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Int. j. econ. manag. soc. sci., Vol(3), No (8), August, 2014. pp.

425-430

TI Journals

International Journal of Economy, Management and Social Sciences


www.tijournals.com

ISSN:
2306-7276

Copyright 2014. All rights reserved for TI Journals.

Investigating the impact of customer relationship management on


relationship marketing and business performance
Zohre Vahdati *
M.S. Student of Commercial Management, Department of Management, Islamic Azad University, Arak, Iran.

Saeid Abdolmanafi
PhD, Business Administration, Assistant Professor, Payam-e Noor University

Ahmad Sarlak
Faculty Member, Department of Economics, Islamic Azad University, Arak, Iran
.
*Corresponding author: vahdati4643@yahoo.com

Keywords

Abstract

Relationship Marketing
Customer Relationship Management
Business performance

Efficient management of customer relationship is one of the most important challenges in business
competition. Organizations require some information about who are their customers, what are their
expectations and needs and how should resolve their requirements. Aim of this study is reviewing effect of
customer relationship management on relationship marketing and business performance in banks and
financial institutions in Golpayegan city. Customer relationship management were measured based on 3
criteria, internet services, customer support and marketing support. Relationship marketing was evaluated
based on 4 criteria, utility, projectability, legitimacy and reciprocity and business performance was essayed
based on 4 criteria of balanced scorecard consist of financial, customer, internal process and learning and
growth. Data were collected by three questionnaires, situation of customer relationship management
implementation and level of relationship marketing and performance evaluation and they were analyzed by
using SPSS21, AMOS20 software. Results indicated that customer support and marketing support have
influenced on relationship marketing among criteria of customer relationship management, and also
relationship marketing has impact on four criteria business performance.

1.

Introduction

An understanding of how to manage customer relationships effectively has become an important topic for both academicians and practitioners in
recent years. Organizations are realizing that customers have different economic value to the company, and they are subsequently adapting their
customer offerings and communications strategy accordingly. Thus, organizations are, in essence, moving away from product- or brand-centric
marketing toward a customer-centric approach [12]. A managerial strategy that helps organizations collect, analyze, and manage customer
related information through the use of information technology tools and techniques in order to satisfy customer needs and establish a long term
and mutually beneficial relationship [6]. CRM is the core business strategy that integrates internal processes and functions and external networks
to create and deliver value to targeted customers and, finally, increase profits [16]. The deregulation of the financial industry, the expansion of
the business area of global financial institutes, and the diversification of consumers' needs for financial services brought about intense
competition in the retail bank industry. Such keen competition made retail banks transform their resources and capabilities from being productor service-centered into customer-centered. As a customer centered IT-driven strategy, Customer relationship management (CRM) has been
increasingly adopted by corporations, including retail banks, and the firms have started to invest heavily in CRM [8]. The final goal of
conducting CRM is to enhance business performance, and therefore, businesses need an objective performance scale to enable a detailed
evaluation. The balanced scorecard (BSC) is an overall performance management system; it evaluates business performance according to the
following four perspectives: financial, customer, internal processes, and learning and growth. The BSC uses both financial and non-financial
indicators to evaluate business performance and gives enterprises an overall in-depth understanding of business operation and performance [16].
Thus, this study uses the four perspectives of the BSC to measure business performance. This study focuses on banks and financial institutions in
Golpayegan to explore the CRM influence on the RM and business performance.

2.

Review of literature

2.1 Customer relationship management


Customer relationship management (CRM) has generally been assumed to create a competitive edge for an organization, as well as to have a
positive impact on organizational performance. However, there is still much debate over exactly what constitutes CRM. In fact, many scholars
have claimed that the precise meaning of CRM is not always clear in the literature Furthermore. For example, at a tactical level, CRM may mean
database marketing or electronic marketing. At a strategic level, CRM may mean customer retention or customer partnering. At a theoretical
level, CRM may mean an emerging research paradigm in marketing [13].
Customer relationship management is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to
create superior value for the company and the customer. It involves the integration of marketing, sales, customer service, and the supply-chain
functions of the organization to achieve greater efficiencies and effectiveness in delivering customer value [11]. Berson et al (1999) divided a
complete CRM system into three main functions: operation, analysis, and integration. Swift (2001) divided CRM actions into four perspectives,

