Customer Relationship Management: a strategy to sustain the organization's name and products in the customers' minds

Dr. Ahmad M. Zamil

King Saud University, Riyadh Community College, Faculty of Administrative Science, P.O.Box 28095,Riyadh 11437, Kingdom of Saudi Arabia, Tel: 966 543718710, Email: drahmad764@yahoo.com,azamil@ksu.edu.sa

Abstract:
This research aims at identifying the factors that play a significant role in the forming of customer behavior toward the brand or the organization. After previewing the literature of marketing, the researcher found that the human resources management activities are the main contributors in retaining the brand's name and the organization's name stuck in the customer's mind. The study confirms that CRM is a complex concept requiring appropriate business process and integrated systems. in addition, the study demonstrates the relevance of the need for effective leadership, sourcing, communication and evaluation within CRM strategies.

Keyword: Customer Relationship Management, Consumer Behavior, Customer Loyalty

1- Introduction:
Customer relationship management (CRM) is a management strategy that unites information technology with marketing. It originated in the United States in the late 1990s, and, to date, has been accepted in a significant number of companies worldwide. On the other hand, some people have negative opinions of CRM; such views hold that it is difficult to implement successfully and that its cost-benefit performance is low, among others. Customer relationship management (CRM) is a broadly recognized, widely-implemented strategy for managing and nurturing a Companys interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes, principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of 1

marketing and client service. Customer relationship management denotes a companywide business strategy embracing all client-facing departments and even beyond. When an implementation is effective, people, processes, and technology work in synergy to increase profitability, and reduce operational costs. As a result of increased competition between companies, resulting from multiple factors such as; globalization, economic and cultural opening, and the spread of global companies across the globe, which resulted in multiple products on one hand, and the diversity of categories of a single product on the other hand, leading to increased purchase options to the consumer, forcing organizations to increase customer focus. Also, organizations have become aware that customers are the foundation of its existence. Therefore, an organization that is keen to maintain its presence, will seek to build a special relationship with its customers, because, customer relationship management is very important for the company to accomplish its long-term goals, and as stated by (Nguyen, 2007) "the success of the organizations in achieving their goals depends largely on the efficiency of management of its relations with customers". Also, best practice of customer relationship management (CRM) that will grow the organization's name and/or products in the customer minds. For example, we may find someone who prefers always to drink tea Lipton brand, such a person, and when he hears the word tea, he remembers only the name of Lipton, because it is engraved in his mind. And this person is loyal to the brand. On the other hand, we may find someone else who does not buy only from City Mall, and here the loyalty is to the organization. Customer relationship management (CRM) has in recent years, evolved into a technology-enabled business management tool for developing and leveraging customer knowledge to nurture, maintain, and strengthen profitable relationships. CRM can be employed to develop an ongoing dialog with customers integrated across all contact points. Customers stand to benefit from customized products and services and/or lower prices when firms put to productive use the better understanding of customers facilitated by CRM. Firms benefit from greater customer loyalty, and by being able to focus on profitable customers. CRM is definitely not a new concept. The academic marketing literature has strongly advocated that long-term orientation in their relationships with customers serves firms better than short-term transaction Orientation.

2- The Changing Market Environment

In the early 20th century in the United States, demand outpaced supply to the extent that companies concentrated on selling as many products as possible. Suppliers focused on product development, manufacturing capacity, and securing distribution outlets, without regard to their consumers. They did not pay much attention to who bought their products or what their customers needed. They used classic marketing tactics, i.e., mass marketing primarily print and broadcast advertising, mass mailings, and billboards. By the middle of the 20th century, however, the economy had matured to a point where consumers had the power of choice because supply had outstripped demand. The era of the passive consumer was coming to an end. Companies began to find out who their customers were, what they wanted, and how they could be satisfied. They analyzed data about their customers and segmented them based on their demographics, such as age, gender, and other personal information. Then they promoted their product or service to a specific subset of customers and prospects. This was called target marketing. Each company thought seriously about the four Ps (price, promotion, product, and placement), the basic concept of modern marketing, which was first suggested by the expert in the field, Jerome McCarthy, in 1960. By the middle of the 1980s, when the economy was highly matured, it had be come extremely difficult to sell things. Traditional target marketing was not so gratifying under circumstances in which it was so difficult to cultivate new customers that this tactic could not sustain cost efficiency. At this point, the idea of relation ship marketing gained the confidence of the business sector. This concept was aimed at building long-term relationships with customers and placed a great deal of value on the retention of existing customers rather than the acquisition of new ones.

