Chapter 2 Literature Review

Transcription

1 Chapter 2 Literature Review 2.1 CRM Concept In traditional of mass production and mass marketing changed the competitive by increasing product availability for consumers, this lost track of their customers individual needs as the market became full of product and service options, today Many companies are racing to reestablish their connections to new as well as existing customers to boost long-term customer loyalty (Chen & Popovich, 2003). Support from Alipour and Mohammadi (2011), the study showed that one of the most important factors in achieving the competitive advantage is absolute of customer focus, the ability of organization to adjust themselves in order to response customer need quickly is one of competitiveness, the customer relationship management is a strategic process of support, against the competitors, providing value for the buyers and gaining excellent benefits. There are three approaches relate to the customer relationship management, first, customer relationship management as a technological tool, customer relationship management is frequently viewed as an information system to enable the organization identify customer, to support market segmentation, interaction with the customer and personalization of products and services. second, the customer relationship management as the strategy approach is relate to process, people, structure and technology to acquire, select and retain customer with high lifetime value to the organization, third, the customer relationship management as a philosophy approach that goes beyond 1

2 covers strategy and tool application. It is relate positive attitudes toward all kinds of stakeholders. It involves a deep understanding of what relationship means and of all implications relate to establishing the relationship. The customer relationship management requires the rethinking of organization processes (Pedron & Saccol, 2009). But successful implementation is not easy because the company do not understand that CRM require company-wide, cross-function, customer focused, business process re-engineering. Viewing CRM as a technologyonly solution is likely to fail. The successful CRM implementation requires an integration and balance approach to technology, process and people. The customer relationship management applications link front office and back office functions with the company s customer touch points, the customer relationship management applications help organizations assess customer loyalty and profitability on measures such as repeat purchases (Chen & Popovich, 2003). 2.2 CRM Benefit The customer relationship management has evolved from advance of information technology and organization change in customer centric processes. Companies that successfully implement CRM will get the reward in customer loyalty and long run profitability (Chen & Popovich, 2003). The customer relationship management implementation is positively associated with customer satisfaction and stronger positively effect to the customer acquisition, regular evaluation management and increasing selling management (Yao & Khong, 2011). The customer 2

3 relationship management leverage information from their databases to achieve customer retention and to cross-sell new products and services to existing customers, therefore organization that implement customer relationship management system make better relationships with their customers, achieve loyal customers and a substantial payback, increased revenue and reduced cost (Blery & Michalakopoulos, 2006; Kubi & Doku, 2010). Support from Sun et al (2006), the study showed that the customer relationship management system transforms a data-collection and storage technology into service-excellence and revenue-growth opportunities. The benefits of customer relationship management that is very interesting, the customer relationship management system help the marketing within organization to identify and target their best customer, manage marketing campaigns and provide guideline of good quality of services and products for sales team, optimizing customer information in order to support telesales, account and sales management, helping the organization improve their customer services with highest of level of service by providing the information of individualized customer, with the aim of improving customer satisfaction and profits (Vazifehdust et al., 2012). The customer relationship management benefits for customer as following Improve customer services, Increased personalized service or one to one service, Responsive to customer s needs, Customer segmentation, Improve customization of marketing, Multichannel integration, Time saving and Improve customer knowledge (Mohammadhossein & Zakaria, 2012). 3

4 2.3 CRM Success Factors Customer relationship management is a combination of people, processes and technology that aim to understand a company's customer it is an approach to managing relationships by focusing on customer retention and relationship development (Chen & Popovich, 2003; Jen, 2013). Support from Arab et al., (2010) showed that customer relationship management success factors are process, human and technology that is important component for the organization that want to implement the customer relationship management system, the process that relate the organization functions such as marketing, sale, service and other, the human factor relate to behalf of employees within the organization, the technology factor that is what facilitates implementing the customer relationship management system, these factors are very important for successfully of customer relationship management implementation. The human factor that effect to customer relationship management implementation, involving a lot of people within organization such as front-line sales, marketing and service providers, business analysts, IT professionals and broad array of managers (Vazifehdust et al., 2012). Many organizations fail to adapt customer relationship management within organization, 69% of customer relationship management project have little impact with their sale performance, 70% of customer relationship management initiative will fail over the next 18 months, 60% of customer relationship management project will fail at end of implementation, cause of failure such as lack of skill to building and using the new technology of customer relationship management system, their customer relationship management cost exceed the plan, poor data 4

5 quality and quantity, lack of leadership and top management involvement, some organization do not know exactly what they want from customer relationship management implementation, some failure occur at early stage of customer relationship management project due to they don t understand benefit of business and financial (Pedron & Saccol, 2009). Likewise Mishra and Mishra (2009), the study showed that the main cause of customer relationship management failure were 29% for the organization change and 20% for little understanding of customer relationship management. The customer relationship management implementation aspect it is not the technology implementation. If the organization viewed the customer relationship management implementation is same as the technology implementation then the customer relationship management project will lead to be failed in finally (Yao & Khong, 2011). 2.4 CRM Mindset There are a lot of researches shown that CRM mindset is very important for customer relationship management implementation in organization. Support from Melendez and Moreno (2013) shown that the customer relationship management is not a technology but it is an organization issue, the keys success of customer relationship management is adequate employee training. They have to adapt their work to align with customer relationship management system. Therefore, the customer relationship management system training for employees is very important because it will help employees understand how to work with customer relationship management system that toward their jobs (Mathur et al., 2015). The 5

