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From e-CRM to s-CRM. Critical factors

underpinning the social CRM activities
of SMEs
a b
Paul Harrigan & Morgan Miles
a
UWA Business School, The University of Western Australia, WA,
Australia
b
Faculty of Business, University of Tasmania, TAS, Australia
Published online: 29 Jan 2015.

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underpinning the social CRM activities of SMEs, Small Enterprise Research, 21:1, 99-116, DOI:
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 Copyright © eContent Management Pty Ltd. Small Enterprise Research (2014) 21: 99–116.

From e-CRM to s-CRM. Critical

factors underpinning the social CRM
activities of SMEs
PAUL H ARRIGAN
UWA Business School, The University of Western Australia, WA, Australia

M ORGAN M ILES
Faculty of Business, University of Tasmania, TAS, Australia
Downloaded by [University of Otago] at 11:55 22 July 2015

ABSTRACT
This paper builds on previous research that investigated the critical factors underpinning the e-
CRM activities of SMEs. However, marketing practice has moved on from the ‘e’ in e-CRM.
Today, the disruptive technologies in CRM are social media. This is particularly true for SMEs,
where social media are free tools that can be used to foster engagement between organization and
consumer, and thus social CRM (s-CRM). An online survey was completed by 156 SMEs, and
exploratory factor analysis uncovered seven factors underpinning their s-CRM activities. Findings
illustrate the importance of a customer relationship orientation, uncover support and data issues
around social media use, promote the importance of customer engagement in online communities,
and recognise the driving role of information processes. This study contributes to theory by measur-
ing s-CRM in SMEs through a dynamic capabilities lens. For SME owner-managers, it emphasises
the need to strategically combine social media use with CRM activities.

Keywords: social media, customer relationship management, social CRM, SME

INTRODUCTION relationship orientation, can be underpinned in

S mall and medium-sized enterprises (SMEs) are

the driving force of most economies, particu-
larly in times of economic downturn. This places
increased significance on quality research shedding
light on the unique factors underpinning the man-
agement of SMEs (e.g. Connelly, Ireland, Reutzel
and Coombs, 2010; Gilman and Edwards, 2008).
SMEs have limited resources, limited expertise and
limited impact on their environment, all of which
impact of their ability to carry out marketing in
particular (Doern, 2009). This paper posits that
the type of marketing by networking that is per-
formed in SMEs, through an intrinsic customer
customer relationship management (CRM) theory
(Slotte-Kock and Coviello, 2010; Lamprinopoulou
and Tregear, 2009; Keskin, 2006).
More than that, SMEs may also be able to
build on their strength in CRM using social
media technologies. Dynamic capabilities theory
holds that unique organizational processes, such
as CRM, must be combined with raw resources
to create a recipe for sustained competitive
advantage. Alone, neither the organizational
process (CRM) nor the raw resources (social
media) are capable of providing a point of differ-
entiation. This is true for SMEs, where many