3- The definition of customer relationship management (CRM):

There are many definitions of customer relationship management presented by, either scholars or practitioners or researchers, and from various perspectives. (Parvatiyar and Sheth, 2004) have included the four dimensions of customer relationship management in their definition, where they defined it as "a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customers". While marketers have defined CRM "CRM is a comprehensive and marketing 3

strategy; that integrates technology, process and all business activities around the customer (Anton and Hoek, 2002). And from the customer focus perspective (Becker, 2009), defined customer relationship management as: "the key competitive strategy you need to stay focused on the needs of your customers and to integrate a customer facing approach throughout your organization". These small differences in definition of customer relationship management due to the difference in the specialties of the authors. In the topic of CRM, some research has suggested the need to understand the suppliers, or service providers of there customer's characteristics, because this can help them in achieving the main goals of any leading organization, which are customer attraction and customer satisfaction (Hosseini, 2009). But marketers have identified these two objectives into four stages: customer identification, customer attraction, customer orientation, and customer development (Meyer, 2010). And this trend reflects some change in the objective on winning customers (Mendoza, et al, 2006).

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Research problem and questions:

Formulated the problem of this research by the following statement: "CRM can not be implemented, through single organizational activity". This problem will be discussed through the following questions: 1. What are the activities of an indirect effect on the implementation of CRM strategy? 2. Which organizational activity has the biggest role in the implementation of CRM strategy? 3. What is the organizational activity which has the biggest role in the successful implementation of CRM Strategy?

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The research importance:

Customer relationship management is very important for any business enterprise, because it is considered the main generator of any business success (Pharma CRM report, 2008). And the importance of this research is due to what was pointed out by (Roh, 2005), that many organizations have employed CRM system to improve decision making process, to provide goods and services in highest quality and to build long-term relationship with customer which benefits both the customer and the organization (Ng Uyen, et al, 2007).

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Research objectives:
This research aims to achieve the following: 1. Determine the activity of a larger role in the implementation of CRM strategy, with a focus on the role of human resource management and the role of information technology. 2. Explain how to use CRM by organizations in achieving customer satisfaction and loyalty, which lead to retaining the name of the organization and its products, either goods or services, in the customer's mind.

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The research hypotheses:

Prior to the hypotheses of this research, we must recall that the implementation of the CRM strategy serves as a change done by organizations seeking the best, the most important requirement of the success of the change is to create and catalyst climate for change. Therefore, the hypotheses of this research will be as follows: a. Ha1: Human resource practices will have a significant impact on organizational climate. b. Ha2: The organizational climate will be significantly related to customer service indices. c. Ha3: The overall satisfaction plays a mediating role between transaction-specific satisfaction and attitudinal loyalty. d. Ha4: Customer loyalty significantly linked to his insisting on dealing with the organization, but not others, and his preference for its products and services.

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Research model:

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Theoretical Background: The role of human resource management in achieving customer relationship management according to the discussion of (Dukakis, 2000), that the highest degree of customer satisfaction could be achieved when the workers themselves are satisfied. But many academic's authors have objected on that by saying: the implementation of CRM can not be accomplished through a single organizational activity, but the implementation of CRM can be done through the functional intersection complementary of process, people, operations and marketing capabilities that are strengthen through information technology and applications (Payne and Frow, 2005, P. 168). Other authors went on, stressing the need for changes in the organizational structure for the successful implementation of CRM (Becker, et al, 2009). As mentioned by (Day and Bulte, 2002), changes in the organizational structure must reach the degree which motivates employees to recognize the advantage of using CRM, and applying advanced managerial methods that ensure the effective dealing with new changes. Furthermore, many organizations nowadays have recognized that their people are the most important asset, because they play the centric role in organizational success (Robbins and Coulter, 2005, P. 282), according to (Chalmeta, 2006), people are the cornerstone in customer relationship management strategy, because they are ones who decide the success or failure of organizational plans and strategies, Human resources management, as an independent variable in this research, is the department who manage and care for people affairs through many activities; human resources planning, recruitment, selection, orientation, training, performance management, compensation and benefits, and career development (AL-Damen, 2006), PP. 115-116). And for the purpose of this research, the activities, recruitment, selection and hiring will represent the role of HRM activities in implementing CRM strategy. Recruitment is the process of locating, identifying and attracting capable applicants, then, we can say that if building a long-term relationship with the customers was a strategic organizational goal, the organization will strive to attract people who can deal friendly with the customers, especially those in the front stage. After developing the recruitment activities, organizations now have a pool of candidates. The definition of selecting process; is the process of screening job applicants to ensure that the most appropriate candidates are hired (Robbins and 6