6 training is an important factor to CRM implementation. Employees should become completely familiar with CRM process concepts. They should be trained in using CRM systems and other technical tools. Internal communications, promoting cross-functional teams and establishing a learning community are ways that organizations can use and train their employees. Besides training, organizations should pay attention on developing their employees skills. The skills and competences of employees need to be continuously developed. For effective CRM, skills development should occur in the following areas: communication, soft networking, peer learning, team building, collaboration, market sensing, ability to understand customers, gain customer trust and respect and creative thinking. Employees bring knowledge, expertise and competences in to organization (Vazifehdust et al., 2012). The training is important for employees. They should be trained in using customer relationship management system and technical tools in order to improve poor understood and satisfied. (Vazifehdust et al., 2012). In order to success of CRM implementation, the organization must put emphasis in the two elements which are behavior of employees and relationship development. Expectation of employees not merely be polite and courteous towards their customer, but most importantly must have the product knowledge and communication skills that can create a relationship with the customers. The positive employees behavior is vital in sustaining customers loyalty. Employees must be trained to response to the customers needs in an appropriate speed. They must also able to 6

7 show concern and care to the customers. Behavior change can only be done if management team is serious in investing in their human capital. This can only be done through series of training and developmental programs for the employees. By improving the competencies of employees in this area will definitely improve the overall service quality of the organization. Organization must also constantly keep their employees motivated because highly motivated people would definitely able provide better services (Long et al., 2013). The majority of fail come from human factor. User training channel of customer relationship management project are necessary that the organization has to provide with appropriate in order to avoid user resistance (Papadopoulos et al., 2012). Employee resistance to CRM software is a result of CRM implementation. Training programs are offered to employees, generally in connection with technological issues rather than behavioral aspects related to a CRM philosophy. The technological CRM focus overlaps with the attention paid to customers. Employees must receive training programs which cover technological and organizational changes (Pedron & Saccol, 2009). Management must show its commitment to an ongoing company-wide education and training program. In addition to enhancing employee skills and knowledge, education boosts motivation and commitment of employee and reduces employee resistance (Chen & Popovich, 2003). Support from study of Pedron and Saccol (2009) showed that customer relationship management software may make the employees resistance due to difficulty of new technology using from 7

8 customer relationship management implementation. Thus, the training program should be provided for all employees who cover technology and organization changes. The employees need to learn a lot of new system. 2.5 CRM Communication In order to build the human factor by providing employees with the information and processes, understand and identify customer needs and effectively build relationships between the company, its customer base and distribution partners is vital (Saeed et al., 2015). Research of Employee's perception toward e-hrm implementation showed that the employee's perception about benefit is an important and related to service that will effect to customer satisfaction, the employee's positive attitude will help to reduce resistance to change in process of implementation (Sekhar & Patwardhan, 2015). The communication channels of CRM project are necessary that the organization has to provide with appropriate, high-lights that a range of risk factors, such as user communication gaps within CRM projects generating cognitive dissonance, ultimately leads to user resistance. Based on this, the need to train, educate, and keep open channels of communication among CRM users (Papadopoulos et al., 2012). The adoption of customer-oriented strategies requires an organizational culture that is adaptive and responsive to change, and the quality of communication within an organization is an important aspect of any change initiative. Failure to success fully communicate a change initiative and its implications for employees can lead to failure ; an effective internal communication strategy needs to be in place, so that there is buy-in to the initiative led 8

9 by the top-management team (Yals & Knox, 2001). 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 & Popovich, 2003). 2.6 CRM Participation CRM is largely dependent on staff attitudes and commitment. The success of CRM requires motivated and involved employees. Regarding the need for adequate organizational structure/processes, the results confirm that CRM is a strategic initiative that requires the complete participation of the entire organization and that its success requires a change of all internal processes, with an emphasis on human resource management practices. Finally, the participation of all employees in CRM implementation, via training and motivation, is also clearly important for CRM implementation success (Melendez & Moreno, 2014). To bring changing to business process and culture, the employees have to understand the purpose and changing within organization. So, the employee participation is required for customer relationship management implementation (Chen & Popovich, 2003). User participation element is a big impact to customer relationship management success. Users or employees should understand that customer relationship management is 9

