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1 Journal of Renewable Natural Resources Bhutan ISSN: Evaluation of Association between Customer Relationship Management and Efficient Relationship Marketing using the Balanced Scorecard (Case Study: Insurance Agencies, Kohgiluyeh and Boyerahmad) Khosro Panahi 1 and *Jahanbakhsh Rahimi Baghmalek 2 1 Department of Management, Yasouj Branch, Islamic Azad University, Yasouj, Iran Department of Management, Yasouj Science and Research Branch, Islamic Azad University, Yasouj, Iran 2 Department of Management, Yasouj Branch, Islamic Azad University, Yasouj, Iran *Corresponding author: fshab2007@yahoo.com ABSTRACT As in other companies, insurance companies must operate strongly and efficiently towards their projected mission, goals and strategies and to satisfy this end, having a model to assess the performance and awareness on to what extent to which organization has met its objectives and where is organizations place in today's complex and dynamic environment, is essential. The nature of the insurance company requires them act in customeroriented manner since survival of the company depends on their customers. In this regard, some companies have adopted relationship marketing and customer relationship management strategy. This is a descriptive study conducted in field manner. The study samples consisted of all insurance agencies of Kohgiloyeh Boyerahmad province which estimated 190 ones. Data on questionnaires were analyzed using SPSS and Smart PLS software applying statistical tests in consistent with hypotheses. According to the results, there is a significant and positive correlation between customer support and marketing support customer to relationship management system and relationship marketing, but implementation of internet services in customer relationship management system does not have significant positive impact on relationship marketing. At the same time results showed that relationship marketing and business performance in terms of financial, customer, internal process and learning growth are positively related. Keywords: customer relationship management, relationship marketing, efficiency INTRODUCTION Service organizations, for their survival rely on customer satisfaction so that they should create a standard for satisfying performance to which opinions of customers can be compared toward improve them frequently (Park et al 2008). Customer satisfaction is to meet customer expectations and according to enormous researches, service quality and customer satisfaction are strongly tied together (Jamal, 2009). Satisfaction is found to be most important principles for successful longterm business relation with customers (Kim et al, 2010). But only those products or a service to leads to satisfaction whose benefits are beyond customers' expectations (Fuller and Matzler, 2008). That is why organizations also tend to know how satisfied their customers in order to make a pillar for marketing strategy and organizational development

2 Bhu.J.RNR. Vol 3; 6, : 2015 (Fonseca, 2009). Insurance companies should pay attention to the modern concept of marketing and demand management, namely, to prioritize meeting needs of its underwriters. Looking at the performance of insurance companies and how they deal with customers are main criteria to predict their future. Taking underwriters needs and their expectations of insurance policies into account is of great importance. Policyholders to cover their risks have some demands to which insurance companies should pay attention. Today, policyholders and customers when buying insurance policies prioritize convenience and speed. Those who want expert tips and advice, expect to deal with in close intimacy and patiently that they feel the service providers themselves have been considered as the insurer and the client company (Amiri, 2004). The nature of the insurance company requires that retain their customers as their durability and the survival depends on their customers and to the extent that they can maintain their current customers to be more successful and innovation strategies and strategies for attracting and retaining customers in insurance companies, can ensure longterm profitability and their survival (Amirshahi and Soffianian 2007). in this regard, some companies have adopted, relationship marketing and customer relationship management strategy. The present research aims to evaluate association between customer relationship management and efficient relationship marketing using the balanced scorecard (Insurance agencies, Kohgiluyeh and Boyerahmad). this study seeks to answer following research question. Is there an association between customer relationship management and efficient relationship marketing? Literature review Customer relationship Kane Kidd in 2003 defined customer relationship management as a strategic use of information, processes, technology to manage the customer relationship with the organization. He describes customer relationship management as a business philosophy with existing and potential customer interest. Customer relationship management process is improved information technology to identify different customer qualification and development and integration, and emphasized that it intended to offer superior value for customers (Shahraki et al., 2010) customers management goal is to gain a competitive advantage in customer management and ultimately increased profitability level (Moghaddam et al., 2010). Customer relationship benefits The benefits of an effective customer relationship management include improved customer satisfaction, increase revenue and gain a competitive advantage as a result of longterm customer retention. Customer relationship management is often a company's investment focus heavily on new customers to retain existing customers of the change. So much for financial reasons as a result of research is showing that enhances customer loyalty and customer retention, resulting in more cash flow, increase profitability and reduce operational costs will be. CRM also helps the customer to be seen as an asset. Customer Relationship Management allows customers to relations with suppliers, more than any other method, management, although this method may make it harder to retain customers. Chen and Chen (1) described tangible and intangible benefits of customer relationship management as follows (Hadizadeh. Moghaddam et al., 2010): 248