Volume 21, Issue 1, 2014 SMALL ENTERPRISE RESEARCH 99

 Paul Harrigan and Morgan Miles
SMEs try to compete on a foundation of cus-
tomer relationships, and many are now experi-
menting with social media technologies that are
readily available to all. Thus, it is argued that
combining social media with CRM to imple-
ment social CRM aligns with dynamic capabili-
ties theory.
Social CRM is the incorporation of everyday
social media technologies into the CRM
armoury. The characterisation of these social
media technologies as CRM tools transforms the
landscape for those building relationships with
customers. In a social CRM environment, engag-
ing with the customer is real-time and interactive,
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and more ‘messy’ data is created on an increasing
range of social media (Chen, Chiang and Storey,
2012; Doan, Ramakrishnan and Halevy, 2011).
For SMEs, social media may be the most appro-
priate CRM technologies to date. They are read-
ily available, mostly free, scalable depending on
the size of organization, and utilised by the
majority of consumers.
This paper seeks to uncover the critical factors
underpinning the social CRM activities of SMEs.
It adds timely value to previous research on the
critical factors underpinning the e-CRM activities
of SMEs (Harrigan, Ramsey and Ibbotson,
2011). SMEs continue to operate with a strong
customer relationship orientation and thus com-
peting via CRM, but the enabling technologies
have significantly changed in the past few years.
Where previous research looked at how websites,
email and database technology were integrated
with CRM, this paper moves on to look at how
social media are integrated with CRM. The over-
all research aim requires a review of the relation-
ship marketing and CRM literatures that
underpin the study. It also requires a review of the
more recent social CRM literature and how it is
related to the SME context. Bonding these two
literatures is dynamic capabilities theory.
RELATIONSHIP MARKETING AND CRM
Relationship marketing and CRM are inextrica-
bly linked (Reinartz, Krafft, and Hoyer, 2004;
100 SMALL ENTERPRISE RESEARCH Volume 21, Issue 1, 2014
© eContent Management Pty Ltd
Harker and Egan, 2006). This paper assumes that
CRM is narrower, focusing on the organization-
customer relationship, rather than the full range
of stakeholder relationships under a relationship
marketing umbrella. CRM may be defined as ‘the
cross-functional integration of processes, people, oper-
ations, and marketing capabilities that is enabled
through information, technology and applications’
(Payne and Frow, 2005, p. 168). Copious amounts
of previous research have investigated issues
around CRM implementation in larger organiza-
tion. Fewer studies have looked at CRM in SMEs
(e.g. Lawson-Body and O’Keefe, 2006; Harrigan
et al., 2011).
Stripped back, CRM advocates the ongoing
management of customer relationships. This typ-
ically requires an organizational culture that is
amenable to long-term, mutually beneficial rela-
tionships with customers and that promotes such
as the best way to achieve competitive advantage
(Boulding, Staelin, Ehret and Johnston, 2005;
Coltman, 2007). This has been called a customer
relationship orientation (Jayachandran, Sharma,
Kaufman and Raman et al., 2005). This is more
specific than a market orientation (Kohli and
Jaworski, 1990), with an emphasis on longevity
of customer relationships. For the majority of
SMEs, this is how they intuitively do business on
a day-to-day business, where their closeness to
customers often provides them with their unique
competitive advantage (Jack, Moult, Anderson
and Dodd, 2010; Moreno and Casillas, 2008;
O’Dwyer, Gilmore and Carson, 2009; Zontanos
and Anderson, 2004).
However, SME owner-managers face a unique
set of challenges when compared to managers of
large businesses (Hills and LaForge, 1992; Eid and
El-Gohary, 2013; Xu, Rohatgi, and Duan 2007).
Bluntly, SMEs tend to lack resources, expertise,
and impact (Carson, Cromie, McGowan and Hill,
1995). A lack of resources means that marketing
strategies must be creative, maximising use of
small budgets. This actually suits a CRM
approach, but even this can be limited to ad hoc
initiatives by a lack of resources. More than that, it
 © eContent Management Pty Ltd Critical factors underpinning the social CRM activities of SMEs
can be limited by a lack of marketing expertise,
around issues like customer lifetime value or the
technologies available to facilitate CRM (Gibb,
1997; Doole, Grimes, and Demack 2006; Parry
et al., 2012). A lack of impact is characterised by
the SME’s weak position in the marketplace, vul-
nerable to competition and to the demands of
powerful customers (Carson et al., 1995; Kocak
and Abimbola, 2009). Being small, though, has
advantages too. Closeness to customers creates an
intuitive knowledge of their needs and market-
place trends, leading to a customer personalisa-
tion, satisfaction and retention focus. Employees
also tend to remain loyal, valuing the empowered
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role they hold in a smaller organization. A lack of
hierarchy and bureaucracy means an inherent
flexibility in line with dynamic marketing condi-
tions (O’Dwyer et al., 2009; Parry et al., 2012;
Hills, Hultman, and Miles, 2008; Kocak and
Abimbola, 2009).
The challenges faced by SMEs also create a
unique set of strengths, with a particular one
being strong customer relationships. However,
for many SMEs the jargon of relationship mar-
keting and CRM is outside their comfort zone
(Street and Cameron, 2007; Zontanos and
Anderson, 2004). SMEs tend not to carry out
formal CRM as prescribed in marketing theory
(Hills, Hultman, and Miles, 2008). Nor do they
tend to use off-the-shelf CRM software packages.
In fact, SMEs tend not to formally commit to
CRM at all. The paradox is that they do CRM
intuitively. This paper seeks to investigate how
social media technologies are being integrated
into this intuitive form of CRM.
DYNAMIC CAPABILITIES
Dynamic capabilities theory holds that an organi-
zation must develop capabilities to acquire con-
figure and utilize resources that are embedded in
its specific organizational context in order to
achieve performance benefits (Doving and Good-
erham, 2008). Resources are understood as the
raw materials for the development of higher order
capabilities (Ravichandran and Lertwongsatien,
Volume 21, Issue 1, 2014 SMALL ENTERPRISE RESEARCH
2005) Developing such capabilities requires the
firm to blend related resources (e.g. social media)
with strategic organizational processes (e.g.
CRM) (Tan, Yen, and Fang, 2002). These capa-
bilities are dynamic in the sense that firms must
continually reconfigure existing resources to
adapt to the changing business context (Tan et
al., 2002). Dynamic capabilities theory is an
extension of the resource-based view (RBV),
which focuses on the internal resources of a firm
as a source for competitive advantage. Such
resources need to be valuable, rare, non-imitable
and non-substitutable to allow organizations to
differentiate themselves from competitors and to
achieve superior performance (Barney, 1991;
Fang, Wade, Delio, and Beamish, 2007). While
the RBV is useful, it does not explain how
resources are used to yield organizational perform-
ance benefits in the context of a changing envi-
ronment (Eisenhardt and Martin, 2000; Priem
and Butler, 2001).
Previous research has applied dynamic capa-
bilities theory to CRM implementation in large
organizations (Banker, Bardhan, Chang, and Lin,
2006; Mithas, Krishnan, and Fornell, 2005; Rai,
Patnayakuni, and Seth, 2006). The conclusions
are often that technologies must only be facilita-
tors of relationship marketing principles such as
customer engagement, personalisation, satisfac-
tion, loyalty, advocacy and co-creation (Reinartz
et al., 2004). The RBV has also been applied to
marketing and innovation capabilities in SMEs
(e.g. Merrilees, et al., 2011; Sok et al., 2013).
This theory has proved very useful for the SME
context. Dynamic capabilities theory, while
closely linked to the RBV, is chosen in this case
due to the focus on the fast-paced social media
environment. Thus, it is viewed as the most
appropriate lens through which to examine social
CRM implementation. It has been argued that
CRM is an intuitive organizational process in
SMEs, but to achieve competitive advantage this
process should be augmented using social media
technologies. As many SMEs build and maintain
customer relationships, this is a difficult strength
101
 Paul Harrigan and Morgan Miles
on which to differentiate. Likewise, social media
are useful, but are readily available, mobile and
imitable, providing SMEs with few direct oppor-
tunities for competitive advantage (Bharadwaj,
2000; Thrassou and Vrontis, 2008). However, it
is argued that social media technologies are
resources that, when combined with existing
organizational capabilities like CRM, can yield
higher order capabilities and create competitive
advantage (Banker et al., 2006).
SOCIAL CRM
Greenberg (2010, p. 34) define social CRM as:
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A philosophy and a business strategy, sup-
ported by a technology platform, business
rules, workflow, processes and social character-
istics, designed to engage the customer in a
collaborative conversation in order to provide
mutually beneficial value in a trusted and
transparent business environment. It’s the
company’s programmatic response to the cus-
tomer’s control of the conversation.
The main social media are clearly Facebook,
Twitter, YouTube, LinkedIn and now Instagram
and Pinterest. However, the nature of the Inter-