Coulter, 2005, P. 288). Therefore, whatever the organization's mission included the slogan calling for establishing good relations with customers; it will not be achieved without employee's commitment. In this area, literature has described, that the employee's commitment has been interpreted such as a building comprises of three psychological dimensions; affective, continuous and normative (Herslovitech and Meyer, 2002). Thus, the employee's behavior, largely influenced by these psychological characteristics. In his study entitled "Employees affective commitment to change: The key to successful CRM implementation", (Shum, 2008) explained this aspect as follows: employees who have a strong emotional link to their goals, their behavior represents affective commitment, employees who adopt a long-term relationships with their goals, are characterized in the continued commitment, and employees who feel the need to retain their responsibility and duties syndrome with the goal, they have a strong normative commitment. Therefore, the success of the initiatives calling for substantial change in the organization such as implementing CRM strategy; depends heavily on the existence of employees with high level of affective commitment towards change (Jones, et al, 2005).

In order to identify the role of human resources in the implementation of CRM, and considering that the implementation of CRM is a kind of large-scale change, organizations have to focus firstly on the creation of the suitable climate for the implementation of this change effectively, some authors have suggested, that organizations should adopt customer-centric culture (Ryals and Knox, 2001), supported by an organizational structure, other scholars have recommended the need for a strong organizational coordination within the organization, as well as with different stakeholders (Bohling, et al, 2006), and according to (Shoemaker, 2001), the nature of the leadership is the crucial factor to employee's commitment. Since increasing of employee's commitment towards change, is one of the outcomes of human resources management activities, and since this commitment helps in the creation of the right climate for change, and since the desirable change, is the implementation of customer relationship management, which represented by customer satisfaction and customer loyalty, this simply means that there is a close relationship between HRM activities and the creation of the suitable climate for change, which has a direct impact on the implementation of CRM strategy. This 7

represents a vindication of the two hypotheses, the first and the second. Practically, these hypotheses were accepted by (Rogg, et al, 2001), in the results of their study entitled "Human resource practices, organizational climate, and customer

satisfaction". Which was conducted on a sample included 385 franchise dealerships engaged in selling and servicing the products of one of the largest automotive manufacturers. Questionnaires were sent to a random sample of 1285 respondents. And the main findings of the study were: There is a significant relationship between HR practices and support of creating the suitable organizational climate, particularly employee's commitment, and this greatly influenced the CRM variables, especially customer orientation. And these correlations had been considered as evidence on the relationship between climate and customer satisfaction. Some researchers and practitioners have attributed the successful implementation of CRM strategy to the integration of the organization resources and competences, to support the implementation process of CRM strategy (Mendoza, et al, 2006). In order to highlight the role of the integration of resources and competences in implementing the CRM successfully, we sill present the case of Fine-Equity Bank in Korea as a case study, because if is a real case. According to (Kim, et al, 2010), the reasons that led to customer dissatisfaction, and the gradual withdrawal from dealing with the bank were; the contravention of the fundamentals of banking and the merger with Seoul Bank. Then the bank has started in a huge project aimed at the implementation of CRM, through the integration of its resources and capabilities, and directed them towards the customer's needs. And in the point of view of (Becker, et al, 2009), the bank has followed the correct orientation as a starting point for the implementation of CRM. Fine-Equity Bank's efforts, aiming at mobilizing the bank's resources and capabilities, as (Kim, et al, 2009) pointed out, in two steps: first, integration the functional resources and capabilities required to develop the processes of the bank, and second mobilization capacities and employees in an integrated approach aiming at the completion of the bank's mission, that aims to make the bank an edge in customer relationship management. The bank achieved positive results through this strategy reflected on the financial performance and efficiency of operations. And here, it can be said that whatever organizational activities integrated, they will not do any good if

we neglected the role of human element. And this reinforces the acceptance of research hypotheses, which placed most of the task to the human resources activities. Some researchers indicated the importance of IT in this regard; they have considered that the key to establish a system to manage customer relationship urgently needs the combination of integrated functional components and technological components, in a way that allows communication between front-line employees, and back office (Strauss and Frost, 2002). If we look at this trend, we will find that the goal of integration of functional components and technological components is to facilitate communication between employees, which means that the human resource is the main player in implementing CRM strategy in all of its stages.

