have purchased their CRM IT
systems from a third party.
Process as a component of CRM implementation is considered to be most delicate and
many cases requires redesigning and re-alignment; removal of broken and non-optimal
ones (Goldenberg, 2002). In support of this theory, it was revealed at both companies that
all the business processes have been affected and redesigned and re-aligned through the use
of information technology as stated by Hammer and Champy (1993). It also came to light
that at Lnsfrskringar that the old, stand-alone and individual data systems have become
sub-systems in the new data system. However this could not be confirmed at HSB as the
CRM process is ongoing. One aspect about the process component at Lnsfrskringar is
the fact that the CRM software purchased from Siebel was modified and changes made to
suit the companys local working environment and this supports Goldenberg (2002)
warning that companies about the risks of forcing the not-built here process upon users.
At HSB they have also purchased the CRM system outside the company and intends to
have it locally configured according to their specific needs.
Chen and Popovich (2003) argued that despite the fact that technology and business
process are fundamental and important to CRM implementation success, the people
aspect especially the employees should be given due consideration. They explain further
that the people component is the most difficult. These sentiments in theory were
discovered in the two companies. Employees in both companies were involved in the
62
40%
technology
30%
20%
10%
0%
Limayem (2004).
Lnsfrskringar
HSB-Norr
In the figure 19 a comprehensive illustration of the differences are shown. The figure
includes all three perspectives of the mix (theory and both companies).
6.3.3 How can the key factors of CRM implementation (i.e. strategy,
leadership and integration) be described?
In line with Bull (2003), empirical data show CRM is a complex and holistic concept that
requires strategic perspective, leadership and integration. It was found that all the
companies recognized and considered the three key factors stated above. Empirical
findings confirm that both of them view CRM implementation from a strategic
63
viewpoint. Both of them started the process as an initiative of top management to focus on
the customer and give a better service, which shows their involvement, provides the
support and global view required to implement CRM. Lnsfrskringar evidenced the
strategic perspective also since they were in the need of coordinating with all 24
companies involved in order to make the process effective and engage all the financial
support required. HSB on its side, had to restructure the whole company and find the
right orientation, which was chosen to include the CRM implementation process as well
as the involvement of all local offices. Moreover, the strategic perspective has resulted in
targeting, categorizing, communicating and doing business with the right type of
customers. All this based on customers profitability as again this fine tune with Verhoef
and Donkers (2001), CRM Guru (2003).
The leadership factor as a requirement for consideration in any CRM implementation as
noted by Galbreath and Rogers (1999) was very much significant issue in both companies.
The rolling out of CRM systems received considerable leadership attention and both
companies admit that CRM implementation was a management inspired action. The
manager at Lnsfrskringar noted that for many years management had wanted a system
that could provide a 360 degree view of the customer. Moreover, in line with Pinto and
Slevin (1987), it was discovered that leadership plays a crucial role in authorizing the huge
financial investment and setting the strategic direction of the CRM project. This view was
emphasized by the VD of HSB-Norr as he stated: overall, I am the one leading the
effort, stirring the changes, and setting the direction and agenda of the whole process.
Another finding quite interesting from the empirical findings is that the VD of
knowledgeable about technology as a strategic tool in customer relationship building and
very determined to push ahead to full implementation status of CRM. Even though there
are no traces of evidence to the contrary at Lnsfrskringar, it could not be confirmed in
this respect.
Both Madu Assumpta (2003) and Chen and Popovich (2003) theory about full integration
of back-end operations and front-office application is at work and fully integrated at
Lnsfrskringar. It has integrated the individual and stand-alone data systems into a
holistic one which provides a better view of the customer than before. However, HSB is
still in the process of integrating all the functional processes and has accomplished them
mostly in the organizational area but not much could be said about their level of
integration within IT since it has not yet been completed.
One difference that was found between the companies is that the manager at
Lnsfrskringar did not mention anything about work teams, as did the VD at HSB. At
Lnsfrskringar, the manager described the organization, after the management level, as
just individual workers. At HSB on the other hand, it was clearly stated that they operate
with teams and team leaders.
