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2006:026

MASTER'S THESIS

Customer Relationship Management


Implementation
A Case Study of Two Service Companies

Thomas Kwaku Obeng


Karla Loria

Lule University of Technology


Master's thesis
Marketing
Department of Business Administration and Social Sciences
Division of Industrial marketing and e-commerce
2006:026 - ISSN: 1402-1552 - ISRN: LTU-DUPP--06/026--SE

IN MEMORY OF THOMAS...
Publishing this thesis has been marked with a shade of sadness and grief. A few weeks after
its defense and final corrections, Thomas Kwaku Obeng, co-author and friend, decided to
go back to his country of origin, Ghana, where he encountered a tragic accident that lead
to his death.
Thomas was a wonderful person always willing and ready to help, considered of others
needs, with very high moral values and a good friend. We shared many working hours
and also many common ideas and interests. We spoke a lot about future plans and
expectations. He valued knowledge and education and his wish was to serve his
community and contribute to its development. This is why he hurried back. As Robert
Opoku, one of his close friends stated: no amount of words could persuade him to stay.
It has taken a while to assimilate the absence of Thomas. This is why the publication of
this thesis comes in so delayed, almost a year after it was completed. This final step
towards concluding what we started together will never be treasured in my heart as much
as the invaluable process of writing, investigating and growing where we both
participated.
Still, this publication is the clearest testimony of how cultural, ethnical and geographic
differences only have helped to enrich the process of personal growth and how close
friendships can be established within different peoples and nations while bringing hope to
humanity.
There is no dignity and honor in anything than to serve your community
Thomas Kwaku Obeng. 2003

Karla Loria R.

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ABSTRACT
This master thesis, prompted mainly by the much publicized questioning of most
Customer Realtionship Management (CRM) initiatives, was to gain a better
understanding of CRM implementation in service companies. CRM has been approached
by both academics and practitioners from divergent perspective and literature appears to be
inconsistent and highly fragmented. The objective then is to unravel the major reasons,
benefits, components and key factors of CRM implementation.
To achieve the purpose of this thesis, a case study involving two Swedish service firms that
have been implementing CRM were studied. Findings from the study show that service
companies enjoy some benefits by implementing CRM as well those in the process of
rolling out a full CRM initiative.
The theory is contradicted when firms show a different mix CRM components as they
unconsciously see CRM as a technology solution. Another finding is that service firms are
radically re-engineering their business processes and are strategically using CRM
technology to capture a complete view of the customer.
Finally, findings have shown that for CRM implementation to be successful and thus
achieve corporate objectives. The right mix of CRM components and all the key factors,
strategy, leadership and integration need to be given due attention by service firms.

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ACKNOWLEDGEMENTS
The twenty weeks of meticulous and hard work contributed to the completion of this
master thesis, a requirement for the E-MBA program at the Division of Industrial
marketing, Lule University of Technology. Writing a thesis of this nature has indeed
broadened our knowledge and at the same time involved many challenges.
The successful completion of this thesis would not have been possible without the
support, encouragement, cooperation and assistance from many individuals who
contributed in diverse ways to the conduct, compilation and the quality of the thesis. As a
result, we would like to express our sincere thanks to first and foremost to the Heavenly
father, for the strength and protection throughout the study. Our next gratitude and
appreciation goes to our Supervisor sa Wallstrm, PhD. for her assistance, guidance
patience and professional touch with which she guided us through this exercise. She
provided us encouragement, direction and constructive suggestions which contributed in
no small way to the quality of this thesis. Please, accept our humble thanks.
We are also grateful to all family members, friends and loved ones who in many ways
contributed and supported us both physically and spiritually. To you we say thanks.
We cannot ignore the support from other members at the division of Industrial Marketing
and E-Commerce who in one way or the other guided us.
Last but not the least, we want to thank the two managers of the service companies that
opened their doors for us in a special way, allowing us to use their companies as case study
for this thesis. We owe you a great deal of gratitude.

January 10, 2005


Thomas Kwaku Obeng.

Karla Loria R.

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Table of contents
1. Introduction .................................................................................................................i
1.1 Background ...........................................................................................................2
1.2 Research Problem..................................................................................................4
1.3 Outline of the Thesis .............................................................................................6
2. Literature Review........................................................................................................7
2.1 Customer Relationship Management (CRM).........................................................7
2.2 Benefits of CRM ...................................................................................................9
2.2.1 Customer Value ............................................................................................ 11
Types of Customer Value....................................................................................... 12
2.2.2 Customer Satisfaction .................................................................................... 13
2.2.3 Customer Retention and Loyalty .................................................................. 14
2.3 Components of CRM.......................................................................................... 14
2.3.1 Technology................................................................................................... 15
2.3.1.1 Functional categories of CRM Technology........................................................ 16
Collaborative CRM .................................................................................................. 17
2.3.2 CRM infrastructure....................................................................................... 18
2.3.2 Business process............................................................................................. 21
2.3.3 People........................................................................................................... 21
2.3.4 The Right Mix of CRM Components .......................................................... 22
2.4 Implementation.................................................................................................... 23
2.4.1 Key Factors of the CRM implementation...................................................... 23
2.4.1.1 Strategy....................................................................................................... 24
2.4.1.2 Leadership ................................................................................................... 24
2.4.1.3 Integration within the organization .................................................................. 28
3. Frame of Reference ................................................................................................... 30
3.1 Research Problem and Research Questions.......................................................... 30
3.2 Delimitation......................................................................................................... 31
3.3 Frame of Reference ............................................................................................. 32
3.3.1 Emerged Frame of Reference........................................................................ 33
4. Methodology............................................................................................................. 34
4.1 Research Process.................................................................................................. 34
4.2 Research Purpose................................................................................................. 34
4.3 Research Approach .............................................................................................. 35
4.3.1 Qualitative and Quantitative Research Approach........................................... 35
4.4 Research Strategy................................................................................................. 36
4.4.1 Sample selection ............................................................................................ 37
4.5 Data Collection.................................................................................................... 38
4.6 Criteria for Quality Measurement......................................................................... 41
5. Empirical Data Presentation ....................................................................................... 43
5.1 Case One: Lnsfrskringar ................................................................................. 43
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5.2 Case Two: HSB-Norr.......................................................................................... 47


6. Analysis...................................................................................................................... 52
6.1 Within-Case Analysis: Lnsfrskringar Norrbotten........................................... 52
6.2 Within-Case Analysis: HSB-Norr ........................................................................ 56
6.3 Cross-Case Analysis.............................................................................................. 60
7. Findings and Conclusions .......................................................................................... 65
7.1 Customer Relationship Management ................................................................... 65
7.2 Research Question One: How can a firms major reasons and benefits of
implementation of CRM be described?...................................................................... 66
7.3 Research Question Two: How can the components of CRM implementation (i.e.
people, process and technology) be described?............................................................ 66
7.4 Research Question Three: How can the key factors of CRM implementation (i.e.
strategy, leadership and integration) be described?....................................................... 68
7.5 Research Problem................................................................................................ 69
7.6 Implications ......................................................................................................... 69
7.6.1 Implications for management/practitioners .................................................... 69
7.6.2 Implication for theory ................................................................................... 71
7.6.3 Implications for further research .................................................................... 71
References..................................................................................................................... 72
Appendix 1:................................................................................................................... 77
Appendix two................................................................................................................ 78

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Table of Figures
Figure 1: Outline of the thesis..........................................................................................6
Figure 2: The integrated framework for customer value and CRM performance ............ 12
Figure 3: Components of CRM and implementation model ......................................... 15
Figure 4: Analytical CRM ............................................................................................ 17
Figure 5: Integrated Customer data on a data Warehouse .............................................. 19
Figure 6: Developing the right mix of people, process, and technology ......................... 23
Figure 7: Integration of Customer relationship and customer leadership management..... 25
Figure 8: Motivation elements of the Integrated CRM-CRL model ............................. 27
Figure 9: 360-degrees view of the customer .................................................................. 30
Figure 10: Emerged Frame of reference for this study .................................................... 33
Figure 11: Relevant situations for different research strategies ........................................ 36
Figure 12: CRM components as assessed by Lnsfrskringar ......................................... 46
Figure 13: Organizational Chart HSB-Norr .................................................................. 48
Figure 14: Organizational Chart HSB-Norr .................................................................. 51
Figure 15: Developing the right mix of people, process, and technology ....................... 55
Figure 16: CRM components as assessed by Lnsfrskringar ......................................... 55
Figure 17: Developing the right mix of people, process, and technology ....................... 59
Figure 18: CRM components as assessed by HSB-Norr ................................................ 59
Figure 19: Comparison chart of values assessed to the CRM components....................... 63
Figure 20: Comparison chart of values assessed to the CRM components....................... 68

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1. Introduction
In this first chapter, we set up the basis to our area of research. An introduction and general
background are provided in order to describe the area in which the study is conducted and further on,
justify the importance of the specific research that has been performed. Finally, the research problem
will be clearly stated followed by the outline of the thesis.
As a result of globalisation of businesses and the evolving recognition of the importance of
customer retention, market economies and customer relationship economics, there has
been a change in mainstream marketing (Grnroos, 1997). Kevin and Yen (2003) explains
that over the past few years, there has been a shift in relationship literature from focusing
on the benefits of long-term relationship for companies to the benefits that accrue to
customers. Because of this it is becoming evident that companies fundamentally have to
change the way in which marketing is done i.e. a fundamental shift from managing a
market, to managing a specific customer (Bose, 2002). Establishing relationship with a
customer is to attract the customer and to build the relationship with the customer so that
the economic goals of the relationships are maintained (Grnroos, 1997).
Kotler (2000) maintained that it has been the practise by firms to devote greater attention
and marketing effort to attracting new customers rather than retaining existing ones. This
is the base for relationship marketing (RM), which came as an answer to the transactional
or traditional marketing approach. Transaction marketing used to emphasise the concepts
of the 4Ps of marketing: product, price, place and promotion that focused only on
attracting businesses, but not so much in retention (Gummesson, 1999). Chen and
Popovich (2003) stated that it has been well acknowledged and recognised that retaining
firms existing customers is more profitable that attracting new ones. As a result,
relationship marketing was developed on the basis that customers vary in their needs,
preferences, buying behaviour and price sensitivity. Bose (2002) added that firms in no
distant future will be driven more and more by individual customer preferences.
Over time there has been a gradual move in marketing thought and practice from mass
marketing market segmentation niche marketing micro marketing mass
customization personalization. The twenty first century marketing thought and effort is
pushing for smaller and smaller groups of consumers as market targets. Increasing
competitiveness in the international economy is forcing the organizations to place larger
emphasis on building valuable customer relationships.
CRM builds on the philosophy of relationship marketing that aims to create, develop and
enhance relationships with carefully targeted customers to maximize customer value,
corporate profitability and thus shareholders value (Frow and Payne, 2004). The goal then
is to improve the customer's experience of how they interact with the company, which
hopefully, will turn into more satisfaction, which might lead to more loyalty, and finally,
to and increase in profit. (Chou et al, 2002). Kotorov (2003), while referring to the roots

of CRM mentioned that in the past, many speculated whether CRM would turn out to
be just another buzzword; one more term to add to the managerial dictionary that would
soon fade away. Bull (2003) adds to this thought stating that it is no longer good enough
just to say that you are customer focused, but it matters what you do. Customer
relationship management (CRM) is of vital importance to organizations and it requires
customer- centric business approach to support effective marketing, sales and service
processes (Carolyn et al, 2003)
The service industry is growing and dominating world economy. According to UK office
for national statistics, the service industry can be categorised into financial, transport, retail
and personal service (Jick, 1999). According to Wallstrm (2002), the service sector
comprises a wide range of companies including banks, insurance companies. She explains
that the service sector employs more and more people, for example nine out of ten new
jobs opportunities are created within the service sector in Sweden. Swedish Institute
(2004) maintained that service sector accounted for 75 percent of all employees in 2003.
Grnroos (1997) said there has been compelling interest in services in many parts of the
world and in different functional areas.
Advances in information technology especially the rapid growth of the Internet usage,
improved production capabilities, demanding customers and accelerated flow of capital
across political boundaries create business opportunities and fuel competition as well
(Rodie and Martin, 2001). According to them, the service sector is considered as one of
the most challenging and competitive landscape, and like all businesses services firms face
some degree of competition. The ability to view all customer interactions and information
is essential to providing the high quality of services that todays customers demand and
service firms that want to be successful in the knowledge economy must implement a
comprehensive CRM integrated solution that involves all departments, working as a team
and sharing information to provide a single view of the customer (Yusuf, 2003)

1.1 Background
The goal of relational marketing is the focus on customer loyalty (Asuncion et al, 2002),
and CRM is becoming the foundational cornerstone of profitable financial success
(Galbreath and Rogers, 1999). Customer satisfaction, understood as the meeting of the
customers expectation is related to delivering high customer value (Kotler, 2000).
Customers who result of successful relationships have far more potential for loyalty as they
are often prepared to pay a premium price for a range of reliable goods or services
(Newell, 2000). Once these customers are recruited they are less likely to defect, provided
they continue to receive quality service. Relationship Marketing emphasises that customer
stickiness (retention) can substantially reduce marketing cost and contributes to firms
profitability because it is always cheaper to retain a customer than to acquire a new one
(Khalifa et al 2002).
Customer relationship management appeared as a new concept at the climax of the
Internet boom (Kotorov, 2003). It changed both the CRM market and customer-related
business requirements of all sizes of companies (Chou et al, 2002). During the early 90s
providers of CRM solutions were offering products that accentuated the automating and

standardizing of internal processes related to acquiring, servicing and keeping customers.


Still, these solutions were very expensive and hard to maintain (Chou et al. 2002). The
new CRM system means that the existing and potential customers are now able to interact
and communicate with corporations.
Kotorov (2003) affirms that many management experts welcomed the concept of
customer relationship management, and hurried its implementation in spite of the lack of a
clear definition, vision and without an understanding of the extent and complexity of
organizational restructuring required for a successful CRM implementation. This is also
supported by Abbott (2001) when she mentions in her study that the majority of the
companies were not ready to take advantage of the enormous amounts of data captured
for CRM purposes. The increasing disappointing results of the applications of customer
relationship management coincided with the technology melt down. Customer
relationship management was not delivering the result that organisations expected. Sudhir
(2004) estimates that CRM projects failing to achieve their objectives range anywhere
from 60 percent to 80 percent. But, on the other hand, a handful of successful Customer
relationship management projects were giving both a proof-of-concept and a guideline for
a successful CRM implementation (Kotorov, 2003). Furthermore, the successful projects
created enormous competitive advantage, making the implementation of Customer
relationship management by rival companies an absolute survival necessity.
The Customer relationship management concept came also with a number of
opportunities for applications and consulting. The demand for CRM-related services has
exceeded available resources, according to NameProtect (2001). Information technology
(IT) departments within the firms are often unable to provide and implement the demand.
The gap between corporate needs and the limited available resources will keep impelling
the great demand for CRM-oriented implementation and integration services to increase.
They also affirm that the best word to describe CRM market is "profitable" and projected
a market growth from $1.2 billion in 1997 to $11.5 billion in 2002.
According to Bellenger et al. (2004), the growing body of literature on CRM is somewhat
inconsistent and highly fragmented. This is a result of the fact that a common
conceptualisation of the phenomenon is lacking (Bull, 2003). Bellenger et al (2004) further
noted that the ambiguity surrounding the nature of CRM has permeated the academic
literature and due to that, has generated research streams that address CRM from
seemingly incongruent perspective.
Many believes that through CRM, firms are able to understand customers from strategic
perspective and as a result the CRM ultimately focuses on effectively turning customer
information into intelligence to more efficiently manage customer relationships (Galbreath
and Rogers, 1999). Another view is that it is technologically orientated. Sandoe et al.
(2001) argue that advances in database technologies such as data warehousing and data
mining, are crucial to the functionality and effectiveness of CRM systems. Kotler (1997)
assures that customer relationship management principally revolves around marketing and
begins with a deep analysis of consumer behaviour. Bose (2002), states that CRM is an
integration of technologies and business processes used to satisfy the needs of a customer
during any given interaction. Chou et al (2002) also describe it as an information industry
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term for methodologies, software, and usually Internet capabilities that help an enterprise
manage customer relationships in an organized way.
This same fragmentation of opinions reflects when it comes to implementing Customer
relationship management. Creating a CRM solution for most companies is generally a
matter of complex integration of hardware, software and applications and it also requires a
careful analysis of business processes. The implementation of CRM impacts on a number
of functions within an organisation including sales, IT, operations, marketing and finance.
Bradshaw and Brash (2001) asserted that implementing CRM is certain to involve the use
of new technologies. Most companies are enthusiastic about implementing CRM, but the
work involved to bring such a system to reality demands an enormous deal of varied
knowledge, project management and a meticulous plan (Bose2002). Thus, CRM failure
rate was estimated to be between 55 percent and 75 percent in 2001 (Kotorov, 2003). Up
to this point, it has been suggested that people, process and technology are key concepts to
consider for the implementation of CRM (Chen, Popovich. 2003). The study of what
they imply and how they are being approached by different companies becomes relevant
in order to increment success of CRM implementation in the future.

1.2 Research Problem


As mentioned, customer relationship marketing (CRM) has become a number one focus
as todays competitive markets were getting more saturated and aggressive. Now the
marketing model is changing from the product-centred stage to the customer-centred
stage. Customers are demanding a different relationship with suppliers than the traditional
sales model (Chou et al, 2002). According to Hamel and Pralahad (1994), the objective is
to amaze customers by anticipating and fulfilling their unarticulated needs. Bose (2002)
explain that service firms especially financial organisations and telecommunication are
regarded as companies that most likely to benefit from CRM implementation due to the
fact that they collect and accumulate a lot data on each customer, adding that firms whose
customers needs and product value are highly differentiated will have the most benefits.
Advances in technology, especially the Internet have greatly enhanced the flow of
dialogue, and the capture, interpretation and dissemination of information. (Frow and
Payne 2004). The new technologies including the use of the World Wide Web have
allowed companies to reach customers in previously inaccessible markets, and to compete
efficiently with the traditional suppliers (De Kare-Silver, in Gurau 2003). On the other
hand, the computer technology and the Internet applications have offered for the first time
in marketing's history the possibility to collect, process, analyze, and efficiently use large
volumes of data, and to adopt a personalized marketing approach for every customer
(Rayport and Jaworski, 2001). According to Abbott (2001), the way customer knowledge
is handled becomes more and more critical to businesses. But without the right
implementation process, tools and systems accessing this data the efforts are largely wasted.
Scott (in Abbot 2001) sustains that: Knowledge in people's heads can be put to use; it is
alive. Knowledge on disk is data. Data is by definition dead - an artifact".

