Assessment of the Critical Success Factors (CSF) of Customer Relationship Management (CRM) in Manufacturing Sector of Iranian Sports Industry

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1 International Journal of Sport Studies, Vol., 2 (4), , 2012 Available online at ISSN Assessment of the Critical Success Factors (CSF) of Customer Relationship Management (CRM) in Manufacturing Sector of Iranian Sports Industry Mahdi Sharifi Moghadam 1. Esmaeil Sharifian 2. Kurosh Ghahraman Tabrizi 2 1. Master s student of Sports Management, Science and Research Branch, Islamic Azad University, Kerman, Iran 2. Department of Physical Education, Shahid Bahonar University, Kerman, Iran Corresponding author: mahdi.sharifi.moghadam@gmail.com ABSTRACT: At the beginning of the third millennium, sports world experienced a new era and the fast and wide developments in all of its aspects has called attention to the use of marketing techniques in sports industry. Being a descriptive-analytical field study, the present research aims to compare the critical success factors of Customer Relationship Management (CRM) in the geographical borderlines of Iran. Data were collected using Moghimi s (2008) CRM assessment questionnaire which was developed using Likert scale. The questionnaire s validity was analyzed and verified through a survey from university faculty members and CRM and sports management experts. In addition, its reliability was calculated by Cronbach s alpha coefficient (α = 0.89). The population of the study consisted of the sports manufacturing companies in Iran (N = 220), 140 of which comprised the research sample. Hypothesis testing was done using the Repeated Measures Analysis of Variance (ranova). Data analysis showed that, among the critical success s factors of CRM, customer contact management, customer service and sales automation had the widest applications; on the other hand, the information system integration and creation of CRM team and committees had the most limited applications. Overall, it can be concluded that the application of the Critical Success Factors (CSF) of CRM is very limited and poor in the manufacturing sector of the Iranian sports industry. Key words: Customer Relationship Management, Critical Success Factors, Sports Industry INTRODUCTION In order to achieve business success, the world s largest sporting goods manufacturers such as Adidas, Nike and Reebok act in organized and consistent ways and try to excel at all stages of design, production, distribution, promotion, and customer relationship (Ghiami Rad et al., 2008). At the end of the 19 th century, sports gained a particular importance as a significant principle of development. From the mid-20 th century on, the modern and organized sports gradually started to rely on marketing methods and modern capital management (Doherty et al., 2007). Today, sportsrelated decision makings and its related issues are obviously affected by economic factors so that it could become an important and profitable industry in developed nations and, in some countries (Saidi et al., 2009), it has even a higher ranking than the automobile industry with more than 50 years of experience (Kazemi, 2007). For example, sport has turned into a $414 bn. industry in the U.S.; in fact, its value has increased from $213 bn. to $410 bn (David, 2009). In the past five years. Such figures exhibit the fast growth of this industry all around the world (Pérez-Gladisha, 2010). Sports industry involves a range of marketing activities that produce and provide sports-related related goods and services for the sake of making profits (Hassanzadeh, 2005). Sports industry can also be considered as the sum total of all the products, goods, services, venues and plans being offered to the customers in the field of sports. This industry consists of three segments: sport performance, sport production, and sport promotion (Glynn Mangold et al., 2009; David, 2009; Moharam zadeh, 2003). Among others, marketing is an influential factor in the development and spread of sports. Marketing deals with the human social needs as well as meeting them. CRM is one of the essential principles of marketing (Kazemi, 2006; Mir Hosseini, 2003). Modern information technology (IT) and CRM have made sports organizations face a great deal of consumers with each of whom they should establish a one-to-one communication. Recently, sports clubs have come to acknowledge the fact that their benefits lie in the utilization of customer relationship management (Hosseini, 2009). Sports clubs fans form their major customers. Such customers are different from the customers of conventional industries as they are marked by being highly loyal and committed to their favorite clubs (Shyan, 2007). Norwegian Rosenborg Soccer Club (Rosenborg 220

