Customer Relationship Management and Technology

Authors:

• Mohammad Hassan Yousefi , [email protected] Department of Business Administration and Marketing, Alla meh Tabatabayi University , Teh ran, Iran • Mohammad Hossein Jarrahi , [email protected] Department of Information Systems, London School of Economics and Political Sciences, London, UK

1. Abstract

During the last decade, increasing attenti on has been given to relationship marketing as a way to enhance cooperation between a selling company and its customers and bring benefits to both parties. Globalization and technology improvements have exposed companies to a situation with tough competiti on. Relationship marketing allows a selling company to better meet competition and exceed their competitors, and hence relationship marketing becomes an important determinator of success in the increasingly competitive business world of today. One method o f relationship marketing is Customer Relationship Management (CRM). Nowadays, new technologies have empowered c ustomer relationship management (CRM) to dominate marketing paradigms. However, a large proportion of CRM practices do not yield expected profi ts. Yet, this phenomenon is attribute d to a misconception of CRM and the role of technology in its implementation as there are diverse attitudes toward this issue. Some interpret CRM through a technological framework, and assume software solutions are what the organization mainly need s for leveraging CRM whereas others contend that CRM is more than a technology, and underscore some required considerations including formulating customer -focused strategy, user involvement, and process alignment before CRM execution. Here, these different perspective s are organized into two main groups of technological and non-technological perspectives , and consequently the position they appreciate for technology in CRM will be pondered and compared .

Keyword s: Information T echnology, Customer Relationship Management, eCRM

2. Introduction

In the new era companies are focusing on managing customer relationships in order to efficiently maximize revenues. Today marketing is not just developing, delivering and selling, it is movin g towards developing and maintaining long term relationships with customers . Effective customer relationship management (CRM) has become a strategic imperative for companies in

1 virtually every business sector. Companies are moving closer to their customers , expending more effort in finding new ways to create value for their customers, and transforming the customer relationship into one of solution finding and partnering rather than one of selling and order taking. While retaining customer loyalty has been a sales and marketing principle for quiet a long time, Customer Relationship Management (CRM) is actually a tremendous step forward in creating a system that can provide a means for retaining individual loyalty in a world of about 6 billion population (Cro teau & Li , 2001). Committed customers are profitable to an organization for the long term. Customer commitment forms when a customer’s expectation is satisfied and the customer realizes fair value from his/her relationship with the organization. From an org anization’s perspective, this value reflects customer equity, but from a customer’s perspective, it represents the customer’s perceived value of the relationship. In order to manage such a relationship successfully, it is necessary to support diverse custo mer information – such as of-the-customer, for-the-customer, and by-the- customer information. Greenberg (2001) stated that in order to understand CRM , you must also understand the changing nature of the customer because customers are not what they used to be. The term CRM, promising to considerably enhance management of customer affairs, has overtaken the market and is revolutionising marketing as well as reshaping entire business models. Over the past decade, CRM has fascinated not only academics but also practitioners. It is estimated that annual investments in CRM technology will surpass $76 billion within the next three years (Gartner Group 2001). Khalifa and Liu (2001) noted that , a survey of more than 1,600 businesses and IT professionals conducted by the Data Warehouse Institute , found that , some of the respondents have CRM project budgets of over $ 10 million. This finding indicates that CRM is very important for organizations. The Cap Gemini further added that, the average total investment in CRM of 300 U .S and European companies was $ 3.1 million. More than 69% of the companies surveyed spent less than $ 5 million and more than 13% of the companies spent over $10 million (Sterne, 2000). This finding also indicates that a great number of companies spend great amount of their budget on CRM and therefore in our opinion we believe that it is important for companies to know the objectives of their CRM initiatives and the type of benef its the organizations intend to derive from them. A substantial number of CRM initiative s do not produce advantageous results . Gartner Group report that CRM technology could not lead to the targeted performances, as between 55 and 75 percent of all CRM implementations ends in failure , and more than 50 percent of all CRM projects are disappointments from the standpoint of customers (Gartner Group 2001). Many studies assert that thes e failure s probably stem from the executives’ insight into technology and its primacy granted in CRM (Rigby, Reichheld et al. 2002). A survey of 300 companies conducted at a CRM conference concluded that CRM is not a cheap , easy , or fast solution. Mooney (2000) further added that , more than two -thirds of CRM projects end up in failure. However , he went further to say that , the successful third could obtain up to 75% return on investment. Thompson (2004) found four broad factors that were driving 72% of the return on investment (RO I) of CRM. They were: Customer -centric strategy, frontline training and support, organization change, and appropriate use of metrics. These findings again support the fact that the actual objectives of CRM initiatives and the benefits should be ascertained . This further support the statement by Balaji and Alexander (2003) that the purpose of CRM is to identify , acquire , serve and retain profitable customers by interacting with them in an integrated way across a range of communication channels. According to Thompson (2004) CRM is a business strategy to acquire , grow and retain profitable customer relationships, with the goal of creating a sustainable competitive advantage. He goes on to say that, product/price -based differentiation is waning because of four broad trends: maturing markets, global trade , efficient manufacturing and the Internet . Thompson (2004) again stated that , now CRM is emerging as a critical strategy simply because relationships are coming to the forefront of the competitive battleground. He further supported this by saying that, CRM should mean creating mutual wins for customers and all the company stakeholders, including employees and business partners . According to Ragins and Greco (2003) Intimate customer relationships offer organizati ons several advantages and benefits. To begin with, the relationship can create a committed customer. They went ahead to say that, more than repeated purchaser; the committed customer has an emotional attachment to the seller. These emotions can include tr ust, liking, and believing in the organization’s