Zohre Vahdati *, Saeid Abdolmanafi, Ahmad Sarlak

426

International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

namely, information collection, data storage, data summarization, and data display and application. Ming and Chen (2002), on the other hand,
summarized CRM actions into three major functions: Internet service, customer support, and marketing support [16].
2.2 Relationship marketing
Relationship marketing (RM) is marketing seen as relationships, networks and interaction [5]. Berry (1993) defined Relationship marketing to
Attracting, maintaining, and in multi-service organizations enhancing customer relationships [10]. For Porter (1993), RM is the process whereby
the buyer and the provider establish an effective, efficient, enjoyable, enthusiastic and ethical relationship one that is rewarding to both parties
[5].
Relationship marketing also involves:
monitoring customer satisfaction
taking action towards reduction of risk and uncertainty perceived by the client
implementing actions aiming at customer loyalty and long-term relationships
Satisfaction of customers on both short and long-term [4].
Wu and Lu (2012) proposed the model for evaluating the RM that includes (1): utility, a necessary condition for implementing further mutualinterest relations so that the customer will be willing to maintain long-term and positive relations with the original supplier [16]. (2)
projectability, defined as expectations respecting the future in the exchange linking (Projectability in relationship consists the notions of (1)
planning (2) adaptation (3) preservation of the relation (4) expectations for relations and (5) timing of exchange [1]. (3) legitimacy, which will
reduce the risk of future uncertainty [16] and (4) reciprocity, a continuing exchange relation based on mutual trust [16].
2.3 Business performance
Business performance is an overall concept used to display the final result of the operation activities of an organization; it is also an index for
evaluating the level of project [16]. Robert Kaplan of Harvard University and David Norton, an American management consultant, have
proposed the balanced scorecard as a means to evaluate corporate performance from four different perspectives:
the financial perspective, the internal process perspective, the customer perspective, and the learning and growth perspective [9].
1- The financial perspective indicates whether the transformation of a strategy leads to improved economic success. Thus, the financial measures
assume a double role. On one hand, they define the financial performance a strategy is expected to achieve. On the other hand, they are the
endpoint of cause and effect relationships referring to the other BSC perspectives.
2-The customer perspective defines the customer/market segments in which the business competes. By means of appropriate strategic objectives,
measure, targets and initiatives the customer value proposition is represented in the customer perspective through which the firm/business unit
wants to achieve a competitive advantage in the envisaged market segments.
3- The internal process perspective identifies those internal business processes that enable the firm to meet the expectations of customers in the
target markets and those of the shareholders.
4- Finally, the learning and growth perspective describes the infrastructure necessary for the achievement of the objectives of the other three
perspectives. In this case, the most important areas are qualification, motivation and goal orientation of employees, and information systems [3].

3.

Research background

[12] under the title The Customer Relationship Management Process: Its Measurement and Impact on Performance. This paper aims to
examined was: (1) to conceptualize and operationalize the process of CRM implementation, (2) to determine whether the implementation of
CRM processes is positively linked to performance, and (3) to identify some key moderators of the relationship between CRM processes and
performance. The first key outcome is a theoretically sound CRM process measure that outlines three key stages: initiation, maintenance, and
termination. The second key result is that the implementation of CRM processes has a moderately positive association with both perceptual and
objective company performance.
[13] have done a research about customer relationship management: conceptualization and scale development. The purpose of this study was
development of reliability and validity criteria for customer relationship management and also reviewing its effect on performance of HongKong bank branches. It was considered four components for customer relationship management that consist of key customer focus, customer
relationship management organization, technology-based customer relationship management and knowledge management, and it was examined
its relationship with business performance include marketing (trust and customer satisfaction) and financial performance (return on investment
and return on sales). Findings were done by using data 215 Hong-Kong financial firms and its clear that there is positive relationship between
customer relationship management and business performance and also between customer relationship management and marketing performance
(trust and customer satisfaction) and financial performance (return on investment and return on sales).
[2] were done study about priority in customer relationship management, its effect for competitive advantage and performance. In this study,
customer-relating capability was reviewed in three related components: 1. Orientation 2. Configuration 3. Information. In this study, it was given
customer-relating capability influenced on situational advantages in comparison with competitors by firm competitive strategy. Relative
performance of company was reviewed in three components: investment increasing, customer maintain and corporate profitability. Also
balanced variables of this study are rate of personalized potential, competition severity, consumed marketing against industrial ones.
[13] were examined a study about effect of relationship marketing orientation on business performance on service-based economy. In this study,
it was examined relationships marketing orientation include six components: 1. Trust 2. linkage 3. Communications 4. common values 5.
Empathy 6. reciprocity.