3 Bhu.J.RNR. Vol 3; 6, : 2015 Table1: benefits of customer relationship management Tangible benefits Intangible benefits Increased customer satisfaction Increased revenue and profitability Improved Customer Service quick return period Management in intimate manner low internal costs positive information obtained from others higher productivity of employees Simple and effective business processes higher rate of customer retention effectiveness of customer segmentation provide funding for marketing and with the Understanding customers' needs and highest rate of return demands in better manner The American Marketing Association s definition of marketing indicates that marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders (emphasis added). keywords Attract, retain and enhance customer relationships Create, maintain and enhance relationships with customers and partners acquire and retain customers Attracting and developing and maintaining relationships with customers to identify, preserve and build lasting beneficial relationships with individual customers relationships with clients based on cooperation commitment Table 2: relationship marketing definition Defined it as attract, retain and enhance customer relationships. To create, maintain and enhance relationships with customers and other partners to benefit, until the goals are met, the parties to fulfill that promise with a twoway exchange can be achieved. focuses on two goals of acquire and retain customers As attracting and developing and maintaining relationships with customers. Integrated effort to identify, preserve and build lasting beneficial relationships with individual customers to continuously strengthen this relationship by creating added value Making relationships with clients based on cooperation commitment authors Leonardoberi, 1983 Gronerous, 1990 Kristopher, 1991 Parasorman, 1991 Shani sojana, 1992 Bent,

4 Bhu.J.RNR. Vol 3; 6, : 2015 to create, develop and maintain valuable relationships maintain strong relationships with customers and other interest groups Activities collaborative programs with, intermediaries and final customers to attract customers and increase communication for bilateral relations develop relationships customers beneficial with To retain and development of relations and engaging customers relationship management with customers and suppliers to create longterm and profitable relationships between organizations and customers to develop and operate longterm relationships and trusted by customers, suppliers, distributors A systematic framework to create, develop and maintain valuable relationships between stakeholders is that the formation of stable relations in the value chain is sequential Create and maintain strong relationships with customers and other interest groups collective continuous process interesting activities and programs by the final customer to create or enhance bilateral economic value with reduced cost A series of marketing activities to attract customers and increase communication for bilateral relations, with emphasis on retaining existing customers some methods adopted by the company to maintain and develop beneficial relationships with customers and competitive for the benefit of both sides Defined as maintain customers and develop more relationships and more attractive customer relationship Is defined as relationship management with customers and suppliers A series of activities that aim to create longterm and profitable relationships between organizations and customers to ensure mutual benefit for the parties Marketing with the conscious aim to develop and operate longterm relationships and trusted by customers, suppliers, distributors and other marketing agents in the environment. Balantin, 1997 Katler, 1999 Partiar and shet, 2000 Kimucha, 2002 Hugardviger, 2003 Fontent and Himon, 2004 Shilbai et al, 2006 Lavlak and riteniz, 2006 American marketing, society Principles and objectives of relationship marketing The main purpose for relationship marketing is to meet customer needs and improve efficiency and effectiveness using elements of the marketing mix and renew relationships with customers who are loyal to the company. The efficiency and effectiveness of the product, price, place, promotion (marketing mix) is now close to its objectives and closer relationship marketing (Salarzadeh Borzooei, 2012). Another goal of relationship marketing is to improve the profitability of the company through a paradigm shift from transactional marketing and 250

5 Bhu.J.RNR. Vol 3; 6, : 2015 emphasis on new customer acquisition to customer retention through the use of customer relationship management (Bianiberkadhi, 2009). Business performance Balanced performance models (The Balanced Score Card: BSC) were developed in 1992 by Robert Kaplan and David Norton in the Harvard Business Review magazine. The models components included financial, internal process, customer, and learning and growth, seeking to control shortterm operations of its longterm vision and strategies. The organization focuses on key performance ratios in the range of targets the focus. The main components are: Customer The internal processes Customer learning growth BSC focuses on three dimensions of past, present and future in evaluations so that past performance may lead to a outcome at today or tomorrow or present performance may leads to an outcome at today or tomorrow. In this model, the parameters are divided into 2 cases: Performance Drivers Outcomes Measures Outcome Indicators (Outcomes Measures) This model seeks to identify the critical success factors and strategies of organizations through strategic measures associated with organizational operations and the bond between them. Aspects of business performance Assessment of business performance using the Balanced Scorecard has 4 financial perspectives, the customer, the internal process of growth and learning is then carried out: 1 Financial component Balanced scorecard assessment takes funds and profit maximization as the ultimate goal of an enterprise into account. Financial criteria and standards for those that are in the eyes of shareholders and stakeholders in general as organizations put performance are considered. After spending money in ways the organization whose funding through the measure profitability, cash flow, return on capital invested, EVA, return on total assets and the financial ratios achieved (Miliosmerkan, 2004). This group included unprecedented proportions assessing ability and financial strength of the company (Avid, 2010). 251