As customers become more and more sophisticated and products more and more
commoditized, service becomes dominant. Customer retention is critical and this requires
loyalty which is brought about by great service, trust and, to different degrees,
personalization (Abbott, 2001).
A whole new world of demands has risen and business rush into the implementation of
the Customer relationship management. This comes as an answer to a most competitive
environment, availability of new technologies and naked survival; therefore, the study of
the elements that determine success becomes more relevant. Even though the level of
satisfaction with CRM implementation has not shown the best results, companies keep
investing enormous amounts of money in the hope that this will bring them a strategic
advantage. This research will focus on the experience that service companies have had so
far.
The
research
problem
can
then
be
stated
as
follows:
To Gain a better understanding of CRM (i.e. Customer
Relationship Management in Service Companies

1.3 Outline of the Thesis


This part will give a description in summary form of the main content and how the thesis is organised
and structured. The thesis has been divided into seven chapters and this can be represented in figure
one as shown below.
Chapter One
Introduction, Background and Problem Area

Chapter Two
Literature Review

Chapter Three
Research Problem, Research Questions and Frame of
Reference
Chapter Four
Methodology

Chapter Five
Empirical data Presentation

Chapter Six
Data analysis

Chapter Seven
Findings, Conclusions and Implications

Figure 1: Outline of the thesis

In chapter one of this thesis, an introduction and background of relationship marketing,


service firms and Customer relationship management is presented. This forms the
foundation for the development of the research area and the remaining chapters. In
chapter two, the overview of previous studies in the area is presented. The chapter is
divided into four main parts-customer relationship management, benefits of CRM,
components of CRM and key factors of CRM implementation. Chapter three presents
the problem discussion which is based on the chapter one and two, arriving at the research
problem and the formulation of three research questions for the thesis. The frame of

reference which shows the conceptualization of the various variables and which also forms
the basis for answering the three research questions is presented in this chapter. Chapter
four highlights a description of the methodology which has been used to conduct this
study. Chapter five looks at the empirical data collected from the two service companies
for this study. In the sixth Chapter the empirical data will be analyzed with theory to
discern commonalities and differences both within-case and across-case. In chapter seven
which is the final chapter, the result of the research will be made and presented by
answering the research questions posed in chapter three. Also, findings and conclusions
will be clearly stated and finally implication for practitioners/management, theory and
future research will be presented in this chapter.

2. Literature Review
The previous chapter provided the background and the problem discussion of the area of this study and
the research problem: To gain a better understanding of CRM (i.e. Customer Relationship
Management) implementation in service companies. We now present the theoretical review chapter,
which sole aim is to provide relevant literature in the field of our study.

2.1 Customer Relationship Management (CRM)


Customer Relationship Management (CRM) has become one of the most dynamic
technology topics of the new millennium. According to Chen and Popovich (2003),
CRM is not a concept that is really new but rather due to current development and
advances in information and enterprise software technology, it has assumed practical
importance. The root of CRM is relationship marketing, which has the objective of
improving the long term profitability of customers by moving away from product-centric
marketing. Bose (2002) noted that CRM was invented because customers differ in their
preferences and purchasing habits. If all customers were alike, there will be little need for
CRM. As a result, understanding customer drivers and customer profitability, firms can
better tailor their offerings to maximise the overall value of their customer portfolio (Chen
and Popovich, 2003). The attention CRM is currently receiving across businesses is due to
the fact that the marketing environment of today is highly saturated and more competitive
(Chou et al, 2002)
According to Greenberg (2004), CRM generally is an enterprise-focused endeavour
encompassing all departments in a business. He further explains that, in addition to
customer service, CRM would also include, manufacturing, product testing, assembling as
well as purchasing, billing, human resource, marketing, sales and engineering. Chen and
Popovich (2003) argued that CRM is a complicated application which mines customer
data, which has been retrieved from all the touch points of the customer, which then
creates and enable the organisation to have complete view of customers. The result is that
firms are able to uncover and determine the right type of customers and predicting the
trend of their future purchases. CRM is also defined as an all-embracing approach that
seamlessly integrates sales, customer service, marketing, field support and other functions
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that touch customers (Chou et al, 2002). They further stated that CRM is a notion
regarding how an organisation can keep their most profitable customers and at the same
time reduce cost, increase in values of interaction which then leads to high profits.
The modern customer relationship management concept was shaped and influenced by
the theories of total quality management (Gummesson, 1997) and by new technological
paradigms (Zineldin, 2000). There is however, a perceived lack of clarity in the definition
of customer relationship management, although all accepted definitions are sharing
approximately the same basic concepts: customer relationships, customer management,
marketing strategy, customer retention, personalisation (Zineldin 2000).
However, while academics debate the subtitles of various definitions, the practitioners
have developed a wealth of applicative papers analysing the concrete challenges and
opportunities of implementing the systems (Bacuvier et al. 2001).
CRM, in some firms, is considered as a technology solution, consisting of individual
databases and sales force automation tools and sales and marketing functions so as to
improve targeting effort. Peppers and Rogers (1999) argued that other organisations view
CRM as a tool, which has been particularly designed for one-to-one customer
communications, which is the function of sales, call centres or the marketing departments.
Accordingly, Frow and Payne (2004) added that CRM stresses two-way communication
from the supplier to customer and from the customer to the supplier to build the customer
over time. The two-way communication has been enhanced greatly by advances in
technology particularly the Internet.
In term of information technology (IT), CRM means an enterprise-wide integration of
technologies working together such as data warehouse, web site, intranet/extranet, phone
support system, accounting, sales, marketing and production. Kotler (2000) assured that
CRM uses IT to gather data, which can then be used to develop information acquired to
create a more personal interaction with the customer. In the long-term, it produces a
method of continuous analysis and refinement in order to enhance customers lifetime
value with the firms
Goldenberg (2000) believes that CRM is not merely technology applications for
marketing, sales and services but rather when it is successfully implemented; it enables
firms to have cross-functional, customer-driven, technology-integrated business process
management strategy that maximises relationships. Chin et al (2003) stated that due to
many technological solutions available for CRM automation, it is often misconstrued as a
piece of technology. But they maintained that in recent times many companies have
realised the strategic importance of CRM, and as a result, it is becoming a business valueeffort rather than technology-centric effort.
Using information technology as an enabler, CRM strategy leverages key functional areas
to maximise profitability of customer interactions (Chen and Popovich, 2003). It has been
recognised that technological advancements and innovations, keen competitive marketing
environment, coupled with the Internet are the main drivers that promote one-to-one
initiative. Through CRM, firms are able to understand the drivers of present and future
customer profitability which makes it possible to appropriately and proportionately
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allocate firms resources to all functional areas that affect customer relationship (Chou et al,
2003).
For customers, CRM offers customisation, simplicity and convenience for completing
transactions irrespective of the kind of channel of interaction used (Gulati and Garino,
2000). Many businesses today realise the importance of CRM and its potential to help
them achieve and sustain a competitive edge (Peppard, 2000). This view was further
boosted by Bose (2002) that as a result of changing nature of the global environment and
competition, firms cannot compete favourably with only minor advantages and tricks that
can easily be copied by competing firms. The implementation of CRM is an enabled
opportunity to rise above minor advantages with a real focus on developing actual
relationships with customers. Firms that are most successful at delivering what each
customer want are the most likely to be the leaders of the future.

2.2 Benefits of CRM


According to Chen and Popovich (2003), CRM applications have the ability to deliver
repositories of customer data at a much smaller cost than old network technologies.
Throughout an organisation, CRM systems can accumulate, store, maintain, and distribute
customer knowledge. Peppard (2000) noted that effective management of information has
a very important role in CRM because it can be used to for product tailoring, service
innovation; consolidate views of customers, and for calculating customer lifetime value.
CRM systems assists companies evaluate customer loyalty and profitability based on repeat
purchases, the amount spent, and longevity. Bull (2003) added CRM makes it practicable
for companies to find unprofitable customers that other companies have abandoned or
jettisoned. This position is supported by Galbreath and Rogers (1999) that CRM helps a
business organisation to fully understand which customers are worthwhile to acquire,
which to keep, which have untapped potential, which are strategic, which are important,
profitable and which should be jettisoned.
Greenberg (2004) emphasised that CRM can increase the true economic worth of a
business by improving the total lifetime value of customer, adding that successful CRM
strategies encourage customers to buy more products, stay loyal for longer periods and
communicate effectively with a company. CRM can also ensure customer satisfaction
through the allocation, scheduling and dispatching the right people, with the right parts, at
the right time (Chou et al., 2002)
According to Swift (2001), companies can gain many benefits from CRM
implementation. He states that the benefits are commonly found in one of these areas:
1. Lower cost of recruiting Customers: The cost of recruiting or obtaining customers
will decrease since there are savings to be made on marketing, mailing, contact,
follow-up, fulfillment services and so on.
2. No need to acquire so many customers to preserve a steady volume of business:
The number of long-term customers will increase and consequently the need for
recruiting many new customers will decrease.
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3. Reduced cost of sales: The costs regarding selling are reduced owing to existing
customers are usually more responsive. In addition, with better knowledge of
channels and distributions the relationship become more effective, as well as that
cost for marketing campaign is reduced.
4. Higher Customer Profitability: The customer profitability will get higher since the
customer wallet-share increases, there are increases in up-selling, cross-selling and
follow-up sales, and more referrals come with higher customer satisfaction among
existing customers.
5. Increased Customer retention and loyalty: The customer retention increases since
customers stay longer, buy more and buy more frequently. The customer does also
often take initiatives which increase the bounding relationship, and as a result the
customer loyalty increases as well.
6. Evaluation of customers Profitability: A firm will get to know which customers are
profitable, the one who never might become profitable, and which ones that
might be profitable in the future. This is very important since the key to success in
any business is to focus on acquiring customers who generate profit and once a
firm has found them, never let them go (ibid)
Curry and Kkolou (2004) refer to the major benefits and reasons for adoption of CRM
which include: customers from the competition will come to prefer your organization; a
simplified, customer-focused internal organization will simplify the infrastructure,
shrinking the workflow and eliminating non-productive information flow; and profits will
increase from more/more satisfied customers and a more compact, focused company.
There are companies that adopt CRM systems just because it is the most advanced
technology and they think they have to have it since their competitors have it (Chou et al,
2002). Some statistics that motivate this behavior are resumed as follows:
By Paretos principle, it is assumed that 20% of a companys customers generate
80% of its profits
In industrial sales, it takes an average of 8 to 10 physical calls in person to sell to a
new customer, 2 to 3 calls to sell to an existing customer
It is 5 to 10 times more expensive to acquire a new customer than obtain repeat
business from existing customer. For example, according to Boston Consulting
Group (Hildebrand, 2000), the cost to market to existing web customer is $6.80
compared to $34 to acquire a new web customer
A typical dissatisfied customer tells 8 to 10 people about his or her experience
Source (Paul Gray and Jongbok Byun, centre for research on information
technology and organization, University of California, March 2001)
Getting to "know" each customer through data mining techniques and a customer-centric
business strategy helps the organization to proactively and consistently offer (and sell) more
products and services for improved customer retention and loyalty over longer periods of
time. Peppers and Rogers (1999) refer to this as maximizing "lifetime customer share",
resulting in customer retention and customer profitability.

10

2.2.1 Customer Value


Real customer relationships, those that result in the customer feeling a genuine sense of
loyalty to the firm, are predicated on a series of satisfying experiences with the company.
Relationships are not developed overnight. Until the customer senses some attachment to
the company, then no relationship can be said to exist. What, then, drives customer
satisfaction? Surely it is the ongoing creation of value in the mind of the customer. (Bristol
Group, 2004).
Woodruff (in Chi et al. 2004) defined customer value as a customer-perceived preference
for, and evaluation of, product attributes, attribute performances, and consequences in
terms of the customer's goals and purposes. According to Chi et al, there have been
limited studies to examine the differential effects of individual dimensions of customer
value on the specific dimensions of CRM performance. They argued that investigating
key dimensions of customer value and their effects is very critical and important since the
delivery of superior customer value can involve significant costs for firms. Also firms even
though they recognize the fact that superior customer value can lead to higher profits,
they may be a bit skeptical since it can lead to profit reduction.
Delivering superior customer value has become an ongoing concern in building and
sustaining competitive advantage by driving customer relationship management (CRM)
performance. Driven by demanding customers, keen competition, and rapid technological
change, many firms have sought to deliver superior customer value, and base on this the
role of the customer has changed from that of a mere consumer to a multi-faceted role as
consumer, co-operator, co-producer, co-creator of value, and co-developer of knowledge
and competencies, which implies a much more important position of the customer than
ever hence, firms are seeking to retain existing customers and attract new customers by
targeted value creation activities. (Chi et al, 2004)
Ryals (2001) affirms that CRM creates value for the customer. The customer benefits
from product and/or service offers which are targeted to meet individual needs and from
improvements in customer service. There are a number of ways in which customer service
can be improved through CRM. This includes reliability, security, efficiency, and
communication as well as quality control and service monitoring. CRM systems also act
as an organizational memory about the customer. This can benefit the customer by
reducing the amount of repetitive form-filling that the customer has to do. Customer
preferences can also be kept on record, making placing an order quicker and easier for the
customer. The use of CRM to provide added value to customers can be directly linked to
improved profitability and value-based marketing for the company
Apart from the value CRM creates for the customer, it can also bring operational benefits
and boost company performance; this, in turn, can increase customer satisfaction and longterm success through longer and closer relationships. In addition, customer data analysis
enables organizations to identify the customers it does not want to have. On an average,
90% of bank clients, for example, are loss-making. Companies have known for a long time
that customer profitability varies and that not all customers are equally desirable.

11

However, it is only with the advent of powerful systems that they are able to quantify and
track customer profitability, and forecast customer lifetime value at the level of the
individual customer. Previously, companies could only say that customers of a certain type
were likely to be more commercially attractive; now they can pinpoint the individuals
who are the most attractive customers. These are the customers with whom it is vital to
retain long-term relationships. One American retail bank carried out a customer profiling
and targeting exercise using data mining techniques. The impact on direct mail campaigns
was dramatic. Campaign costs fell by one third and response rates doubled the number of
new accounts increased by 33% and the profitability of these new accounts by the same
amount. Defection rates fell by 5% and the lifetime value of these new customers grew by
an estimated 20%. By combining an understanding of customer purchasing drivers and
customer profitability, companies can tailor their offerings to maximize the overall value of
their customer portfolio (www.cranfield.ac.uk, 2004)
Types of Customer Value
It is suggested that it is impossible to create sustained value for a firms shareholders unless
value is being created for its customers. In fact, they suggest, service has been enhanced
because, through the use of technology, the customer can now deal with the firm in a
much more convenient way. Access is available through several channels and is guaranteed
24 hours a day, seven days a week. (Bristol Group, 2004) This then raises a fundamental
question about the type of value companies should create for their customer. For example,
Kotler (1997) argued that customer value can be understood in terms of product value,
service value, employee value, and image value. However, this approach is largely derived
from the standpoint of a firm not that of customers, or at least not totally customer based.
The broad theoretical framework developed by Sheth et al. in Chi et al 2004) was
somewhat different in that they suggested five dimensions of value from the customer's
perspective (social, emotional, functional, epistemic, and conditional) as providing the best
foundation for extending the value construct. However, it is worth noting that not all
these dimensions have equal significance at any time, although they are related in some
sense. As a result present study, therefore, posits that customer value can be better
understood in terms of four key dimensions, each of which may play a different role in the
customer perception process and thus contribute differently to the performance of CRM.
The next figure illustrates the types of value that a customer can experience.

Figure 2: The integrated framework for customer value and CRM performance (Chi et al,
2004. p117)

12

Functional value refers to the utility derived from the perceived quality and expected
performance of the product or service, and perceived sacrifice refers to the loss derived
from the product or service due to the increment of its perceived short-term and longterm costs. Functional value pertaining to the customers acquisition and use of the
product is generated by price, convenience, access or technology. Unfortunately,
competitors can most easily duplicate functional value (Bristol Group, 2004). Customers
are becoming more value-oriented and are not simply influenced by high quality or lower
price and value for money represents, therefore, the simplest and most easily copied form
of functional value. Thus, creating functional value offers a fleeting competitive advantage.
(Bristol Group, 2004).
Social value refers to the social utility derived from the product or service. Emotional value
refers to the utility derived from the affective states that a product or service generates.
Barnes (2004) has noted that emotional value is much more lasting form of value which
elicits an emotional response from customers. It is less easily duplicated by the competition
and generally contributes to less emphasis on price. When a firm employs qualified,
friendly, helpful employees value is created every time a customer is made to feel
welcome, important and valued. The creation of such emotional value for customers is
fundamentally different from the creation of functional value through price reductions,
increased convenience and technology. Both forms of value are important. However,
genuine customer relationships cannot be formed on the basis of functional value alone.
Customer relationships require an emotional connection with the firm if they are to
thrive. The emotional value is the more lasting, yet the more difficult to create. A reliance
on technology alone will not do it. (Barnes, 2004)

2.2.2 Customer Satisfaction


Kotler (2000) defined satisfaction as a persons feelings of pleasure or disappointment
resulting from comparing a products perceived performance (or outcome) in relation to
his or her expectations. When customers become satisfied about the value that is offered
and sometimes his or her expectation is met and exceeded, can generate many benefits for
a firm (Bateson and Hoffman, 2002). According to them, positive word-of-mouth coming
from existing and satisfied customers sometimes can translate into more new customers
coming to the firm. Also, satisfied current customers often buy more products more
frequently and are less likely to defect to competitors than are dissatisfied customers.
According to Bateson and Hoffman (2002) firms that have high degree of customer
satisfaction, also seem to have the capacity to shield off competition particularly price
competition.
Kotler (2000) pointed out that it is important to measure customer satisfaction regularly
through survey to determine customers level of satisfaction. He said this is because firms
may think that they are getting a sense of customer satisfaction through customer
complaints. However, in reality, 95 percent of dissatisfied customers do not make any
complain and they just leave. As a result it is important for firms to make it easy for the
customer to complain. Dissatisfied customers who usually complain, about 54 to 70
percent will continue to do business again with the organisation if their complaints are
13

taken care off and resolved and may even be 95 percent if the complain receive quick
response and action. (Kotler, 2000)

2.2.3 Customer Retention and Loyalty


Bateson and Hoffman (2002) define customer retention as focusing a firms marketing
efforts towards the existing customer base. This explains the view that instead of trying to
acquire new customers, firms engulfed in customer retention efforts must make sure that
existing customers are satisfied so as to create and maintain long-term relationships.
Lovelock et al (1999) said in business context, loyalty is used to describe the willingness of
a customer to continue patronising a firms goods and services over a long period of time
and on a repeated and preferably exclusive basis, and voluntarily recommending the firms
products to friends and associates. In their view, customers will continue to be loyal to a
particular firm if they feel and realise that better value is being offered.
Kotler (2000) assured the most important consideration to attain high customer loyalty is
for firms to deliver high customer value. He continued to stress that it has been the
practice by firms to devote much attention and effort to attracting new customers rather
than retaining existing ones, adding that traditionally firms emphasise more on making
sales rather building relationships, on preselling and selling rather than caring for the
customer afterwards.
Kotler (2000) states the critical factor to attaining customer loyalty is customer satisfaction
because a customer who is highly satisfied will exhibit the following characteristics:
1.
2.
3.
4.
5.

stays loyal longer


buys more as the company introduces new products and upgrades existing ones
talks favourably about the company and its products
pay less attention to competing brands and advertising, and is less sensitive to price
cost less to serve than new customers because transactions are routinized.

Bateson and Hoffman (2002) noted that firms must put in place effective tactics for
retaining customers and subsequently making them loyal. They mentioned tactics such as
maintenance of proper perspective, remembering customers between calls, building
trusting relationships, monitoring the service delivery process, responding swiftly to
customers in need and provision of discretionary effort. According to them despite that
every customer is important, firms must not retain certain customers if they are no longer
profitable, abusive to the extent of lowering the morale of employees, reputation is so bad
that it tarnishes the image and reputation of the company should the firm associates itself
with that customer.

2.3 Components of CRM


To be able to satisfy and even exceed customers expectation requires 360 degrees view
of the customer. This calls for CRM implementation model that integrate the key
dimensions of people, process, and technology within the context of an enterprise-wide

14

customer-driven, technology-integrated, cross-functional organization. Each component


presents significant challenges, but it is the ability to integrate all three that makes or
breaks a CRM system. (Goldenberg, 2002). See figure 3.