2 ability to respond effectively and promptly to a customer problem. This has also been argued by Fournier (1998) who stated that , committed customers can be viewed as organizational assets who are likely to be a source of favorable word -of-mouth referrals and are resistant to competitor’s offers. Gummesson (2002) also added that , generally , it is also worth noting that, CRM as an emerging and a relatively new discipline is in great need of theoretical assist ance. In augmenting this, Stefanou and Sarmaniotis , (2003) argue that , the guiding theories and models are not many and in short supply in the field, this is probably due to the fact that it is a new area of research and because of its relatively recent in terchange with IT and information systems, which have been rapidly developing. In the non-restricted environment of the market economy most firms meet a severe competition (Gregory & Stuart , 2003). To be able to successfully compete and thus survive , com panies must differentiate themselves from the competitors by providing something extraordinary. According to Jackson (2003), personalized customer service can be a way for a company to differentiate . To be able to provide personalized customer service, dat a-warehousing of the customer’s transaction data is important, especially if the company has many customers. However , the technology and the data -warehousing is not the total solution to excellent customer relationship management. The personal contact and the personal service are crucial for maintaining satisfied customers. With the increasing availability of modern technology, companies will find it relatively easy to compete on product s. Indeed, one of the most disputable constituents of CRM is the techn ology, particularly information technology. To date, an increasing amount of research addressing success factors of CRM implementations has been published. These have dealt with CRM from different slants in terms of the role of technology. Equally importan t, the way in which CRM is defined is not exclusively semantic, but impacts immensely on the implementation approach (Payne and Frow 2005). In this paper, the literature is first separated into two groups based on how the technological aspects of CRM are analyzed. The core ideas about critical factors and st ages, in CRM practices will then be explored.

3. The Evolution of CRM

The marketing concept as expressed by Drucker (1954) is that “the purpose of a firm is to create and serve customers” (p.64). This philosophy of doing business has three major components; 1) All company activities should be based on the recognition of a need, 2) A customer orientation should be integrated throughout the entire company and 3) Customer satisfaction should be viewed as the means toward long-run profitability goals. According to Drucker the aim of marketing is to know and understand customers so well that the product or service fits them and sells itself. The concept of and in particular the view of marketing seems to have been constantly developed to match the time in which it has been used . Kotler (1999) describes the old marketing , or as he calls it ; the Neanderthal marketing, as a combination of the following practices: - Equating marketing with selling. - Emphasizing customer acquisition rather than customer care. - Trying to make a profit on each transaction rather than trying to profit by managing customer lifetime value. - Pricing based on marking up cost rather than target pricing. - Planning each communication tool separately rather than integrating marketing communication tools - Selling the product rather than trying to understand and meet the customer’s real needs.

According to Morris , Pitt and Honeycutt (2001) the view of marketing (as selling) changed by the end of 1990, when marketing inst ead became equivalent with a set of value-creating activities. The authors further describe marketing of today as much more complicated: “Organizations must make fundamental decisions regarding how to approach different market segments and individual cust omers. The conventional wisdom is that the marketer is no longer interested in making a sale or achieving a transaction, but instead must focus on relationship marketing” (p.98). Morris et al

3 (2001) further claim this orientation to be of special importance when dealing with industrial customers, since the goods and services bought by them have an impact on the performance of day -to -day business operations, and thus the viability of the company. “The buyer -seller relationship tends to involve mutual interdependence, with each party attempting to satisfy organizational objectives through the other” (Morris et al , 2001 p .4). “Industrial marketing can thus be formally defined as the creation and management of mutually beneficial relationships between organizati onal suppliers and organizational customers” . Marketing is confirmed by Storbacka and Lehtinen (2001 ) who describes products as a process in which the customer does not receive value from the purchase itself but from each exchange between customer and provider. Their conclusion is thus that companies should focus on relationship development rather than product development. A method to develop customer relationships suggested by Storbacka and Lehtinen (2001 ) is Customer Relationship Management (CRM). Accord ing to Storbacka and Lehtinen the history of CRM starts before the industrial revolution. By that time craftsmen and artisans got their training from older generations. They also generally controlled the entire production process since they often worked al one or in small companies. Besides, the craftsmen knew their customers personally and therefore knew each customer’s needs and how each customer used their product. Information on customers was usually stored in the memory of the craftsmen. This was an ear ly form of customer relationship management (CRM). However , at the end of the 19th century production activities changed significantly with the industrial revolution and serial and mass production became a rule . Craftsmen were still needed but now more for leading and management work. The people working in the industries did not have any, or at least very limited, contact with the customers

4. The General Definition of CRM

According to Wilson (2002 ) CRM is a concept that enables an organization to tailor s pecific products or services to each individual customer according to his or her need. In the most advanced scenario, CRM may be used to create a personalized, customized, one-to -one experience that will give the individual customer a sense of being cared for, thus opening up new marketing opportunities based on the preferences , previous behaviour and history of the customer . Fayerman (2002) said that CRM as a customer -focused business strategy that aims to increase customer satisfaction and customer loyalt y by offering a more responsive and customized services to each customer. In our opinion, it is important to know that numerous attempts to defining CRM exist and that many organizations adapt the definition to their own business and unique needs. The foll owing are two examples of how CRM is defined. CRM is an infrastructure that enables the delineation of and increase in customer value, and the correct means by which to motivate valuable customers to remain loyal -indeed , to buy again (Dyche, 2001p.4) CRM i s an enterprise -wide mindset, mantra, and set of business processes and policies that are designed to acquire, retain and service customers. CRM is not a technology, though. Technology is a CRM enabler (Greenberg 2001). CRM is about managing customer knowl edge to better understand and serve them. It is an umbrella concept that places the customer at the center of an organization.