net through Web 2.0, is that almost all websites
are becoming ‘social’; that is that they allow
interaction (Chau and Xu, 2012). Customers can
post comments, ratings, reviews, and share all
these across their own social networks. Thus,
sites like Amazon, TripAdvisor, Urbanspoon,
Yelp, the entire Google network and many other
peer-to-peer websites such as blogs, micro blogs,
wikis, podcasts, photo sharing, video sharing and
social bookmarking can be viewed as social
media technologies and thus as potential CRM
tools (Chau and Xu, 2012; Chen et al., 2012).
As more and more consumers are active on
social media, marketers’ use of these tools is also
increasing. 21 per cent of marketers say that
social media has become more important to their
company over the past six months (HubSpot,
2013). 74 per cent of all marketers say Facebook
is important to their lead generation strategies. 52
102 SMALL ENTERPRISE RESEARCH Volume 21, Issue 1, 2014
© eContent Management Pty Ltd
per cent of all marketers have found a customer
via Facebook in 2013. For LinkedIn, the figure is
43 per cent, and for Twitter it is 36 per cent
(HubSpot, 2013). Social media technologies,
more than any other, have the capability to bring
marketers and customers closer together through
two-way interactions. On one hand, they let mar-
keters engage with customers, rather than com-
municate to them (Hennig-Thurau, Malthouse,
Friege, Gensler, Lobschat Rangaswamy and
Skiera, 2010; Pagani and Mirabello, 2012; Cui et
al., 2012). On the other, they provide immense
data collection possibilities for marketers through
individual social media profiles and industry-spe-
cific conversations that take place in public
forums online (Bijmolt, Leeflang, Block, Eisen-
beiss, Hardie, Lemmens and Saffert, 2010).
Through these two roles, the relational properties
of social media technologies make their classifica-
tion as CRM technologies clear.
Previous research has found that SMEs can be
innovative in their marketing capabilities (Mer-
rilees, Rundle-Thiele and Lye, 2011; Sok et al.,
2013). Specifically, they can use relatively simple
technologies such as websites, e-mail, analytics
tools and databases to build on traditional CRM
activates, and to improve their inherent market-
ing orientation and customer focus (Eid and El-
Gohary, 2013; Harrigan et al., 2011; Simmons,
Armstrong and Durkin, 2008). There is likely
two main areas of social CRM implementation
in SMEs, customer engagement and customer
information management (O’Cass and Weer-
awardena, 2009; O’Dwyer et al., 2009).
Customer engagement
Engaging with customers is one of the most sig-
nificant shifts in marketing brought about by
social media. The growing body of literature on
customer engagement is based on the under-
standing that customers are no longer exogenous
to the firm or passive recipients of marketing
efforts (Deshpande, 1983; Gronroos, 1999). Cus-
tomer engagement is an extension of the market-
ing communications literature, which holds that
 © eContent Management Pty Ltd Critical factors underpinning the social CRM activities of SMEs
interactions with customers should now be two-
way and that value be co-created (Payne and
Frow, 2005; Vargo and Lusch 2004; Verhoef,
Reinartz and Kraft, 2010). Specifically, customers
can share and create official and unofficial mar-
keting messages, they can provide customer serv-
ice to each other, and they can even get involved
in product decisions (Bijmolt et al., 2010; Chau
and Xu, 2012; Ren et al., 2011).
From an academic perspective, there are a
number of definitions of customer engagement.
Industry bodies, such as the Advertising Research
Foundation (2008), Adobe (2008), the Econo-
mist Intelligence Unit (EIU) (2007), Forrester
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Consulting (2008) and Gallup (2010) have pro-
vided definitions. The EIU define engagement
as: ‘the creation of experiences that allow companies
to build deeper, more meaningful and sustainable
interactions between the company and its customers
or external stakeholders’ (Economist Intelligence
Unit, 2007). Forrester Consulting (2008) defines
customer engagement as: ‘creating deep connec-
tions with customers that drive purchase decisions,
interaction, and participation over time’. This
paper concurs with Vivek et al.’s (2012, p. 4)
definition of customer engagement as: ‘the inten-
sity of an individual’s participation and connection
with the organization’s offerings and activities initi-
ated by either the customer or the organization’.
Communication with customers in SMEs
tends to be constant, informal and open, with
the purpose of creating mutual value (Gilmore,
Gallagher and Henry, 2007; Street and
Cameron, 2007). There also tends to be a social
aspect to these relationships, which takes the
form of face-to-face contact (Gilmore et al.,
2007). The notion of engagement with cus-
tomers is something that SMEs are particularly
capable of. SMEs tend to involve their customers
as active partners in the co-creation of products
and services, due to the fact that they tend to
have fewer customers and also place so much
emphasis on customer personalisation, satisfac-
tion and retention (Harrigan et al., 2011; Zon-
tanos and Anderson, 2004).
Volume 21, Issue 1, 2014 SMALL ENTERPRISE RESEARCH
SMEs could use social media such as Twitter
and Facebook to ‘crowd source’ (i.e. gather views
from a large number of customers), in order to
provide customer service; or to inform, educate
and entertain customers, and inspire viral mar-
keting (Hennig-Thurau et al., 2010; Hoyer, et
al., 2010; Krishnamurthy, 2009). They could
also use forums relevant to their particular indus-
try to share their expertise in the field, and to
build relationships with key influencers (Eid and
El-Gohary, 2013). However, research is currently
lacking in these areas, leaving it unclear how
SMEs are actually using social media technolo-
gies to engage with customers, and what the crit-
ical factors are.
Customer information management
In order to meet the needs of customers effec-
tively and efficiently, SMEs must maintain a
level of engagement with customers, but they
must also be able to acquire and manage infor-
mation on their customers (Hutchinson and
Quintas, 2008; Payne and Frow, 2005; Sand-
berg, 2014). This may comprise: information
capture; information integration; information
access, and information use (Jayachandran et al.,
2005). These have been described as relational
information elements in previous research that
applied them to CRM in larger organizations.
The notion of information capture is derived
from market orientation literature (e.g. Kohli and
Jaworski 1990). Looking at social media, virtual
communities collect a tremendous amount of
data, most of which is both real-time and indefi-
nite (Hennig-Thurau et al., 2010; Konus, Ver-
hoef and Neslin, 2008). Data can indicate market
trends, customer preferences, customer satisfac-
tion, customer influence and value, and competi-
tor information (Chen et al., 2012; Chau et al.,
2009; Chung et al., 2005). With every engage-
ment with customers on social media, more data
is created (Bijmolt et al., 2010). Tools like Sprout
Social, Radian6, Simplify360, Social Mention,
Twitonomy, Google Trends, and Hootsuite have
all been borne out of the need to try to manage
103
 Paul Harrigan and Morgan Miles
and present social media data to marketers. How-
ever, for SME owner-managers, the challenge
remains of being able to filter usable information
from such communities in a timely manner
(Hennig-Thurau et al., 2010).
Information integration requires the assimila-
tion of customer information from all touch
points, not just social media, to develop a single
view of the customer (Jayachandran et al., 2005).
Instead of customer information being stored in
different systems, or not being stored at all, it
needs to be stored in one place. Information
integration has always been one of the biggest
CRM challenges for larger organizations, with
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information silos existing in the various organiza-
tional departments (Boulding et al., 2005; Payne
and Frow, 2005; Kumar et al., 2006). Even in
SMEs, information silos can exist between areas
like accounts, sales and marketing. Social media
data in the form of ‘likes’, ‘retweets’, follows,
shares, video or picture uploads, comments,
reviews, or posts is very ‘messy’ for marketers to
quantify and analyze (Bijmolt et al., 2010; Chen
et al., 2012). Thus it can often be left out of
marketing decision-making (Sandberg, 2014).
This is despite the fact that, if integrated with
other customer data, social media data has the
potential to truly provide a 360 degree picture of
the customer (Kaplan and Haenlein, 2010; Bij-
molt et al., 2010; Lee, Ahn and Bang, 2011).
Information access means the marketer or
owner-manager actually having access to all the
information on customers (Jayachandran et al.,
2005). This means the data being in a simple
and usable and actionable format. Again in larger
organizations, this has been a major challenge
with information not being shared in a relevant
and timely manner to decision-makers and cus-
tomer-facing employees (Payne and Frow, 2005;
Bijmolt et al., 2010; Jayachandran et al., 2005).
Today, the social media monitoring tools men-
tioned earlier seek to remedy this by providing
up-to-date metrics in a readable format. These
may be very useful for busy SME owner-man-
agers or marketers.
104 SMALL ENTERPRISE RESEARCH Volume 21, Issue 1, 2014
© eContent Management Pty Ltd
Finally, information use refers to how mar-
keters actually use customer information in their
decision-making (Jayachandran et al., 2005). For