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Investigating The Impact Of customer relationship management On Relationship marketing and Business Performance
International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

Business performance was reviewed in four factors: investment increasing, market share, return on investment and customer maintenance. This
study was done among 279 service firm in Hong-Kong and finally, its clear that there is positive relationship between relationship marketing
orientation and business performance.
[7] Under the title The impact of customer relationship marketing on the firm performance: a Spanish case. The purpose of this research is to
produce some evidence of the association between customer relationship marketing strategies and the market and economic performance of the
firm. The findings suggest that the effect of attraction and loyalty programs is greater on market performance than on economic performance.
Furthermore, the results show that attracting customers through a good service quality and reaching a good position in the market have greater
impact on economic results than loyalty.
[16] Under the title The relationship between CRM, RM, and business performance: A study of the hotel industry in Taiwan. This study aims
to investigate the implementation of customer relationship management (CRM) and its effect on relationship marketing (RM) and business
performance, through an analysis of the hotel industry in Taiwan. This study determined that implementing CRM strategies will have a
significant and positive influence on RM effects, thus furthering the influence on business performance, and that the most advantageous CRM
strategies differ for hotels and B&Bs.
[15] was examined customer relationship management and marketing performance and they concluded that there is a weak relationship between
marketing performance and customer relationship management in Iran Banking Industry. On the other hand, results indicated not only banks
were not familiarity with technology-based customer relationship management, but also they were considering less logic about customer
relationship management. Variables of knowledge management and technology-based customer relationship management have lower average
related to other variables of CRM, i.e. key customer and customer relationship management organization and this subject indicated that banks
have not optimal situation in these two dimensions related to other dimensions. Other variables have higher average than theoretical dimensions
average such as services quality and trust dimensions and they are in more optimal place.

4.

Research hypotheses

H1a. Implementing Internet services in the CRM system will have influence on the RM .
H1b. Implementing customer support in the CRM system will have influence on the RM
H1c. Implementing marketing support in the CRM system will have influence on the RM .
H2a. RM has influence on the financial aspect of business performance.
H2b. RM has influence on the customer aspect of business performance.
H2c. RM has influence on the internal process aspect of business performance.
H2d. RM has influence on the learning and growth aspect of business performance.

Business performance

RM
CRM

Financial
Utility

Internet service

Projectability

Customer

legitimacy
Customer support

reciprocity

Internal process

Marketing support
Learning and
growth
Figure1. Conceptual model [16]

5.

Methodology

Descriptive studies involves collecting data in order to test hypotheses and answer questions concerning the current status of the subject(s) of a
study. Typical descriptive studies are concerned with the assessment of attitudes, opinions, demographic information, conditions, and
procedures. In this study the researcher chose the analytical descriptive method using an applied manner.
5.1 Sample
The population of the study is the whole of the banks and financial institutions in Golpayegan city. Focus on managers and Employees. 300
questionnaires distributed as a sample of the study, only 250 questionnaires returned.
5.2 Study Tools and Data Collection
The data collection, manners analysis and programs used in the current study are based on two sources:

Zohre Vahdati *, Saeid Abdolmanafi, Ahmad Sarlak

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International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

1. Secondary sources: books, journals, articles, thesis to write the theoretical framework of the study.
2. Primary source: the questionnaire that was designed to reflect the study objectives and questions. In this study, both primary and secondary
data were used. Data for the model collected via questionnaire. This questionnaire was adapted from the survey questionnaire [16]. The
questionnaire instrument sections are as follows:
Demographic variables: The demographic information was collected with closed-ended questions, through (4) variables.
Cause & effect factors: this section measured the cause and effect factors of 8 variables such as: Internet service function thorough (3) items,
Customer support function thorough (3) items, Marketing support thorough (3) items, Relationship Marketing thorough (9)items, Financial
thorough (4) items, Customer thorough (4) items, Learning and growth thorough (4) items, Internal process thorough (3) items. Point Likert
scale was used to measure the variables of the mode.

6. Data Analysis and Rrsults


6.1 Reliability
This paper conducts a Cronbachs coefficient test to each construct to determine whether any construct lacks of reliability and therefore its
corresponding question needs to be removed. According to the suggestions by Nunnally (1978), Cronbachs coefficient in basic research
should at least reach 0.8, and the reliability in exploratory research should at least reach 0.7, and if it is lower than 0.35, it shall be rejected or
adjusted.
Table1. Cronbach's alpha coefficients for main dimensions and constructs

No. Dimension
Internet service
Customer support
Marketing support
Relationship
marketing
Financial
Customer
International process
Learning ang growth