In both companies there is no reported conflict among employees as theory suggests that
the release or sharing of data to another function or department leads to a loss of power
and breeds conflict. What was found at HSB is a general discomfort with the initial
reorganization of the tasks, but also, in the departments where the process is fully in place,
the level of satisfaction of the employees has reported to be high, according to the VD.
Finally, the concept of localness described by Senge (1990) was found to be true in both
64
companies. At Lnsfrskringar since they are part of 24 others and at HSB-Norr since the
office in Lule heads all others in the Norrbotten area.
In terms of integration within the organization, there are major differences in the statements
that both managers expressed even though both admit this concept to be central in the
implementation of CRM, in accordance with Greenberg (2001). At Lnsfrskringar, the
integration was described to happen as a direct result of the IT system, when all the
information was available to all functional departments. At HSB, the integration was
described as a major part of the process. Bringing together the functional and regional
operations and redesigning the processes first so that they integrate the appropriate
technology later.
65
In order to fully achieve the research problem, three questions were postulated and will be
answered below:
7.2 Research Question One: How can a firms major reasons and benefits of
implementation of CRM be described?
In this study especially from the empirical data and analysis sections, it has been revealed
that service firms benefit from the implementation of CRM. The companies have
benefited from CRM by way of providing customer value, high level of customer
satisfaction, reduction in operation cost, profitability etc. These are in harmony with Swift
(2001) and Curry and Kkolou (2004). In support of theory by Seth et al (1991),
Lnsfrskringar and HSB create value for their customers. However, the study revealed
that Lnsfrskringar, in an unconscious manner pursue functional value creation tactics
which could make customers not bonded to the company for long-term relationship. This
revelation is in order with theory that some firms create functional value using price or
technology that instead of creating value for the customer rather creates shareholders
value. Though the findings show that HSB creates both functional as well as emotional
customer value, it must be noted that emotional value should be the ultimate aim
regarding the type of value firms create for their customers, if they want to avoid shortterm relationships and take advantage of long-term relationships that impact positively on
satisfaction, retention and profitability.
Empirical findings about Lnsfrskringar and HSB confirm theory that there is a positive
correlation between customer satisfaction, retention and loyalty. The study uncovered that
customer satisfaction in the two companies is understood by the managers to be quite
high. It is believed that if the companies are able to create emotional value that is less
possible to duplicate by competitors, the customers will be emotionally charged and their
response elicited; customers will feel bonded and this can contribute to customer
retention, loyalty and ultimately, profitability. The expectancy of the benefits is always a
major drive to the implementation of a change and in this case a central motivation for the
CRM implementation process to take place. Other reasons for implementation are the
realization of the specific needs in terms of market, competition and other macroeconomic factors. It must be emphasized that what is still to be seen is whether in the long
run these benefits will continue to show and if the customers will prefer the company over
its competitors as a result of the implementation of CRM.
66
The study has shown that the two companies have all the three components of CRM
working, even though they are treated differently. This is not an unusual finding since
both change processes had to adapt to the specific conditions, timing and environment
within the organizations. It was found that Lnsfrskringar is quite ahead in terms of the
level of integration of all the components due to the fact that it started earlier. HSB, on
the other hand, is still in the rolling out phase. We discovered that, as they reach the final
stage of CRM implementation, all the components will be fully integrated as postulated
by Goldenberg (2002) and Chen and Popovich (2003).
The two companies in this study do recognise that innovations and advancement in
technology could be harnessed and leveraged to radically re-engineer business process and
build stronger customer relationships. This perspective is in harmony with Davenport and
Short (1990). The findings from this study also confirm theory that technology in the
form of data warehouses and particularly the Internet has brought momentous change in
the work process and has indeed catapulted high level of organisational performance. This
might be explained by the fact that probably the most tangible and immediate evidence of
the changes in the day to day work are the ones liked to the use of technology. The
studied companies have shown also that there is a willingness to shop for IT solutions from
external providers. They both claimed that changes were or would be made to the system
to adapt it locally but the basic package was outsourced. The reasons for this were not
clearly stated but we believe that companies feel safer to adapt to systems that they can see
in than start from nothing and be responsible for its full development. This also confirms
theory that stated that the market for CRM solutions is growing.