example, reach and ‘virality’ on social media can
be used to measure the effectiveness of social
media campaigns. Sentiment analysis of social
media and blog posts can monitor customer sat-
isfaction (Liang, Ho, Li and Turban, 2012). At a
more advanced level, social media data can be
used to segment and target particular customers
with offers relevant to their searches and posts,
through real-time bidding. This is common
across the Google network. Due to the sheer vol-
ume of customers on social media, marketers
must also be able to identify those worth target-
ing or ‘seeding’ new ideas or marketing messages
with (Neilsen, 2006). Are SMEs using informa-
tion collected via social media to learn who refers
mostly to them, influences others the most, or
possesses most knowledge about their product or
service (Kumar et al., 2010)?
METHODOLOGY
Questionnaire Development
Many items were borrowed and/or adapted from
Jayachandran et al.’s (2005) study on traditional
CRM in larger organizations (see Appendix A).
The customer relationship orientation construct
was borrowed directly, but items in CRM tech-
nology use and relational information processes
constructs were adapted to refer to a social media
context. As a result, new factors were drawn out
of these constructs. A customer engagement scale
was developed based on an extensive review of
literature (e.g. Hoyer et al., 2010; Nambisan and
Baron, 2007) in this relatively new theoretical
domain. The online communities’ factor was
drawn from items in this scale. Questionnaire
items were reviewed by expert colleagues and a
pre-test was conducted on a random sample
(n=50) of the target population. These processes
enabled the testing of criterion, content and con-
struct validity. Due to some respondent
enquiries, the wording of the instructions was
 © eContent Management Pty Ltd Critical factors underpinning the social CRM activities of SMEs
edited. Ultimately, though, we were assured of
the respondents’ understanding of the items in
the final questionnaire.
Questionnaire administration and
sampling
The survey was hosted on an online platform
and email invitations were sent directly to the
individual contacts on an obtained list that were
defined in the SME bracket. This list was pur-
chased from a market research agency in Lon-
don, and all organizations were based in London
and the South East of England. This study fol-
lowed European Union (EU) guidelines around
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SME definition, which includes any enterprise
employing less than 250 employees. An intro-
ductory email was sent, followed by an email
containing the link to the online survey. A fol-
low-up email was used to improve the response
rate. As an incentive to participate, a prize of
£150 was offered to respondents who completed
the survey. To fit with the purpose of our
research, we omitted those respondents who did
not utilise any social media technologies, which
was determined via the CRM technology use
measures. 156 usable surveys remained, which
represents a response rate of eight per cent. This
sample is similar in size to previous organization-
focused CRM research (e.g. Jayachandran et al.,
2005). The Mann-Whitney U-test was employed
as a non-response bias check on early and late
respondents to the survey on a random selection
of variables (Armstrong and Overton, 1977).
There were no statistically significant differences
for any construct or demographic characteristics
between the first 15 per cent of responses and
the last 15 per cent, suggesting that non-response
bias was not a significant problem (Armstrong
and Overton, 1977).
RESULTS AND ANALYSIS
The questionnaire contained a general question
asking respondents which social media they used.
Table 1 provides more detail on this. In addition to
the social media listed, a few respondents also used
Volume 21, Issue 1, 2014 SMALL ENTERPRISE RESEARCH
Yammer, which is an intra-organizational social
network tool, while others used salesforce.com,
which is a more traditional CRM software pack-
age. One respondent classified Groupon (a dis-
count/voucher tool) as social media. Other tools
used included Xing (a discussion forum), Family
Bhive (a discussion forum), Gist (contacts profil-
ing), Second Life (a virtual environment), Vimeo
(video-sharing) and Slideshare (presentation and
knowledge sharing). In all, these findings show
that SME are using a range of social media for
CRM purposes.
TABLE 1: S OCIAL MEDIA USE
Social media Percentage of respondents
LinkedIn 65%
Twitter 55%
Company blog 50%
Facebook 44%
YouTube 41%
Mobile apps 24%
Employee blog 22%
Flickr 14%
Analytical technique
Principal component analysis (PCA) using
orthogonal rotation (VARIMAX) was performed
to ascertain the underlying structure of the data.
The PCA method analyses the structure of the
correlations among a large number of variables
based on a common set of underlying dimen-
sions (Hair, Anderson, Tatham, and Black,
1998), and enables the researcher to determine
whether a certain set of items do or do not con-
stitute a construct (Straub, 1989). A varimax
rotation with Kaiser normalisation was executed
in IBM SPSS (version 22), which is in line with
Hair et al.’s (1998) assertion that orthogonal
rotation should be chosen where the researcher
aims to reduce the number of original variables.
The alternative was an oblique rotation, which
was less suited to the aim of the study to pro-
duce more meaningful and interpretable factors
with fewer cross-loadings (Pedhazur and
Schmelkin, 1991). Although oblique rotation
105
 Paul Harrigan and Morgan Miles
may fit the data slightly better, interpretability
and replicability were key drivers in this study
(Kieffer, 1998).
A Kaiser-Meyer-Olkin (KMO) score of 0.882
and a Bartlett’s test for sphericity score of
4149.02 (p<0.001) indicated sampling adequacy
and the suitability of the data for factor analysis.
Components with eigenvalues (latent root crite-
rion) of less than one were excluded, and a mini-
mum parameter of 0.55 (Raubenheimer, 2004)
was set in the interpretation of data, which is
higher than the generally accepted level of 0.30.
This resulted in 39/70 items being retained.
Table 2 details the rotated component matrix.
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Cumulatively, the seven factors explain 67 per
cent of the variance displayed in the quantitative
data, which is deemed adequate to represent the
data (Pett, Lackey, and Sullivan 2003). Further,
Cronbach’s alpha (α) in each factor ranged from
a low of 0.74 (Factor 7) to a high of 0.94 (Factor
1), which is within the acceptable limit of 0.7 for
internal consistency of scale reliability of the
components that comprise the seven factors
(Nunnaly 1978).
Factors
Expanding on the information presented in
Table 3, seven complementary yet distinctive fac-
tors were found to underpin SMEs’ social CRM
activities. Factor One is titled ‘Online communi-
ties’. This factor accounts for 34.87 per cent of
the total variance and consists of thirteen items
with factor loadings ranging from .798 to .582.
The items contained in this factor describe the
range of issues in the management of online cus-
tomer communities.
Factor two is titled ‘Social media support’. This
factor accounts for 8.75 per cent of the total vari-
ance and consists of seven items with factor load-
ings ranging from .752 to .591. The items
contained in this factor describe how social media
support key CRM processes and decisions.
Factor three is titled ‘Information capture’. This
factor accounts for 7.08 per cent of the total vari-
ance and consists of five items with factor load-
106 SMALL ENTERPRISE RESEARCH Volume 21, Issue 1, 2014
© eContent Management Pty Ltd
ings ranging from .862 to .640. The items con-
tained in this factor describe that SMEs are cap-
turing customer information from a range of
sources.
Factor four is titled ‘Information use’. This fac-
tor accounts for 5.38 per cent of the total vari-
ance and consists of three items with factor
loadings ranging from .864 to .776. The items
contained in this factor describe the key strategic
actions driven by social CRM.
Factor five is titled ‘Customer relationship ori-
entation’. This factor accounts for 3.49 per cent
of the total variance and consists of four items
with factor loadings ranging from .817 to .717.
The items contained in this factor describe the
extent to which the culture of an SME favours
long-term customer relationships, and thus
CRM.
Factor six is titled ‘Social media data’. This fac-
tor accounts for 3.78 per cent of the total vari-
ance and consists of four items with factor
loadings ranging from .7 to .632. The items con-
tained in this factor describe the types of cus-
tomer data that SMEs collect from social media.
Factor seven is titled ‘Customer communication’.
This factor accounts for 3.12 per cent of the total
variance and consists of three items with factor
loadings ranging from .783 to .695. The items
contained in this factor describe the customer
communication norms of SMEs.
DISCUSSION AND CONCLUSION
Factor 1 – Online communities
The first factor underlines the biggest shift from
e-CRM to social CRM; the nascence of cus-
tomer engagement. This significant factor
describes how SMEs are managing and using
online customer communities in CRM. They
tend to build their own online communities to
interact with customers, but they are less likely to
participate in customer-owned communities or
to make communities in general central to mar-
keting. This runs somewhat counter to the ideals
of customer engagement proposed by Verhoef et
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TABLE 2: R OTATED COMPONENT M ATRIX