Figure 3: Components of CRM and implementation model (Chen and Popovich 2003, p. 676)

2.3.1 Technology
Davenport and Short (1990) stated that information technology (IT) for a very long period
of time been seen and recognised as an enabler to make firms radically re-engine their
business process if they want to achieve dramatic efficiency and improvement in
performance. CRM, to many is synonymous to information technology and in most cases
the core of it.
The push towards better CRM technologies is a natural result of the search for businesses
for greater productivity and efficiency in customer-facing operations like sales, marketing,
customer service and support (Greenberg, 2004). The rapid rate at which CRM
technologies are evolving gives businesses many tools which can enable them to enhance
customer relationships. According to Trepper (2000) CRM technologies are designed to
automate sales and service functions, aggregate customer information into data warehouses
and data marts, and manage collaborations with customers through an expanding number
of interaction points.
Hammer and Champy (in Chen and Popovich 2003) emphasised that information
technology assists and supports business process re-engineering , thus facilitating work
practice changes and adopting innovative ways that link a company with its customers,
suppliers and other stakeholders. Chen and Popovich (2003) argued that CRM application
is capable of leveraging innovations in technology to gather and analyse customer data
patterns, interprets customer behaviour, develop predictive models, respond with timely
and effective customised communications, and deliver product and service value to every
individual customer.

15

Peppard (2000) suggest that technological advances in global networks, convergence and
improved interactivity, are key and critical to e-business and CRM growth. The core
functionality of a CRM product is its ability to maintain a single, cohesion view of the
customer for the customer-facing functions of sales, services and marketing (Trepper
2000). This view is shared by Eckerson and Watson (in Chen and Popovich 2003) that the
use of technology can make companies enhance and optimise their interaction with
customers by creating an integral view of customers to learn from their past interactions to
optimise future ones.
It is also important to note that technology does play a significant role in CRM efforts, by,
among other things, seamlessly linking front (e.g. sales) and back office (e.g. logistics)
functions to provide for the efficient and effective management of interactions across
different customer touch-points (e.g. Internet, direct mail, sales call etc.) Chen &
Popovich (2003). CRM technology enables firms to harness the power of database, data
mining and interactive (e.g. Internet) technologies to collect and store unprecedented
amount of customer data, build knowledge from the data, and disseminate the resulting
knowledge across the organization (Bose, 2002). Thus, it seems that both over and
underestimating the role that technology plays in CRM initiatives can have detrimental
effects on firms relationship management efforts.
From a customer's perspective, effectively identified and implemented technology can help
companies directly match customer desire for customization in the products and services
they seek and provide personalized after-sale service and support based on customer profile
data. From a business standpoint, technology can help identify the most valuable customer
relationships and equip employees with abundant and relevant information about those
customers in order to provide more effective sales and service. In effect, CRM technology
can integrate the enterprise, fostering an environment of shared customer knowledge and
focusing the right employees on serving the right customers. (Galbreath; Rogers, 1999)
2.3.1.1 Functional categories of CRM Technology
CRM technology has been categorised into three distinct areas. The categorisation is
meant to help better understand how a CRM strategy and technology can provide such
all-inclusive architecture that is focused on serving the customer. (Reynolds, 2002).
Collaborative CRM
Reynolds (2002) describes collaborative CRM as the interfaces such as e-mail,
conferencing, chat, real-time applications, which facilitate the interaction between a
company and its customers, as well as within the business itself when dealing with
customer information. Collaborative CRM stresses two-way communication instead of
one-way communication.
Operational CRM
This, also known as front-office CRM, involves the areas where direct customer
contact occurs. (Kahlifa, 2004). The automation of integrated business process that

16

involves front-office customer touch points such as sales, marketing and customer service
through many interconnected channels of delivery, including the integration between
front and back office, as well as order management, customer service, marketing
automation, sales-force automation and field service. (Trepper 2000). A typical example is
when sales is automatically pulls data out of inventory systems or customer services
automatically calls up a customers billing records. (Reynolds, 2002)
Analytical CRM
It is also known as back-office or strategic CRM and involves understanding the
customer activities that take place in the front office (Kahlifa, 2004). It usually involves
analysis, modelling and evaluating data in a data warehouse or various data storehouse to
create a mutually beneficial relationship between a company and its customers (Reynolds,
2002). Greenberg (2004) states that analytical CRM is the capture, storage, extraction,
processing, interpretation and reporting of customer data to a user. Analytical CRM
enables businesses to target high-value customers and put together marketing campaign
that are totally relevant to these people in terms of cross selling, product development or
addition of services. Data is often stored in a data warehouse, which can be described as a
large repository of corporate data (Dyche, 2002), which then give the company
information that allow them to provide value to their customer. Hence, it is crucial to
capture the right data, a process that must be done with great customer care and
understanding (Newell, 2000).
The figure below shows an example of this.

Figure 4: Analytical CRM (Khalifa, M., 2004, Doctoral CRM course material, Lule University
of Technology)

Collaborative CRM
Collaborative CRM involves any CRM function that provides a point of interaction
between the customer and suppliers. It focuses on facilitating interactions between
customers and the companies (Trepper, 2000). Reynolds (2002) describes collaborative

17

CRM as the interfaces such as e-mail, conferencing, chat, real-time applications, which
facilitate the interaction between a company and its customers, as well as within the
business itself when dealing with customer information. Collaborative CRM stresses twoway communication instead of one-way communication. For example, technologies like
the electronic communication is used to facilitate relevant, timely and personalized
interaction with the customer (Greenberg, 2001)

2.3.2 CRM infrastructure


The technical infrastructure of CRM must integrate the customer information that flows
through diverse departmental touch points and customer channels. The CRM technology
must provide a way to process this sea of information so that becomes available when and
where it is required. Through CRM technology the customer experience will be identical
no matter what channel is used. (Reynolds, 2002).
Data Warehouse technology
Chen and Popovich (2003) defined data warehouse as an information technology
management tool that gives decision makers of an organisation instant access to
information by collecting islands of customer data throughout the enterprise by
combining all databases and operational systems such as sales and transaction processing
systems, financial, human resources, inventory, purchase, and marketing systems.
According to Greenberg (2004) data warehouse is interpreted to mean an enterprise-wide,
cross-functional repository of data which is organised around subjects that have been
collected many sources and merged centrally into a coherent body over time. Eckerson
and Watson (in Chen and Popovich 2003) further explained that data warehouses extract,
clean, transform and manage a huge amount of data from different systems, which allows it
to create a historical record of all its customer interactions.
To be able to have a total customer view as in the words of Dyche (2000) a single
version of truth, all data must be stored in a centralised cross-functional data where both
current and past information moves in and out. The sources for data warehouse can be
those from within the company itself, customers and other third party. Data warehouse,
which makes it possible for companies to be able to extract knowledge about customers in
a constant manner, reduces the need for traditional marketing research tools such as
customer survey and focus groups (Chen and Popovich, 2003).
In CRM, data warehouse is considered an important aspect because of its ability to
transform consolidated customer data into customer intelligence which then provides a
basis of understanding the behaviour of the customer so that the right decision on how to
service the customer is made (Chen and Popovich, 2003). Dyche (2002) pointed out that
if the data is not fully integrated the view of the customer relationships is based on a
fraction of the customers real interactions with the company, which then leads to false
and unholistic view of the customer. Examples of customer data can be said to include all
sales, promotions and customer service activities, information relating to billing and
account status, customer interactions, back orders, product shipment, product returns,
claims history, and internal operating cost, coupled with transaction details can enhance
18

the understanding of customers and their purchasing patterns. The application of data
warehouse according to Chen and Popovich (2003) can provide the following benefits to
an organisation:
1. accurate and more rapidly access to information to facilitate responses to questions
from customers
2. quality of data and filtering to eliminate bad and duplicate data and
3. customer profitability analysis, customer profiling and retention modelling is
enhanced and facilitated because data is extracted, manipulated and drill down
quickly.
Figure 5 depicts a typical data Warehouse fully integrated

Figure 5: Integrated Customer data on a data Warehouse (Khalifa, M., 2004, Doctoral CRM
course material, Lule University of Technology)

Enterprise Resource Planning (ERP)


Enterprise resource planning, according to Sharp et al (2004) is a business management
system that comprises integrated sets of comprehensive software. Chen (2001) explains
ERP as a system highly integrated with back-office function. According to Chen, ERP
links all areas of a firms operation such as manufacturing distribution, order management,
human resources and financial systems with external customers and suppliers which then
becomes a highly integrated system available to all.
Chen and Popovich (2003) noted that ERP is not the same as CRM and there are some
differences between them. While ERP can be described as integrated back-office
functions, CRM combines both front and back office functions so as to maintain
relationships and build loyal customers. Also, ERP integrates all functional areas of a firm
with its suppliers and customers but CRM improves front office applications and customer
touch points so that customer satisfaction and profitability can be optimised. Further, ERP
systems address fragmented information systems while CRM addresses fragmented
customer data.
19

Sharp et al (2004) added that when ERP is implemented successfully, it could be used to
manage and integrate all the business functions within an organisation. ERP has the ability
to facilitate the flows of information between all supply chain processes both internal and
external in an organisation. The further stated that ERP allows companies to have full
integration of the various departments and it has been described as the information
infrastructure that can perform almost everything from entry to sales to orders to
customers.

Internet Technology
Kotler (2000) says the Internet is a network that connects users to an amazingly large
information highway and in recent times business transactions over the internet are at a
much higher volume. Kotler noted that there is considerable growth in the amount of
Internet financial transaction in the areas of insurance sales, home banking, stock trading,
but stress that though the Internet population is growing, the cyberspace population is
gradually becoming more mainstream and diverse.
Internet technologies are making sweeping changes in the software industry and almost
every class of software application is incorporating Internet functionality as a core feature
and this is also true in CRM applications. Companies are using Internet technologies to
build a stronger relationship with their customers by improving customer service,
increasing sales efficiency cycle and the development of more effective marketing
programmes (Chou et al, 2002). In this regard, they again stated that CRM provides a
new opportunity for Internet service firms, and as such Internet service firms are coming
out with strategic initiatives to offer their clients CRM solution.
Gilbert et al (2003) postulated that the Internet is experiencing a striking evolvement and
provides the underpinning for electronic mail, the World Wide Web (WWW) and
electronic commerce. They further argued that the Internet has been propagated as a nearperfect market, which provides an unparallel transparency beyond the capabilities of
conventional media. This perspective was further boosted by Mols (2000) that the
application of the Internet has led to the belief that it will have weighty impact on the way
service firms such as insurance companies, law firms, distributors and financial service firms
will do business in the future. Mols added that the Internet is believed to change the way
and manner firms interact with their customers and thus the way they initiate, develop and
terminate relationships with them.
Kotler (2000) mentioned that the Internet has potential benefits like buyers convenience,
information and few hassles, lower cost to marketers, relationship building tool that can
accrue to both the firm and the customer. In the view of Mols (2000), the Internet has
made the market become more transparent, leading to increased price competition in
business that offers easily comparable services and which are unable to build significant
switching barriers or close relationships with customers. Advances in Internet technologies
have greatly enhanced the flow of dialogue, and the capture, interpretation and
dissemination of information. Internet technologies enable the development and
20

management of more complex multiple channels and cross-channel relationship. (Frow


and Payne).

2.3.2 Business process


A business process refers to a collection of tasks or activities that together result in a
desired business outcome (Hammer, 1996). It could also mean a business process refers to
a group of activities that convert organizational inputs (e.g. human resources) into desired
outputs. The process component of CRM is the most delicate because inappropriate
automation of the CRM business process will only speed up the errant process. While
most companies do have customer-facing business processes in place (i.e., processes that
directly interface with the customer during the purchase, payment, and usage of the
company's products and services), many times these business processes need to be updated
or even replaced. (Goldenberg, 2002)
Processes are often difficult to implement and manage formally in an environment with
many sales and marketing people. But clearly, consistent processes are essential to all areas
of customer relationship management and despite the technological perspectives discussed
in the previous section; the philosophical bases of CRM are relationship marketing,
customer profitability, lifetime value, retention and satisfaction created through business
process management. (Chen and Popovich, 2003). According to them CRM is a
continuous effort that requires redesigning core business processes starting from the
customer perspective and involving customer feedback.
In fact, companies have been repeatedly warned that failure is eminent if they believe that
CRM is only a technology solution (Goldenberg, 2000). To realize effective process
change, a company needs first to examine how well existing customer-facing business
processes are working. Then the company needs to redesign or replace broken or nonoptimal process with ones that have been created and/or agreed upon internally
(Goldenberg, 2002). Also, processes need to be constantly reviewed for acceptability from
both customers point of view and organizations perspective. Optimizing customer
relationships requires a complete understanding of all customers; profitable as well as nonprofitable, and then to organize business processes to treat customers individually based on
their needs and their values (Renner in Chen and Popovich 2003).
Companies pursuing a CRM initiative often make the dangerous mistake of trying to
correct their own customer-facing process deficiencies. The do this, not by agreeing
internally on how users would like a process to be done, but rather by purchasing CRM
software that contains one or more business processes that have been pre-built by the
CRM vendor. By doing this, they force the "not-built-here" process upon system users.
(Goldenberg, 2002).

2.3.3 People
While both technology and business processes are both critical to successful CRM
initiatives, it is the individual employees who are the building blocks of customer

21

relationships. (Chen and Popovich, 2003). The people component is the most difficult
component given the sensitivity of users to change. CRM systems, which support and/or
automate integrated customer processes, often, imply changes in the way users do their
day-to-day jobs. Users who have not properly understood the reasons for the change, who
do not participate in formulation of the change, who do not receive sufficient information
about the change, or who do not get sufficiently trained on the change will often be
adverse to that change. The story of "the rotten apple spoiling the lot" is relevant here
since negative feedback can substantially harm a CRM system's success (Goldenberg,
2002). An organisations customer management, people need to be recruited, managed,
developed and motivated within a supporting structure. Commitment from top level
management is a requirement and crucial to the success of CRM. As a result customercentric management requires top management support and commitment to CRM
throughout the entire CRM implementation (Chen and Popovich 2003)
CRM projects require full-time attention of the implementation project team with
representatives from sales, marketing, manufacturing, customer services, information
technology, etc. (Chen and Popovich 2003). In addition, project teams require not only
sponsorship by top management but also a project champion that can persuade top
management for continuous change efforts (Al-Mashari and Zairi, 1999). In general,
project teams assist companies to integrate their core business processes, combine related
activities, and eliminate the ones that don't add value to customers.
CRM initiatives require vision and each and every employee must understand the purpose
and changes that CRM will bring. Re-engineering a customer-centric business model
requires cultural change and the participation of all employees within the organization.
Some employees may opt to leave; others will have positions eliminated in the new
business model. Successful implementation of CRM means that some jobs will be
significantly changed. Management must show its commitment to an ongoing companywide education and training program. In addition to enhancing employee skills and
knowledge, education boosts motivation and commitment of employee and reduces
employee resistance. Additionally, management must ensure that job evaluations,
compensation programs, and reward systems are modified on a basis that facilitate and
reward customer orientation. After all, how people are measured will determine their
behavior. (Chen and Popovich, 2003).
By rethinking the quality and effectiveness of customer-related processes, many
organizations began to eliminate unnecessary activities, improve outdated processes, and
redesign activities that had failed to deliver the desired outcomes. Then, by re-creating the
process through an understanding of the capabilities of the technology, the outcomes were
more predictable and the promises for a meaningful ROI more substantial and realistic.
The metrics for success became the improved effectiveness in serving the customer
(www.darwinmag.com).

2.3.4 The Right Mix of CRM Components


Figure 6 shows the right mix of CRM components according to Limayem (2004). This
mix represents the effort in term of resources required for CRM implementation.
22

According to Limayem (2004) for CRM to be successful and thus achieve its intended
purpose, the components must be 70 percent people, 20 percent process and 10 percent
technology
technology
10%
process
20%

people
70%

Figure 6: Developing the right mix of people, process, and technology (Limayem, M., 2004,
Doctoral CRM course material, Lule University of Technology)

2.4 Implementation
The implementation of CRM impacts on a number of functions within an organization
including sales, IT, operations, marketing and finance. Bradshaw and Brash(2001) also
asserted that implementing CRM is certain to involve the deployment of new
technologies that requires a re-examination of business process which should lead
technology decisions. Still, many companies have difficulty in implementing an effective
CRM program because they allow software vendors to drive their approach to customer
management, or retrofit a customer strategy to match the CRM technology they have
purchased (Rigby et al. in Jerry and Romano 2003). Bradshaw and Brash (2001) further
noted that CRM applications must not only integrate functionally at the front office but
also integrate with back office functions such as manufacturing and billing.
CRM is a new management concept that relies heavily on technology and process
automation to create its environment. However, Galbreath and Rogers (1999) affirm that
to create such an environment will entail change. Change in processes. Change in people.
Change in technology. Change in management styles. Change in the overall way a
business looks at and conducts business with its customers. Introducing this level of change
into any business can create turmoil among employees if not introduced and implemented
carefully and with purpose and this therefore require a kind of leadership to spear head all
these (Galbreath and Rogers (1999).

2.4.1 Key Factors of the CRM implementation


A study confirms that CRM is a complex and holistic concept requiring appropriate
business processes and integrated systems. In addition, the study demonstrates the

23

relevance of the need for effective leadership, sourcing, targeting and evaluation within
CRM strategies (Bull 2003). In the ensuing paragraphs discussion on strategy, leadership
and integration as key factors of CRM implementation will be made.
2.4.1.1 Strategy
Strategy is defined as an overall plan for deploying resources to establish a favorable
position (Grant in Bellenger et al 2004). CGI Group Inc. (2004) noted that CRM
initiative launched without a strategy can lead to a failure. Simply stating We are going to
do CRM is not a strategy. A CRM strategy needs to clearly define how a firm will be
viewed and manage all touch points with your customers and should also define how you
plan to achieve results. Jill Dyche, Partner and Co-founder: Baseline Consulting Group
noted that many CRM strategies are really nothing more than an intellectual exercise
intended to Kick off a CRM program and that strategy view of CRM is more apt and
useful as a means for the company to define its overarching objectives
(www.crm2today.com) According to Crosby (2002), CRM must begin with a business
strategy which drives the organization and business processes that in turn are enabled by
the use of information technology.
The strategic view of CRM emphasizes the fact that resources destined for relationship
building and maintenance efforts should be allocated based on customers lifetime value to
the firm (i.e. estimated net profits over the cause of the relationship; (CRM Guru, 2003,
IT Directory.com, 2003). This view thus suggests that all customers are not equally
valuable and that maximum profitability can only be achieved when available resources are
invested in customer relationships that provide a desired level of return (Ryals, 2003). The
implication that stems from this strategic perspective of CRM is that firms must
continually assess and prioritize customers based on their expected lifetime value, if they
are to build long-term profitable customer relationships. Those who define CRM as a
strategy also tend to stress that it enables firms to build the right type of relationships
with each individual customer, which in some instances, implies not to build one at all
(Verhoef & Donkers in Amalia et al 2003). The strategic view of CRM is not on how
relationships are developed and maintained, but also, on how building the right type of
relationships that can have a substantial positive impact on corporate profitability. Hence,
it has been argued that customer relationships should be treated as a portfolio of assets or
investments that needs to be actively managed to maximize profitability (Ryals, 2003).
2.4.1.2 Leadership
Galbreath and Rogers (1999) pointed out that CRM environments, by nature, are
complex and require organizational change and a new way of thinking about customers and about a business in general. Creating such an environment requires more than
adequate management of the customer relationship or new technologies, it requires new
forms of leadership as well. Because leaders monitor the external environment of an
organization they are often the best placed to set the vision or strategic direction of CRM
projects. In addition, leaders are influential in the authorization and control of
expenditure, the setting and monitoring of performance and the empowerment and
motivation of key personnel (Pinto and Slevin in Galbreath and Rogers 1999).
24

Management attention tends to be focused more on profit than customers, which probably
explains why organizations are more reluctant to measure critical dimensions of the value
creation process not directly reflected in the financial accounting. There are also likely to
exist other constraints in the form of limited management resources, whereby priority is
given to technical development, the system being too detailed to produce simple
performance measures and a lack of internal expertise resulting in limited sources for
obtaining accurate data on CRM to improve internal knowledge (Curry and Kkolou,
2004).
While CRM environments improve business performance, initiatives undertaken in this
new management field require sound leadership as well. customer relationship leadership
(CRL) is a recommended approach to bridge the gap between a CRM vision and its
reality so as to head the charge and rallies an organization around CRM (Galbreath and
Rogers, 1999) Leadership in CRM implementation is very critical in three distinct aspects
and this is explained by the three key components of customer relationship leadership
(CRL) Model that are necessary in order to align an organization to better fulfill the goal
of effective CRM. They are: technology; organizational environment; and atmosphere of
innovation.
The figure below illustrates the critical areas that management, and for that matter
leadership, required for a successful CRM implementation.

