Effects of Customer Relationship management (CRM) on customer satisfaction and sustainability

Muhammad Tariq Jamal Siddiqi1 (14937)

Raheel Najam Siddiqi2 (14961)

Haider Ali3(14941)

Abstract

Establishing the important role of marketing tool which is Customer Relationship Management (CRM)
for customer satisfaction and sustainability, the current research presents integrating multiple relationship
layers (i.e., personal loyalty, relationship with online consumption communities and local network
effects). In the process of the review, the authors develop a comprehensive framework the authors also
identify broad challenges to encouraging sustainable behaviors and use these to develop novel theoretical
propositions and directions for future research. Data collection was carried out in the mobile
telecommunications market using a paper-based survey, website’s rating and customer review. The
respondents must be 18 years or older and had been mobile service users for at least 15 months. The role
of relationship with online consumption communities becomes more significant as customers perceive a
higher level of indifference among service providers. Further, local network effects were significantly and
negatively related to retaliation. The findings of this study provide important theoretical and practical
implications for academics and practitioners alike, especially in the contractual, network industries.

Key words: CRM, CUSTOMER SATISFACTION AND SUSTAINABILITY, RELATIONSHIP

Background
Undoubtedly, CRM has recently become one of the most broadly accepted instruments that support
customer oriented organizations decisions. More specifically, CRM is regarded as one of the best
strategies and practices for hotels in order to develop their performance and thus to make sure that their
long-term business is survival]. It is worth mentioning that CRM is mainly based on the belief that
establishing long-term relationships with customers is critical for obtaining loyal customers who are much
more profitable than non -loyal ones. Though previous studies confirm the positive effects of CRM on
business performance, actual results in the business world remain controversial regarding the real
outcomes of CRM and its effects on businesses investing in it In this regard, the successful
implementation of CRM strategies will be of great benefit to the organizations, investing in it. Such
organizations can reap the benefit of increasing sales and ensuring long-lasting customer retention and
loyalty The uncertainties about the precise implication and domain of CRM led to improper
implementations of CRM and therefore to unsatisfying results in improving customer relationships.
Attempted to provide a more conceptual clarity of CRM through identifying four key areas necessary for
successful CRM implementation: (1) strategy, (2) people, (3) processes, and (4) technology. In other
words, CRM can only be effective if all four areas work in harmony. More particularly and based on
previous CRM studies, it can be concluded that CRM implementations can be successful only if they
involve these CRM four dimensions: (1) customer-oriented strategies (2) knowledge management (3)
organizing around CRM and (4) the incorporation of CRM based technologies Consequently, to develop
both customer satisfaction and to improve profitability, hotels must nowadays emphasize on
implementing a CRM strategy in appropriate manners.However, in spite of the wide use of CRM in the
organizations, there have been only limited studies and publications within the hotels sector. This
research paper tend to bring attention to the application CRM dimensions in the hospitality industry. It
examines the direct outcomes of the CRM activities on customer’s satisfaction.

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

CRM has been defined in numerous ways and with many descriptions. It can generally be defined as the
art of acquiring customers and having a long-lasting relationship with them. As well, CRM can be
referred to as the combination of people, processes, and technology used to understand and obtain
customers for a company. It focuses on customer relationships and retention. To benefit fully from the
implementation of CRM, companies must have efficient CRM strategies to ensure satisfying outcomes
for the company. In order to compete with competitors in today’s market, businesses need to have more
than just a professionally designed Website or software, and other dimensions are to taken into
consideration. In an attempt to summarize the different definitions of CRM, this research paper focus on
the definition that states that CRM implementations usually involve the four dimensions: (1) focusing on
customer-oriented strategies (2) managing knowledge (3) organizing around CRM and (4) incorporating
CRM based technology. The multi dimensions concept of CRM can be considered relatively new,
because of the limited studies focusing on CRM dimensions in some service sectors such as banking . So
based on this new approach, it can be presumed that CRM consists of the four abovementioned broad
behavioral dimensions.