% of variance Cronbach’s Component
Factors and items Eigenvalue explained alpha α 1 2 3 4 5 6 7
Factor 1 Online communities
We build our own online communities with our customers 13.60 34.87 0.94 .672
We participate in relevant customer-owned communities .607
Our online customer communities are central to our marketing .660
Other relevant customer communities are central to our marketing .582
Online communities are a way of engaging with customers .651
We monitor and act on interactions between customers in these communities .737
We proactively manage interactions in these communities .798
We use these communities to promote ourselves to customers .792
We use these communities to have conversations with our customers .772
These communities allow us to involve customers in product/service development .616
© eContent Management Pty Ltd

Customers use these communities mainly to make positive comments and reviews .655
We have a strategic approach to managing online communities .648
We do track customers across media/channels .609
Factor 2 Social media support
Social media enables our CRM system to support sales force in the field with customer information 3.41 8.75 0.90 .685
Social media enables our CRM system to provide sales force with leads for cross sell/up sell opportunities .715
Social media enables our CRM system to support marketing planning and budgeting .752
Social media enables our CRM system to analyze responses to marketing campaigns .644
Social media enables our CRM system to customize our communication to customers .663
Social media enables our CRM system to calculate customer life time value .591
Social media enables our CRM system to calculate customer retention rates .709
Factor 3 Informatioon capture
We collect customer information on an ongoing basis 2.76 7.08 0.85 .640
We integrate customer information from the various functions that interact with customers .850
We integrate internal customer information with customer information from external sources .822
We integrate customer information from different communication channels .862
We merge information collected from various sources for each customer .647
Factor 4 Information use
We use customer information to assess the lifetime value of our customers. 2.10 5.38 0.88 .776
We use customer information to measure the value of each customer’s referrals to other customers .864
We use customer information to measure the amount of information sharing between our customers .783
Factor 5 Customer relationship orientation
Our employees are encouraged to focus on customer relationships 1.71 3.49 0.82 .717
In our organization, retaining customers is considered to be a top priority .789
In our organization, customer relationships are considered to be a valuable asset .811
Our senior management emphasizes the importance of customer relationships .817
Factor 6 Social media data
Social media enables our CRM system to collect customer psychographics data 1.47 3.78 0.87 .632
Social media enables our CRM system to collect customer interaction data .668
Social media enables our CRM system to collect customer service data .670
Social media enables our CRM system to collect external data (e.g. competitor information) .700

Volume 21, Issue 1, 2014 SMALL ENTERPRISE RESEARCH

Factor 7 Customer communication
We enable our customers to have interactive communications with us 1.21 3.12 0.74 .783
We provide our customers with multiple ways to contact the organization .767
Critical factors underpinning the social CRM activities of SMEs