2 BK) is among many clubs that use CRM as a strategic instrument. Research has shown that when CRM is utilized, there are similarities between soccer clubs and conventional industries (Boyd et al., 2004). In addition, regarding sports clubs, CRM should be compatible with protection laws (Hosseini, 2009). The term customer relationship management was emerged in late 90s in the U.S and was planned in the form of a business strategy with the aim of selecting and managing the most valuable relationships with customers (Hicks, 2006). To date, it s been being adopted by a significant number of firms throughout the world (Beasty, 2006). In recent years, many organizations have come to understand that, due to stricter global competitions, they should be customer-oriented; hence, CRM has become one of the essential components of many organizational strategies. CRM is a combination of information systems and strategic management which aims to offer better services and establish effective relationships with customers (Alfonso et al., 2008; Kanellakis, 2005). Facilitating the cooperation between specific areas, CRM is a function of investment in several organizational areas that are influenced by three factors of sales, marketing and customer service (Saidi et al., 2009). It accentuates the joint cooperation between suppliers and buyers for the purpose of creating values (Sharifi Moghaddam, 2011; Shiaw-Wen, 2000). It involves a set of actions taken for the sake of recognition, confirmation, acquisition, development, profitmaking and increase of customer loyalty by offering appropriate and cost-effective goods and services at the right time to the right customers through a suitable communication channel (Kevork et al., 2006). In other words, CRM is a widespread marketing strategy that combines customer-related technologies, processes and business activities (Doherty et al., 2007). CRM is defined as empowering buyers and suppliers to jointly plan for an assured future which seeks to fill up the gap between marketing, sales and after-sale service. The principle of consumerism and customer satisfaction is regarded in the modern management theories as a major orientation of modern organizations and companies and, in many studies, has proved its efficiency in improving the performance, productivity and success of various institutions. Hence, as part of their goals, companies should target an increase in their intelligent performance for the attraction and retention of customers while trying to reduce the associated costs. When CRM is implemented and managed accurately and successfully, it causes the transformation of all those departments of a firm or organizations that are in direct relationship with customer satisfaction and it ultimately changes the destiny and future of that firm or organization. The Critical Success Factors (CFS) is the media through which CRM is examined (Mendoza, 2006). Mendoza et al., (2007) suggested a model based on the critical success factors of customer satisfaction for employment and strategic examination of CRM. Their model includes 13 critical success factors and 55 indices developed to direct the company that intends to use CRM strategy. These factors account for three critical aspects of any CRM strategies: human factors, processes, and technology. Accordingly, taking into account Mendoza s (2007) model, Moghimi (2008) offered a model with 11 critical success factors of CRM strategy for Iranian organizations and companies. The present study will follow Moghimi s model to step towards its objectives. Many researchers have attempted to identify the elements and characteristics of CRM, but there are few studies in the area of CRM in sports industry. Moreover, their obtained results show variations in their views. Therefore, this study aims to pursue a better understanding and comparison of critical success factors of CRM in Iran s sports manufacturing industry. METHODS With respect to its purpose i.e. comparing the critical success factors of CRM in the sports manufacturing industry of Iran, the present study is regarded as an applied research and concerning the research method used, it s a descriptive-analytical one. The research population includes all of the manufacturing companies of sports products throughout Iran (N = 220). The data related to these companies were collected from the official websites of the Ministry of Industries and the Ministry of Trade and also Iran s Sports Database in The statistical sample of the research comprises 140 companies of the population which were randomly selected. The sample size was determined based on Morgan table. The designed questionnaire contained two parts. The first section dealt with overall information about the companies and the second section included the measurement items which comprised a total of 49 questions on the critical success factors of a successful CRM system. All measurement items were developed using a 5-point Lickert scale. The questionnaire s validity was confirmed by five CRM and five sports management experts. The obtained validity score, using the below formula, was Next, to ensure their reliability, survey questionnaires were distributed among 30 sports manufacturing companies. The reliability coefficient was then calculated using Cronbach s alpha (α = 0.89). In order to collect data, the questionnaires along with a cover letter elaborating on the study and its 221

3 Intl. J. Sport Std. Vol., 2 (4), ,, 2012 purpose, researcher s name and address, and some guidelines for better completion of the questionnaire were sent to the companies via fax, post, , or hand delivery. Both descriptive and inferential methods were used in analyzing the collected data. Descriptive statistics was used to organize, summarize and classify the raw scores and to describe the sample size, develop the frequency distribution table and percentages, calculate the indices of dispersion like mean, standard deviation and finally to draw graphs. With regard to the objectives of this study, inferential statistics was utilized to test the research hypotheses and examine the mean differences of the 11 critical success factors of CRM. Doing so, Kolmogorov Smirnov test was used to analyze the normality of the collected data and Freedman test was used to rank the factors. With respect to the study s purposes and in order to test its hypotheses and examine the mean differences of the 11 critical success factors of CRM, Repeated Measure Analysis of Variance (ranova) was used at the significance level of p < In order to determine the pairwise mean differences between variables, Bounferoni post hoc test was used. The statistical analysis was carried out by SPSS V20 at the significance level of p < RESULTS Table 1 presents the mean and standard deviation of the experience of 140 active companies in the manufacturing sector of Iran s sports industry. Table 1: Mean and Standard Deviation of the Experience of Sports Manufacturing Companies Variable Number Minimum Maximum Mean S.D. Experience Graph 1: illustrates the educational level of the managers of Iran s sports manufacturing companies. As we can observe, the majority of the managers have a bachelor s degree (40%), and others have high-school diploma (30.7%), associate s degree (23.6%), master s degree and higher (5.7%). Master's and higher 6% Bachelor's 40% Associate's 23% High school diploma 31% Graph 1: Frequency Percentage of the Participants Based on their Educational Level The geographical domain of the studied companies activities was provincial, nation-wide, limited international and international, the distribution of which is presented in Graph Considering the research objectives and in order to test the hypotheses and examine the mean difference between the 11 critical success factors of CRM, ranova was used. Since p < 0.05, the test was significant. Therefore, Bounferoni s post hoc test was used to determine the pair wise mean difference of the variables (Table 2). 222