Customer Orientation

The main purpose behind customer–oriented behaviors is to increase customer long-lasting satisfaction
and to create customer-loyalty. Customer-oriented strategies, in an organization, definitely ensure an
extremely positive impact on its performance. Customer orientation is a critical factor in the success of
CRM projects. Besides, other studies reveal that service firms require a better understanding of customer
orientation in order to enhance their performance. Customer orientation has a positive impact on
marketing planning capabilities. Besides, this strategy also influences the successful implementations of
marketing actions or innovations. Hence, we note that despite the numerous positive impacts of customer
orientation on organizations performance, there is still a shortage of literature about its impact on service
firms and hotels performance.

Knowledge Management

As mentioned earlier in the preceding section, CRM can be successful only if customer information is
effectively transformed to customer knowledge. Managing knowledge effectively greatly help
organizations in building better customer relationship and enhancing organizational performance.
Collecting and analyzing customers’ information also help companies to develop highly personalized
offerings. in spite of the cited benefits of knowledge management, only few studies illuminate the role of
knowledge management in the hotels performance. Investigating the impact of knowledge management
dimension on hotel industry in future research.
CRM Organization

First, it is important to note that in order to enhance customers relationships and firms performance,
organizations have to develop appropriate working environments. As a result of the previous supportive
working conditions, organizations can ensure the required customer-oriented behaviors of their
employees. Researchers also argue that CRM cannot be successful even with the most advanced
technology and even with customer - oriented approaches, unless the project is completely integrated at
all levels. CRM success does not only require technological quality or systems, but also effective service
concept and suitable operation procedures. It goes without saying that Knowledge about customers plays
a vital role in CRM, Therefore, such data can be used to establish and develop beneficial and long-lasting
relationships with customers.

CRM Technology

Several studies demonstrate that CRM applications help organizations to collect and analyze data about
customers, respond with timely and effective customized communications, and efficiently deliver
personalized offerings to their customers Marketing executives frequently adopt the latest software
programs to better respond to customers and to build profitable long-lasting customer relationships. CRM
technologies help organizations to boost customer satisfaction, increase customer retention, and build
profitable long-term customer relationships. Though, CRM technologies generally end up in failure if not
used properly. Accordingly, the suitable use of technology in marketing is one of the greatest
opportunities in service firms. It is important to get the right information from the right people at the right
time in order to make the right decisions summary, we can conclude that for a successful implementation
of CRM projects, firms need to combine the four abovementioned dimensions—customer orientation,
CRM organization, knowledge management, and CRM-based technology—into an effective overall CRM
strategy. Hence, insufficiencies in any of these areas can lead to lowering CRM projects performance or
even to failures.