5. The General Definition of eCRM

A new term for taking care of customers via the Internet, eCRM, is recently applied by some org anizational and academic communities (Ragins & Greco , 2003). eCRM refers to electronic customer relationship management or, more simply, CRM that is Web -based (Dyche,2001). eCRM can also be defined “as the use of the Internet and IT applications to manage customer relationships” (Chaffey D., 2002). There is a lot of debate over whether eCRM is a real designation or just a marketing ploy by CRM organizations and academics trying to distinguish themselves in the rapidly increasing morass of CRM pretenders (Gr eenberg , 2001 ). Again he went ahead to say that , eCRM is CRM and CRM must become eCRM.

4 In the attempt to define the term eCRM, most web -based authors use the term CRM and eCRM interchangeably for example; Hewson Consulting Group defined it to mean the sam e utilization of e - technology with regards to CRM. This may be due to their interdependent nature and their business orientation. The academics may however be criticized if the distinction is blurred or not clear. Pan and Lee , (2003 ) attempted to make a distinction between the terms CRM and eCRM; CRM was considered an approach or business strategy providing seamless integration of every area of business that touches the customer -namely, marketing, sales, customer service and field support - through integrati on of people, process, and technology. eCRM on the other hand, taking advantage of the revolutionary impact of the Internet, eCRM has thus broadened it and it now expands the traditional CRM techniques by integrating technologies of new electronic channels , such as web, wireless, and voice technologies, and combines them with e-business applications into the overall enterprise CRM strategy. Swift (2001 ) describes analytical eCRM as a four -step interactive process consisting of collecting and integrating online customer data, analyzing this data, building interactions with customers based on this data are optimized, and measuring the effectiveness of these interactions in terms of these performance. The application of eCRM strategies and initiatives will pro ve vital in the battle for online customers, particularly as new technologies reaches greater volume of consumers .

6. CRM, Strategies, Objectives and Benefits

6.1. Strategies and Objectives

According to Gray and Byun (2001) more than 57% of chief executives in a survey with 191 respondents believe that the major objective and strategy of CRM initiatives is customer satisfaction and retention. Keen (2000) states that one of the strategies and objectives of CRM and eCRM is that companies provide cons istent and up-to -date customer catalogue, order and inventory data across all their sales channels : web , call center and all physical points of presence . According to Chye and Gerry (2002), one strategy of CRM initiatives is to change the organization into becoming customer -centric with a major focus on customer profitability as compare to line profitability. Again they lamented that, the understanding gained from CRM enable companies or organizations to estimate the profitability of individual accounts. Th ey further add that, organizations are then able to differentiate their customers properly with respect to their profitability. Organizations can then build predictive churn models to retain their best customers by identifying symptoms of dissatisfaction a nd churning, making sure that the customers who generate profit are retained.

Peppers (1999) summarize the following as the basic strategies and objectives of CRM initiatives:

Customer identification: The organization must be able to identify the cu stomer via marketing channels, interactions and transactions for a period of time in order to provide value to the customer by serving his or her need at the right time with a right product or service.

Customer Differentiation: Every customer has his or her own needs and demands and therefore from the organization’s point of view, customers have their own lifetime value.

Customer Interaction: One of the most important objectives of CRM by an organization is to keep track of customer behaviour and needs over time. This is because, from a CRM point of view, the customer’s long-term profitability and relationship to the company is very important. This is the reason why a company should continue to learn about its customers and in a continuous manner.

5
Pers onalization: This can be defined as treating each customer differently or uniquely and that is the motto or a major objective of CRM. Through the process of personalization, the organization can increase customer loyalty.

According to Thompson (2004) th e main strategies and objectives of CRM initiatives are:

To acquire customers
To grow profitable customer relationships
To retain profitable customers
To create competitive advantage

According to Deck (2004), the objective and the strategy of CRM is that it should help organizations to use technology and human resources to understand the behaviour of customers and the value of those customers. If it works that way, an organization can:

• Provide better customer service • Make call centres more efficient • Cross -sell products more effectively • Help sales staff closes deal faster • Simplify marketing and sales processes • Discover new customers • Increase customer revenues

According to Greenberg (2001), below are objectives and strategies for an organization that is implementing CRM: 1. Increase revenue: The organization should focus sales force on increasing revenue through better information and good incentives to drive top line growth. 2. Reduction of cost of sales : Organization should use new technologies to reduce the cost of deploying sales automation solutions and improve the effectiveness of sales efforts at the same time. 3. Sales representative retention : organization should empower organizational sales force to proactively track and monitor their performance and compensations levels to better motivate them to achieve goals and be successful within their positions and for the organization. 4. Increase sales representative productivity : Organization should reduce the steps in volved in tracking and quoting customer data with integration of sales capabilities across the organization. 5. Improve win probability : Organization should improve the focus of organizational sales efforts with better information to help sales force to close deals.

