Customer Relationship Management (CRM) (document en anglais)

The focus of this study is to find out the impact of Customer Relationship Management (CRM) on the fi- nancial performance of firms in India. The study identifies four CRM constructs – customer need sensing, communication, intermediaries, and the internal environment of firms. A CRM scale is developed, refined and validated and confirmatory factor analysis is used to examine the model fit. Firm data on profitability and growth is used as performance indicators for estimating the regression model. Using a large sample of

171 firms from eight different industry types, results suggest that there is a positive influence of CRM on firm performance but that this impact is insignificant.

Introduction

Customer Relationship Management (CRM) is a hot topic in the marketing literature these days. Customer relationships have been in- creasingly studied in the academic marketing literature (for example, Dwyer et al. 1987; Morgan and Hunt 1994; Sheth and Parvatiyar

1995). Gronroos (1991) advocated that cus- tomer relationships ought to be the focus and dominant paradigm of marketing. According

to Reinartz et al. (2004), organizations are realising that customers have different eco- nomic value for the company. An intense interest in this concept is also apparent in marketing practice and is most evident in firms’ significant investment in customer relationship management systems (Reinartz and Kumar 2000; Wyner 1999).

With increasing competition, survival is becoming difficult by the day and companies are looking towards solutions to help them

Harmeen Soch (Ph.D.) is Senior Lecturer of Marketing, Department of Commerce & Business Management, Guru

Nanak Dev University, Amritsar, India. E-mail: meenu_soch@yahoo.com

H.S. Sandhu (Ph.D.) is Professor of Marketing, Department of Commerce & Business Management, Guru Nanak

Dev University, Amritsar, India. E-mail: sandhu_hs12@yahoo.com

GLOBAL BUSINESS REVIEW, 9:2 (2008): 189–206

SAGE Publications Los Angeles/London/New Delhi/Singapore

DOI: 10.1177/097215090800900202

190 Harmeen Soch and H.S. Sandhu

sustain and increase the efficiency of their companies. As a customer ’s relationship with the company lengthens, profits rise. Com- panies can boost profits by almost 100 per cent by retaining just 5 per cent more of their customers (Reichheld and Sasser Jr. 1990). On average, businesses spend six times more to acquire customers than they do to keep them (Gruen 1997). It is universally accepted that marketing must become financially account- able, though it is not always clear what that means in practice (Wyner 2004). Return on marketing investment has different mean- ings in different situations. It is said that com- panies that implement Return on Investment (ROI) programmes, with integrated measure- ment of expenses and performance, typically show meaningful ROI gains within two years (Cook 2004). Starkey and Woodcock (2002) point out that good customer management is important and has delivered shareholder value, as there is a strong correlation between customer management performance and business performance. They have suggested that if a business invests $ 15m in CRM and manages its product properly, the company should eventually expect a return of $ 200m. It is known by now that customers are con- sidered assets to an organization that leads to increase shareholder wealth (Ryals 2005).

Although the ultimate objective of any measurement process is to increase share- holder value, one of the real advantages of a CRM measurement process is that the firm normally also obtains measures such as cus- tomer lifetime value and acquisition and retention costs, which relate to the value dual-creation process (Boulding et al. 2005). The customer market is often the key market.

Marketing tools that businesses can employ for retaining their customers are, therefore, likely to provide for a competitive advantage by contributing to product and service differ- entiation, as well as creating barriers for switching to other products and services. Because of that, the concept of customer rela- tionship management has gained much importance in recent years. Earlier it has been defined as ‘a process and technology that support the planning, execution and moni- toring of coordinated customers, distributor and

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