We maintain regular contact with our customers .695

107
 Paul Harrigan and Morgan Miles © eContent Management Pty Ltd

TABLE 3: R ESULTS FROM FACTOR A NALYSIS

Standard
Factor Mean1 Deviation
Factor 1 Online communities
We build our own online communities with our customers 3.16 1.26
We participate in relevant customer-owned communities 2.99 1.14
Our online customer communities are central to our marketing 2.72 1.15
Other relevant customer communities are central to our marketing 2.81 1.10
Online communities are a way of engaging with customers 3.72 1.11
We monitor and act on interactions between customers in these communities 3.21 1.10
We proactively manage interactions in these communities 3.00 1.06
We use these communities to promote ourselves to customers 3.27 1.14
We use these communities to have conversations with our customers 3.27 1.19
These communities allow us to involve customers in product/service development 3.03 1.15
Customers use these communities mainly to make positive comments and reviews 2.87 1.01
We have a strategic approach to managing online communities 2.83 1.14
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We do track customers across media/channels 2.85 1.10

Factor 2 Social media support
Social media enables our CRM system to support sales force in the field with 3.12 1.19
customer information
Social media enables our CRM system to provide sales force with leads for cross sell/up 3.16 1.17
sell opportunities
Social media enables our CRM system to support marketing planning and budgeting 3.06 1.20
Social media enables our CRM system to analyze responses to marketing campaigns 3.23 1.24
Social media enables our CRM system to customize our communication to customers 3.42 1.22
Social media enables our CRM system to calculate customer life time value 2.41 1.06
Social media enables our CRM system to calculate customer retention rates 2.53 1.11
Factor 3 Information captu ure
We collect customer information on an ongoing basis 3.85 .99
We integrate customer information from the various functions that interact with customers 3.70 1.01
We integrate internal customer information with customer information from external sources 3.44 1.03
We integrate customer information from different communication channels 3.87 .89
We merge information collected from various sources for each customer 3.49 .97
Factor 4 Information use
We use customer information to assess the lifetime value of our customers. 2.92 1.06
We use customer information to measure the value of each customer’s referrals to 2.84 1.06
other customers
We use customer information to measure the amount of information sharing between 2.61 0.99
our customers
Factor 5 Customer relationship orientation
Our employees are encouraged to focus on customer relationships 4.46 0.69
In our organization, retaining customers is considered to be a top priority 4.56 0.71
In our organization, customer relationships are considered to be a valuable asset 4.69 0.54
Our senior management emphasizes the importance of customer relationships 4.50 0.68
Factor 6 Social media data
Social media enables our CRM system to collect customer psychographics data 2.69 1.13
Social media enables our CRM system to collect customer interaction data 3.01 1.18
Social media enables our CRM system to collect customer service data 3.01 1.22
Social media enables our CRM system to collect external data (e.g. competitor information) 3.09 1.16
Factor 7 Customer communication
We enable our customers to have interactive communications with us 4.07 0.95
We provide our customers with multiple ways to contact the organization 4.29 0.72
We maintain regular contact with our customers 4.25 0.74
1 Mean score of agreement. 1 = Strongly Disagree, 5 = Strongly Agree.

