ASSESSMENT OF CUSTOMER RELATIONSHIP MANAGEMENT AND ITS IMPACT ON THE ORGANIZATION PERFORMANCE

BACKGROUND OF THE STUDY: A large number of organizations were organized based on the products and services they offered (Christopher, Payne and Ballantyne, 2002). The 4Ps, which stand for product, pricing, place, and promotion, were given a lot of attention as the primary focus of this endeavor. The emphasis was placed on trade, and if this objective was accomplished, businesses could rest assured that they would continue to operate. It goes without saying that this time period was dominated by transactional marketing. However, by the late 1990s, the vast majority of companies had begun to come to the conclusion that the 4Ps were no longer adequate to ensure continued profitability. Products could be quickly duplicated to the appropriate quality standards, prices could be easily matched, product availability was no longer a problem, and mass promotions were no longer as successful as they once were (Reinartz and Kumar, 2003). Customers and consumers have, in many circumstances, grown more discerning and less susceptible to the old marketing demands, most specifically "advertising." This comes as a result of the availability of additional options, which is partially due to the globalization of markets and the introduction of new sources of competition. Additionally, the majority of markets have progressed to the matured stage of their respective lifecycles (Christopher, Payne and Ballantyne, 2002). In reaction to the shifts that took place in the economic climate, businesses started undergoing internal shifts and shifted their focus to be more on the needs of their customers. Because of this, the concept of relationship marketing came into existence. According to the teachings of certain institutions, the terms "customer relationship marketing" and "relationship marketing" are interchangeable. According to this point of view, relationship marketing is a strategy to management that helps businesses to find lucrative clients, attract more of them, and keep more of them by managing the connections they have with those consumers (Reinartz and Kumar, 2003). According to the teachings of some other institutions, customer relationship management includes the use of information technology (IT) to the process of relationship marketing strategy implementation (Wilson et al, 2005). Customer Relationship Management is frequently referred to by its abbreviation - 'CRM,' and shall hereafter be referred to as such in this research. CRM stands for "customer relationship management."

The customer relationship management (CRM) philosophy is centered on a pan-company orientation in which the specific capabilities of an organization are centered around creating and delivering value to targeted market segments in the expectation that this will developed into a relationship such that the organization is able to determine, fulfill, and even predict the needs of the customer while simultaneously attaining customer loyalty in order to increase profits over time (Rigby et al., 2002). Therefore, successful CRM activities are anticipated to enable organizations to rapidly gather customer data, keep existing customers, determine which customers have been the most valuable over time, increase customer loyalty, acquire new customers, and grow relationships with existing customers, thereby positioning the organization in a better financial position for the future. Construction companies have a need to better comprehend and be aware of the bottom-line financial returns of business automation projects in order to reap the advantages of investing in such IT applications. This is necessary in order to gain the benefits of investing in such IT applications (Love and Irani, 2004). In addition, it is considered to be essential for the long-term success of a firm to have an understanding of both the clients and the requirements that they have (Nargundkar and Srivastava, 2002). Despite this, only a small fraction of companies have even the most fundamental information about their clients (McKeen and Smith, 2003; Kale, 2004). Many companies, realizing the importance of putting the needs of their customers first, have turned to customer relationship management (CRM) software in order to collect, organize, comprehend, predict, and fulfill the ever-changing wants and expectations of their clientele (Reinatz and Chugh, 2002). It is generally accepted that a successful CRM will result in financial benefits for the firm. The development of an efficient platform to carry out CRM duties has been made possible by advances in information technology. Despite the fact that there is universal consensus that CRM has the potential to have both a direct and indirect influence on customers. The term "Red Queen syndrome" refers to the phenomenon in which many businesses that operate in the construction industry have been attempting to respond to the demands that have been imposed on them by utilizing IT applications such as CRM and ERP. However, these efforts have not been met with immediate benefits or improvements in business performance. With this in mind, the purpose of the research that is presented in this paper is to provide material suppliers operating in the construction industry with the underlying knowledge necessary to overcome the 'Red Queen' syndrome that is frequently associated with enterprise applications such as CRM and to ameliorate their chances of obtaining improvements in business performance.