Kim , Suh and Hwang (2003) divided the strategies and objectives of CRM initiatives into four categories . They are as follows:

1. Customer knowledge : • Appropriate customer information collection • Analyzing customer data • Acquiring new customers • Employee training and skills improvement • CRM technique improvement • Secure service

2. Customer interaction: • Responding appropriately to customer request • Business process integration • Channels management improvement • Maximi zing the effectiveness and efficiency of organizational operations

6 • Customizing products and services.

3. Customer Value: • Improving customer retention • Increasing profits • Customer service and support improvement • Building an attractive virtual community

4. Customer satisfaction. • Improving service quality • Establishing relations hips with customers

Trepper (2000 ) indicated that , there are three crucial strategies and objectives that need to be fulfilled by a CRM system. These are as fo llows: • To enable the sales, marketing and the service staff to perform their duties more like a team, that will lead to a reduce cost and increase efficiency. • To provide a complete view and consistent view of each customer for all customer interacti ons by the company. • To provide the customer with a complete view of the company, irrespective of how the customer contacts the company.

According to Burnett (2001 ) CRM objectives and strategies can also be grouped under the following categories:

Increased profitability margins: By knowing the customers better, efforts can be made to switch less profitable accounts to lower cost/service delivery channels.
Decreased sales and marketing administrative cost: The decrease can occur if the organization specify and has good knowledge about its target segment customers. As a result, the organization will use its resources better when no effort is a waste of money or time.
Improve customer satisfaction rate: The increase in customer satisfaction rate will occur because customers will find that the offer is more in line with customers’ specified needs.
Win rates: This will also improve because the company will withdraw from unlikely or bad deals earlier in the sales process.

Bayon, Gutsche and Bauer (2002) state that , organizations should see the objectives of marketing applications by CRM. They went ahead to say that, these could be categorized under the following:

Better information for better management: Organizations should implement highly focused targeted campaigns with better returns on marketing investments.
Expanding marketing channels through the web: Organizations should make use of the power of the Internet to increase marketing reach and effectiveness.
Closed -loop marketing: Organizations should use programs with comprehensive marketing system that support planning, campaign management, execution, Internet support and analysis to improve marketing management.

Dyche (2001), argues that organizations purchase CRM products base on the follow ing objectives:

• Customer profitability and value modelling: Extensive processing and detailed data combined with profitability modelling products have made it possible for organizations to know which of their customers are valuable and thus worth kee ping. Now organizations can measure the customers who are price sensitive, those who bring in some small margins and might never recoup their value, irrespective of their purchase volume; yet some customers who are very low volume purchasers were neverthel ess highly profitable. However, profitability is only one area of revenue line. A customer can be unprofitable at the

7 short run but could have referred many high -value customers to the organization, thereby making him very valuable. Again some customers could be very profitable and valuable at the long run.

• Customer retention: Knowing and understanding that some customers have left the company and knowing specifically who has left is even more important, and also knowing why these customers left is not an easy task at all. The more customers leave, the revenue to the company decreases and hence the greater the loss of revenue. It is also difficult to encourage customers to stay, but this is done base on the assumption that, keeping an existing customer is far more cost effective than acquiring a new one.

• Cross -selling and up-selling: Cross -selling and up selling is trying to know which products can increase, rather than decrease a customer’s total profitability. Cross -selling is selling a product t o a customer base on another purchase the customer has already done. Up -selling is also defined as motivating an existing customer to trade up to more profitable products. Because of the assumption that selling more services to an existing customer is less costly and also increases revenue, it has become very common these days. Cross -selling helps companies to sell the right product to the right customer at the right time. The desire of many companies to do the cross -selling has made the automation of CRM marketing technologies very popular.

• Behaviour Prediction: This helps organizations to determine the next thing customers will do in the future. Data mining techniques are use for behaviour prediction based on the customers’ history to foresee customer’ s future behaviour . By understanding the next action a customer will take, the organization can make so many marketing decisions based on that. The key to this is to help you to actually know who your best customers are.

• Personalization: This is the ab ility of a company to personalize or customize communication, products and services base on knowledge, behaviour and preferences at the interaction time. Personalization technologies can apply their learning’s to future personalized messages. This helps to remove the guesswork, resulting in a creeping understanding of customers and their preferences over that customer’s relation with your company. Personalization on a business to customers (B2C) website is largely based on the analysis of a customer’s click streams, his or her navigation path through a company’s website.

6.2. Benefits of CRM

Trepper 2000 noted that we have to wait -and-see to determine the benefits and the Return on Investment (ROI) of CRM since CRM does not bring any direct monetary benef its after implementation. He further goes on to say that rather, CRM requires a large amount of initial investment in hardware and software and without any immediate cost saving or revenue improvement. The benefits of CRM need to be measured on a long-term relationship with customers and to generate long -term benefits through increased customer satisfaction and retention (Cyber Marketing Services , 2000 ). According to (Mooney , 2000) a survey of 300 companies conducted at a CRM conference concluded that CRM i s not a cheap, easy, or fast solution . Patton (2001) further adds that , most top 500 companies in the USA are involved in some sort of CRM initiative and strategy and many of the multi million dollar initiatives have stalled or failed as the executives of these companies continue to look for the benefits they want to get from these initiatives and strategies. Again he stated that, the benefits and the scope are far less what has already been talked about in CRM .