10 the mission for all members (Jen, 2013). Empowered employees are given the freedom, independence and discretion over their activities. Delegating responsibility and empowering staff to handle customer contacts is essential for relationship management. By empowering people, it gives them the sense of power and authority, thus giving them more chance and rooms to innovate, creation and explore new fields. Employee involvement means allowing employees to involve in their own jobs design and evaluation of their own jobs. If employees are not involved and consulted in the CRM project design and planning stages, this will lead to their requirements to be poorly understood and satisfied (Vazifehdust et al., 2012). 2.7 Past Research The study from Prasongsukarn (2010) showed that the customer relationship management cannot be successfully implemented without executives and employees readiness. Support from Melendez and Moreno (2013), the study showed that the customer relationship management is not a technology but it is an organization issue, the key of customer relationship management success are adequate top management support, employee training and motivation, and adequate organizational structure/processes, the finding confirm that customer relationship management require the complete participation of the entire organization and that its success require a change of all processes within the organization. Likewise, the study from Blery and Michalakopoulos (2006) showed that culture factor is important factor, because employees should accept the changes and what the implementation of CRM will bring. 10

11 Support from Chen and Popovich (2003) the study showed that customer relationship management implementation will bring changing to business process and culture, the employees have to understand the purpose and changing within organization. So, the employee participation is required for customer relationship management implementation. When business process changed that mean there are some jobs is changed that make difficulty and problem into employees. The training program is necessity for employees in order to reduce resistance and motivate them to drive customer relationship management project. Likewise study from Payne and Frow (2005) showed that employees have a crucial role to play within each of the CRM processes and implementation, especially for Change management and project management are particularly dependent on participation of employees for customer relationship management success. The study from Mathur et al (2015) showed that the customer relationship management is a backbone for communication between frontline employees and customers. Successful customer relationship management implementations depend on employees integrating into the system. The employees need to learn a lot of new system. They have to adapt their work to align with customer relationship management system. Therefore, the customer relationship management system training for employees is very important because it will help employees understand how to work with customer relationship management system that toward their jobs. Support from research of Pedron and Saccol (2009) showed that the customer relationship management software may make the employees resistance due to difficulty of new technology using from customer 11

12 relationship management implementation. Thus, the training program should be provided for all employees who cover technology and organization changes. The rewarding employee is important issue for customer relationship management implementation due to the fact of sales people they usually think that maintaining a close relationship with customer is not their responsibility. As a result, the organization will get a lot complains and suggestions from customer due to the customer is not receive satisfaction. The study from Amoako et al (2012) showed that issue of no customer focus and misunderstanding customer needs are very important for customer relationship management implementation, then the organization needs to motivate employees to be absolutely customer centric due to no customer focus problem arise because of employee reluctance, then result is a highly expensive customer strategy being adopted by the company in an effort to retain customers, with reluctant, unfocussed and poorly trained. Likewise, the study from Jen (2013) showed that organization is the most important factor. There are a lot of elements toward the organization factor but user participation element is a big impact to customer relationship management success. Users or employees should understand that customer relationship management is the mission for all members. The successful of customer relationship management come from all employees in organization make effort to encourage the success of customer relationship management project. Therefore the customer relationship management perceives value is important for all employees in organization. The employees involvement means that allow employees to involve with their jobs design and 12

13 evaluation. The employees participation is important for customer relationship management implementation due to low participation of employees will lead to be poor understood and satisfied. Thus, the training is important for employees. They should be trained in using customer relationship management system and technical tools (Vazifehdust et al., 2012). In addition, the empowerment is important for customer relationship management implementation because the study showed that the positively empowerment in the customer relationship management will provide better efficiency of individual relationship (Yao & Khong, 2011). The study from Papadopoulos et al (2012) showed that strong evidence to support the focus on this risk factor, which include human factor due to human factor impact to service quality that relate to long-term customer retention because the cost of maintenance existing customer is lower than five times of cost that association with attempts a new customer. The customer who is unsatisfied then they will never buy the products or services again from the same company. Not only that the customer will communication their dissatisfaction to at least nine other people. There are 43%-65% of customer relationship management project fail. The majority of fail come from human factor. User training, education and communication channel of customer relationship management project are necessary that the organization has to provide with appropriate in order to avoid user resistance. Support from Yals and Knox (2001), the study showed that the adoption of customer-oriented strategies require changes of organizational process that need a good quality of communicate for all employees within organization because failure of 13

14 successfully communication can lead to failed of customer relationship management implementation. Likewise the study from Rababah et al (2011) showed that the important step before doing implementation of customer relationship management system which is to communicate customer-oriented culture within organization to be more understanding and awareness about customer relationship management system. The studies from Hsieh et al (2012) show that manager realize that the quality of service is provided by front-line service employees that directly impacts to customer satisfaction. It is organization's ability to retain existing customer, attracted new customer, cross-sell and up-sell products or services. Employee s satisfaction may impact their service quality. If employee s satisfaction is high then they will offer high-quality service to customer then result of customer satisfaction is high also but if employee' satisfaction is low then they may provide low-quality service to customer. So, the employee s satisfaction is important for quality of service. A good of customer relationship management system able to increase the employees' satisfaction by fulfill their work need but if customer relationship management system or function fail to support their service activity or their work then employees are dissatisfied. Impact of CRM Factors on Customer Satisfaction and Loyalty showed that the service quality has a positive effect to customer satisfaction, the employee that provide a service to customer is important because the employee is the connection between organization and customer, therefore, it is important to make sure that employees are friendly and respectful to customers (Long, 2013). 14