Figure 7: Integration of Customer relationship and customer leadership management


(Galbreath and Rogers, 1999, p.166)

Technology
CRM is a new management concept that relies heavily on technology and process
automation. As a result the customer relationship leader must be technologically inclined.
If leaders do not vigorously pervade the entire organization with information technology,
then this will strongly hinder front-line staffs ability to ensure effective management of
customer relationships. (Galbreath and Rogers, 1999).
Companies are entering a new era in which total customer care transitions from slogan to
reality, a reality enabled by advancements in infrastructure technology that connect the
various systems and databases associated with managing the customer from "cradle to
grave". In doing so, front-line employees are being empowered through more up-to-date
and comprehensive information.
25

In the perspective of the customer, technology can help companies directly match
customer desire for customisation in the products and service they seek and provide
personalised after-sale service and support base on customer profile data., technology, from
the viewpoint of the company can enable it identify customers which are most valuable
for relationships. It will also equip employees with rich, abundant and relevant
information about customers for effective marketing. The customer relationship leader
must admit and accept the fact that for CRM to be successful and beneficial, the CRM
technology is given strategic orientation. Effective leadership is a requirement in making
sure that CRM technology becomes functional, well integrated and ultimately embraced
by the entire organisation so that the overall success is driven along (Galbreath and
Rogers).
Organisational Environment
Haapaniemi (1998) has noted that keen competition, coupled with the fast nature of
internationalization are some of the factors pushing firms to be more flexible, fast-moving
and placing the customer at the centre of their business. The new organisational
environment creates a challenge for the modern leader to ensure that all teams act in
cooperation with each other and congruously with the vision and mission of the larger
company. (Galbreath and Rogers, 1999). To this end leaders must make sure that a
conducive environment for CRM is created which will allow employees to act locally and
think globally.
It is necessary that leadership must accomplish and facilitate a shared vision. Vision should
not be imposed, because front-line employees will likely dismiss it as another heavyhanded management tactic. Also, creating an environment of action and learning is to
move decision making down the hierarchy to a local, customer level. This is called frontline empowerment, but Senges (in Galbreath and Rogers 1999, pg 167) call it "localness"
instead, because of its accurateness. He says, Localness means unleashing people's
commitment by giving them the freedom to act, to try out their own ideas and to be
responsible for producing results. "It is abundantly clear that rigid authoritarian hierarchies
thwart learning, failing both to harness the spirit, enthusiasm and knowledge of people
throughout the organization and to be responsive to shifting business conditions"
A conducive atmosphere of action and learning ensures higher retention rate of most
skilled and talented staff. In CRM definition, using the right employees on the right type
of customers will be critical to realise the vision of CRM (Galbreath and Rogers, 1999).
They further noted that employees at the localised environment develops personal
relationships and are in a better position to serve customer needs.
Atmosphere of innovation
It has been stated by Michael Porter that innovation can enable a firm to have a strategic
superiority. To be able to put in place an innovative environment requires entrepreneurial
thinking. It is the responsibility of the customer relationship leader to bring that
innovation and encourage all employees to accept it (Galbreath and Rogers, 1999). A
leader in the process of building innovative environment should also recognise that such
26

innovation is built in accordance with the way the firm is structured and organised. The
leader must lead the workforce, putting teams in place and ensure cohesion at work place.
(Galbreath and Rogers, 1999). This is illustrated below.

Figure 8: Motivation elements of the Integrated CRM-CRL model (Galbreath and Rogers,
1999, p.169)

Motivating CRM
In the implementation of CRM, the customer relationship leader (CRL) must consider
motivation as central and critical. This is because even though the best technology can be
deplored, a conducive and innovative working environment created, if employees are not
well motivated, very little will be achieved (Galbreath and Rogers, 1999). As a result they
further said it is important that leaders should not stand back and watch from afar. And
that is why it has been stated that even the greenest lawn need almost daily watering. To
this end, leaders need to adhere to a firm set of behaviour and values.
Challenge the process
Galbreath and Rogers (1999) noted that leaders must always challenge the process by
putting up questions like what is the reason for doing this? The leader must look for
customer and employee value in the processes that the company employees. However,
Galbreath and Rogers (1999) explains that leaders must not have the notion that customers
are created equally, but rather they must find out the true value of unsatisfied customers.
Blind loyalty to sub-standard customers can be a mental stumbling block to many
organisations.
Inspire a shared vision
If a vision is shared it becomes attractive image of the future which enables employees also
develop their own visions. The customer relationship leader must create an environment
that helps employees feel a part of the team and a vital contributor in making sure that the
vision is realised. A shared vision inspires the future and if it is shared then it becomes a

27

strategic tool enables a company retain and boot the morale of the best work force
(Galbreath and Rogers (1999).
Enable others to act
Localness is a critical and important aspect of CRM. But allowing others to act means
that they need to be trained and coached about it. This helps to restore confidence in
front-line employees when attending to boost customers. When others are allows to act
they feel motivated. Galbreath and Rogers (1999) mentioned that making others to act
indicate an informational feature leadership. The leader must not only keep its employees
informed but also but seek feedback from customers.
Model the way
In CRM the leader must lives and breathes the vision of the company almost on daily
basis. The leader must interact with customers, and develops understanding of their needs
as well. The leader in the process of modelling the way develops a framework that enables
the firm to listen to customers. As stated by Jack Welch of General Electric, effective
leader personally take time with customers and listen to them (Galbreath and Rogers.
(1999).

Encourage the heart


CRL must not be seen as too hard or difficult but a bit flexible and soft. The customer
relationship leader must develop the character of giving praises and must not allow
problems to take the better part of the firm. It is critical that customer relationship leader is
clear about the future prospects. Senge (in Galbreath and Rogers, 1999 pg 170) stated
People follow the leader who truly has subordinated best interests close to his heart. And
employees who feel valued treat customers better.
2.4.1.3 Integration within the organization
According to Greenberg (2004), integration is the smooth flow of customer information
among various company players specifically the departments and functional units.
Organizational ability or willingness to co-ordinate and integrate these processes varies.
The re-engineering of work processes in CRM to put the customer at the centre of the
business circle entails a change in departmental roles and responsibilities. Integration of a
complete CRM solution can be daunting task given the large number of packages and the
diverse vendors that IT managers must coordinate with (Bose, 2002). Major challenges fall
into the categories of business integration and software/hardware integration. In the eservice, for example, segment Sims (in Curry and Kkolou 2004) identifies three classes of
products and services:
- self-service solutions where companies allow customers to solve their own problems by

28

directing them to searchable online databases;


- e-mail management allows customers to ask their questions and either receive
automatic responses or be routed elsewhere by rules-based logic; and
- real time interaction provides services accessible via a Web browser.
In each instance the challenge lies in deciding which the routine, common questions are
and which are the more complex ones that need to be handled by a representative.
A functional organization often takes "ownership" of customer data. Many departments
and individuals see customer handling as a sales or marketing function, and regard the
release of their data to another function as a loss of power. A customer-centric model
requires sharing the data enterprise-wide; this usually requires a fundamental paradigm
shift in the culture to sharing information and knowledge. Especially in organizations
where tradition has established separate goals and objectives, top management must not
take a passive role in change efforts. Silo-based organizational myopia must be replaced
with a customer-focus so departments will collaborate rather than compete with each
other. Many of these changes efforts can be aided by effective communication throughout
the entire project and reaching all levels of employees. (Chen and Popovich, 2003).
Firms are traditionally made up of various functional units, with each having well-defined
roles and functions towards the attainment of organizational mission of existence (Madu
and Assumpta, 2003). However, these functional units sometimes operate independently
as stand alone units or islands. The consequence therefore is that employees in one
department or functional area are not abreast with what takes place in other departments
within the same organization. Greenberg (2004) explained that firms also consist of
processes and the firms ability or willingness to coordinate and integrate these processes
varies. Madu and Assumpta (2003) further stated that because of stand alone functions and
processes create a situation where employees in one department place their needs ahead of
those of the firm as a whole resulting in internal conflicts between various departments to
the extent that communication among employees virtually come to a halt.
In view of this, it has been recognized by firms that to achieve business success, integration
of all functional areas and sharing of customer information across the enterprise is
paramount (Madu and Assumpta, 2003). CRM solution that simply uses front-office to
receive and record information will eventually fail, which can harm a companys
reputation with customers by highlighting the shortfalls of its back-office processes
(Greenberg, 2004). As such, Bradshaw and Brash (2002) mentioned that CRM
applications must not only integrate functionally at the front-office but also with backoffice functions such as manufacturing and billing. This view was further boosted by
Greenberg (2004) saying achieving customer loyalty and profitability becomes real if frontoffice content generates and prompts a relevant back-office response.
If firms consider the customer as the very reason for their existence and without them
firms has no mission, then achieving customer satisfaction through value creation requires
the integration of all participants especially enterprise resource planning, supply chain
management, e-procurement and Internet technology. The Internet makes it possible to
integrate both the back-office and the front-end applications. This helps firms to deliver
quality and value to the customer. (Madu and Assumpta, 2003). Again, Greenberg (2004)
29

emphasized that achieving resource maximization in serving customers, firms must


endeavor coordinate and harmonize resources in such a way that full integration of the
channels for sales and customer integration, and all activities and processes are
synchronized throughout the value chain. He further stressed firms must also collaborate
with suppliers and other third parties-both within and outside the firm which can then
deliver value for the customer. The figure 9 below illustrates integrated functional areas of
a firm that provides a 100 percent view of the customer.

Figure 9: 360-degrees view of the customer (Kotorov, 2002, p. 226)

3. Frame of Reference
In this chapter, the research questions will be developed based on the literature review and the research
problem (i.e. to gain a better understanding of CRM (i.e. Customer Relationship Management)
implementation in service companies.) and the delimitations of the study will be stated. Further, the
chosen relevant theories will be assessed and we will be used to develop the emerged frame of reference.

3.1 Research Problem and Research Questions


Customer relationship management (i.e. CRM) has become a number one focus as todays
competitive markets are getting more saturated and aggressive. The marketing model is
changing from the product-centered stage to the customer-centered stage. Customers are
demanding a different relationship with suppliers than the traditional sales model (Xu, Yen,
Lin and Chou, 2002). According to Hamel and Pralahad (1994), the objective is to amaze
customers by anticipating and fulfilling their unarticulated needs. This can be done by
implementing CRM. This study intends to reach into the CRM implementation process
and therefore a research problem has been stated as follows:
To gain a better understanding of CRM (i.e. Customer Relationship
Management) implementation in service companies.
Based on the literature review three research questions can be developed which now will
be:

30

Research Question One:


How can a firms major reasons and benefits of implementation of CRM be described?
This question intends to expand into the motives that companies have to implement
CRM. It is considered to be relevant to understand what drives companies into the
change and to what extent the benefits assessed by the theory are experienced and
expected.
Research Question Two:
How can the components of CRM implementation (i.e. people, process and technology) be described?
CRM is a complex concept often understood in diverse ways. Still, the process of
implementing it will affect the organization as a whole in different degrees. Therefore,
looking into its components is expected to give a light into these areas and how they have
been balanced out in the companies studied.
Research Question Three:
How can the key factors of CRM implementation (i.e. leadership, strategy and integration) be
described?
CRM implementation also involves several key factors. This question intends to look into
the specific factors that have been mentioned to enhance the success of CRM.

3.2 Delimitation
As discussed in previous chapters, there are many different definitions of CRM; however,
for this study we have chosen to understand CRM as a management approach that enables
organizations to identify, attract and increase retention of profitable customers. This is
done, as mentioned, by managing relationships with them and achieving a 360 degree
view of the customer within a context of an enterprise-wide, customer-driven,
technology integrated, cross functional organization.
This study is also delimited by other factors:
it will only focus on the companys perspective of CRM implementation. The
opinion and appreciations of the final customers will not be considered.
It will also focus on the general concepts, factors and benefits of CRM; it does not
intend to be a study of specific technologies applied to the CRM implementation
so theories regarding this area will not be regarded.

31

3.3 Frame of Reference


A frame of reference according to Miles and Huberman (1994) explains, either graphically
or in narrative form, the main things to be studies-the key factors, constructs or variables
and the presumed relationship between them. Consequently, a frame of reference presents
the theories and models that are most suitable for the research problem and it also
describes how the theories are related to each other.
There are three main areas of study in this project which intends to gain a better
understanding of CRM implementation: i.e. the benefits of CRM, the components and
the key factors of implementation. Several variables have emerged from the theory
presented in order to facilitate the comprehension and measurement of these areas.
Concerning the benefits of CRM, these are understood to be the ones that derive from the
implementation and use of CRM in a specific company; in other words the gains that
results from implementing CRM. Swift (2001) and Curry and Kkolou (2004) summarizes
these benefits in terms of cost reduction and/or profitability, customer satisfaction and
loyalty, Sheth et al. (1991) and has stated the benefits in terms of value creation; these will
be considered as the main variables within benefits of CRM implementation. For the
purpose of this study, we have chosen to understand customer value as a customer perceived
preference for, and evaluation of, products attributes, attribute performances, and
consequences in terms of the customers goals and purposes Woodruff (in Chi et al 2004).
Different kinds of value creation will also be assessed (Chi et al, 2004). We intend to
identify the value that service firms deliver to customers as a result of CRM. Customer
satisfaction according to Kotler (2000) has to do with a persons feelings of pleasure or
disappointment resulting from comparing a products perceived performance in relation to
his or her expectation. For the purpose of this study, and considering the delimitations,
customer satisfaction will be assessed by identifying what the companies perceive as their
customers response to their CRM efforts and their own opinion of internal satisfaction
with the implementation of CRM. Retention and loyalty are feelings that create an
individual's overall attachment to a product, service, or organization and will be
understood as such in this study. They will be measured by identifying the length of time
customers have been with a service firm, the number of products they hold according to
the companys records, the mobility tendencies to other companies and how the CRM
implementation has affected these aspects. The increase in profitability of the customers,
understood as customers who provide the best possible return, will also be identified by
their mobility and number of products and response to sale efforts and overall growth that
the companies have identified as a result of CRM implementation.
When it comes to the components of CRM, we have chosen to refer to people, process and
technology since Goldenberg (2002) sustains that integration makes or breaks the CRM
system. People will be considered to be the individual employees who are the building
blocks of customer relationships. (Chen and Popovich, 2003). Process is referred as a
collection of tasks or activities that together result in a desired business outcome (Hammer,
1996). The relevance of this component is also described by Goldenberg (2002).
Technology will be assessed as an enabling tool to radically redesign business process and

32

achieve dramatic improvements in organizational performance (Davenport and Short,


1990). The identification of these components and the description of how they have been
affected by the implementation of CRM will be of interest in this project. Also,
Limayem's (2004) assessment of the mix of these components will be used to analyze how
the companies have balanced out the CRM implementation efforts.
Finally, several key factors of CRM implementation have been identified and chosen for
this study as they are repeatedly mentioned by different authors. Strategy is defined as an
overall plan for deploying resources to establish a favorable position (Grant, 1998) and
has been referred to as an appropriate response to the changes that CRM implies within a
company (Kotorov, 2003; Crosby (2002). Leadership is to be considered as the
management skills required for creating an environment and rally an organization around
the CRM implementation process, defining a CRM vision that serves as a guideline is a
key issue according to Lindgren (2004). We will then look at the role of the people in
leadership positions within the companies and study their involvement, participation and
roll towards the CRM changes (Pinto and Slevin, 1987, Galbreath and Rogers, 1999).
Integration, understood as the incorporation of all departments of service firms acting
cohesively and providing a holistic view of the customer with the purpose of serving the
customer better (Chen and Popovich, 2003) is also a key factor to be addressed as a
variable in this research.

3.3.1 Emerged Frame of Reference


The figure below presents the research variables used in the research questions and the
chosen operational definitions. It summarizes the benefits (research question one) as a
result of the implementation process of CRM which includes the consideration of the
components (i.e. people, process and technology, research question two) as well as the
key factors to be studied (i.e. strategy, leadership and integration, research question three).
All this in the effort to answer the research problem (i.e. To gain a better understanding of
CRM).

Figure 10: Emerged Frame of reference for this study (own source)

33

4. Methodology
This chapter will describe the research methods used in this study. It will also describe the research
process, the research purpose, research approach, research strategy, sample selection and data collection,
qualitative data analysis and criteria for quality measurement( validity and reliability) of the research
will be discussed.

4.1 Research Process


Research design is defined my Malhotra (1996) as a structure to carry out research. It is a
guide to the data collection and analysis fragment of the research study. It also specifies the
kind of information to be collected, the sources of the data and the procedure for data
collection. Scientific research can be conducted in varied ways. Despite this assertion,
research involves a series or sequence of activities, which are interrelated and that together
constitute the research process. As noted by Zikmund (2000), it is not possible that all
research activities will follow in the same order but there is the possibility that one can
recognize a common pattern. It can be realized that the research process operate in the
form of a cycle because in many occasions emerging conclusions from a research study will
generate new problems and ideas that have to be looked at again and investigated further.
(Zikmund, 2000).
In this thesis the research process presented by Zikmund was duly followed in order to be
able to conduct this study.

4.2 Research Purpose


According to Yin (1994) and Zikmund (2000), research can be used for three purposes.
These are exploratory, descriptive and explanatory.
Exploratory studies are a valuable means of finding out what is happening; to seek new
insights; to ask questions and to assess phenomenon in a new light Saunders et al (2000).
Robson (1993) explained that an exploratory study is a particularly useful approach if one
wishes to clarify the understanding of a problem. The advantage of exploratory research is
that it has great flexibility and is adaptable to change. The flexibility inherent in
exploratory research does not mean absence of direction.
Descriptive research is described within problem areas where there already exists plenty of
literature and the aim is to study events that have occurred or happening in present time.
The aim of descriptive research is to describe characteristics of a population or
phenomenon. It seeks to determine the answers to who, what, when, where and how
questions (Zikmund, 2000). According to Robson (1993) the object of descriptive
research is to portray an accurate profile of persons, events or situations. Usually it is taken
as an extension of or a forerunner to a piece of exploratory research (Robson, 1993).
Zikmund (2000) noted that accuracy is of immense importance in descriptive research.
Though admitted errors cannot be eliminated completely, a good research strives for

34

descriptive precision. It is usually taken based on some previous knowledge and


understanding of the nature of the research problem.
Explanatory research aims at establishing causal relationship variables. The emphasis here is
on studying a situation or a problem in order to explain the relationships between
variables (Saunders et al, 2000). Usually, exploratory and descriptive research precedes this
kind of research and according to Zikmund (2000) the research must be knowledgeable
about the research subject.
The research purpose in this study has been assessed as both exploratory and descriptive.
The exploratory phase of our research stems from the fact that knowledge about
implementing CRM is limited, fragmented and scarce. Its study will increase our
knowledge about CRM and implementation factors. Further, by exploring it will enable
an insight into the new phenomenon of CRM implementation and related issues in
service firms. The study is also descriptive because intentionally we relied on variables and
patterns drawn from the theory and stated in the frame of reference.