Another factor that could affect CRM usage i s the evaluation of tangible return on it, according to Dyche (2001), it is difficult to evaluate tangible returns on the resources expanded to plan , develop, implement, and operate CRM . This is further supported by Kim , Suh &Hwang (2003) that, the intangi ble nature of benefits such as customer loyalty, service quality, value enhancement, and innovation of operation, effectiveness of process, service improvement, competitiveness, trust and efficiency have to be measured.

8 According to Gray and Byun (2001) the following are the main benefits of CRM. They went on to say that, for an organization to get all these benefits, sales, marketing and service functions must work together:

To improve the company’s ability to retain and acquire customers
To maximize the lifetime value of each customer
To improve service without increasing cost of service.

Again they argue that, proper identification of the customer helps sales force to do cross selling. They further add that, this is through clean data about the customer and a single customer view. Further more, they say that, understanding the customer through differentiation can lead to cost effective marketing campaign, it could also reduce something like for example direct mailing cost. Also, they argue that c ustomer satisfaction and loyalty through interaction could also lead to cost effective customer service. Moreover, they argue that, customer satisfaction and loyalty through personalization can also lead to lower cost of acquisition and retention of customer and thereby maximizing share of wallet. (Gray and Byun 2001)

Crosby (2002) argues that , by using customer information wisely to deliver what the customer needs, companies will create long-term, collaborative relationships with the customers. He further states that, this will bring many benefits since long-term customers are less costly to serve and smooth -running relationships are less resource intensive. A survey of more than 500 executives in six industries , communication, chemicals, pharmaceuticals, electronics/high -tech, forest products and retail, believe that 10% improvement of overall CRM capabilities can add up to $35 million benefits to a $1 billion business unit . ( Gray and Byun 2001). CRM is a very big tool that contributes so much to profit in dicated by Newell (2000). Further more he stated that , if organizations could transform the customer data into other elements of a successful CRM program knowledge and then use that knowledge to build relationships it would then create loyalty and thereby creating profit. Turban et al . ( 2000 ) suggest that increasing customer satisfaction increases customer loyalty . Swift (2001 pp. 28) argues that organizations can get a lot of benefits from CRM initiatives. He goes on to say that, these benefits could be fo und in these areas:

• Higher customer retention and loyalty: The customer retention will increase when customers stay longer, buy more and buy more frequently. The customers take more initiatives that increase bounding relationship, and as a result th e customer loyalty increases.

• Increased customer profitability: The customer profitability will increase when the customer wallet -share increases, the up-selling goes up as well as cross -selling and follow up sales and also more referrals come with higher customer satisfaction among existing customers. • Evaluation of Customer profitability:

When the organization gets to know which customers are profitable and which ones that might become profitable in future, that is the potential profitable cu stomers and those who will never become profitable. This is a very important area because the key to any successful business is to acquire and focus on those customers who bring profit, when you get them, you do not want to leave them.

• Reduced cost of sales: The costs regarding selling are reduced due to the fact that existing customers are usually more responsive. In addition, with better knowledge of channels and distributors, the relationships become more effective, as well as costs for marketing campaigns are reduced.

• Lower cost of recruiting customers:

9 When the cost of recruiting new customers reduce or go down, there will be savings to be made on marketing, mailing, contact, follow-up, fulfilling, service and many more.

• No need to re cruit so many customers to preserve a steady volume of business : When the number of long-term customers increases and consequently the need to recruit many new customers will decrease.

• It adds more valuable knowledge already gained from direct custome r interaction and this knowledge in turn helps improve product development process.

7. Technological Perspective

Whilst its underlined epistemology c omes from positivist traditions , the first group of literature refer s to technology as a self -ruling driver of change in organization. Hence , no critical position is acknowledged for other agents such as people (Orlikowski 1996).

7.1. Definitions of CRM

It is very common amongst this group to define CRM as a so rt of technology or application; therefore, CRM is often equated with technology (Payne and Frow 2005 ). To some, CRM means information -enabled relationshi ps marketing (Ryals and Payne 2001) or data -driven marketing (Kutner and Cripps 1997; Hansotia 2002); some describe it as an eCommerce application (Khana 2001) ; others concei ve it as methodologies or technologies , ranging from a database to internet solutions (Stone and Woodcock 2001 ) (Burghard and Galimi 2000). In this term, CRM products are categorized into operational (e.g. for automating the sales forces ), analytical (e.g. for building a CRM data warehouse) and collaborative (e.g. for building w eb and online communities) as exe mplified by (Chang 2001; Firth 2001 ; Karimi , Somers et al . 2001 )

Many e xecutive s and practitioners also regularly have the same outlook on CRM. Payne and Frow (2005 ) report that a manager, who spent $ 30 million on IT systems integration, defined CRM in terms of sales force automation project . Similarly, Cor ner and Rogers (2005 ) state that some managers take are concerned only with the mechanistic aspect of CRM systems and fail to consider the people who will use it.