Research Problem
Customers’ access to lots of information about products and their distributions for choosing one products
in the competitive atmosphere causes lack of customers’ loyalty toward producers of them. Therefore,
having effective relationship with customers and saving them, is the most effective concept in being
permanent and profitable companies(Ghazian et al., 2016). Heavy investment of different agencies has
been on customers’ relationship management. However, various records shows that it performance has
high risk. Indeed, the effect of customer relationship management in different areas especially in service
dimension is inevitable and cannot be ignored because of its high risk. Since the importance of using
customer relationship management in public sector, which is the main competitive instrument and get
permanent advance in competitions in most of countries, it is important to plan and edit mechanism to
decrease risks and simplifies its management. As the researcher s concluded that of the main reason of the
costumer relation management failure is the lack of appropriate instrument and criteria to evaluate
relationship with customers. Like the other concept, if this organizational concept can’t be evaluated, it
can’t be managed, too. Therefore, it is important to have comprehensive instruments to systematically
evaluate customer relationship management. As the importance of customer- center in marketing, the
main loss is lack of effective permanent relationship with customers. On the other hand, in past customers
expected producers to deliver on time, high quality, cheap products and services .Commercial is relation –
based .Distribution chains are powerful. As distributing of products was wide, the main competition was
keeping services and developing products to customers and simplifying customers buying, instead of
keeping the relationship with customers. But today, organizations are in complicated and dynamic
environment and competition among organization is increased, products’ life is decrease and
organizations come to decline. In many cases produces productions have the same qualities and customers
decide what to buy costumer –cent r is reveal by prioritize allocation resources on providing the higher
value and customers’ ‘satisfaction. There are various definitions for customer- center. called customer –
center as enough comprehending of customers’ purposes to provide higher a continuousvalues.in other
word, they found customer- center as an organization cultures that provided higher values for consumers
by the most effective and creative a necessary behaviors. defined comer –center as collection of beliefs
that prefers customers ‘ needs and interests and pay attentions to customers benefits instead of other
beneficiaries such as organization owner, managers and staff. One of the aspect of organizations customer
-center is companies attention to customers’’ responses and reactions .todays customer-center and their
reaction and satisfaction to companies products and services consider with customer relationship
management. The more customer relation management, the more customer relation is considered. That
means; they want to behave in the way to keep customers, and to have a long relationship with customers.
Appliance industries are not exceptional and they concern about keeping their customers .therefore this
study investigates the customer relationship management and customer s’ reactions among LG appliance
industries companies in Tehran .In fact , the effect of customers relationship management on customer’s
reaction is investigated .WE want to know that whether customers relationship management can improve
customer’s reactions? Therefore, Internet service, customers support and marketing support dimensions re
used to evaluate customers relationship management .we used price sensitivity, bran preference, buying
intention, and developing brand to evaluate customer reaction. Thus, the main question of this research is
this: what is the relationship between customer relationship management and customers’ reactions?

Research Purpose
This paper establishes a research model to study the effective impact of the use of CRM. The starting point of the
model is the establishment of a unified measurement of the degree of introduction of the CRM technology solution
in companies, also known as CRM practices, which is expected to be related to the results obtained by the model.
The objective of the study is to establish and measure the variables that determine the improvement in business
performance that CRM may have, according to the degree of its introduction in the company. The model obtained
could be used to measure the impact of CRM in companies in any business sector with homogeneous characteristics.
The main objective of this study is to review and provide the conceptual basics to understand the definition of
customer satisfaction; some factors which can affect the customer satisfaction and also the methodologies used for
measuring customer satisfaction. The impact of successful Implementation of customer relationship management
would clearly shows a beneficial result in term of customer satisfaction and sustainability.
Research Questions
1. What is the relationship between customer relationship management and customers’ reactions?
2. What are the key factors of CRM?
3. How CRMs implement in an organization?
4. Who are responsible persons to implement CRM in organization?
5. Why CRM is important for both buyers & sellers?
6. When and where collaborative CRM required?
7. Why customer satisfaction is important?

Conceptual framework and hypotheses

The proposed model of this research is based on the resource based view theory. It conveys that the hotels
have the resources and capabilities can effectively achieve a competitive advantage to hotels. This
proposed research model contains four dimensions of CRM which encompasses customer orientation,
CRM organization, knowledge management, and technology based CRM. This proposal is based on prior
researches
(Abdullateef et al., 2010)
(“How Does CRM Technology Transform into Organizational Performance?,” 2010).
(International Journal of Research in Marketing - Journal - Elsevier, n.d.)

The research examines the relationship between customer relationship management dimensions and
hotels performance. Thus, we propose the following hypotheses:
H1. Customer orientation has an influence on customer retention.
H2. Knowledge management has an influence on customer retention.
H3. CRM organization has an influence on customer retention.
H4. CRM technology has an influence on customer retention.
H5. CRM dimensions have an influence on customer

Literature Review
Customer Relationship Management (CRM) “is a business strategy that aims to understand, anticipate
and manage the needs of an organization’s current and potential customers”. It is a “comprehensive
approach which provides seamless integration of every area of business that touches the customer-
namely marketing, sales, customer services and field support through the integration of people, process
and technology”.CRM is a shift from traditional marketing as it focuses on the retention of customers in
addition to the acquisition of new customers. “The expression Customer Relationship Management
(CRM) is becoming standard terminology, replacing what is widely perceived to be a misleadingly
narrow term, relationship marketing (RM)”.