4.3 Research Approach


According to Saunders et al (2000), the approach to a research can either be deductive or
inductive. They explain that deductive approach deals with the development of theory
and hypotheses by designing a research strategy to test it. However, the inductive
approach will use data collected to develop theory based on the analysis of that data. As far
as this study is concerned, the deductive approach was chosen since the research is based
on existing literature review. Theories were compared with the empirical findings before
finally conclusions are made.

4.3.1 Qualitative and Quantitative Research Approach


There are two approaches that can be applied by researchers; qualitative approach and
quantitative approach (Denzin and Lincoln, 1994a). According to Yin (1994) the best
method to use for a study depends on the purpose of the study and the accompanying
research questions. Qualitative approach is defined as an inquiry process of understanding a
social or human problem, based on building a complex, holistic picture, formed with
words, reporting detailed views of informants, and conducted in a natural setting.
(Creswell, 1994).
The quantitative approaches can be described as a logical and linear structure, in which
hypothesis take the form of expectations about likely causal links between the constituent
variables stated in the hypotheses, thus leading to the rejection or acceptance of the
theoretical proposition (Eldabi et al., 2002).
This research study would seek to gain a better understanding of CRM (i.e. Customer
Relationship Management) implementation in service companies. The whole concept of
CRM and its implementation is a new management approach and as a result there are not
enough studies on the topic. This provides a reason for the adoption of qualitative

35

approach. Another reason is the fact that there is lack of understanding and divergent
perspective about CRM implementation which supports the chosen approach to be of
qualitative nature. This study is not intended to make generalisations but it is aimed at
developing a comprehensive understanding of the various variables of CRM
implementation.

4.4 Research Strategy


According to Yin (1994), there are five primary research strategies in social sciences:
experiments, surveys, archival analysis, histories and case studies. He claims that each
strategy has certain advantages and disadvantages, which are determined by three
conditions. These conditions are:
- The type of research question posed
- The extend of control an investigator has over the actual behavioral events
- The degree of focus on contemporary as opposed to historical events
According to Yin (1994) these three conditions can be related to the five research
strategies as shown in the table below.
Strategy

Form
of
research
question
Experiment How, why
Survey
Who,
what,
where,
how
many, how much
Archival
Who,
what,
analysis
where,
how
many, how much
History
How, why
Case Study How, why

Requires
control
behavioral events
Yes
No

over Focus
contemporary
events
Yes
Yes

No

Yes/No

No
No

No
Yes

on

Figure 11: Relevant situations for different research strategies (Yin, 1994, p.6)

There is no need to control behavioral events in this research which experiment strategy
emphasizes, this rules out experiment as a research strategy. The proposed research will be
focusing on contemporary issues so historical cannot be an appropriate option. Survey and
analysis of archival records are advantageous when the research goal is to describe the
incident or prevalence of a phenomenon or when it is to be predictive about certain
outcome (Yin, 1994). This left us with only one research strategy, which is case study.
Case study, as a research strategy is defined as an inquiry that investigates a contemporary
phenomenon within its real-life context, when the boundaries between phenomenon and
context are not clearly evidenced and which multiple sources are evidenced and used (Yin,
1994). Case study research emphasises detailed contextual analysis of a limited number of
events or conditions and their relationship. The researcher who embarks on case study

36

research is interested in specific phenomenon and wants to get a deeper understanding.


(Dooley, 2002)
Yin (1994) emphasised that case study has a distinct advantage when a how or why or
in the case of exploratory what question is being asked about contemporary sets of
events over which the researcher has little or no control over the variables. Even though
suspicion may exist using case study as a research strategy due to its unscientific feel, it can
as well be very worthwhile way of exploring existing theory and a simple well-constructed
case study can enable the research to challenge an existing theory and also provide a source
of new hypotheses. Another advantage of applying case study is the fact that it enables an
entire company to be subjected to an in-depth investigation. According to Daymond
(2002. p105) the case may be an organization, a set of people such as a social or work
group, a community, an event, a process, an issue or a campaign
From the above, case study is considered the most suitable research strategy for this project
since it will enable us gain a deeper understanding of a process (i.e. CRM
implementation), which is a contemporary event that we have no control over. In this
particular study, the cases to study are two particular companies that have been faced
with the event of implementing CRM. Their experiences and benefits derived from the
process have been compared and addressed in comparison with the existing theory to
draw conclusions and open up possibilities for future studies.

4.4.1 Sample selection


In selecting a sample, it is important to have a target population in mind. The population
can be described as the specific group that will be relevant to the research study. The
group should possess information relevant to the researcher (Malhotra, 1996). All research,
involves sampling. This is because no study, whether quantitative, qualitative or both can
include everything: you cannot study everyone everywhere doing everything (Miles
and Huberman, 1994: p 27).
The smaller number of cases for which you need to collect data means that more time can
be spent designing and piloting the means to collecting this data. According to Saunders et
al. (2000), sampling saves time and data collection is more manageable.
In this case, service companies were chosen since CRM implementation has been assumed
to be higher in this industry, and therefore worth studying. Romano (1989, p. 36) argued
that there is no precise guide to the number of cases to be included the literature
recommending the use of case studies rarely specifies how many cases should be
developed. This decision is left to the research We chose to select two cases for this
study. One that has been working with CRM and one that is at the beginning stage of its
implementation. This allows us to compare different points of view, gather relevant
information from the different stages and refer to their experiences as we assess the
research problem.
For qualitative research like case study, Perry (1998) explained that the selection of cases is
often purposeful and involves using replication logic and largely depends on the
conceptual framework developed from the prior theory. Patton (1990, p. 181) emphasized
37

that which ever case selection strategy used, the underlying principle that is common to
all of these strategies is selecting information rich cases, that is cases worthy of in-depth
study. Saunders et al (2000), has noted that once a researcher has chosen a suitable
sampling frame and established the actual size of the sample, determining the most
appropriate sampling technique to obtain representative sample is very important. Purposive
or judgmental sampling allows the researcher to use its judgment to select cases that will best
enable the researcher to answer the research questions in order to achieve the objectives
(Saunders et al, 2000). Since the CRM concept is quite new and it is still evolving, not
many companies have implemented it. In order to answer the research questions, we
needed to identify institutions that were familiar with the concept and had been using it.
We then visited several service companies and asked directly to their representatives about
this. After having an opinion on a number of them, we then chose to focus on the ones
that seemed to be most involved with the concept and who would actually be able to
share with us their experience and opinions. Any other technique, rather that judgmental
sampling would not have served our purpose to collect relevant information regarding this
topic.

4.5 Data Collection


Yin (2003) for the purpose of case studies, documentation, archival records, interviews,
direct observation, participants observations and physical artefacts can be useful. These
sources complement each other. He maintains that each of these sources has its own
strengths and weaknesses and no one source has a complete advantage over all the others,
as a result a good case study should use as many sources as possible. According to
Walliman (2001) data may be collected as either primary or secondary. In the context of
this study and for us to achieve its purpose, both primary and secondary data were used.
Secondary data is the one that has been already collected for the purposes other than the
problem at hand. It includes both raw data and published summaries. Secondary data is
very often found inside the organization(s), in the library, or on the Internet, from
consumer research organizations who collect data on varied subjects for purchase.
(Saunders et al, 2000). The advantages with secondary data are that it can be collected
more quickly and it is an easy and inexpensive way of receiving information. It has also
been shown to be useful when performing exploratory studies since it saves the researcher
from reinventing the wheel. Despite these, secondary data can pose a problem of
finding relevant materials. (Saunders et al 2000).
Primary data is a type of data, which is collected and assembled specifically for the research
project at hand (Zikmund, 2000). It can be described as the one collected by the
researcher in order to carry out the research. Primary data can be collected from sources
such as questionnaire, focus group discussion, personal interviews, and telephone
interview. Yin (1994) explained and advocated that the use of more than one source is a
good practice as it increases the validity in scientific studies. Interviews are one of the
methods of data collection used in qualitative research (Ritchie and Lewis, 2003). For this
study, interviews have been the primary data collection method. Interviews are, as

38

mentioned above, one of the most important information source in case studies (Yin,
1994).
The type of interview adopted in this study was face-to-face interviews (also referred to as
personal interviews). Face-to-face interviews have several advantages, e.g. it allows
opportunity for the respondent to freely respond and reveal attitudes and feelings; makes it
possible for probing further and has a higher rate of participation.
(www2.edu.org/NTP/interviews.htm). E-mail was used to make appointments, and
confirm the dates and time for the interviews as well as to send information about the
study (interview guide) developed based on theory prior to the appointments. When it
came to choosing the person to be interviewed, here again we applied the purposive
sampling because it was very important to get hold of a knowledgeable, well informed,
involved and well positioned person within the institution who could have a good
understanding of the company, its strategies and processes. Therefore we contacted people
in management and top management positions, asked for their consent and interest to
participate in the interview, sent them a previous guide to orient the discussion (see
Appendix 1) and finally set the date and time for the meetings.
The actual interview(face-to-face) was conducted by the two of us (Karla and Thomas)
and on the average the two interviews lasted one and half hours with the Marketing
Manager in charge of Private insurance at Lnsfrskringar and the Managing Director of
HSB. The interview was conducted in English since the respondents were very fluent and
could express themselves well in English. In the process of the interviews, a mini disk
recording device was used to record the two interviews which were in the form of
informal conversation. Also, we took personal notes of certain issues of great interest and
importance. Even though an interview guide was sent to the respondents some days
before the interview, the whole interview took the unstructured form as the respondents
were allowed to tell their own stories with intermittent questions and certain clarification.
After the interview, the recorded conversations were transcribed word-by-word and were
compared alongside the notes taken during the interview by us. We also sought
clarification of any part that was unclear and all these took place within 48 hours.
Qualitative Data Analysis
Data analysis consists of examining, categorizing, tabulating, testing or otherwise
recombining both quantitative and qualitative evidence to address the initial propositions
of a study (Yin 2003, p.109) Miles and Huberman (1994) define qualitative data analysis
as consisting of three concurrent flows of activity: data reduction, data display, and
conclusion drawing and verification. Data reduction, data display, and conclusion
verification were described - as interwoven before, during, and after data collection in
parallel to make up the general domain called "analysis" (Miles and Huberman, 1994). In
this view, the three types of analysis activity and the activity of data collection itself form
an interactive, cyclical process.
Pattern matching: For qualitative data analysis, one of the most desirable strategies is to use a
pattern-matching logic (Yin, 1994). Such logic compares an empirically-based with a

39

predicted pattern. In this process, when similar results happen and for predictable reasons,
the evidence produced is seen to involve the same phenomena described in the theory,
and is called "literal replication". In contrast, when the qualitative data analysis produces
contrasting results, but also for predictable reasons, it is called "theoretical replication".
Other strategies used are the explanation building, where the goal is to analyze the
qualitative data by building an explanation about the situation. (Pacitti, 1998); and the
ttime series analysis which essential logic is the match between a trend of data points
compared with a theoretically significant trend specified before the onset of the
investigation, versus some rival trend, also specified earlier, versus any trend based on some
artefact or threat to internal validity. (Yin 1994) He noted that interpreting the data when
the mixed method is used, the following steps are recommended:

look for patterns of agreement - across data sources, by mediating variables, with
literature, with experience;
look for contradictions - across data sources, by mediating variables, with
literature, with experience;
try to resolve contradictions - through alternative plausible explanations for a
finding, by re-examining the data, by collecting specific data to test an alternative
hypothesis;
identify the most important findings - rank and organize them; and
present the findings simply - through charts and tables, selected photos or videos
that illustrate an important point.

Yin (2003) adds two additional specific techniques of analyzing case studies. They are:
1. The logic model, which deliberately stipulates a complex chain of events over
time. The events are staged in repeated cause-effect-cause effect pattern, whereby a
dependent variable (event) at an earlier stage becomes the independent variable
(causal event) for the next stage
2. Cross-case synthesis: comparing two or more cases within a multiple case study or
across single case studies.
In this study, the pattern matching technique will be used to compare data from previous
studies/theories presented in the theory chapter and later chosen for supporting the
research questions formulated. Also, a cross-case synthesis will be used to compare data
from the two cases selected. This is done by looking at the similarities, contradictions and
new information that each company provides in contrast with the one stipulated in the
chosen theories and also in contrast with each other as their experience, results, processes
and timing has been different. The first step after the interviews was then to organize the
information according to the research questions and then compare it as described above.

40

4.6 Criteria for Quality Measurement


In assessing and evaluating the quality of any research, there are basically two major
criteria that are usually applied. These are validity and reliability.
Validity means in essence that a theory, model, concept, or category describes reality with
a good fit. A valid measure is the one which measures what it is intended to be measured.
In fact, it is not the measure that is valid or invalid but the use to which the measure is put.
The validity of a measure then depends on how we have defined the concept it is
designed to measure (De Vaus, 2001).
In this study conscious effort was made to enhance the validity. In the first place, allowing
our supervisor to make critical input into the shaping of the research questions and the
interview guide contributed significantly to the validity of this study. Secondly, the
validity was increased by conducting face-to-face interview with responsible officials of
the two service companies who were very knowledgeable about their companies and,
needs and processes and above all the area of the research. Again, using both interviews
and documentation as sources of evidence has increased the validity. By using multiple
case studies i.e. two service companies for the study might have increased the validity of
the study as it provided the opportunity to gather more information concerning the
problem area of the research.
Reliability, on the other hand is the extent to which a test or procedure produces similar
results under constant conditions on all occasions (Yin, 1994). The object is to ensure that,
if a later investigator followed exactly the same procedures, the same findings and
conclusions would result. According to Saunders et al. (2000) in order to obtain high
reliability researchers must ensure that the anonymity of respondents to questionnaire is
kept and also introducing some form structure to the interview schedule. Both of these
steps were taken for this study.
As a way to increase the reliability of this study, an interview guide was designed (see
Appendix 1) with general questions for the interviewees. This guide was first tested and
examined by several people linked and not linked to the research process to determine its
clarity and that the major aspects of interest were being covered. After having polished the
questionnaire, it was then sent to the interviewees a week and a half before the interviews
took place. This allowed them to examine the questions, consider their answers and have
a general idea about the major points to be addressed during the conversation.
Further, reliability was improved because prior information about the companies was
collected via internet and read some weeks before the actual interview day. This enabled
the interviewers to have a general knowledge of the companies, their interests, and
operations in general before meeting with the managers, which also contributed to asking
the most appropriate and relevant questions. Again, reliability was enhanced due to the
fact that during the face-to-face interviews, a recording device (Mini Disk) was used to
record the conversation and also notes were hand written to highlight specific points of
interest. This helps to minimize certain forms of biases The interviews lasted an average
of one and a half hour each and covered not only the points in the guide but also
developed other areas of interest that arose during the conversations. After the interviews
were over, the recordings were transcribed word-by word and then the relevant

41

information was organized according to the structure of the research questions together
with the notes that were handwritten. These notes were compared, discussed and cross
checked before writing the final text of the empirical data collection chapter by the two
interviewers. Unclear information and doubts were also addressed by a phone
conversation with the interviewees to make sure everything was being interpreted
correctly. This process was all done within 48 hours of each interview to ensure that the
events were fresh in the minds of both interviewees and interviewers. All these were done
with the aim of enhancing the reliability. Lastly, reliability was enhanced because both
respondents from the two service companies were very fluent in English and had no
problem understanding the questions and expressing themselves well.

42

5. Empirical Data Presentation


In this chapter, we present a brief overview of the selected firms (Lnsfrskringar and HSB-Norr),
followed by the empirical data collected during the personal interviews. The information from each
company will be presented separately and will follow the structure of the research questions

5.1 Case One: Lnsfrskringar


Lnsfrskringar is Swedens only customer-owned and locally based banking and
insurance group. Operations consist of 24 independent regional insurance companies and
the jointly owned Lnsfrskringar AB. The regional insurance companies have a
combined total of more than 3 million customers and are the market leader in non-life
insurance, with a market share of 31 %. Lnsfrskringar offers a broad range of insurance
and financial services for companies and private individuals and manages assets of SEK 140
Billion. Today, the bank offers complete solutions in the areas of saving, lending and
payments. This development has proved highly positive, and today represents a full-service
alternative for private individuals and farmers.
Lnsfrskringars guiding principles are: customer-owned, locally based, accessible, and
personal attention. Homeowners and farmers are the strategic target groups for the
banking operations. They are offered a total customer concept with substantial customer
benefits.
The long-term goal is for the majority of Lnsfrskringars insurance customers to also be
bank customers. A clear objective is to raise the level of awareness about Lnsfrskringars
banking operations. This is being achieved though a number of offers that clarify
Lnsfrskringars products and services and make it attractive for customers to combine all
their banking and insurance business at Lnsfrskringar. A total of 542 persons work with
banking operations nation wide. Half of them at the regional insurance companies.
Lnsfrskringar Norrbotten is one of the 24 independent regional insurance companies. Its
area of operation is in the Norrbotten and its headquarters are located in Lule. It has 57
employees with an annual turnover of 250million SWE crowns mainly generated from
insurance premium. The company structure is very slim: Chief executive plus two
marketing managers, one director of claims and one financial manager. Besides them,
theres only one more level composed by the agents or staff of the different departments.
(www.lansforsakringar.se, interview Nov 2004)
CRM at Lnsfrskringar - Norrbotten
The CRM efforts at Lnsfrskringar started several years ago as independent ideas and
activities oriented to provide a better understanding of the customer but it was not until
the year 2000 when these processes started being referred to as customer relationship
management. Up to that date, they have had separate systems and processes running that
were not efficient in providing a good overview of the customer. Since 2000, they started
operating with a new CRM data system designed by Siebel (American company) and have

43

adapted it to the local environment. The manager interviewed was not part of the
conception of the CRM process but has been an active part of its implementation and
operation during the last couple of years.
The manager stated the following as main internal reasons that drove the company to
adopt and implement CRM:
They wanted to bring together the entire customers knowledge that the company
had; their view of the customer was scattered and this made their operations slow
and inefficient.
There was a need for better contact and a more Professional way to target the
customers efficiently from the customers point of view, more personalized.
They were in need of a better internal control over customers activities, concerns
and interests in order to serve them better.
There was a need to attract the right kind of customers to the company. This is
more profitable customers.
Lnsfrskringar expected several tangible benefits from the CRM process regarding the
companys operations implementation. According to the manager, they are already
recipients of benefits like the following:
The new system gives the company a more professional look overall.
They are able to know more precisely the wishes and desires of their customers.
They are enabled to up-sell their products by personalizing the offers to the
customer.
They can categorize the customers based on profitability and growth potential.
They are enabled to control, track and follow up the customers activities at the
institution as well as the customer mobility.
Lower costs for claims (better customer selection)
Lower costs for retaining the customers.
Duration (retention) has improved
Efficient and more professional customer relation that reflects in customer
satisfaction according to studies performed.
Ability to keep track of customers history
Customers are more profitable
The economic result in the company is improving
Improved sales between parts of the company (bank, private insurance, company
insurance etc)
Better control over fraud (customers that just tend to take advantage of the system)
Benefits that the company has been able to provide to their final customers include:
Customers are more satisfied due to the improved and personalized attention
(Lnsfrskringar has the most satisfied customer index according to the studies
performed).
They can receive answers to their concerns promptly since the agent has access to
their information as Lnsfrskringar clients without regard of the department they
call or visit (bank, insurance).