7.2. The Role of Technology in CRM Implementation

Accordingly , technology is viewed as a main driver of CRM and its most significant success factor. Ling and Yen (2001 ) contend that technologies such as data warehouse and parallel computing have metamorphosed into the main enab ler of CRM . Researche rs have identified some key technological aspects , particularly sales force automation , as the critical factors in the success of CRM projects (e.g.; (Morgan and Scott 2001 ; Pullig , James et al . 2002). Acc ordingly , Gray and Byun (2001) believe that, although some argue that CRM has a meagre role in CRM success, each key CRM tasks relies upon technology significantly . Yong Ahn et al (2003 ) indicate revolution in marketing paradigm s to be chiefly based on the rapid advance s of IT in areas invo lving data wa rehousing and data mining. Sandoe et al (2001) characterize in similar fashion th e functionality and efficiency of CRM in terms of database technologies . Therefore, IT plays a major role in develop ing CRM . One of the senior CRM manager s of J.P. Morgan states : “ Early on there was a real focus on technology and the idea that technology was going to make it happen”(Fung 2002). In addition, it is assumed that of f-the -shelf CR M packages propose a wide and comprehensive range of required technology for running customer relationship management initiatives (Greenberg 2001). These could be executed for CRM planning as is done for ERP and advance

10 database systems (Day 1994 ; Sivadas and Baker -Prewitt 2000). Moreover , it is sometimes assumed that CRM solutions sold over and over again are appropriate and usable because they have been thriving in analogous environments (Corner and Rogers 2005).

As such, this point of view represents a sort of technology determinism in which design drivers are heavily technological rather than social (Fleck and Howells 2001).This means that by implementing a particular technology, certain changes which are technically possible are made incontestable and inevitable due to the intrinsic nature of technological progress (Leonardi and Jackson 2004). Correspondingly ,many companies assume that by installing the tools (CRM software ) the CRM will be rolled out (Rheault and Sheridan 2002). Thereupon, actual implementations tend to be substantially technologica lly biased and pay little attention to managing the changes in process es (Fleck and Howells 2001). For example, the finance sector and bank industry have had a tendency to leverage advanced IT practices before any other considerations (Ryals and Knox 2001; Goldberg 2003).

Such a context has consequently influenced many proposed framework s of CRM implementation. Winner (2001) suggests a CRM model which starts with creating a customer database. Meltzer (2005 ) suggests establishing a customer information infrastructure as the start ing point of his framework. Likewise , a number of proposed model s suggest technical aspect s, particularly data warehousing, as the first step of embracing CRM. T hese sorts of implementation often continue with data mining or data analysis (Cunningham , Song et al . 2004) (Ahn, Kim et al . 2003; Pan and Lee 2003). Wilson et al (2002 ) suggest that the majority of managers suppose it to be easier to proceed with hard facet s like technology than softer ones like strategy and so frequently start with hard issues first .

8. Non-technological Perspective

This group, with their r elatively interpretive research, have a more holistic view of CRM and thus do not limit the CR M concept to the technology. To them, CRM means more than a software solution (Boon, Corbitt et al . 2003) and is not devised by installing a software package (Close 2001 ; Amerongen 2004). They generally argue that the belief of those managers who assume CRM software plus a data warehouse will make profit is the or igin of the CRM failures (McKim 2002; Newell 2003 ). Wehmeyer (2004) believes that pursuing CRM implementation as simply an IT project leads to trouble . Rigby et al (2002) question the perception which associate s CRM with a customer relatio nship handling software tool and prove this assumption to be the source of several perils. They also report that in a survey of 451 executives many of those who held this line of thought found that not only did their CRM adoption not produce profit but it also damage d their customer relationships.

8.1. Definitions of CRM

Although there are as many CRM definition as there are writer s, CRM is actually widely acknowledged as a n indispensable business approach (McCalla , Ezingeard et al . 2003). Previous work defined CRM as a stra tegy (Davids 1999; Parvatiyar and Sheth 2001; Verhoef and Donkers 2001; Rajola 2003), a process (Srivastava , Shervani et al . 1999; Day and Van den Bulte 2002; Boon, Corbitt et al . 2003), capability (Peppers , Rogers et al . 1999 ), a philosophy (Hasan 2003), a multifaceted discipline (Renner 1999; Gosney and Boehm 2000; Syspro 2002 ), or as a customer -centric approach (Deighton 1998 ; Galbreath 1998; Lockard 1998; Hobby 1999). However, the presence of technology in the definitions is an important point. On one hand, a couple of authors describe CRM in such as to exclude the technology aspect (Anton 1996; Swift 2000; Zablah , Bellenger et al . 2004). For instance, Rigby et al (2002 ) explain CRM as an assimilation of business proce sses with customer strateg y to generate long-term customer loyalty and profits ; the word “technology” is deliber ately overlooked in this definition. On the other hand, others suggest definitions where the integration of business processes, particularly customer -bas ed ones

11 and infor mation technology , are emphasized (Glazer 1997; Couldwell 1998; Srivastava , Shervani et al . 1999; Kearney 2001; Grabner -Kraeuter and Moedritscher 2002 ; Wikstrom 2004; Payne and Frow 2005). Although there is no general consensus about the role of technology, they usually recogn is e technology as one of a number of components of CRM .