CRM is concerned with the creation, development and enhancement of individualized customer
relationships with carefully targeted customers and customer groups resulting in maximizing their total
customer life-time value”.
The focus [of CRM] is on creating value for the customer and the company over the longer term. When
customers value the customer service that they receive from suppliers, they are less likely to look to
alternative suppliers for their needs. CRM enables organizations to gain ‘competitive advantage’ over
competitors that supply similar products or services. Today’s businesses compete with multi- product
offerings created and delivered by networks, alliances and partnerships of many kinds. Both retaining
customers and building relationships with other value- adding allies is critical to corporate performance.

The adoption of C.R.M. is being fuelled by a recognition that long-term relationships with customers are
one of the most important assets of an organization

CRM developed for a number of reasons

 The 1980’s onwards saw rapid shifts in business that changed customer power
 Supply exceeded demands for most products
 Sellers had little pricing power
 The only protection available to suppliers of goods and services was in their relationships with
customers

CRM involves the following

 Organizations must become customer focused

 Organizations must be prepared to adapt so that it take customer needs into account and delivers
them
 Market research must be undertaken to assess customer needs and satisfaction

Customer relationship management focuses on strategically significant markets. Not all customers are
equally important”. Therefore, relationships should be built with customers that are likely to provide
value for services. Building relationships with customers that will provide little value could result in a
loss of time, staff and financial resources

Markers of strategically significant customers

Strategically significant customers need to satisfy at least one of three conditions :

 Customers with high life-time values (i.e. customers that will repeatedly use the service in the
long-term e.g. Nurses in a hospital library)
 Customers who serve as benchmarks for other customers e.g. In a hospital library consultants
who teach on academic courses
 Customers who inspire change in the supplier

In order to understand and develop a CRM strategy, it is

important to clearly define what CRM actually means. This is
particularly relevant since the field of CRM remains under
development and consulting firms, IT vendors and companies
have created their own definitions and conceptualizations that
continue to evolve. These different definitions and conceptualizations can be grouped into three
perspectives of CRM: the functional level, the customer facing level, and the company-wide level

Functional level

If viewed from a functional perspective, CRM refers to the set of processes that must be in place to
execute customer related tasks, such as sales force automation or online campaign management. This
CRM perspective is often combined with a strong technology orientation that arises when vendors need to
position their particular product. For some vendors or buyers, functional CRM is nearly synonymous with
technology.

Customer-facing front-end level

In contrast, from the customer-facing perspective, CRM is a set of activities that provides a single view of
the customer across all contact channels. This type of CRM evolves from practitioners’ need to manage
different channels consistently in order to focus on the total customer experience. The goal is to build a
single view of the customer across all contact channels and to distribute customer intelligence to all
customer-facing functions (marketing, sales, service, etc.).This view stresses the importance of
coordinating information across time and across contact channels to manage the entire customer
relationship systematically

Company-wide level

If CRM is viewed from a company-wide level perspective, the primary objective is to uncouple the term
«CRM» from any technology underpinnings and from specific customer management techniques. Instead,
this perspective views CRM as a strategic orientation to implement customer centricity within the entire
organization and create shareholder value. Here, knowledge about customers and their preferences has
implications for all parts of the organization including functions that are not boundary spanners per se,
such as R&D or supply chain management.

CRM’s strategic perspective

When CRM is adopted at the company-wide level, it represents strategic CRM. As such, CRM aims to
gain a long-term competitive advantage by optimally delivering value to the customers and extracting
business value from the relationship with the customers. Therefore, CRM defined from a strategic
perspective is as follows:

CRM is the strategic process of selecting customers that a firm can most profitably serve and shaping
interactions between a company and these customers. The ultimate goal is to optimize the current and
future value of customers for the company.

