The impact of customer relationship management on the financial performance of an organization 1
The impact of customer relationship management on the financial performance of an organization 2
This chapter provides an overview of the dissertation in brief. Background of the study and rationale of the study are discussed in the first half. Then this chapter goes on to explain six research objectives and two research questions. Finally structure of the dissertation is discussed.
1.2 Research context
Customer relationship management, because of its nature, technological advancements, and its ability to attract and retain potential customers has received tremendous attention form the organizations. CRM when deployed effectively helps organization to focus directly on customer and succeed in customer-centric environment.
The concept of customer relationship management (later referred as CRM) is not very old. It originated from the early 1990’s because of the emerging demands in the world (Ling and Yen, 2001; Xu et al., 2002). The roots of customer relationship management can be seen in relationship marketing by which long-term profitability can be achieved through a shift from transaction-based marketing to customer retention by aiming at effective management (Christopher et al., 1991). The base of customer relationship management is relationship marketing and it stresses on profits generated through customer, lifetime value, retention and satisfaction created through implementing effective management (Chen and Popovich, 2003). Main aim of relationship marketing is to enable organizations to attain and maintain long-term healthy relationships with the customers in order to maximize profitability. While CRM make use of information technology (IT) to effectively implement relationship marketing strategies (Ryals and Payne, 2001).
The importance of CRM has increased dramatically from the last decade and it is being given priority at the top corporate agendas. Companies have accepted CRM as a major element of corporate strategy. This is due to the emergence of new technologies and the shift in marketing from transactional approach to relationship oriented. The impact of customer relationship management on the financial performance of an organization 3
1.3 Rationale of the study
This research focuses on the impact of CRM solutions on the financial performance of an organization. In this regard financial services industry is considered for this research. CRM is mainly implemented in retail, airlines, and financial services industry. Reason for selecting financial services industry is because of continuous changes taken place in it.
Companies need to focus on customer needs and their core competencies in order to deliver optimized products and services to the customers. Due to the increased competition companies working as one unit have split into various divisions in order to focus on customers and increase the value chain.
Customers demand a variety of financial products; this originated the need of collaborating with the vendors of CRM. Most of the financial services organizations have implemented CRM but there are some left as well. Regardless of CRM implementation firms find it difficult to successfully achieve the targets. According to the The Economist, (2003); cite in Geib et al, (2006), despite of the CRM many organizations cannot determine whether the customer has got an additional account with its subsidiaries or not.
1.4 Research objectives
There are overall six objectives for this research. Research objectives explained below strongly relate to the research questions which are explained in section 1.5. The first research objective is to determine the performance implications derived from the use of CRM. This will enable the findings to generate a conclusion.
The second research objective is the selection of an industry which implements the CRM software. Based on...
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