The actual and according to Goldenberg (2000), most delicate component of CRM is the
re-design in the companys processes when implementing CRM. Both companies day to
day operations and response to the customers was affected by the implementation of
CRM. Tasks had to be reassigned and the overall way of approaching them was altered.
We also found out that employees at all levels in the two companies have been involved
in the CRM implementation process. This was shown to be very positive despite the fact
that there was discomfort and to some degree, resistance. It is believed that through
education, training and seminars, and one-on-one conversations, management could
succeed in persuading the staff to push ahead with the CRM project. This is a quite
important finding when it comes to the implications of employee participation. We can
deduce that being involved in the process turned to be most positive in comparison to
having had the process imposed to them, especially when considering the staff as the
internal customers of the change.
Probably the most evident proof of discrepancy regarding the CRM process came when
showing what the managers considered the mix of the CRM implementation process in
their respective companies. The following chart shows the theory and the opinion of the
companies individually.
67
process
technology
30%
20%
10%
0%
Limayem (2004).
Lnsfrskringar
HSB-Norr
From this, the mix of components in terms of effort evidenced that Limayem (2004)
supports the idea of people being the component that requires more effort, while
Lnsfrskringar showed to have paid more attention to the implementation and
adaptation to technology. Process and people had small and equal designations. However,
this cannot be the official perspective of the company as throughout the interview such a
view was not explicitly stated. HSB shows more of balanced position, where the
components even though they do not match theory, still behave in a similar way. People
being the one with a higher value, then process and lastly, technology.
7.4 Research Question Three: How can the key factors of CRM
implementation (i.e. strategy, leadership and integration) be described?
Our study of the two service firms has strongly supported Crosby (2002) view that CRM
must begin with a business strategy, which then drives the organisation. We noticed that
the two companies saw CRM from strategic perspective. This was deduced from the way
the two companies explained their reasons for implementing CRM. We found out that
and empirical data also support that because CRM was considered as strategic, the
companies are in a better position than before and as a result they are able to aim into
getting a complete view of their customers. Both companies claim that CRM has made it
practicable to target the right customers and communicate better with customers.
We found out that Lnsfrskringar did not experience much implementation obstacles as
compared to HSB. The reason could be that the origin of the implementation process at
Lnsfrskringar was made under normal circumstances while at HSB there might have
been an adverse environment after changing the management team and merging the three
companies that earlier composed HSB-Norr. Still, we conclude that even though the firms
may be facing difficult times, leadership and management can still drain through the basic
68
ideas and motivation for the CRM implementation process to take place and provide
tangible benefits to the organization. This has also proven to be important as the new
structure at HSB and the new possibilities at Lnsfrskringar have reported to give
satisfaction to the employees once CRM implementation has been adopted.
Further, the study has shown that for CRM implementation to be successful and certainly
enable firms to have a complete view of the customer, requires a leader who is strong,
determined, technologically imbued and above all, able to provide the strategic direction
of the CRM project. Leadership in the two service firms demonstrated and provided a
strong headship and motivation in this regard. We found out that HSB has a leader who is
bent on pursuing CRM and strongly believes on its positive consequences. We think the
VD has provided the kind of leadership required which supports Pinto and Slevins
position. At Lnsfrskringar, the manager was also motivated with the possibilities an
internal customer satisfaction the CRM implementation provided, but his function in this
regard was more passive since CRM here has operated longer, the staff has adapted to it
and has become more of a daily routine.
7.6 Implications
This is the last and final section of this thesis. As a result, and based on the empirical
findings, we make some recommendation for policy implication for management and
practitioners. This will be followed by implications for theory and future research
69
satisfaction and retention, high performance in terms of sales volume and profitability. It
also came to light that service firms that are in the process of CRM implementation can
start to enjoy some benefits along the road. This shows that service firms can also attain
some level of benefits even though the CRM implementation process is in progress.
Secondly, the sampled companies have shown beyond any reasonable doubt that CRM
solution provides a better platform to have a complete (360 degree) view of the customer.