Strategic process:
The CRM activities are initiated and managed from the very top of the organization. Strategic initiatives
by definition involve multiple, if not all, organizational functions.

CRM does not belong to any single department but rather demands contribution and reinforcement from
all corporate functions. There is no place for a silo mentality that discourages information sharing and
condones the idea that one function «owns the customer”. Furthermore, CRM is a continuing process that
cannot be handled as just another software implementation project. It must be viewed as a continuous
effort to become an ever more customer-centric company

Selection:

When the economic value of a customer is the basis for resource allocation, firms focus on their most
profitable or potentially profitable customers. It is not about denying services to certain customers but
rather about recognizing a fit between the firm’s offering and a customer’s desire, behavior, and
characteristics.

Interactions:

The relationship between the customer and the firm takes the form of an interactive dialog. Information
and goods are exchanged, and the exchange evolves as a function of past exchanges. This is very different
from a purely transactional scenario in which firms sell one-time products and services to customers.
Moreover, it recognizes the fact that the customer journey involves many touch points before it eventually
results in a transaction

Customers:

The term is applied broadly here. Depending on the industry and company, a customer can be an
individual account, one or several segments within a market, or an entire market. Customers include not
only end users but also intermediaries, such as distributors, retailers, and so on. Generally, firms are
moving away from single, all-purpose solutions and starting to satisfy smaller segments with better
targeted products, services, and communication propositions. Although segmentation is nothing new,
modern CRM aims at targeting individual customers with customized product offerings

Current and future value of the customer

Optimizing current and future value means that firms move away from extracting profit from single
transactions and work to maximize profits over time and a series of transactions. Firms want to maximize
customer equity—that is, the value of all customer relationships.Value extracted from customers includes
direct contribution from purchases (customer lifetime value), but increasingly also indirect contribution
from referrals, influence, and knowledge sharing

In a nutshell, CRM is a management concept based on established marketing principles that recognizes
the need to balance organizational and customer interests carefully. CRM is not a result primarily of
technological solutions but is rather a strategic orientation supported by them.These complex sets of
activities together constitute the basis for a sustainable and difficult to imitate competitive advantage, the
customer-centric organization. With strategic CRM, a company creates an environment and flexible
support system that can deal readily with issues surrounding product innovation, increasing customer
expectations, acquisitions, globalization, deregulation, the convergence of traditional markets, emergence
of new technologies, privacy issues, and new customer contact channels.

Any initiative around CRM should be based on a clear vision of what the company aims to achieve with
their customer relationship management efforts. Therefore, an essential component of the CRM vision
should focus on the customer value. Based on the discussion above, we suggest that a key part of the
vision should focus on the topic of value. In fact, building on the concept of customer value, we can infer
that the CRM vision is to build an organization in a manner that all actions are geared towards
maximizing the lifetime value of each customer to the firm. This involves acquiring and retaining
strategically important customers and develops, communicate, and deliver value propositions that meet or
exceed customer expectations. With this vision, an organization can focus on developing the key asset of
the enterprise that matters in the long term, progressively deeper relationships with valuable customers.

The implementation of the CRM strategy is a process of planning and executing a series of small CRM
projects. These projects are all aimed at addressing the elements of the CRM strategy (as discussed in
Chap. 3), and they normally fall into three categories:

1. Operational CRM projects 2. Analytical CRM projects 3. Application projects

References
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Call Center Performance.

Ghazian, A., Hossaini, M. H., & Farsijani, H. (2016). The Effect of Customer Relationship Management
and its Significant Relationship by Customers’ Reactions in LG Company. Procedia Economics and
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International Journal of Research in Marketing—Journal—Elsevier. (n.d.). Retrieved October 30, 2021,

from https://www.journals.elsevier.com/journals.elsevier.com/international-journal-of-research-in-
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