Number Of Items
3
3
3
9
4
4
4
3

Coefficient
0.898
0.888
0.929
0.762
0.863
0.87
0.905
0.896

6.2 Demographic Variables of Sample


4 demographic variables are included in this study (gender, age, marital status, Educational Level. The results in table (2) represent distribution
of sample individuals according to demographic variables: Among the people in the sapmle, 83.6% male and 16.4% female that most of them
were 31-40 years old. In addition, 28.4% have a diploma, 23.6% Associate Degree, 37.2% B.A and 10.8% M.A. Respondents with respect to
marital status consist on single are 14.8% & married are 85.2%.
Table2. Distribution of Sample individuals according to demographic Variables

No.
1

Variable
Age

Class
Less than 30 years

Frequency
56

Percentage
22.4

30-40 years

109

43.6

41-50 years

69

27.6

50 years and more

16

6.4

250

100.0

Male

209

83.6

Female

41

16.4

250

100

Total
2

Gender
Total

Educational Level

diploma

71

28.4

Associate Degree

59

23.6

B.A

93

37.2

M.A

27

10.8

Total
4

marital status
Total

250

100

single

37

14.8

married

213

85.2

250

100

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Investigating The Impact Of customer relationship management On Relationship marketing and Business Performance
International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

6.3 Structural equation modeling (SEM) analysis


This study uses AMOS software to perform a relationship model analysis to understand the cause-and-effect relationship between variables. The
result of an SEM analysis for banks and financial institutions shows that the model fitness indexes are close to or meet the standard, confirming
that this model is acceptable. (2=841.4; df=480; RMSEA=0.055; CFI=0.869; GFI=.831).
The standardized parameter estimation value in the path analysis (Table 3 and Fig. 2) shows that the Internet service function of CRM strategies
does not have a significant influence on the RM (1a is 0.168 ; P value is 0.217). The customer support function CRM also has a positive and
significant (1b is 1.031; P value is 0.00),supporting H1b. the marketing support function of CRM has a positive and significant influence on
the RM (1c is 0.288 ; P value is 0.042 ), supporting H1c. RM has a positive and significant influence on the financial aspect of business
performance (2a is 1.048 ; P value is 0.00),customer aspect of business performance (2b is 0.913; P value is 0.00), internal process aspect of
business performance (2c is 0.472; P value is 0.00),and learning and growth aspect of business performance (2d is 1.239; P value is 0.00).The
above findings show that RM has a positive and significant influence on the four aspects of business performance, supporting hypotheses H2a
H2d for banks and financial institutions.
Table3. Hypothesis path test result

Hypothesis

Variables Relation

p -value

Test Result

H1a

Internet service Relationship


marketing
Customer support Relationship
marketing
Marketing support Relationship
marketing

0.168

0.217

rejected

1.031

supported

0.288

supported

H2a

Relationship marketing
Financial perspective

1.048

supported

H2b

Relationship marketing
Customer perspective.

0.913

supported

H2c

Relationship marketing
Internal process perspective

0.472

supported

H2d

Relationship marketing
Learning and growth
perspective.

1.239

supported

H1b
H1c

Internet service

Estimate Value

Customer support

0.168

Marketing support

0.288

1.031

Relationship marketing

1.048

Financial

Customer

0.913

0.472

1.239

Internal process

Figure 2. The relationship model

Learning and growth

Zohre Vahdati *, Saeid Abdolmanafi, Ahmad Sarlak

430

International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

6. Conclusion
In trade world, it was focus on customer relationship management concept. Although in past customer servicing were in lower degree in
organizations, todays organizations are considered their customers in center of all activities, and they are revised marketing strategies and their
sales based on them. Whatever its changing in todays, its expanding authority to customer. CRM have more importance in servicing
organizations such as banks, transportation industry, medicine services, insurance, hotels, etc. Since customer take account part of addressed
service in servicing process, it should considered strategies to personalize these services for each customer. Development of each CRM system
are very complex that it was required a subtle planning, modeling and execution to recognize and analyze main advantages. In this study, we
apply banks and financial institutions as goal of study to review effect of CRM on relationship marketing and business performance. Findings
indicated that administration of CRM strategies have a positive and meaningful effect on relationship marketing, and then it leads to increase
effect on business performance. Results indicated that execution of customer support and marketing support in CRM strategies in banks and
financial institutions have positive and meaningful impact on relationship marketing that it was confirmed in [16]. Moreover, relationship
marketing have positive impact on four aspects of business performance in banks and financial institutions. This result, positive and meaningful
impact on relationship marketing on business performance, was confirmed in [13], [7] and [16]. Therefore, except type of investment in banking
industry, higher impact of relationship marketing lead to impact of higher business performance.

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