44

They provide a bonus system called lansbonus which gives the customer
discounts based on the number of products the customer has and the longevity of
the customer (how long they have been customers).
Low insurance rates
They can access information online 24/7

Lnsfrskringars manager also mentions that there has been a trend from younger
customers (under 40) in the past years to move around from one company to the next
expecting to take advantage of special promotions. This is a problem because it forces
them to sell and re-sell the same product to the same person year after year. Customers
that leave usually come back as soon as the promotion in the competitors side is over, but
this still generates a cost to the company. For this reason, they have now been taking
advantage of the benefits that they have gathered from their CRM abilities to target
customers better while seeking and promoting loyalty. At this point, the manager
describes his satisfaction level with the CRM process as a very good and prognosticates
that their main focus for the coming times will be increasing customer profitability (more
products per customer) and loyalty.
According to the manager interviewed, once the company started using CRM, the whole
company was affected and probably it showed mostly once the new CRM technology
started operating. He calculates that the investment for the whole system has been in the
range of 500 million Swedish crowns (nation wide). As it was described, a basic CRM
solution package was bought from an American company, Sibel, in the year 2000 and has
been continuously readapted to fit their needs. This system came to operate as a
framework, uniting all the other individual systems that operated before. The old systems
somehow lie underneath the new; but with the new one, the company is now able to
access and exchange information from the different departments. The new system allows
them also to process the information and assess different tools to improve customer service
such as a potential rate that is now assigned to each customer depending on demographic
information and other considerations. This also allows them to operate better marketing,
sales and other efforts, have a better control, not only in terms of activities of the customer
at the company but also of the agents who provided the service.
Processes in the company were also redesign and adapted to the new technology and
mindset. There was a complete realignment in the way things were done and a general
integration of the information within the company. The manager stated as well that the
process itself didnt face any resistance from the staff, but it did take some time to adapt to
the new technology since the new systems were not easy to operate. The new CRM
system is complex. Getting it to run smoothly has taken a lot of time due to the fact that it
operates under a different logic, so the learning process presented a problem bigger than
expected, the Marketing Manager said. However, through education and clearly telling
them what the benefits and effects would be in terms of better view and more satisfied
customers the staff has been able to get the system in place. Once the staff was able to
adapt, they agreed that it would have been extremely difficult for them to manage their
customers without this system and they all feel satisfied as well.

45

When explaining the effort in terms of assigning resources like time and money, the
manager assessed them as follows:

15%
15%

70%

people
process
technology

Figure 12: CRM components as assessed by Lnsfrskringar

This mix is probably not the right one, according to the manager since people should
probably be higher. He explained that in reality there is a very short period to get
things running and therefore, it becomes learning by doing process and people adapt to it in
that way
The manager stated that leadership has been very crucial because of the way that
Lnsfrskringar is set up. Common agreement and financial and logistical support from all
24 companies was indispensable to stir the change specially facing a huge monetary
investment. The formal implementation decision of a CRM system came then directly
from the top management in the year 2000, but for many years they had wanted a system
that provided a 360 degree view of the customer.
He mentioned that the company is the only one in Europe that combines the particular
mix of products that they offer and this made the CRM decision even more urgent. It was
indispensable to integrate the individual data systems in order to operate well and compete
in the industry. They were able to see CRM as a requirement of a successful business
conduct to serve the customer better, attract and select better customers and target better
their campaigns. The manager believes that recognition of the customer is the main
thing and believed that the CRM system provides them with this strategic tool. He
added that integrating the customer information was indispensable since the agents were
not able to handle the customer well: information should be available to all; otherwise
the customer would have had to be transferred from one department to the other. The
integration of all systems of the various functional units has enabled the company to have a
complete view of the customer which in the past was not possible. An employee in the
banking section can know about an insurance customer and be in a better position to
serve the customer well he noted.

46

5.2 Case Two: HSB-Norr


Hyresgsternas Sparkasse och Byggnadsfrening (HSB) was established on 1923 from
Hyresgstfreningen i Stockholm. The motivation was to build and maintain good
apartments with low living costs for their members. The quality and general living
conditions were also a concern for HSB. Today, HSB has over 540 000 members and
4000 unions (bostadsrttsfreningar) in the Swedish territory.
HSB-Norr is then a service company owned by its members and member of the nation
wide HSB company. The companys main areas of services include administration of
housing contracts, maintenance. It also provides its clients (bostadsrttsfreningar, i.e.
BRF) with technical and professional support, financial service assistance, insurance and
loan negotiations among other. HSB used to have banking services as well until 2003,
when the bank was sold out. Since October 2004, HSB has been operating in the
insurance business and the premium charged by HSB is 30% less than customers can find
on the market.
All the members of HSB are considered customers but the closest relationship is held with
the boards of the BRF. HSB mostly with the boards and so far the relationship with these
boards had been quite stable and unquestioned. However, the trend is now changing as
new generations of members start serving on the boards. These new board members do
not have same traditional relation with HSB, in the professional sense. The new
generation of board members has brought up the possibility of going out to find other
companies able to provide cheaper or better services than HSB, so the competition has
risen.
HSB realizes and believes that relations are, and should be the key word in its business
because their particular industry is based upon trust and trust can only be built when
there is a strong relationship.
The organization of the company has drastically changed in the past years. Formally, there
used to be 3 different companies that formed HSB-Norr. These companies merged into
one three years ago. The change happened at a formal level but in practice they had
continued to operate and behave as 3 different companies with different cultures. Today,
the company has basically three formal levels in the organization. The VD, or general
manager for HSB-Norr and there are 3 departments: Administration, Economy (financial),
and technical, all of them supported by the Information department. Under each of these
departments the different functional areas are distributed and now a sales team has been
introduced. They work through all the areas by geographical markets.

47

Figure 13: Organizational Chart HSB-Norr (www.hsb.se/norr, Dec 13, 2004)

At this time, HSB has also submerged into very aggressive building objectives. New
production of apartments in Lule is also a priority for them and this is now handled by
the technical department.
CRM at HSB-Norr
Customer Relationship Management (CRM) has not been fully implemented yet at HSB
but the company is in the process of implementing it within the shortest time possible.
According to the VD, the process has consisted of 1 year of planning and 6 months of
implementation so far. However, HSB has gone through most of the various stages of
CRM implementation by way of restructuring the entire business process, handling the
people component and implementing some of the technology. The company, as the VD
explained, had the need for different systems and IT solutions since they are capable of
collecting more information about the customers for the purpose of serving them well.
The total investment in the CRM implementation process (including only technology and
the new experts hired for this purpose) is in the range of the 2 million Swedish crowns
(locally).
The VD stated the following as main reasons that drove the company to adopt and
implement CRM:
New members of the boards started changing the stable/unquestionable position
that HSB had in the past
The demands of customers were changing towards tailored-made and personalized
solutions; the normal one-size-fits-all contracts were no longer enough.
Competition was becoming very keen
They considered that there was a need to strengthen trust and generate new
relations with the boards.
HSB-Norr considered to have the right timing, environment and resources to face
the change
Internal benefits already mentioned as a result of the ongoing CRM process:
Improved contact with the customers
48

Increase in sales of new and existing services


Possibility to evaluate the relation with the boards
Feedback opportunities
Higher productivity
More efficiency in the organization as a whole.
Input from the BRF board members for product development.
More legs to stand on as a company, more ways to generate revenues.

Benefits that the company has been able to provide their final customers include:
Personal contact from the representatives and top management
Improved communication channels
Improved after-sales services
Provision of market information that affects the BRF (finances, regulations, taxes)
Education and training for the board members
HSB meets the customer when they are available.
Customers feel now that they are part of the development of the company, as their
thoughts are heard and implemented.
Local presence supported by the whole organization
One-stop shopping
State of the art technology in providing services
HSB apartments usually generate a higher price in the market
Internet technology available 24/7 with information and services like online
invoicing and reports among other.
At this point, the VD for HSB-Norr describes his satisfaction level with the CRM process
as a very good and prognosticates that their main focus for the coming times will be to
improve the way in which the relations have been handled to obtain trust and loyalty
from their existing customers. The year 2005 will be then focused on the existing
customers and later (relationship improvement and retention) and, in 2006, they will
move more aggressively to expand their market share.
In terms of the organization, HSB-Norr was restructured almost completely. After the
companies were merged 3 years ago, 80% of the management team was also changed. So,
from having managers with an average age of 60+ the company moved to managers with
an average age of 32. Only this part of the change was already hard to assimilate for the
organization. Now, the company is faced with the implementation of new processes, new
ways of working, new mentalities. A lot has happened at the same time; some have
adapted quickly and for some it has been harder to understand. Another important aspect
is that during the years, HSB has acquired a quite strong position on the market. This has
also been a reason of resistance since it makes it hard to convince people to change when
things are going fine.
The changing process has not been an easy one for the organization to adapt to. To some
degree, everyone has been involved in making it happen but sometimes with a measure of

49

resistance. The staff has all been provided with seminars and meetings where the new
vision has been exposed to them and overall it has shown good results. An example of
resistance to the process was the sales team in their beginning stage. They used to be
managers of an administrative area before with people reporting to them. Now, all
administrative tasks were reassigned so they could focus a 100% of their time to three basic
processes: time to market, time to customer and time with customer. The resistance
came because they perceived the change as a loss of power but just after having the process
operating for 6 months, the team has shown to be extremely successful. The results are
already showing and they are very satisfied themselves. Another example that has been
hard to deal with is the people in what today is the front desk. Their tasks will also be
reorganized so that they can pay unconditional attention to the customers concerns. This
has created some resistance because so far, they have felt that the most important part of
their job is the administrative one (dealing with the paper work, etc) and they have had a
negative perception of the task of attending customer issues. They feel it is less important
and to some degree, they have though that the customer just comes to interrupt their job.
So, they havent received so well the idea of letting go of the administrative area and
attend the customer first, they have felt a bit underestimated and, as the VD described,
probably a bit less indispensable. The way in which this process will be structured is the
task for the next two weeks. The VD has the confidence that once it starts operating, the
staff will be able to perceive the benefits and adapt to the change.
The changes have also required dealing with the organizational cultures. The VD
explained that they work in a very vast area (from Skellefte to Kiruna) and the cultures
tend to be very different. So one of the first things they had to attend was to somehow
merge the general culture and establish a common vision for the company. Now, relations
is the key word. At the same time, reorganizing the company and the different processes
was a priority. Since May 2004 a sales organization was established with 6 people who
were already part of the staff at HSB. Their functions were reassigned and a team leader
was hired to guide them, train them and inspire them in their new task. The biggest
change in this area has been the perspective towards the consumer: they dont come to
us, we go to them and meet them outside the office assured the VD, and they also have
to produce a 5 year tailored plan for each customer depending on their present situation
and how the future looks like.
Another area that has faced a big change is the front desk, as described previously. HSB
now intends to have a service center and move from individual agents dealing with
administrative and customer service functions, to a team of people that works under a
front and back-office structure. They should then be able to have access to much more
information, deal with unique contract agreements, as opposed to the one-size fits all
contract, and a new IT system that can provide them with a better understanding of the
customer. Other examples of processes and activities that have changed within the
company are: the bank that HSB operated before was sold, a new insurance company
started offering services since October and the real estate broker that has been working for
HSB until now will soon be outsourced. She will still work with the HSB name under a
franchise agreement.

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HSB-Norr has also attended the need for new technology to support the CRM process.
For the organization, a new switchboard will come in place this month that will connect
all service centers in the different cities. A new CRM IT system will be fully functional
before next summer comes to provide the staff with updated and complete information on
the customers. So far the investment on this system has been in the range of the 2 million
SEK and is expected at least to duplicate. In terms of the final customers, they already
have access to features like web invoices, email consulting and communication, general
information on services, reports and ordering services online. This has facilitated the task
of the sales team and made the communication with the boards much more efficient
When explaining the effort in terms of assigning resources like time and money, the VD
stated that 50% of the effort has been put into the process, 40% into people and 10% into
technology. He conceded that even though money spent on technology is quite high, this
will not yield any benefits if people and process are not given serious attention and effort.
10%
40%

50%

people

process

technology

Figure 14: Organizational Chart HSB-Norr (www.hsb.se/norr, Dec 13, 2004)

At HSB-Norr the whole CRM implementation process is being led and coordinated by
the VD. He states: overall I am the one leading the effort, stirring the changes. But for
the specific things, he has assigned project managers. One person with IT infrastructures,
another sales, the service center, etc. The VD added that as a leader, my job is to
motivate the employees and set the agenda and the direction in which we should move.
Management then takes the decision as of what to do and the staff decides how they will
do it. The employees are big parts of making the process happen.
The implementation of CRM as explained by the VD is strategic in its perspective at
HSB-Norr. Despite the notion that the company over the years has generated a lot of
revenue and is quite wealthy, it is looking now into the future. According him, the
strong economy today can be the biggest enemy tomorrow as fat lions do not hunt He
believes that the changes currently taking place aim to strengthen the company and
maintain good figures in all the years to come. Right now, the changes are being done
under a positive atmosphere but according to the VD, if changes dont take place now,
they will be forced to take place in the future under much more stressful conditions. The

51

efforts would be then focused on survival instead of growth. So, implementing CRM in
the company is crucial.
Some strategic decisions based on the CRM concept that have been already implemented
are to take care of the customers personally and give them tailor made services, change the
focus from a passive company to a company that reaches the customer to meet their needs
and hears their concerns, taking cultural differences into consideration and providing them
with top of the line quality. As far as the company is concerned, it has been strategically
important to categorize the customers depending on their size and profitability as well.
The integration within the company has been a major concern, as mentioned before.
Bringing together the processes, the different offices, the cultural differences, and
improving the overall function of HSB-Norr as one and only team. In the near future,
concluding the process of implementing the necessary IT systems will bring a better and
more global support to the whole CRM process. This intends to be done within the nest
6 months.

6. Analysis
This chapter contains an analysis of the empirical data presented in the previous chapter. In the
analysis, the empirical data will be compared with the theories presented in the frame of reference and
some support theories, all derived from the literature review. The analysis will follow in the same
structure as the research questions and research problem. We begin with a within case analysis of
Lnsfrskringar AB, thereafter a within-case analysis of HSB. Finally, a cross-case analysis will
follow where the cases will be compared against each other in order to detect and examine common
patterns and anomalies.

6.1 Within-Case Analysis: Lnsfrskringar Norrbotten


According to Goldenberg (2000) CRM is not merely technology applications for
marketing, sales and service, but rather, when fully and successfully implemented, a crossfunctional, customer-driven, technology-integrated business process management strategy
that maximizes relationships and encompasses the entire organization. In Lnsfrskringars
case, this concept started to shape up as such after the year 2000 when a conscientious
management decision came to restructure the separate systems and processes that used to
run in the company since they had proven to not be efficient in providing a good
overview of the customer. As mentioned in the theory chapter, there is a whole scope of
definitions and different perceptions of CRM. This was also confirmed at Lnsfrskringar
when the manager explained that the company had been operating with diverse ideas and
activities oriented to provide a better understanding of the customer but they had never
formally thought about them as CRM until the technology component came in place.

52

According to previous studies, CRM does not have a high satisfaction level among the
managers and CRM projects tend to be unsuccessful, but as Kotorov (2003) describes,
there is a handful of companies that have proven the opposite. Lnsfrskringar is one of
them, since the manager stated to have a high satisfaction level with CRM after its
implementation.

6.1.1 How can a firms major reasons and benefits of implementation of


CRM be described?
As mentioned before, Swift (2001) has summarised the benefits of CRM implementation
in terms of cost reduction and/or profitability, customer satisfaction and loyalty. He
mentions for example the drop in the cost of recruiting customers, the benefits of long
term consumers, and the evaluation of customer profitability. At Lnsfrskringar, it was
learned that benefits concerning cost and profit improvement were present; some of them
being: lower cost of production, improvement in sales volume, ability to cross and up sell
and the categorization of customer profitability and potential. In terms of customer
satisfaction, Lnsfrskringar has also experienced results as they assure that customers
claim to be more satisfied due to the improved and personalized attention they now
receive, the fact that they can receive answers to their concerns promptly since every
agent is well informed and the low rates in the insurance premiums. Lnsfrskringar has
assured to have the highest index of satisfied customers according to the studies performed
by LTU.
In the case of retention and loyalty, mentioned by Swift (2001),
Lnsfrskringar states that they have started to show improvement in duration of
customer loyalty and pursue to take advantage of this condition by offering a bonus system
called lansbonus; which gives the customer discounts based on the number of products
and the longevity of the customer with the company. This effort can be also linked to
Seth et al. (1991), as he has stated the benefits in terms of customer value creation. Chi et
al (2004) can be functional, social, emotional and perceived sacrifice. From all of these, it
is also shown that the company creates value for their customers mostly in the form of
functional value.
Curry and Kkolou (2004) outlined major benefits and reasons for adoption of CRM. At
Lnsfrskringar the simplifying of the infrastructure, shrinking the workflow and
elimination of non-productive information flow was present and clearly visible. They also
claim that their customers are more satisfied and their profits have increased, which also
matches the theory.