6 Bhu.J.RNR. Vol 3; 6, : 2015 Figure 1: research conceptual model (Chenlong et al, 2012) 2 Customers component In business strategy, it is important how to differentiate an organization from its competitors for attracting, retaining and deepening relationships with customers (Kaplanonorton, 2004). In Balanced Scorecard model, customer is central as customers of products, attention and complaints, timely delivery of products to customers and low complaint (Wongrassam & Simmons, 2003). 3 Internal process This defined as those standards must be satisfied in order to stakeholders and customers satisfactions in internal processes (Kaplan and Norton, 1996). This then enhances the previous two dimensions and to issues such as the ratio of revenue to marketing costs, net income the number of fulltime staff, all personnel incomes, and time conversion cycle refers to the idea of product development costs during the year (Wongrassam & Simmons, 2003). 4Growth and Learning Those measures should be used to improve learning and development of staff training to meet stakeholders and customers demands (Kaplan and Norton, 1996). Hypothesis 1. There is a positive and significant association between CRM and relationship marketing. H1a: the implementation of customer relationship management system service has positive and significant impact on relationship marketing. H1b: supporting the implementation of customer relationship management system has a positive and significant impact on customer relationship marketing. H1c: supporting the implementation of marketing customer relationship management system has a significant positive impact on the relationship marketing. 2. There is a significant positive relationship between relationship marketing and commercial performance 252

7 Bhu.J.RNR. Vol 3; 6, : 2015 H2a: customer relationship marketing has positive and significant impacts on financial dimension of business performance. H2b: customer relationship marketing has positive and significant impacts on customer dimension of business performance. H2c: customer relationship marketing has positive and significant impacts on internal process dimension of business performance. H3d: customer relationship marketing has positive and significant impacts on growth and learning dimension of business performance. Methodology This is a descriptive study conducted in field manner. The study samples consisted of all insurance agencies of Kohgiloyeh Boyerahmad province which estimated 190 ones. Data on questionnaires were analyzed using SPSS and Smart PLS software applying statistical tests in consistent with hypotheses. According to the results, there is a significant and positive correlation between customer support and marketing support customer to relationship management system and relationship marketing, but implementation of internet services in customer relationship management system does not have significant positive impact on relationship marketing. Data analysis Variables normality test To assess variables normality of KolmogorovSmirnov test was used. Significant level Table 3: Distribution of test variables Kolmogorov Smirnov statistic Number Variables Internet service Marketing support Financial customer Internal process Learning and growth According to Kolmogorov Smirnov in the table (3) the significance level of less than 0.05 Kolmogorov for all variables was obtained and as a result o normality of variables is rejected and nonnormal assumption is accepted by research. Given that variables are not normally distributed, so to analyze the data from the PLS method as structural equation modeling was used. To evaluate the model, the standard introduced by "Fornell and Larkr" is used. The indices measure the relationship of a structure in comparison with other structural ones. The validity of acceptable model once suggested that a model structure has greater interaction with its parameters to other structures. Fornell and Larkr standard is calculated so that a structure 253

8 Bhu.J.RNR. Vol 3; 6, : 2015 should AVE root of the structural correlation with other structures. The measures are presented in Table 4: Table 4: variables Validity variable Marketing support Financial customer Internal process Learning and growth After ensuring appropriate measurement model we should evaluate and test structural model. Structural model or hypothesis test consisted Path Analysis (Beta), coefficient significance, determined variance (R2). Path represents the effect of each independent variable on the dependent variable. In Table 5 shows path coefficients for variables: Table 5: path coefficient for research variables variable Marketing support Financial customer Internal process Learning and growth As it can be seen in the table, effect of each independent variable on the dependent variable in the path is clear. For example, the effect of marketing support and customer support on relationship marketing was found to be 0.52 and 0.29 respectively. To evaluate the significance of routes (the effects of independent variables on the dependent variables) of the tstatistic is used. The results showed significantly greater levels of the path is as 0.05 and 1.96 ± in larger amounts from 2.66 to 0.01 probability level were significant. The results are presented in Table 6. Table 6: paths significance test variables

9 Bhu.J.RNR. Vol 3; 6, : Marketing support Financial 0.04 customer Internal process Learning and growth As it can be seen in table 6, it can be noted that the only relationship marketing has not significant effect on relationshipbased services and other paths are at significant at probability level of In the following analysis, determined variance is used to answer question that what percentage of variance is explained by the independent variables. The variances explained by each of the variables are shown in the table (7). The explained variance Table 7: The explained variance variable Internal process Financial Customer Growth and learning According to the table (7), it can be concluded that explained variance for relationship marketing is 50%. The independent variables (Internet Service, customer support and marketing support) in total accounted for 50% variance of relationship marketing. 255

