2002:016 SHU MASTER’S THESIS Customer Relationship Management Case studies of five Swedish Companies JOHAN JOHANSSON FREDRIK STRÖM Social Science and Business Administration Programmes INTERNATIONAL BUSINESS AND ECONOMICS PROGRAMME Department of Business Administration and Social Sciences Division of Industrial Marketing Supervisor: Manucher Farhang 2002:016 SHU • ISSN: 1404 – 5508 • ISRN: LTU - SHU - EX - - 02/16 - - SE Preface This thesis is written as our Master’s Thesis in the Msc. Programme in International Business and Economics at the Division of Industrial Marketing at Luleå University of Technology. The hard work during ten weeks of the fall term in 2001 has been very interesting and has provided us to gain a better understanding of how Customer Relationship Management is used in Swedish companies and increased skills regarding academic and scientific writing. We would like to show our sincere gratitude and appreciation to the people that have helped us during the process of writing, making this thesis possible. First of all, we would like to thank our supervisor Professor Manucher Farhang for his support and committed guidance. Furthermore, we want to thank Tim Foster who provided us with support and advice during the initial phase of the writing and Christina Sales Baptista who earlier introduced and guided us in the area of relationship marketing. We would also like to thank all companies that have taken the time to participate in our research. Without them, this thesis would not have been possible to complete. Finally, we would like to give our deepest thanks to our close ones, families and friends, who have stood us by during these ten weeks. Johan would like to thank Anna-Maria Killmey and Fredrik would like to thank his dearest Åsa Martinsson. Their support and encouragement gave us the strength to successfully bring this thesis to an end. Luleå University of Technology, 2002-01-10 Johan Johansson Fredrik Ström Abstract This thesis aims to study how Customer Relationship Management (CRM) is used in companies. By exploring, describing and somewhat explaining companies objectives of CRM and their CRM processes as well as how the organization is affected by CRM, achieves the overall purpose of the study. Five case studies were performed within the construction, financial, and manufacturing industries and all studied companies originated from Sweden. Three major finding was made. Firstly, Swedish companies have well developed objectives with CRM that exist within the three classification areas, cost saving, revenue enhancement and strategic impact. Secondly, Swedish companies have accepted and implemented CRM processes that is a condition for the transition into a customer centric company. Thirdly, the organizational structure in Swedish companies has not been affected by the use of CRM due to that Swedish companies have not adapted to the CRM business framework. Today, Swedish companies mostly use CRM as a sales and marketing support system. Sammanfattning Syftet med denna uppsats är att studera hur Customer Relationship Management (CRM) används i företag. Syftet är uppnått genom att utforska, beskriva och förklara företags CRM målsättningar och deras CRM processer samt hur organisationen har påverkats av CRM. Fem fallstudier i svenska företag genomfördes inom tre industrier: bygg & anläggnings, finansiella, och tillverkningsindustrin. Tre intressanta resultat gjordes, för det första, svenska företag har väl utvecklade CRM målsättningarna fördelade i tre områden, kostnadsbesparingar, intäkts ökande och strategisk betydelse. För det andra svenska företag har anammat och infört CRM processer, vilka är en förutsättning för omvandlingen till ett företag med kunden i centrum. För det tredje har organisationsstrukturen i svenska företag inte påverkats av användandet av CRM, då svenska företag ej har anammat CRM som affärsmodell. Idag använder svenska företag CRM mest som ett försäljnings och marknadsföringssystem. Table of Contents 1. Introduction.......................................................................................................................1 1.1 The Evolution of Marketing.................................................................................... 1 1.2 Customer Relationship Management...................................................................... 2 1.3 Problem Discussion ................................................................................................ 4 1.4 Research Purpose.................................................................................................... 6 1.5 Demarcations .......................................................................................................... 6 1.6 Disposition of the Study ......................................................................................... 7 2. Literature Review .............................................................................................................8 2.1 The Objectives with CRM ...................................................................................... 8 2.1.1 Objectives by Burnett....................................................................................... 8 2.1.2 Objectives by Newell........................................................................................ 8 2.1.3 Objectives by Swift........................................................................................... 9 2.1.4 Objectives by Galbreath & Rogers.................................................................. 9 2.1.5 Objectives by Kalakota & Robinson.............................................................. 10 2.2 The CRM Process ................................................................................................. 10 2.2.1 Integration of Business Functions in the Marketing Strategy ....................... 10 2.2.3 The CRM Process Cycle ................................................................................ 13 2.3 CRM’s affect on the organizational structure....................................................... 14 2.3.1 Organization Design Variables ..................................................................... 14 2.3.2 Organizational Change.................................................................................. 17 2.3.3 Structure of the CRM Marketing Organization ............................................. 18 3. Theoretical Frame of Reference ....................................................................................20 3.1 Conceptualisation.................................................................................................. 20 3.1.1 Objectives with CRM ..................................................................................... 20 3.1.2 The CRM Process .......................................................................................... 21 3.1.3 The Structure of the CRM Organization........................................................ 23 3.2 Emerged Frame of Reference ............................................................................... 24 4. Methodology ....................................................................................................................26 4.1 Research Purpose.................................................................................................. 27 4.2 Research Approach ............................................................................................... 27 4.3 Research Strategy.................................................................................................. 28 4.4 Data Collection Method........................................................................................ 29 4.5 Sample Selection................................................................................................... 31 4.6 Analysis of Data.................................................................................................... 31 4.7 General Analytical Strategy.................................................................................. 32 4.8 Quality Standards: Reliability and Validity.......................................................... 34 5. Empirical Data ................................................................................................................36 5.1 Skanska AB........................................................................................................... 36 5.1.1 The Objectives with CRM in Skanska ............................................................ 37 5.1.2 The CRM Process in Skanska ........................................................................ 39 5.1.3 CRM´s Affect on the Organizational Structure in Skanska ........................... 40 5.2 Svenska Kullager Fabriken AB ............................................................................ 41 5.2.1 The Objectives with CRM in SKF .................................................................. 42 5.2.2 The CRM Process in SKF .............................................................................. 43 5.2.3 CRM´s Affect on the Organizational Structure in SKF ................................. 44 5.3 Scania AB ............................................................................................................. 45 5.3.1 The Objectives with CRM in Scania .............................................................. 46 5.3.2 The CRM Process in Scania .......................................................................... 47 5.3.3 CRM´s Affect on the Organizational Structure