108 SMALL ENTERPRISE RESEARCH Volume 21, Issue 1, 2014

 © eContent Management Pty Ltd Critical factors underpinning the social CRM activities of SMEs
al. (2010) in a special issue of the Journal of Ser-
vice Research, but may be explained by the lack of
time factor in SMEs. Moreover, SMEs do tend
to maintain a higher level of face-to-face contact
with customers than larger organizations (Jack et
al., 2010; O’Dwyer et al., 2009). However, this
is not to say SMEs aren’t embracing social media
to engage with customers. Findings show that
they are an important part of SMEs’ CRM activ-
ities, most likely allowing them to interact with
customers around marketing messages, product
decisions and general conversations (Bijmolt et
al., 2010; Chau and Xu, 2012; Ren et al., 2011).
This most certainly falls in line with the defini-
Downloaded by [University of Otago] at 11:55 22 July 2015
tion of customer engagement by Vivek at al.
(2012) provided earlier in the paper.
Factor 2 – Social media support
More than customer engagement, social CRM
advocates the use of data on customers, readily
available from social media, to drive strategic
decisions (Kaplan and Haenlein, 2010; Bijmolt
et al., 2010; Lee et al., 2011). Of course, data has
always been the ‘engine’ that drives CRM (Jay-
achandran, et al., 2005, Payne and Frow 2006),
but social media data is very different. It is acces-
sible, consumer-generated and real-time, but is
also ‘messy’ and difficult to analyse (Bijmolt et
al., 2010; Chen et al., 2012).
SMEs in this study are using social media to
support a range of key CRM decisions; sales,
planning, campaigns, communications. To a
lesser extent, they are using social media to calcu-
late customer lifetime value and retention rates,
but these are higher level calculations for a
smaller organization. The fact that SMEs are
using customer data gathered from social media
to support such a range of decisions is a key find-
ing, and reinforces that social media are appro-
priate CRM tools. Previous research has shown
that SMEs were strong on communicating with
customers, but weaker in the information aspects
of CRM (Harrigan et al., 2011; Parry et al.,
2012). This study shows that social media are
facilitating improvement in this area.
Volume 21, Issue 1, 2014 SMALL ENTERPRISE RESEARCH
Factor 3 – Information capture
Information capture generally is vital for any
organization undertaking CRM. Findings show
that SMEs are capturing information on cus-
tomers from a range of sources and integrating it,
most likely to build a 360-degree picture of the
customer (Kaplan and Haenlein, 2010; Bijmolt et
al., 2010; Lee et al., 2011). This relates to the
information capture and integration constructs
found to exist in larger organizations by Jayachan-
dran et al. (2005), and to previous research on
knowledge management in SMEs by Sandberg
(2014). For SMEs, this finding shows that they
clearly recognise that each ‘touch point’ with a cus-
tomer is also a source of information (Bijmolt et
al., 2010). Social media like Facebook, Twitter and
LinkedIn can constitute a number of touch points.
Factor 4 – Information use
Information use refers to how marketers actually
use customer information in their decision-mak-
ing (Jayachandran et al., 2005). Findings around
this factor show that SMEs tend not to be using
information to calculate more complex CRM
indicators, such as customer lifetime value, cus-
tomer referral value or customer information
sharing (Kumar et al., 2010). This supports find-
ings under the Social media support factor and
illustrates a trend that runs beyond social media.
Generally, it seems that SMEs do not go to
advanced levels in CRM data mining. Perhaps
this can be explained by the fact that they just
don’t see the need to, due a relatively small cus-
tomer base and also a preoccupancy with day-to-
day marketing decisions (Carson et al., 1995).
Previous research has underlined the difficulty
for SMEs in maintaining a strategic or longer-
term focus (Doole et al., 2006; O’Dwyer,
Gilmore, and Carson, 2009, Sandberg, 2014).
Factor 5 – Customer relationship
orientation
CRM requires an organizational culture that is
amenable to long-term, mutually beneficial rela-
tionships with customers (Boulding et al., 2005;
109
 Paul Harrigan and Morgan Miles
Coltman, 2007). Findings show that SMEs most
certainly maintain such a customer relationship
orientation, where they aim to retain customers,
view them as valuable assets and promote rela-
tionship-building. This confirms previous litera-
ture that has linked CRM to the type of
marketing that SMEs undertake (e.g. Harrigan et
al., 2011; Merrilees et al., 2011; Street and
Cameron, 2007). Thus, although CRM is a con-
cept that much research has investigated in larger
organizations, it is evidenced in SMEs too. This
has been suggested as their main means to negat-
ing their many weaknesses, and building on their
main strength; their customer relationships
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(O’Dwyer et al., 2009; Pinho, 2007; Hills et al.,
2008; Kocak and Abimbola, 2009). Moreover,
relevant to this study, it confirms that the plat-
form for social CRM exists in SMES, where
social media as resources can be combined with
CRM as an organizational process to create
dynamic capabilities (Banker, Bardhan, Chang,
and Lin, 2006).
Factor 6 – Social media data
This factor is very much linked to the second
factor, Social media support. The focus here is on
the types of data that SMEs collect from social
media, which in turn support the range of deci-
sions discussed in the other factor. Findings show
that SMEs are collecting psychographics, interac-
tion, service and more general external data on
customers. That SMEs are able to glean this
amount of data from social media is impressive,
where previously information processes where
found to be weaker in SMEs (Harrigan et al.,
2011; Parry et al., 2012; Sandberg, 2014). Previ-
ous research with regard to larger organizations
has noted that social media data can indicate cus-
tomer preferences, customer satisfaction, market
trends, and competitor information (Chen et al.,
2012; Chau, Xu, Cao, Lam and Shiu, 2009;
Chung, Chen and Nunamaker, 2005). The chal-
lenge has been the sheer amount of data on
social media, but it seems SMEs are both able to
gather and act on the customer data they need.
110 SMALL ENTERPRISE RESEARCH Volume 21, Issue 1, 2014
© eContent Management Pty Ltd
Factor 7 – Customer communication
This factor complements the fifth factor, Cus-
tomer relationship orientation. Findings show that
SMEs communication norms with customers are
characterised as regular, interactive, and multi-
channel. This confirms much prior literature on
the regular nature of SMEs’ contact with their
customers (Carson and Gilmore, 2000; Keskin,
2006; Lamprinopoulou and Tregear, 2009). In
SMEs, communication with customers tends to
be constant, informal and open, with the pur-
pose of creating mutual value (Gilmore et al.,
2007; Street and Cameron, 2007). The interac-
tive and multi-channel aspects to this factor are
particularly important in that they provide a
platform for the use of social media in CRM.
SMEs are open to new means of communica-
tion, particularly those that facilitate interaction
with customers. Social media is one such means.
To conclude, it is clear that SMEs are very
suited to the principles and practices of CRM,
where they possess a customer relationship orien-
tation and maintain regular interactive communi-
cation with their customers. From this platform,
SMEs are adopting social media technologies to
complement their CRM activities. This reflects
dynamic capabilities theory in practice, where
existing CRM processes are combined with new
social media resources as a means toward competi-
tive advantage. Previous research has applied
dynamic capabilities theory to CRM implementa-
tion, but not to social CRM in SMEs. Specifically,
SMEs are able to build access and use online cus-
tomer communities to engage with their cus-
tomers and serve them in new ways. They are also
able to capture and use customer information
from social media to support a range of key CRM
decisions, such as campaign planning, budgeting,
and communications strategies. Such a strategic
approach to social CRM, incorporating both
front-office engagement and back-office informa-
tion activities, is impressive for SMEs shackled by
resource constraints. Perhaps social media is the
piece in the jigsaw for SMEs; the CRM technol-
ogy that fits with their unique needs.
 © eContent Management Pty Ltd Critical factors underpinning the social CRM activities of SMEs
IMPLICATIONS
This paper sought to uncover the critical factors
underpinning the social CRM activities of
SMEs, building logically on previous work look-
ing at e-CRM in SMEs before the social media
era. Like that research, this paper reinforces that
CRM is a very appropriate marketing theory for
the SME context. This opens the door to further
research in the area, such as the customer loyalty
or service recovery strategies of SMEs.
The unique contribution of this paper lies in
the application of social CRM to SMEs. This
paper used existing CRM scales, and developed a
new one for customer engagement, to measure
Downloaded by [University of Otago] at 11:55 22 July 2015
the level of social CRM activities in SMEs. Thus,
the application of CRM scales previously only
used in larger organizations, namely the rela-
tional information processes construct of Jay-
achandran et al. (2005), is a key contribution.
Also a contribution is the development of a cus-
tomer engagement scale, which resulted in the
online communities’ factor.
Ultimately, finding that SMEs are using
social media technologies to complement their
CRM activities is a contribution to theory.
SMEs seem to find these technologies fit with
their intuitive way of managing customer rela-
tionships, and they are easy to access and use for
both organization and customer. This paper
breaks down social CRM in SMEs into seven
distinct factors, which are ripe for further
research. In particular, the online communities
and social media support factors could benefit
from further qualitative investigation. Other-
wise, a structural equation modelling approach
could be used to shed light on the relationships
between the seven factors.
A final theoretical contribution is the use of
dynamic capabilities theory as a lens through
which to view social CRM in SMEs. Due to pre-
vious research asserting that CRM is an intuitive
process in SMEs, this paper took the position
that something extra would be required to
deliver a competitive advantage. Social media
technologies are this resource where, on their
Volume 21, Issue 1, 2014 SMALL ENTERPRISE RESEARCH
own they are just a set of technologies available
to everyone, but when uniquely combined with
existing CRM processes they can lead to
dynamic capabilities in SMEs.
In addition to theoretical contributions, the
study also has implications for practice. Chiefly,
SMEs should view social media technologies as
tools to improve their customer relationships.
They should immerse themselves in the online
communities relevant to their industry, interact-
ing with key stakeholders. More than that, they
should view these communities as a source of
market and customer information to guide new
marketing, product or service ideas. Even for
those SMEs with face-to-face customer relation-
ships, social media can add value by giving access
to marketplace trends, gauging customer satisfac-
tion, identifying new customers and providing
customer service. Many organizations are using
Twitter to provide ‘social customer service’.
Answering customers’ questions via this open
platform adds value to the customer experience
through almost immediate engagement. It also
creates efficiencies where customers can see
answers to questions they may have. For SMEs
without face-to-face customer relationships,
social media are certainly an essential tool to try
to engage with customers and add a relationship
element to doing business. These businesses
could go beyond customer service, and develop a
presence on Facebook, LinkedIn or Tumblr as an
industry expert, posting up their experience and
knowledge around key industry trends. This pro-
vides value to customers, and other stakeholders
encouraging engagement and thus providing
data on customers’ behaviours and opinions.
Consumers are certainly using social media to
search for businesses, as well as using search
engines. Consumers often expect contact details,
opening hours, and posts about stock or events.
They also expect to be able to interact and for
responses to be quick. Thus, it is important for
SMEs to be selective in the social media they
choose. The answer lies in what customers are
using. Facebook is ubiquitous, but a small engi-
111
 Paul Harrigan and Morgan Miles
neering firm may be advised to also engage with
LinkedIn groups discussing key developments in
the industry. A small restaurant cannot afford to
ignore Urbanspoon, Yelp or TripAdvisor, or
influential food bloggers in the area.
To try to manage the day-to-day social media
tasks, some tools exist to enable scheduling posts
across accounts, and the analysis of their reach
and any response they provoke. Buffer or Hoot-
suite are common scheduling tools, while Sim-
plify360, Social Mention, Twitonomy are useful
analytics tools. These tools provide details on the
reach of all posts, the most popular posts, and
information on customers who saw the posts, and
Downloaded by [University of Otago] at 11:55 22 July 2015
who the most engaged customers are. For SMEs,
social media are free but the time taken to man-
age them properly may be the biggest challenge.
Thus, these tools may be critical to success.
Before concluding, it is important to note the
limitations of this study. First, the sampling
frame was limited in geographic scope to Lon-
don and the South East of England. Second,
only a quantitative approach was utilised, and it
is true that qualitative approaches are often rec-
ommended to gain an in-depth understanding of
critical factors in SMEs. However, as it is, this
study provided a strong contribution to theory
and practice by uncovering the critical factors
underpinning the social CRM activities of
SMEs. This contribution builds on previous
research in this area prior to the social media era,
and lays the foundation for future research as the
social media era matures.
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NOW AVA I L A B L E
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• Editorial:
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small business alliance and network research.
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Qualitative Market Research, 7, 228-236.
• Fostering university–industry collaboration in Saudi Arabia
through technology innovation centers – Mohammad S
Khorsheed, Mohammad A Al-Fawzan
• Promoting techno-entrepreneurship through incubation: an
overview at BADIR Program for Technology Incubators
– Mohammad S Khorsheed, Mohammad A Al-Fawzan,
Abdulaziz Al-Hargan
• Case study: KACST Technology Innovation Center in radio
frequency and photonics – Abdelrazik Sebak, Saad Haj
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• A Saudi comprehensive Research Center for Obesity: Experi-
ences from the first four years – Assim A Alfadda, Amr S Moustafa
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115
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A PPENDIX A: C ONSTRUCTS AND I TEMS