10 Bhu.J.RNR. Vol 3; 6, : 2015 Figure3: path coefficients and factorial loads of variables 256

11 Bhu.J.RNR. Vol 3; 6, : 2015 Figure 4: t statistic/path significance Results of hypothesis test The study hypotheses are included in the light of significant test paths and path analysis,: results rejected accepted accepted accepted accepted accepted accepted t Path coefficients Table 8: research hypotheses to Relationship Relationship Relationship Financial dimension Customer dimension Internal process Growth and learning From Internet service Marketing support N As can be seen in the table, according to the results of the tstatistic it can be noted that the first hypothesis is rejected. Other hypotheses are significant in probability level of 1% and are accepted. 257

12 Bhu.J.RNR. Vol 3; 6, : 2015 The results of the test hypotheses First hypothesis: the implementation of customer relationship management system services in a positive and significant impact on a relationship marketing. According to the study paths of the tstatistic is significant and larger amounts of 1.96 in 0.05 and larger amounts of 2.66 at 0.01 are significant because the tstatistic this hypothesis equivalent to 0.04 is rejected. The second hypothesis: the implementation of customer relationship management system to support customer relationship marketing has a significant positive effect. This hypothesis with a tstatistic of 8.01 due to the larger amounts of 1.96 and 2.66 is accepted with a coefficient equal to 0.29 confirming the hypothesis. The third hypothesis: the implementation of customer relationship management system, marketing support and significant positive effect on the relationship marketing. This hypothesis with a tstatistic of to 1.96 and 2.66 to be accepted because of the larger quantities with a coefficient equal to 0.52 hypotheses is accepted. The fourth hypothesis: relationship marketing is a significant and positive impact on the financial aspect of business. The hypothesis with the tstatistic equal to to 1.96 and 2.66 to be accepted because of larger quantities and with a coefficient of 0.47 indicates this hypothesis is accepted. Fifth hypothesis: a significant and positive impact on the customer relationship marketing and commercial activities. The hypothesis with the tstatistic greater than the amount equivalent to due to 1.96 and 2.66 to be accepted with a coefficient of 0.73 rejected this hypothesis. Sixth hypothesis: relationship marketing is a significant and positive impact on the internal business processes. The hypothesis with the tstatistic greater than to 1.96 and 2.66 with coefficient of 0.66 shows that hypothesis is accepted. Seventh hypothesis: relationship marketing is a significant and positive impact on the learning and development of commercial activities. This hypothesis with the tstatistic greater than due to 1.96 and 2.66, due to having path coefficients about 0.60 indicates accepting this hypothesis. REFERENCES Amiri, S. (2004). Assessing quality of insurance services with quality scale model, master's thesis, Institute of Education Planning and Research Management. Amirshahi, A., and Soffianian, d. (2007). Identify obstacles and barriers to the implementation of relationship marketing at stateowned insurance company in Iran. first edition H. Moghaddam, A., Ramin Mehr, H., Hajmoghani,. (2010). A model of successful implementation of customer relationship management (Case study: Bank Saderat in Tehran). Reference knowledge Salardh Borzooei, d. (2012). The relationship between relationship marketing (sales relationship) and customer loyalty. Recovery of Moshtaghi, SA. (2010). The effect of corporate entrepreneurship on organizational performance (Case Study: Alborz insurance agencies in the city of Rasht). Park, Y.J., PilSun, H. and MyungHwan, R., (2008). Measurement of a customer satisfaction index for improvement of mobile RFID services in Korea. ETRI Journal, 30(5), pp Jamal, A., (2009). Stigating the effect of service quality, dimensions and expertise on loylty, European Journal of Marketing, 43(3/4). 258

13 Bhu.J.RNR. Vol 3; 6, : 2015 Kim, H., Kim, Y.K., Jolly, L. and Fairhurst, A., (2010). The role of love in satisfied customers relationships with retailers. The International Review of Retail Distribution and Consumer Research,20(3), pp Fuller, J. and Matzler, K., (2008). Customers delight and market segmentation: An application of the threefactor theory of customer satisfaction on life style groups. Tourism Management, 9, pp Fonseca, J., (2009). Customer satisfaction study via a latent segmentation model. Journal of Retailing and Consumer Services,16, pp Kaplan R.S. and Norton D.P. (1996). Using the Balanced Scorecard as a strategic management system. Wongrassam,Gardiner P.D and Simmons J.E.L. (2003). Performance Measurement Tools: The Balanced Scorecard And The EFQM Excellence Model Jang, S.C., Hu, C., Bai, B. (2006). A canonical correlation analysis of erelationship marketing and hotel financial performance. Tourism and Hospitality Research 6 (4),