This was facilitated by the integration of people, process and technology. In this regard,
service firms must endeavour to ensure full integration of all aspects of CRM applications
and continuously upgrade the CRM systems. It is also worth mentioning that the sampled
companies did not implement CRM by purchasing a whole CRM solution and imposed
it on their environment. But rather, the solution bought was modified to suit their local
working place. This then suggests that it is probably advisable for service firms, in their
attempt to implement CRM, not rush into buying a whole CRM packaged solution and
impose it on their environment.
Moreover, one of the companies is very much focused in creating functional value as a
way to build satisfied and loyal customer base. According to Bristol Group (2004),
functional value which is mainly created through price, convenience and technology is
easily duplicated by competitors, and since customers are becoming more value-oriented
and are not just influenced by high quality or lower prices. It is essential that service firms
recognise that creating emotional value for the customer holds the key to customer
satisfaction, retention and profitability, which ultimately creates shareholders value (i.e. the
financial reward for owner). It must be emphasised that creating shareholders value is not
sustainable in the long-run if firms continue to create functional value.
Further, the basis of CRM is about how best a firm can maintain closer relationships with
its customers, especially the existing ones. This then calls for pragmatic retention schemes.
In this study, it came to light that even though the two companies talk about customer
retention as very important, statistically, the actual rate of customer retention or rotation
has not been determined. This may create a problem with regards to the total number of
customers attained and lost in a particular time period. In this respect, we recommend for
service firms to be able to know the net effect of retention effort and steps be taken to
actually measure in real terms, the retention rate in order to judge the effectiveness of
retention programmes.
Lastly, none of the service companies in the study has the right mix of CRM components
put forward by Limayem (2004). In this wise, problems regarding employees resistance
might have come due to that. We therefore recommend to all the companies to
reconsider the mix so that by having the right mix of 70 percent for people, 20 percent for
process and 10 percent for technology, implementation obstacles can be addressed. Again,
the study has confirmed theory that the human component is very important and crucial
in any CRM implementation. To this end, firms that are in the process and those planning
70
to implement CRM must ensure that it is indeed the employees who will use the CRM
systems and interact on daily basis with customers. As such, employees must be well
involved, informed, educated and motivated if the CRM project is to be successful.
71
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Appendix 1:
Interview guide
Introduction
The interview will focus on questions related to the major reasons for and benefits of
CRM implementation, components/elements of CRM, and major CRM implementation
factors. The interview guide shown below will give you an idea of the areas that will be
covered.
Interview Guide:
1. When did your company start to implement customer relationship management?
a. Can you describe the process from start until today
b. Who was involved / whom has been affected and how
c. What other aspects of the company were affected
2. Why did your company decide to implement CRM (Reasons for
implementation)
3. Can you give us an example of major obstacles that you faced during the
implementation of CRM?
4. What benefits were assumed to be derived from CRM when you first decided to
implement it
5. What benefits have you seen so far, both for your company and the customer?
6. What would you improve within CRM implementation in your company?
7. Can you give us an idea of how much your company has invested in the
implementation of CRM (time and monetary costs)?
On a scale of 1-5 (5 being excellent), can you rate your overall satisfaction with CRM in
your company
77
Appendix two
Expanded Interview Guide
1. When did your company start to implement Customer Relationship Management?
a. Can you describe the process from start until today?
b. Who was/were involved and who have been affected?
c. What other aspects of the company were affected?
2. Why did your company decide to implement CRM (Reasons for implementation)?
3. Can you give us an example of major obstacles that you faced during the
implementation of CRM?
4. What benefits were assumed to be derived from CRM when you first decided to
implement it
5. What benefits have you seen so far, both for your company and the customer?
Customer value?- Customer satisfaction? (internal/external customer)
Retention-Loyalty? (Rate)
6. What would you improve within CRM implementation in your company?
7. Can you give us an idea of how much your company has invested in the
implementation of CRM (In terms of time and monetary costs)?
8. On a scale of 1-5 (5 being excellent), can you rate your overall satisfaction with CRM
in your company?
78