1.2     STATEMENT OF PROBLEM

There is no universally acceptable approach for the measurement and assessment of the ongoing contributions of CRM activities to the performance of an organization (Garbner – Kraenter et al, 2007).  This research aims to critically evaluate, compare and contrast the various approaches used to measuring CRM effectiveness, summarize their limitations and purpose modifications to obtain best practice towards the realization of a universally accepted holistic assessment for ongoing contributions of CRM activities to the performance of an organization.  To gain a better understanding of CRM in building material supplier firms.

1.3     OBJECTIVES OF THE STUDY

These thesis objectives are as follows:

1. To      identify        the     main problems     concerning   CRM implementation process.

2. To examine the core principles required in adopting and integrating CRM system within an organization.

3. To critically analyze the CRM adoption framework proposed by many leading CRM reviews.

4. To examine how CRM is measured within an organization.  To know the strategic/technological benefits of CRM implementation.

 1.4     RESEARCH QUESTIONS

The questions addressed in this thesis are:

1. How do organizations measure the effectiveness of their CRM activities?

2. How could these measurements be improved?

3. How can a firm major reasons and benefits of implementation of CRM be described?

4. How can the component of CRM implementation (i.e. people, process, and technology) be described? 

5. What are the strategic implications of the implementation and use of CRM systems?

 1.5   RESEARCH HYPOTHESES

The following hypotheses are hereby formulated:

H1:Perceived operational benefits from using CRM Technological initiatives are positively linked to CRM impact.

H2:Perceived strategic benefits from using CRM technological initiatives are positively linked to CRM impact.

H3:Top management support is positively linked to CRM impact technological readiness.

H4:Technological readiness is positively linked to CRM impact.

H5:Technological readiness is positively linked to knowledge management capabilities.

H6:Knowledge management capabilities are positively linked to CRM impact.

 1.6     SIGNIFICANCE OF THE STUDY

Currently, there is no universally accepted empirical method for measuring CRM effectiveness; there is no definite guidance as to how to assess the value of CRM activities nor is there a holistic assessment of ongoing contribution of CRM activities to organizational performance (Grabner-Kraeuter et al, 2007). As CRM techniques become more sophisticated and expensive, as well as relevant in many business environments, there is the need for accountability of investments on their activities. CRM will benefit managers and other business individuals because it allows the system to identify the different needs of the different customers, so that products can be target marketed and suggestively sold to the most appropriate clients.   CRM strategy may lead to an “increase in the bottom line” of the company and lastly with its importance must establishment need to consider the implementation of the CRM so as to ensure that when it is used it adds value and is successful.

 1.7    LIMITATIONS OF THE STUDY

One of the limitations of this study is non-availability of resources on the CRM implementation in the Nigeria building material and construction firms.

Lack of academic literature on the subject matter.

Telephone calls were used during interviews, its typically non-academic literature.  Academic literatures used for the  study have been based on developed economies, whereas, the research focus is on the construction of building material firms in a developing economy.

1.8     SCOPE OF THE STUDY

The importance or vital prospect of customer relation management (CRM) in the development and upliftment of any business/technological economy cannot be over emphasized. This literature is based on the general overview of the measurements of (CRM) as it impacts on the organizational performance in the building material suppliers and construction industry situated in Nigeria. Based on this the focus will be to analyze the activity of (CRM).  That will aid business and technological firms for maximum utilization.  Industries around metropolis of Enugu, Asaba, Ontisha, Awka and its environs are used to obtain cogent and vital information, as such will be used as research base.

 1.9     CONTEXTUAL DEFINITIONS OF TERMS

The terms below were defined for the purpose of this research to enable a clearer understanding of the meaning  of these terms as they apply to this research.

CRM

Christopher, Payne and ballantyne (2002 p.16) define CRM as `a strategic approach to improving shareholder value through the development of appropriate relationships with key customers and customers segments’.

CRM Effectiveness

The effectiveness of CRM is defined as attaining a satisfaction level achieved by CRM activities (Kim, Sub and Hwang, 2003).

CRM Critical Success Factors

Critical success factors have been defined as `the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization’.

Reliability

Payne, A. and Frow, P. (2005) defines reliability as the degree to which measures are free from error and thus yield consistent results.

Validity

Payne, A. and Frow, P. (2005) defines validity as `the degree to which instruments truly measure the constructs which they are intended to measure’.