6.1.2 How can the components of CRM implementation (i.e. people,


process and technology) be described?
CRM implementation, as Goldenberg (2002) stated, requires the integration of key
components of people, process and technology within the context of an enterprise-wide,
customer-driven, technology-integrated, cross-functional organization. All these three
aspects were identified at Lnsfrskringar and are in operation.
As noted by Davenport and Short (1990), information technology has been recognized as an
enabler which radically redesign business processes for attainment of dramatic
53

improvements in organization performance. This position was evidenced at


Lnsfrskringar because as the manager put it since 2000, with the introduction of the
new CRM system bought from Siebel, the whole process has changed. It was also
discovered that database technologies are driving the company into high performance.
This view is supported by theory that advances in technology are crucial to the
functionality and effectiveness of CRM systems.
The new data system, which is now operational in the company, is helping to manage its
relationships with customers and according to the manager it would have been extremely
difficult for them to do this without this system. Eckerson and Watson (2000) point out
that using technology to optimize interactions with customers; companies can create an
integral view of customers to learn from past interactions to achieve future ones.
Lnsfrskringar is using technology to have a complete view of the customer by
integrating with the help of the new CRM system, all customer information, history and
their activities at the company. This also supports Dyches (2002) theory about the need
of all data being stored in a centralized cross-functional system which shows a single
version of truth about the customer. Lnsfrskringar also shows evidence of having
operational and analytical CRM fully integrated (i.e. front and back office operations). In
the case of the collaborative CRM which was also stated by Trepper (2000), there
customers have the possibility of accessing information online, contacting agents to answer
their concerns online and through the phone and also get information about the products
and prices. The only thing that is not available is buying insurance online. They can apply
for it but they must wait for the company to answer once it has been approved. According
to the manager, the system is complex and requires constant adaptations. Goldenberg
(2002) further warned that companies implementing CRM should not purchase CRM
software that has been pre-built by a CRM vendor and then forcing the not-built here
process upon users. Lnsfrskringar did buy a pre-built system but they claim to have
adapted it to their specific needs.
In the implementation of CRM at Lnsfrskringar, the whole business process was affected
and changed and this called for a shift in the way things used to be done before CRM
came into the picture. The stand-alone and individual systems became sub-systems of a
bigger, more complex concept. This fits well with Goldenbergs (2002) when explains
that the process component of CRM is delicate and that many times these business
processes need to be re-designed or broken and the non-optimal ones, replaced.
According to Chen and Popovich (2003), even though technology and business process
are both critical to successful CRM implementation, it is the individual employees who
are the building blocks of customer relationships. He added that the people component is
the most difficult given the sensitivity of users to change, stressing that employees who
have not properly understood the reasons for the change, who do not participate in
formulation for the change, who do not receive sufficient information about the change,
or who do not get sufficiently trained on the change will often be adverse to that change.
What was found out at Lnsfrskringar shows that all the employees were involved in the
process. However, according to the manager, even though there was no form of
resistance, they were uncomfortable with the new system due to the learning problem
associated with the change. But it was discovered that the company managed to educate
54

the employees, telling them clearly what the benefits and effects would be in terms of
better view of the customer; more satisfied customers and therefore, more satisfaction for
themselves. Lnsfrskringars manager also used incentives for the staff and stated that
they have been able to get the system in place.
According to Limayem (2004) the right mix of CRM components in terms of effort
should be 70% people, 20% process and 10% technology. This is illustrated in figure 15.

technology
10%
process
20%

people
70%

Figure 15: Developing the right mix of people, process, and technology (Limayem, M., 2004)

15%
15%

70%

people
process
technology

Figure 16: CRM components as assessed by Lnsfrskringar

However, this was not the case at Lnsfrskringar, as illustrated in figure 16. In assessing
values to the mix of components in terms of time and money, the manager explained the
effort in the terms shown below. This clearly demonstrates that they still consider CRM as
a technology tool that will enable them maintain long term- relationship with their
customers.

55

6.1.3 How can the key factors of CRM implementation (i.e. strategy,
leadership and integration) be described?
Many theories discuss the need that in implementing CRM, certain key factors ought to
be given serious consideration. Crosby (2002), emphasizes that CRM must begin with a
business strategy, which drives the organization and business process. The empirical data
shows that at Lnsfrskringar the management team realized its inability to have a
complete view of the customer before implementing CRM. In accordance with theory by
Pinto and Slevin (1987), management was very crucial due to the huge financial
investment involved and setting the strategic vision of CRM project at Lnsfrskringar.
Also, Lnsfrskringar required a complete support from all the different locations in order
to plan and motivate the change, assign the resources and proceed with the
implementation which shows the strategic orientation and intention of the CRM
implementation concept. So, just as Crosby (2002) stated, CRM begun with a strategic
thought which then lead to the re-design of the business process and the use of new
technology. The Lnsfrskringar claims that as a result, they have a complete view of the
customer. The manager further explained, Our company has been able to build the right
type of customer relationships. This is in line with Verhoef and Donkers (2001) theory
on firms building the right type of customers.
Bradshaw and Brash (2001) discussed the importance of management styles, which Bull
(2003) refers to as effective leadership. This was also confirmed at Lnsfrskringar. Because
of the way the institution is set up, the decision, vision and drive had to come from top
management and then somehow permeate to the rest of the 24 companies involved. This
also supports Senges (1990) concept of localness since the process had to empower the
local offices to make certain decisions. The manager mentioned also that there was a need
to motivate the rest of the staff for the change. This was done by the local leaders and
according to him, turned out to be a very positive experience. This is also in accordance
with the basic principles of CRL (customer relationship leadership) mentioned by
Galbreath and Rogers (1999)
Chen and Popovich (2003) argument for data and information sharing enterprise-wide
was found to be existing at the company. In the words of the manager, information
should be available to all; otherwise the customer would have had to be transferred from
one department to the other. It was also evidenced the way that CRM has changed the
day-to-day work at the company and how the different functions and departments of the
company have integrated and share information, just as Greenberg (2001) sustains. The
integration within the organization was described as a direct result of the implementation of
the IT system.

6.2 Within-Case Analysis: HSB-Norr


Customer Relationship Management (CRM) implementation is an ongoing process at
HSB-Norr at this time. According to the VD, the process has consisted of 1 year of
planning and 6 months of implementation so far. However, HSB has gone through the

56

various stages of CRM implementation by way of restructuring the entire business process
and the people component and implementing some of the technology. The definition of
CRM by Goldenberg (2000) could then be recognized and the process has shown already
a clear resemblance to the theory though it is not complete. Furthermore, the lack of a
clear definition of the CRM concept (Kotorov, 2003) is not so perceivable at HSB since
the process was clearly thought before starting the implementation. It did not come out as
a result of the circumstances but as recognition of a need and all the steps have been
clearly thought of. So the implementation at HSB has followed an integral restructuring of
the company and clearly intends to place the customer at the center.
Kotorov (2003) describes a handful of companies that have proven to be successful with
the implementation of CRM. At HSB, even though the process is not complete, the VD
described his overall satisfaction level as very good, since they have already obtained
important benefits out of the implementation process.

6.2.1 How can a firms major reasons and benefits of implementation of


CRM be described?
The major reason and benefits of firms implementing CRM stated by Curry and Kkolou
(2003) and Swift (2001), have taken place at HSB. According to the VD, benefits that
have already taken place in terms of cost and profit have to do with an easier, more
effective way of communication with the customers which has resulted in an increase in
sales. Curry and Kkolou (2003) dont mention anything about product development
specifically, but this has come up as a major benefit under the experience of HSB.
According to the VD, customer satisfaction has also increased and been manifested in the
various meetings as they feel taken into account for future decisions that will affect them
directly. In the case of retention and loyalty, mentioned by Swift (2001), it is still to be
seen what HSB can accomplish once the whole process has taken place. This is a very
important topic for them since until now their relationship with the boards had been
unquestioned and now, it is not only questioned but also the time to renegotiate the
contacts is soon to arrive. By that time, the results of implementing CRM will be easily
measurable.
The theory by Bristol group (2004) on value creation is identified at HSB. The value HSB
creates for its customers can to a large extent be described as functional as well as
emotional. According to the VD, the fact that HSB does not compete on price supports
the emotional value creation perspective. However, creating value through their local
presence, product quality and technology can be associated with functional value. There
was no empirical finding to support social value as noted by Chi et al (2004).

6.2.2 How can the components of CRM implementation (i.e. people,


process and technology) be described?
In line with Goldenberg (2002), all the three components of CRM implementation have
been identified at HSB. HSB has a firm belief in technology to assist in the CRM
implementation and this view supports Davenport and Short (1990) position on
57

technology to bring change in the work process. HSB is about to put in place a new
switchboard of telephone interconnection that will link all service centers at different
cities. Other IT technologies currently in operation, which give access to customers,
include web invoices, emails consulting and communication, online reports and ordering
services online. What is important is that HSB makes effective use of the Internet in this
regard and this supports Peppers and Roger (2000) view of the use of Internet in building
lasting relationships with e-customers by offering services in traditionally impossible way.
IT has then been an enabling tool for HSB to re-design its entire organization and thus
affirms the theory by Hammer and Champy (1993). It must however be pointed out that
even though Goldenberg (2002) emphasizes the need to have all the three components in
place, HSB is yet to put in place a new CRM system. As result confirmation of the extent
of operational and analytical CRM (Trepper, 2000) could not be made. Even though
Goldenberg (2002) warned about shopping for CRM systems, HSB has already purchased
a system from an external company and it intends to be fully functional by the summer.
The business processes at HSB has been reorganised as an important component and has
required a long period of redesigning. According to Goldenberg (2002), taking
inappropriate steps in this area could easily lead to chaos. HSB has been conscientious
about this and has taken a long time to plan and study the optimal way for restructure to
take place. This was considered as the first step of the process. According to the VD, HSB
has restructured almost completely. The changing process at HSB has not been easy for
the company to adapt to and this supports theory about the complexity and difficult nature
of changing business process. Goldenberg (2002) stressed the need to eliminate nonoptimal process and this was found out at HSB.
As noted by Chen and Popovich (2003), HSB has not found it easy to effectively manage
the people aspect of the change CRM implementation requires. The VD explained that
some have adapted quickly and others havent. HSB has project teams working on the
various aspects with leader guiding, training and inspiring them in the new task. This is
supported by Chen and Popovich (2003). Cap Gemini IDC (1999) theory is seen to be in
place at HSB as the implementation team is made up of representatives from sales,
marketing and information technology and customer service. At HSB, to some degree, all
employees have been involved in the process but some with a measure of resistance.
About 80% of management team was changed before the process started and this affected
the whole company environment. After this, many functions and tasks were either
eliminated or re-assigned when the CRM process began; which agrees with Chen and
Popovich (2003). Despite the resistance, management at HSB is using seminars and
meetings to educate the employees, which moves in line with theory. The VDs
explanation of the resistance faced among employees especially the administrative staff is
due to the fact that they perceive administrative functions (dealing with papers) as more
important than attending to customers concerns. This situation of perception of tasks
among the staff was never mentioned in the theory studied.
According to Limayem (2004) the right mix of CRM components in terms of effort
should be 70% people, 20% process and 10% technology. This is illustrated below in
Figure 18 and figure17 show the mix estimated at HSB, which have 50% process, 40%
people and 10% technology.

58

technology
10%
process
20%

people
70%

Figure 17: Developing the right mix of people, process, and technology (Limayem, M., 2004)
10%
40%

50%

people

process

technology

Figure 18: CRM components as assessed by HSB-Norr (personal interview)

The above figures show that HSB does not consider CRM as centred in technology since
it gives 10% effort to it, which agrees with what Limayem (2004) stated. However, the
effort HSB assign for both people and process fell short of the right mix as demonstrated in
figure above 17.

6.2.3 How can the key factors of CRM implementation (i.e. strategy,
leadership and integration) be described?
The theory by Bull (2003) about CRM implementation factors was evidenced at HSBNorr. CGI Inc. (2004) and Jill Dyches (www.crm2today.com) view of CRM is present
at HSB-Norr since the CRM ongoing process has had and continues to have a strategic
perspective of CRM. Several specific actions support this idea, for example, changing the
focus to have the customer as the center and provide personalized services, considering the
internal cultural differences, categorizing the customers depending on their size and
profitability, among other. This is in tune also with CRM Guru (2003).
Pinto and Slevin (1987) refer to new forms of leadership being required for the CRM
process to take place and at HSB-Norr, this factor was clearly visible not only in the style,
but also in the physical change of the leaders. As it was stated by the VD, before he came
to HSB-Norr, drastic decisions had taken place in terms of changing the management
team. The average age went from 60 to 32 and only this brought a big switch in
mentality, management styles and vision to HSB-Norr. The CRM process begun after this
and thanks to the strategic view and vision, the leaders have been able to implement it

59

with great benefits. All aspects cited by Galbreath and Rogers (1999) when referring to
CRL (customer relationship leadership) were found to be true at HSB also. The
importance of the leaders being technology savvy shows in the efforts to connect back and
front office, the new phone system, the new Internet applications for customers. The need
of building teams to act in cooperation with each other shows in every department and, as
stated by the VD, it is especially successful in the new sales team. And finally, the
atmosphere of innovation has been promoted by integrating all the staff in the
reconstruction of the processes, assignment of the new tasks and product development. To
some extent, Senges (1990) concept of localness is also recognizable since some
functions will be shared and delegated to the local offices around Norrbotten. Finally, it is
important to mention also that the decisions regarding CRM have been launched directly
by the VD and top management team who have also been an active part of the process
and have had cooperation of team leaders in some areas.
Integration within the organization has also been a key concept for HSB-Norr, as stated by
the VD and in accordance with Greenberg (2001). The route of bringing together the
three companies that HSB-Norr was divided into, as well as integrating the functions of
the departments, bringing together some tasks by geographical area, the integration of the
front and back office functions into an all rounded service centre (which is now ongoing)
and finally the intention of installing an IT system that will integrate all functions and
locations.

6.3 Cross-Case Analysis


In this section cross-case analysis will be made to examine if possible differences and/or
similarities exist in the benefits of CRM implementation, components of CRM and key
CRM implementation factors and through the study of this, reach for the answer of the
research problem.
Goldenbergs (2000) definition of CRM was identified in both Lnsfrskringar and HSBNorr. Both consider CRM as a cross-functional, customer-driven, technology-integrated
business process, management strategy even though they emphasize different aspects that
will be mentioned later. Some similarities found in both service companies, apart from the
definition stated, are the fact that the processes took place as a result of recognition of a
specific need in the organizations to reach their customers. This is in line with Peppers and
Rogers (1999) that maximizing the lifetime customer value leads to customer retention
and customer profitability. Also, both managers interviewed declared to have a high
satisfaction level with the implementation of CRM in their companies. This contradicts
the affirmation made in the theory chapter which regarded the implementation of CRM
as unpopular (Rigby et al., 2002).
One discrepancy found between the companies was the timing. In Lnsfrskringars case,
the CRM implementation process was launched, according to the manager, in the year
2000 while at HSB the process is still taking place and started about one and a half year
ago. This allowed reaching the opinions of the managers at different stages of the
implementation processes.

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6.3.1 How can a firms major reasons and benefits of implementation of


CRM be described?
Curry and Kkolou (2004) outlined major benefits and reasons for adoption of CRM. At
Lnsfrskringar some of reasons for adoption that were mentioned by the manager were
the intention of simplifying of the infrastructure, shrinking the workflow and elimination
of non-productive information flow. HSB-Norrs VD the increase in competition and
changes in the expectations of the customers.
Swift (2001) and Curry and Kkolou (2004) postulated some benefits that could accrue to a
firm implementing CRM. Those relating to cost and profit such as lower cost of
production and the ability to cross-sell were found to be consistent with empirical data
found at Lnsfrskringar. Both companies mention the improvement in sales volume and
categorisation of customer based on profitability and potential. This confirms theory by
Bull (2003) and Galbreath and Rogers (1999). The HSBs VD mentioned that as a result
of implementing CRM the lead time for new product development is shortened as a result
of increased amount of inputs from customers into the product development. This could
however not be confirmed either by theory or at Lnsfrskringar.
In terms of customer satisfaction, both companies assured to have received good input
form their customers as a result of the CRM implementation effort. The all claim to be
more satisfied and this is in conformity with Curry and Kkolou (2004). According to the
Lnsfrskringars manager, their customers are satisfied due to improved and personalised
attention they now receive and the fact that they can receive answers to their concerns
promptly. This sentiment was shared by HSBs customers, who according to the manager
have also experienced satisfaction because they feel that their concerns are now being
taken care off. Swift (2001) mentioned also retention and loyalty as benefits of CRM
implementation. This topic shows a bigger gap between the companies experience.
Lnsfrskringars manager maintains, for example, that they have experienced
improvement customer loyalty. HSB-Norr is still waiting to see the results in terms of
retention and loyalty but are actively perusing these benefits.
Seth et al. (1991) and Chi et al (2004) linked the benefits of CRM to customer
satisfaction, which both companies stated to be striving for. Lnsfrskringar by
introducing promotional tools like the Lans-bonus and better rates for insurance premiums
and HSB by local presence, product quality and technology. Both companies showed
evidence of providing functional value and HSB, to some extent, emotional value. None
of them mentioned any evidence of having other kinds of value creation mentioned on
the theory.

6.3.2 How can the components of CRM implementation (i.e. people,


process and technology) be described?
Goldenberg (2002) postulated that CRM implementation requires that people, process
and technology be given serious consideration as each component presents significant
challenges. He further stated that it is the ability to integrate all three dimensions that

61

makes or breaks a CRM system. Empirical findings show that the two service companies
have all the three aspects in place and were given various degree of attention.
Lnsfrskringar has fully integrated its IT systems. Both companies recognize information
technology as a support tool in the process redesigning. According to the manager
interviewed at Lnsfrskringar, their new CRM system bought from Siebel is driving the
company into high level of performance. Even though HSB is yet to fully implement the
technology aspect of CRM components, it has a firm belief that the implementation of
the IT system that will take place in a 6 month period, will bring a complete change in
the work processes. This assertion is supported by Davenport and Short (1990). Although
HSB is still in the process of rolling out a full CRM system, the idea of putting in place a
new telephony switchboard to connect all their offices, which also forms part of the
companys CRM technologies evidence its intention to leverage technology to bring the
desired change at the work place.
Lnsfrskringar has fully integrated both operational and analytical CRM which makes it
possible for them to have a complete view of customers. This supports Greenberg 2004).
However, this could not be confirmed at HSB. Collaborative CRM noted by Trepper
(2000 on the other hand was evidenced in both companies though the use of Internet
technology, and other touch points. Giving customers the possibility of accessing
information online, contacting agents through phone and E-Mail are some examples of
this. Another commonality is that the two companies use their CRM systems to better
manage their customer relationships and therefore this affirms Pepper and Rogers (2000).
In both cases, the Internet was seen to have been put into effective use in building lasting
customer relationships. Also, both companies admitted that the CRM system is complex
because as the manager of Lnsfrskringar explains it incorporates a lot of data and as
noted by the VD at HSB that changing the process at HSB has not been easy to adapt.
In this area it is good to mention that both companies have purchased their CRM IT
systems from a third party.
Process as a component of CRM implementation is considered to be most delicate and
many cases requires redesigning and re-alignment; removal of broken and non-optimal
ones (Goldenberg, 2002). In support of this theory, it was revealed at both companies that
all the business processes have been affected and redesigned and re-aligned through the use
of information technology as stated by Hammer and Champy (1993). It also came to light
that at Lnsfrskringar that the old, stand-alone and individual data systems have become
sub-systems in the new data system. However this could not be confirmed at HSB as the
CRM process is ongoing. One aspect about the process component at Lnsfrskringar is
the fact that the CRM software purchased from Siebel was modified and changes made to
suit the companys local working environment and this supports Goldenberg (2002)
warning that companies about the risks of forcing the not-built here process upon users.
At HSB they have also purchased the CRM system outside the company and intends to
have it locally configured according to their specific needs.
Chen and Popovich (2003) argued that despite the fact that technology and business
process are fundamental and important to CRM implementation success, the people
aspect especially the employees should be given due consideration. They explain further
that the people component is the most difficult. These sentiments in theory were
discovered in the two companies. Employees in both companies were involved in the

62

process. Though some of them were quite uncomfortable, no remarkable level of


resistance was experienced by Lnsfrskringar. But the situation was different at HSB as
the whole company went through drastic changes before the CRM implementation
process started. Therefore, the employees at HSB have had a harder time adapting to the
overall changes and some still struggle with the idea. However, what became clear is that
in both companies, through seminars, training, interaction with the staff and explaining
the CRM concept, have managed to get the system in place and to receive the linked
benefits. Further, empirical findings from both companies suggest that the implementation
of CRM at Lnsfrskringar and HSB was started and supported by top management.
It has been stated by Limayem (2004) that the right mix of CRM components (defined as
the total effort required) should be: People 70%,
Process 20%, Technology 10%.
However, it was found that none of the companies in the study declared to have the mix
as stated by Limayem (2004). At Lnsfrskringar, the effort in percentage for the three
components of CRM implementation is 15% for people, 15% for Process and 70% for
technology At HSB, the effort, as explained by the VD was 50% for Process, 40% for
People and 10% for Technology. This is illustrated as follows.

MIX OF CRM COMPONENTS


80%
70%
60%
50%
people
process

40%

technology
30%
20%
10%
0%
Limayem (2004).