8.2. The Role of Technology in CRM Implementation Newell (2003) de scribes how organization s spend a tremendous amount of time and energy looking for a technological solution without having first established a clear business case with goal s and objectives as well as metrics to identify the results they hope to achieve. Th ey do not understand that it is intelligence about customers and not technology that drive s CRM . Roberts et al (2005) contend that technolo gy is an enabler of CRM success but is not a key fact or. Rigby et al (2002 ) view technology as simply a facilitator in the process of CRM . F urthermore, they nominate certain contributions of technology to the five imperatives of CRM and so highlight the widespread mistake of substituting the hard real ity of creating an integrated customer relationship strategy with the easy promise of CRM software. Therefore, technology is only an enabler of success; it enables the business to enhance customer relationship s through efficient and congruous processes (Johnson 2004). In the other word s, the function of information technology is to promote relationship orientatio n, customer retention and customer value initi ated through process management; and to enable all of these aspects collectively to be implemented (Ryals and Knox 2001 ). The role of technology in CRM initiatives among some consultant compan ie s has also been minim ized in favour of a more holistic approach . Therefore, they imply that CRM is a long -term commitment transcending a single CRM software solution (Hart , Hogg et al . 2004)

A number of empirical studies show similar results. By way of illustration, Reinartz et al (2004) conducted a study among 211 se nior managers of consumers products companies in several countries. In their studies, the CRM process was broken down to three phases . These were relationship initiation, relationship maintenance and relationship termination. The influence of process on performance was controlled by technology and organizational alignment. They found that CRM technology did not have a substantial impact on any of above stages. Similarly, Day and van den Butle (2002 ) conclude in the ir study of 345 US business es of ov er 500 employees that n either customer data nor information technology contribute notably to the overall customer relating capability once other competen cy factors such as organizational culture have been attained . Thus information technology is merely a necessary condition. Finally, Thompson(2004) advises: “Use technology. Easy -to -use and affordable software options abound. Just make sure you are a good carpenter before buying the latest hammer” .

It has been argued that the current trend of acquiring expensive information technology for CRM purposes has been encouraged by the enticing claims of CRM vendors . Moreover, literature in the CRM field has been impacted by CRM vendors explicitly or implicitly (Hart , Hogg et al . 2004 ). One marketing technique of CRM vendors is to persuade com panies that huge software and hardware installation will best improve their CRM initiatives (Ceonex 2004). Despite claiming to provide comprehensive solution s, few vendors can truly supply the full range of specifications re quired for cohesive CRM strategy (Payne and Frow 2005). G.Carr (2003) states that big so ftware and hardware vendors offer appealing features that require companies to buy hardware and software exceeding their real needs.

As was previously indicated, many investments in CRM technology have not had desirable performance outcomes. To exemplify , despite the fact that 74% of U.S. businesses spent more on CRM technology in 2001 than they did in 2000 (by as much as 50% ), fewer than half of the IT managers surveyed by Unisys Corporation report a p ositive return on IT investment; 42% report a level return and 14% a negative return (information-week .com 2001). It has been noted in previous studies such as Hitt and Snir (1999 ) that I T has a complementary role by boosting process effectiveness . Generally, o ne factor is assumed to be complementary to another when raising the first triggers an increase in the second’s marginal value (Milgrom and Roberts 1995). Reinartz et al (2004) denote that CRM technology plays a

12 complementary part s ince it boost s the marginal value of information processes. Additionally, Ocker and Mudambi (2003 ) develop a three dimensional model in which technology alignment is one of CRM ‘s complementary readiness factors. Alt hough information technology could enhance the marginal value of organizational processes, it could not be a substitute for them (Brynjolfsson and Hitt 2000). The Meta Group report reinforce s this by pointing out that putting investment in CRM technology before the adoption of a customer -based culture is a n important fault (Met Group 1998). Hence it can be seen that in order for CRM technology investments to be successful the re are several considerations that should be taken into account before selecting and installing the CRM software .

8.3. Other Elements of a Successful CRM Program

Since from the non-tech nological perspective CRM technology is interpreted in a different way , the proposed implementation process es are also totally different . If first priority is not granted to technology then the question remains as to what the main components of a CRM program are. As a matter of fact, many researchers , in addressing th is question, have examined the success factors and consequently developed success model s from different points of view. Their f indings are here categorized into four major groups; namely people, customer -based strategies , process es and technology. The findings of these researchers on technology and its role in CRM implementation have already been examined and so the focus will now be on the re maining three groups.

A number of information systems researche rs - such as Edin -Dor (1987 ), Orlikowsky (1994 ), Marakas e t al (Marakas 1996) - st ate that the essential differences between successful information systems and futile ones lie in the people who use them. Hence various studies discuss people and the roles they play in the success of CRM . In their recent study, Fjermestad and Romano (2003 ) maintain that concept s like usability and resistance should be em phasised; thus key CRM design should involve incremental and iterative approaches to best focus on people -related considerations. Themes such as user acceptance and user involvement are often interwoven with effective information systems implementation. Khalifa and Liu (2003) point out that materializati on of new phenomena such as e -commerce have caused customer s to become end-user s of information systems . Additionally, some researchers suggest relative CRM success factors such as top-manager commitment (Yu 2001; Ocker a nd Mudambi 2003 ; Alt and Puschmann 2004 ; Jegham and Sahut 2004; Roh, Ahn et al . 2005) as senior ex ecutive s fall into a huge pitfall once they assume the CRM initiative to be the role of IT managers (Rigby, Reichheld et al . 2002). CRM initiative s do not assist the organization until senior managers get involved (Hansotia 2002). In addition, o thers stress training and employee empowerment issues before CRM implementation (Ryals and Payne 2001 ; Shoemaker 2001; Harding, Cheifetz et al . 2003; Jegham an d Sahut 2004; Wikstrom 2004; Roh, Ahn et al . 2005) (Markus 1983; Fisher 2001). As a result the requirements of users comprising customers, staff, and partners have appeared to be a fundamental concept of successful CRM design (Amerongen 2004). Nevertheless, many approaches fail to take user involvement into account - with users being obliged to use the information systems despite their best interests (Brown , Massey et al . 2002).