Adapted/Developed
Questionnaire items from

Factor 1 Online communities

We build our own online communities with our customers Anderson (2005)
We participate in relevant customer-owned communities Hennig-Thurau et al. (2010)
Our online customer communities are central to our marketing Anderson (2005)
Other relevant customer communities are central to our marketing Hennig-Thurau et al. (2010)
Online communities are a way of engaging with customers Konus et al. (2008)
We monitor and act on interactions between customers in these communities Nambisan and Baron (2007)
We proactively manage interactions in these communities
We use these communities to promote ourselves to customers
We use these communities to have conversations with our customers Bijmolt et al. (2010),
These communities allow us to involve customers in product/service development Hoyer et al. (2010)
Customers use these communities mainly to make positive comments and reviews Gregoire et al. (2009)
We have a strategic approach to managing online communities Nambisan and Baron (2007)
We do track customers across media/channels Van Bruggen et al. (2010)
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Factor 2 Social media support

Social media enables our CRM system to support sales force in the field with
customer information
Social media enables our CRM system to provide sales force with leads for cross
sell/up sell opportunities
Social media enables our CRM system to support marketing planning and budgeting Jayachandran et al. (2005)
Social media enables our CRM system to analyze responses to marketing campaigns
Social media enables our CRM system to customize our communication to customers
Social media enables our CRM system to calculate customer life time value
Social media enables our CRM system to calculate customer retention rates
Factor 3 Information capture
We collect customer information on an ongoing basis
We integrate customer information from the various functions that interact with
customers
We integrate internal customer information with customer information from Jayachandran et al. (2005)
external sources
We integrate customer information from different communication channels
We merge information collected from various sources for each customer
Factor 4 Information use
We use customer information to assess the lifetime value of our customers. Jayachandran et al. (2005)
We use customer information to measure the value of each customer’s referrals to Kumar et al. (2010)
other customers
We use customer information to measure the amount of information sharing Kumar et al. (2010)
between our customers
Factor 5 Customer relationship orientation
Our employees are encouraged to focus on customer relationships
In our organization, retaining customers is considered to be a top priority Jayachandran et al. (2005)
In our organization, customer relationships are considered to be a valuable asset
Our senior management emphasizes the importance of customer relationships

Factor 6 Social media data

Social media enables our CRM system to collect customer psychographics data
Social media enables our CRM system to collect customer interaction data
Social media enables our CRM system to collect customer service data Jayachandran et al. (2005)
Social media enables our CRM system to collect external data
(e.g. competitor information)
Factor 7 Customer communication
We enable our customers to have interactive communications with us
We provide our customers with multiple ways to contact the organization Jayachandran et al. (2005)
We maintain regular contact with our customers

116 SMALL ENTERPRISE RESEARCH Volume 21, Issue 1, 2014