Lnsfrskringar

HSB-Norr

Figure 19: Comparison chart of values assessed to the CRM components.

In the figure 19 a comprehensive illustration of the differences are shown. The figure
includes all three perspectives of the mix (theory and both companies).

6.3.3 How can the key factors of CRM implementation (i.e. strategy,
leadership and integration) be described?
In line with Bull (2003), empirical data show CRM is a complex and holistic concept that
requires strategic perspective, leadership and integration. It was found that all the
companies recognized and considered the three key factors stated above. Empirical
findings confirm that both of them view CRM implementation from a strategic

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viewpoint. Both of them started the process as an initiative of top management to focus on
the customer and give a better service, which shows their involvement, provides the
support and global view required to implement CRM. Lnsfrskringar evidenced the
strategic perspective also since they were in the need of coordinating with all 24
companies involved in order to make the process effective and engage all the financial
support required. HSB on its side, had to restructure the whole company and find the
right orientation, which was chosen to include the CRM implementation process as well
as the involvement of all local offices. Moreover, the strategic perspective has resulted in
targeting, categorizing, communicating and doing business with the right type of
customers. All this based on customers profitability as again this fine tune with Verhoef
and Donkers (2001), CRM Guru (2003).
The leadership factor as a requirement for consideration in any CRM implementation as
noted by Galbreath and Rogers (1999) was very much significant issue in both companies.
The rolling out of CRM systems received considerable leadership attention and both
companies admit that CRM implementation was a management inspired action. The
manager at Lnsfrskringar noted that for many years management had wanted a system
that could provide a 360 degree view of the customer. Moreover, in line with Pinto and
Slevin (1987), it was discovered that leadership plays a crucial role in authorizing the huge
financial investment and setting the strategic direction of the CRM project. This view was
emphasized by the VD of HSB-Norr as he stated: overall, I am the one leading the
effort, stirring the changes, and setting the direction and agenda of the whole process.
Another finding quite interesting from the empirical findings is that the VD of
knowledgeable about technology as a strategic tool in customer relationship building and
very determined to push ahead to full implementation status of CRM. Even though there
are no traces of evidence to the contrary at Lnsfrskringar, it could not be confirmed in
this respect.
Both Madu Assumpta (2003) and Chen and Popovich (2003) theory about full integration
of back-end operations and front-office application is at work and fully integrated at
Lnsfrskringar. It has integrated the individual and stand-alone data systems into a
holistic one which provides a better view of the customer than before. However, HSB is
still in the process of integrating all the functional processes and has accomplished them
mostly in the organizational area but not much could be said about their level of
integration within IT since it has not yet been completed.
One difference that was found between the companies is that the manager at
Lnsfrskringar did not mention anything about work teams, as did the VD at HSB. At
Lnsfrskringar, the manager described the organization, after the management level, as
just individual workers. At HSB on the other hand, it was clearly stated that they operate
with teams and team leaders.
In both companies there is no reported conflict among employees as theory suggests that
the release or sharing of data to another function or department leads to a loss of power
and breeds conflict. What was found at HSB is a general discomfort with the initial
reorganization of the tasks, but also, in the departments where the process is fully in place,
the level of satisfaction of the employees has reported to be high, according to the VD.
Finally, the concept of localness described by Senge (1990) was found to be true in both
64

companies. At Lnsfrskringar since they are part of 24 others and at HSB-Norr since the
office in Lule heads all others in the Norrbotten area.
In terms of integration within the organization, there are major differences in the statements
that both managers expressed even though both admit this concept to be central in the
implementation of CRM, in accordance with Greenberg (2001). At Lnsfrskringar, the
integration was described to happen as a direct result of the IT system, when all the
information was available to all functional departments. At HSB, the integration was
described as a major part of the process. Bringing together the functional and regional
operations and redesigning the processes first so that they integrate the appropriate
technology later.

7. Findings and Conclusions


Here we present the findings and conclusions with the aim of reaching the research purpose and answer
the research questions. Also the implications for management, theory and future research will be
stated.

7.1 Customer Relationship Management


Customer relationship management (i.e. CRM) is one of the topics of the moment in the
business arena. Its requirements for new and updated technology, the change of scope
towards the customer and the necessities for integral change within the organizations make
the implementation process a matter for great attention and careful planning. This research
focused in investigating this process and its main purpose has been to gain a better
understanding of CRM (i.e. Customer Relationship Management) implementation in
service companies.
Two service companies were chosen as stated by Goldenberg (2000) and the empirical
findings have supported the theory that defined CRM as not merely technology
applications for marketing, sales and service, but rather, when fully and successfully
implemented, a cross-functional, customer-driven, technology-integrated business process
management strategy that maximizes relationships and encompasses the entire
organization.
It was interesting to find that, even though the basic concept of CRM was well
understood and their main objective is to center themselves in their respective customers,
the interpretation of the CRM concept was quite different and emphasized different areas.
We believe this can be attributed not only to the fact that the companies were at different
stages of the process, but also implemented CRM under very different circumstances,
realities and structures within the organizations. Another interesting finding is the opinion
of the managers in terms of their high satisfaction level with the CRM process. As far as
we could appreciate, this can be attributed to the fact that both companies have been able
to receive benefits that they can directly relate to the CRM implementation.

65

In order to fully achieve the research problem, three questions were postulated and will be
answered below:

7.2 Research Question One: How can a firms major reasons and benefits of
implementation of CRM be described?
In this study especially from the empirical data and analysis sections, it has been revealed
that service firms benefit from the implementation of CRM. The companies have
benefited from CRM by way of providing customer value, high level of customer
satisfaction, reduction in operation cost, profitability etc. These are in harmony with Swift
(2001) and Curry and Kkolou (2004). In support of theory by Seth et al (1991),
Lnsfrskringar and HSB create value for their customers. However, the study revealed
that Lnsfrskringar, in an unconscious manner pursue functional value creation tactics
which could make customers not bonded to the company for long-term relationship. This
revelation is in order with theory that some firms create functional value using price or
technology that instead of creating value for the customer rather creates shareholders
value. Though the findings show that HSB creates both functional as well as emotional
customer value, it must be noted that emotional value should be the ultimate aim
regarding the type of value firms create for their customers, if they want to avoid shortterm relationships and take advantage of long-term relationships that impact positively on
satisfaction, retention and profitability.
Empirical findings about Lnsfrskringar and HSB confirm theory that there is a positive
correlation between customer satisfaction, retention and loyalty. The study uncovered that
customer satisfaction in the two companies is understood by the managers to be quite
high. It is believed that if the companies are able to create emotional value that is less
possible to duplicate by competitors, the customers will be emotionally charged and their
response elicited; customers will feel bonded and this can contribute to customer
retention, loyalty and ultimately, profitability. The expectancy of the benefits is always a
major drive to the implementation of a change and in this case a central motivation for the
CRM implementation process to take place. Other reasons for implementation are the
realization of the specific needs in terms of market, competition and other macroeconomic factors. It must be emphasized that what is still to be seen is whether in the long
run these benefits will continue to show and if the customers will prefer the company over
its competitors as a result of the implementation of CRM.

7.3 Research Question Two: How can the components of CRM


implementation (i.e. people, process and technology) be described?
The studied companies have shown that even though firms to some extent consider CRM
as a technology solution, this could not be found in an explicit statement by the
companies.

66

The study has shown that the two companies have all the three components of CRM
working, even though they are treated differently. This is not an unusual finding since
both change processes had to adapt to the specific conditions, timing and environment
within the organizations. It was found that Lnsfrskringar is quite ahead in terms of the
level of integration of all the components due to the fact that it started earlier. HSB, on
the other hand, is still in the rolling out phase. We discovered that, as they reach the final
stage of CRM implementation, all the components will be fully integrated as postulated
by Goldenberg (2002) and Chen and Popovich (2003).
The two companies in this study do recognise that innovations and advancement in
technology could be harnessed and leveraged to radically re-engineer business process and
build stronger customer relationships. This perspective is in harmony with Davenport and
Short (1990). The findings from this study also confirm theory that technology in the
form of data warehouses and particularly the Internet has brought momentous change in
the work process and has indeed catapulted high level of organisational performance. This
might be explained by the fact that probably the most tangible and immediate evidence of
the changes in the day to day work are the ones liked to the use of technology. The
studied companies have shown also that there is a willingness to shop for IT solutions from
external providers. They both claimed that changes were or would be made to the system
to adapt it locally but the basic package was outsourced. The reasons for this were not
clearly stated but we believe that companies feel safer to adapt to systems that they can see
in than start from nothing and be responsible for its full development. This also confirms
theory that stated that the market for CRM solutions is growing.
The actual and according to Goldenberg (2000), most delicate component of CRM is the
re-design in the companys processes when implementing CRM. Both companies day to
day operations and response to the customers was affected by the implementation of
CRM. Tasks had to be reassigned and the overall way of approaching them was altered.
We also found out that employees at all levels in the two companies have been involved
in the CRM implementation process. This was shown to be very positive despite the fact
that there was discomfort and to some degree, resistance. It is believed that through
education, training and seminars, and one-on-one conversations, management could
succeed in persuading the staff to push ahead with the CRM project. This is a quite
important finding when it comes to the implications of employee participation. We can
deduce that being involved in the process turned to be most positive in comparison to
having had the process imposed to them, especially when considering the staff as the
internal customers of the change.
Probably the most evident proof of discrepancy regarding the CRM process came when
showing what the managers considered the mix of the CRM implementation process in
their respective companies. The following chart shows the theory and the opinion of the
companies individually.

67

MIX OF CRM COMPONENTS


80%
70%
60%
50%
people
40%

process
technology

30%
20%
10%
0%
Limayem (2004).

Lnsfrskringar

HSB-Norr

Figure 20: Comparison chart of values assessed to the CRM components.

From this, the mix of components in terms of effort evidenced that Limayem (2004)
supports the idea of people being the component that requires more effort, while
Lnsfrskringar showed to have paid more attention to the implementation and
adaptation to technology. Process and people had small and equal designations. However,
this cannot be the official perspective of the company as throughout the interview such a
view was not explicitly stated. HSB shows more of balanced position, where the
components even though they do not match theory, still behave in a similar way. People
being the one with a higher value, then process and lastly, technology.

7.4 Research Question Three: How can the key factors of CRM
implementation (i.e. strategy, leadership and integration) be described?
Our study of the two service firms has strongly supported Crosby (2002) view that CRM
must begin with a business strategy, which then drives the organisation. We noticed that
the two companies saw CRM from strategic perspective. This was deduced from the way
the two companies explained their reasons for implementing CRM. We found out that
and empirical data also support that because CRM was considered as strategic, the
companies are in a better position than before and as a result they are able to aim into
getting a complete view of their customers. Both companies claim that CRM has made it
practicable to target the right customers and communicate better with customers.
We found out that Lnsfrskringar did not experience much implementation obstacles as
compared to HSB. The reason could be that the origin of the implementation process at
Lnsfrskringar was made under normal circumstances while at HSB there might have
been an adverse environment after changing the management team and merging the three
companies that earlier composed HSB-Norr. Still, we conclude that even though the firms
may be facing difficult times, leadership and management can still drain through the basic

68

ideas and motivation for the CRM implementation process to take place and provide
tangible benefits to the organization. This has also proven to be important as the new
structure at HSB and the new possibilities at Lnsfrskringar have reported to give
satisfaction to the employees once CRM implementation has been adopted.
Further, the study has shown that for CRM implementation to be successful and certainly
enable firms to have a complete view of the customer, requires a leader who is strong,
determined, technologically imbued and above all, able to provide the strategic direction
of the CRM project. Leadership in the two service firms demonstrated and provided a
strong headship and motivation in this regard. We found out that HSB has a leader who is
bent on pursuing CRM and strongly believes on its positive consequences. We think the
VD has provided the kind of leadership required which supports Pinto and Slevins
position. At Lnsfrskringar, the manager was also motivated with the possibilities an
internal customer satisfaction the CRM implementation provided, but his function in this
regard was more passive since CRM here has operated longer, the staff has adapted to it
and has become more of a daily routine.

7.5 Research Problem


Going back to the Research Problem stated (i.e. to gain a better understanding of CRM
(i.e. Customer Relationship Management) implementation in service companies. We
believe that the main objective has been completed and that the service companies chosen
were both good examples for the study. They both provided sufficient and relevant
information to answer the research questions and evaluate the theory against the practice.

7.6 Implications
This is the last and final section of this thesis. As a result, and based on the empirical
findings, we make some recommendation for policy implication for management and
practitioners. This will be followed by implications for theory and future research

7.6.1 Implications for management/practitioners


In this study, the purpose was to achieve better understanding of CRM implementation in
service companies with particular reference to benefits, components and key factor of
implementation. Even though the aim of this study is not to generalise our findings, we
believe that it is worthwhile to come out with some findings we think that it will be of
tremendous benefits to the sampled companies and other service companies which have
implemented CRM, in the process or about to do so.
In the first instance, empirical findings proved that service companies can also benefit from
CRM implementation. For example the companies studied talk of high level of customer

69

satisfaction and retention, high performance in terms of sales volume and profitability. It
also came to light that service firms that are in the process of CRM implementation can
start to enjoy some benefits along the road. This shows that service firms can also attain
some level of benefits even though the CRM implementation process is in progress.
Secondly, the sampled companies have shown beyond any reasonable doubt that CRM
solution provides a better platform to have a complete (360 degree) view of the customer.
This was facilitated by the integration of people, process and technology. In this regard,
service firms must endeavour to ensure full integration of all aspects of CRM applications
and continuously upgrade the CRM systems. It is also worth mentioning that the sampled
companies did not implement CRM by purchasing a whole CRM solution and imposed
it on their environment. But rather, the solution bought was modified to suit their local
working place. This then suggests that it is probably advisable for service firms, in their
attempt to implement CRM, not rush into buying a whole CRM packaged solution and
impose it on their environment.
Moreover, one of the companies is very much focused in creating functional value as a
way to build satisfied and loyal customer base. According to Bristol Group (2004),
functional value which is mainly created through price, convenience and technology is
easily duplicated by competitors, and since customers are becoming more value-oriented
and are not just influenced by high quality or lower prices. It is essential that service firms
recognise that creating emotional value for the customer holds the key to customer
satisfaction, retention and profitability, which ultimately creates shareholders value (i.e. the
financial reward for owner). It must be emphasised that creating shareholders value is not
sustainable in the long-run if firms continue to create functional value.
Further, the basis of CRM is about how best a firm can maintain closer relationships with
its customers, especially the existing ones. This then calls for pragmatic retention schemes.
In this study, it came to light that even though the two companies talk about customer
retention as very important, statistically, the actual rate of customer retention or rotation
has not been determined. This may create a problem with regards to the total number of
customers attained and lost in a particular time period. In this respect, we recommend for
service firms to be able to know the net effect of retention effort and steps be taken to
actually measure in real terms, the retention rate in order to judge the effectiveness of
retention programmes.
Lastly, none of the service companies in the study has the right mix of CRM components
put forward by Limayem (2004). In this wise, problems regarding employees resistance
might have come due to that. We therefore recommend to all the companies to
reconsider the mix so that by having the right mix of 70 percent for people, 20 percent for
process and 10 percent for technology, implementation obstacles can be addressed. Again,
the study has confirmed theory that the human component is very important and crucial
in any CRM implementation. To this end, firms that are in the process and those planning

70

to implement CRM must ensure that it is indeed the employees who will use the CRM
systems and interact on daily basis with customers. As such, employees must be well
involved, informed, educated and motivated if the CRM project is to be successful.

7.6.2 Implication for theory


Gaining a better understanding of CRM implementation in service companies is the
bedrock of this study. Investigating and analysing the benefits, components and key factors
of CRM implementation, and comparing them with existing theories which provided the
basis of this study, contributes to previous theory and research. The discussions of the
commonalities and differences between theory and empirical data and highlighting areas of
exceptional interest that existing theories have not mentioned, adds to the theory in
general. This will serve as a basis for further research in the realm of CRM, as in some
instances there were some agreements and contradictions between theory and empirical
data or findings.
Also, since this study is a real practical experience of testing what previous theories and
research have established, the findings in this thesis contributes to theory in this regard.
Another contribution to theory is that previous studies and research discussed that firms
can enjoy some benefits if they successfully implement CRM. However, while this study
confirms this view, it has also uncovered that firms can also achieve and gain some level of
benefits though the implementation is ongoing.

7.6.3 Implications for further research


The subject area of Customer Relationship Management (CRM) is very encompassing
and diverse. In this study, the focus was on the CRM implementation process. Even
though CRM is not to be considered a technology solution, its full integration is a
requirement for a successful implementation. Further research could be directed
specifically at CRM applications and integration, the planning process of CRM
implementation, and the customers perspective on CRM, which was not included in this
study. Also, since one of the companies is still in the process of implementing CRM to the
full, it will be of interest for further research to find out the implications of the completion
of the CRM implementation process. One more aspect that could also be studied is the
control and evaluation methods for the CRM implementation in the companies. What
happens after the implementation is complete, how the CRM concept changes over time
and if and how the companies will adapt in the long run.
Further, this study was conducted in service companies in Lule, Sweden. As such, a
similar one can be taken in another part of Sweden or a different area altogether either
within the same service industry or another industry. This will provide the opportunity
make comparisons and discern any trend in CRM implementation in different settings.

71

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www.gccrm.com
www2.edu.org/NTP/interviews.htm accessed 4th January 2005.

Appendix 1:
Interview guide
Introduction
The interview will focus on questions related to the major reasons for and benefits of
CRM implementation, components/elements of CRM, and major CRM implementation
factors. The interview guide shown below will give you an idea of the areas that will be
covered.

Interview Guide:
1. When did your company start to implement customer relationship management?
a. Can you describe the process from start until today
b. Who was involved / whom has been affected and how
c. What other aspects of the company were affected
2. Why did your company decide to implement CRM (Reasons for
implementation)
3. Can you give us an example of major obstacles that you faced during the
implementation of CRM?
4. What benefits were assumed to be derived from CRM when you first decided to
implement it
5. What benefits have you seen so far, both for your company and the customer?
6. What would you improve within CRM implementation in your company?
7. Can you give us an idea of how much your company has invested in the
implementation of CRM (time and monetary costs)?
On a scale of 1-5 (5 being excellent), can you rate your overall satisfaction with CRM in
your company

77

Appendix two
Expanded Interview Guide
1. When did your company start to implement Customer Relationship Management?
a. Can you describe the process from start until today?
b. Who was/were involved and who have been affected?
c. What other aspects of the company were affected?

Do you consider people, process and technology to be important components of


CRM in your company?
Can you give us an example of how these components changed when CRM was
first implemented in your company?
What do you consider a good mix of these components? (in percentage terms)
Do you consider leadership, strategy and integration as important factors to be
considered?
Can you give us some example of how they have been considered in your
company when implementing CRM? Which of these factors (leadership, strategy
and integration) do you consider to be more important to the implementation of
CRM and why

2. Why did your company decide to implement CRM (Reasons for implementation)?
3. Can you give us an example of major obstacles that you faced during the
implementation of CRM?
4. What benefits were assumed to be derived from CRM when you first decided to
implement it
5. What benefits have you seen so far, both for your company and the customer?
Customer value?- Customer satisfaction? (internal/external customer)
Retention-Loyalty? (Rate)
6. What would you improve within CRM implementation in your company?
7. Can you give us an idea of how much your company has invested in the
implementation of CRM (In terms of time and monetary costs)?
8. On a scale of 1-5 (5 being excellent), can you rate your overall satisfaction with CRM
in your company?

78