In the past, CRM projects traditionally encompassed new technology and rarely started with a consolidated strategy supporting busin ess objectives as well as changing management programs (Burn 1989). However, Henderson and Venkatraman (1993) argue that the main factor preventing companies from exploit ing the expected benefit s of IT investments is misalignment between business and IT strategies. So far , several researchers have accommodate d customer -based strategy before CRM implementation (Hansoti a 2002; Syspro 2002; Wilson , Daniel et al . 2002; Alt and Puschmann 2004 ; Wikstrom 2004).They conclude that rolling out CRM before providing customer strategy is analogous to constructing a building without a plan or measurements (Rigby, Reichheld et al . 2002 ). The creation of a customer relationship strategy is the vital step in a CRM project (Rajola 2003), and such a strategy shou ld be beyond technical aspects (Amerongen 2004). Gartner (2003) identified eight distinct layers or building blocks used by the world’s leading businesses to reach excellence in CRM . Strat egy is placed in the front

13 stage s and CRM technology is ranked next to last . Similarly , Payne and Frow(2005 ) developed a model for CRM implementation which commences with the strategic development process and addresses technology issues towards the end. Likewise, some CRM utilisation frameworks being presented by consulting companies such as Syspro and Ceonex concentrate on strategy calculation in initial stages and reflect technology in last stages (Syspro 2002; Ceonex 2004). As previously indicated, a group of researchers believe there is a crucial need to formulate customer - focused strateg ies befo re any other stages. A consequence of this strategic alignment might be some modification in key processes (Wikstrom 2004). Roberts et al (2005) show that CRM technologies alone can not achieve CRM goals owing to significant need s for ongoing process alignment. A few researchers (Stone , McFarlane et al . 1993; Domegan 1996; Elliott 1997) decla re that coordination challenges rather than technological ones - such as the reluctance IT manager s to share customer information with other s due to a notion of losing of power – cause most obstruction to CRM programs . For that reason, several studies investigating CRM success factors suggest process reengineering as an indispensable means of the cross -functional integration (Massey, Montoya -Weiss et al . 2001 ; Ryals and Knox 2001 ; Wilson , Daniel et al . 2002). In addition, some address the reengineering of al l the processes which generat e customer experiences comprising sale channel p rocess, personalization process and after sale process (Gartner Group 2001; Ocker and Mudambi 2003; Kale 2004; Roh , Ahn et al . 2005). This might also encompass organization staff , customer -facing members as well as suppliers (Roberts, Liu et al . 2005 ). In short, the reengineering of critical processes should be finished ahead of installation of any CRM technology . Putt ing the technology into practic e before establishing a customer -focused structure through respective organizational cha nge will put the CRM in danger . In a recent survey conducted among managers , 87% attributed the failure of their CRM to insufficient change management in their company while 4% said it was due to software problems (Rigby, Reichheld et al . 2002). Likewise, through analyst fieldwor k with their client, resea rch and consulting firm Gartner Inc., found that successful enterprises have become more aware of the importance of focusing on customer satisfaction rather than on technological applications (Nelson 2003).

9. Conclusion Once an organization decides to implement CRM, overcoming disagreement about the compo nents of a well -designed CRM plan presents a significant challenge (Payne and Frow 2005). Indeed, CRM means different things to different people (Winer 2001). Tw o perspectives on the importance and the role of technology in CRM have been examined in this paper; their different views could also be scrutinized on the basis of different forms of change . Organizational studies such as those conducted by Orlikowski (2000) recommend thre e different roles executed by technology in an organization al context . These are; (a) “inertia ” - where the technology triggers limited change so that status quo is maintained ; (b) “application ” - where technology assist s the organization in complement ing and refining current processes ; (c) “change ” which refers to use of technology to significantly modify operations in an organization. The first group of literature places technology in category (b) and hence other organizational aspects like processes or strategy remain unchanged . On the contrary, the second group considers CRM to be properly categorized under (c). T hey call for fundamental change and reconstruction of business processes. Eventually, according to the Socio -Technical approach to information system s for which the social factors are central, the information system is designed more successfully if human agencies are kept in mind(Cornfo rd and Lin 2000 ). It is also predicated that CRM as a leisurely maturing business practice will switch from technological dominance to an era where issues such as people and organizational alignment will play even more significant roles (Nairn 2002). This paper does not intend to evaluate all the factors relating to CRM success. Indeed, it s focus is limited to the role of technology . Therefore, further investigation s are needed in order to explain the key parameters of organizational readiness to implement CRM across the organization . F urther research might explore to pics such as change management and organizational alignment in orde r to provide a more comp rehensive CRM success framework from the customer’s perspective while relying upon more acceptable definitions of CRM.

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18