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Benefits of implementation of CRM strategy:

The most important benefits are achieving overall customer satisfaction that leads

to gain customer loyalty (Keh and Lee, 2006). Some researchers have argued that the two benefits are the driver for many of the related benefits such as; increased sales volume, improve service quality, increase profits (Zineldin, 2005). CRM benefits can be divided, to tangible benefits and intangible benefits. According to (Chen and Chen, 2004) the tangible benefits are: a. b. c. d. e. f. The increase in profitability. Speed in the investment of time. The growth of labor productivity. Reduce marketing costs. Increase customer relation rates. Achieving higher return on marketing's investments.

And the intangible benefits are: g. h. i. j. k. l. m. n. Achieving customer satisfaction. Increase the effect of word of mouth. Increase the quality of services provided to customers. Processes become more easily. High quality of communication channels. The best customer segmentation. Better understanding of customer's needs. Reduce the gap between, what the organization provides, and customer expectations. 9

In order to build close and ongoing relationship with the customer, the organization must pay attention to three aspects: the value in customer perspective, responding to the customer needs and desires to achieve customer satisfaction, and the customer loyalty becomes the expected result of customer satisfaction.

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Customer loyalty and its effects on the customer behavior:

There are a lot of researches in the marketing literature, which have emerge the

existence relationship between customer satisfaction, customer loyalty and customer profitability (Helgesen, 2006), and this link forms the cornerstone of the marketing concept. The question now arises: Who is achieved first, customer satisfaction or customer loyalty? According to (Heskett, 2008) the customer loyalty is the result of complete customer satisfaction, and this supports our acceptance of the third hypotheses, which states that "The overall satisfaction plays a mediating role between transaction-specific satisfaction and attitudinal loyalty". Also, this view was supported by other researchers and practitioners, (Holetzky, 2010), has argued that attraction of new customers to deal with the organization by world of mouth (WOM) represents the customer loyalty, and the customer will not show the behavior reflects his loyalty, if not satisfied. Moreover, (Denisi and Griffin, 2005, P. 320), have indicated that providing good services to the customer increases his loyalty, or "Good customer service = high levels of customer loyalty", and achieving customer loyalty requires organizations to keep their customer happy. This forms another evidence to support the acceptance of the third hypothesis. In this area (Burkwood, 2004), P. 267) has pointed out that customer satisfaction reflects the extent of the customer's pleasure due to his purchasing and using the products and services of the organization. And because it is natural to retain what makes us happy in our minds, and because customer satisfaction makes him happy, then by exceeding customer satisfaction, the organization can build customer loyalty, customer loyalty as a term used to describe the behavior of repeat customers, as well as those that offer good ratings, reviews, or testimonials, some customers do a particular organization a great service by offering favorable word of mouth (WOM) publicity regarding a product, telling friends, family and neighbors, thus adding them to the number of loyal customers (Holetzky, 2008). And because the customer is the final judge of product quality, an organization can achieve customer loyalty and retention by

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understanding the current and future needs of current and potential customers (ALDamen, 2006, P. 23). Also, organizations can use communication to be in touch with the customers to build customer loyalty, and after purchasing service is an important factor in achieving customer loyalty. And providing supplementary services to the customers has a high contribution in this area, because such services will increase the brand quality and make the customer to buy again and again the same brand from the same organization, and this is an endorsement to the fourth hypothesis. Furthermore, the loyal customer will play the role of the hidden marketer for the brand and the organization, because they (the brand, and the organization) have became part of his mind and memory.

Conclusion:
As mentioned earlier this paper has two objectives. These objectives are to examine the activity of a larger role in the implementation of CRM strategy, with a focus on the role of human resource management and the role of information technology. It shows a strong relationship it todays business environment between HR and use CRM strategy to measure performance on customer in order to enhance customer satisfaction. Human Resources practices were found to significantly and positively affect performance. In addition the use of customer performance measures partially mediates the relationship between HR and performance. The study confirms that CRM is a complex concept requiring appropriate business process and integrated systems. in addition, the study demonstrates the relevance of the need for effective leadership, sourcing, communication and evaluation within CRM strategies. According to the second objective of the study there are basic conditions one showed consider when starting a CRM implementation system one of the basic conditions is that organizational climate as defined customer satisfaction and loyalty has to understand the business process inadequate information in the system regarding selfrenewing, innovative, agile and aligned with customer needs and expectations. Loyalty is really a propensity to act in a certain way i.e. recommended the product, purchase in the future, etc. however the loyal customer will maintain final judge of product quality which prevents industry failure. CRM strategy should be aligned to the organizations mission and purpose in order to bring about a sustained 11

achievement of business objectives and profitable customer relationships. CRM strategies vary; however, the most successful strategies have several things in common

12- References
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