4 Intl. J. Sport Std. Vol., 2 (4), ,, 2012 Inter-group effects Mauchly's W Table 2: ANCOVA Test Degrees of Sig. freedom Approx. Chi- Square Greengouse- Geisser Lowerbound Epsilon Huynh- Feldt Factors / The present study deals with the identification of the critical success factors of CRM and prioritizing them in Iran s sporting goods manufacturing industry. The findings indicated that, among 11 critical success factors presented in Table 3, customer contact management had the first priority with the highest mean (3.64) and information systems integration has the lowest priority (mean = 1.55) (ref. Table 3). Table 3: Descriptive Analysis of Eleven Critical Success Factors of CRM Critical Success Factors Commitment and support of senior management Creation of a multidisciplinary CRM team Inter-departmental integration for achieving CRM goals Mean Priority S.D Minimum Communication of the CRM objectives to the staff Maximum Personnel commitment Customer service Sales automation Marketing automation Support for operational management Customer contact management Information systems integration Graph 2: Mean Scores of the Critical Success Factors of CRM As presented in Table 4,, being even lower than the average level, the mean score of CRM systems (2.424) in Iranian sports manufacturing companies is not desirable. It should be noted that such a score 223

5 was at an acceptable level in few companies, most of which were active in international or nationwide domains. Table 4: Descriptive Analysis of CRM Systems in Iranian Sports Manufacturing Companies Total number Mean S.D. Minimum Maximum CRM DISCUSSION AND CONCLUSION According to the results obtained from studying the Iranian sporting goods manufacturing companies, we concluded that the CRM systems applied in these companies are lower than the international average standard level which calls for more attention by their managers. Today, sporting goods manufacturers should plan for the entire lifetime of customers rather than only one limited period. To this end, they can utilize CRM for establishing long-term relationships with customers and desirably controlling these relationships. Doing so provides the companies with an opportunity to collect information from customers and use them in offering products and services that are favored by them. In addition, running accurate and frequent evaluations based on critical success factors can inform sports manufacturing companies of their weaknesses and strengths regarding CRM practices. Some companies in Iran, utilizing customer-care software systems to identify customer demands and take actions to gain their satisfaction and maintain long-term relations with them. Nevertheless, CRM is not solely a softwarebased system; in order for the CRM system to be highly effective and efficient, a number of factors like the development of the CRM strategy need to be considered. In any type of company, passing from the strategy development stage to the implementation stage calls for a change in responsibilities. In other words, responsibilities are transferred from strategists to the managers of the relevant departments or units. Appropriate design and implementation of CRM strategies increases the motivation of managers and staff by giving them a picture of their potential benefits. Thus, the participation of different departments managers in activities related to strategy development is necessary. The critical success factors also explicate the fact that all of the units of a company, whether directly or indirectly, take part in the development of strategies and implementation of CRM practices. Confusion over the concept of customer relationship management is followed by the inefficiency in CRM execution. Facing with new business environments, a noticeable problem of sports manufacturing companies in the execution of CRM strategies is the fact that few models are designed to act as a guide for them. Accordingly, with regard to the obtained results and prioritization of the critical success factors, a model was designed that can help sports manufacturing companies in executing and evaluating their CRM strategies. Finally, we came to conclude that there exists no integrated framework or pattern that can definitely help a company to successfully execute CRM strategies. Customer relationship management in every organization or company calls for a great deal of study and investigation, and the offered model in this study is a forward step to the construction of an integrated model for the success of CRM in sports manufacturing industry. Practical Recommendations In this section, some recommendations are offered based on the research findings to help the improvement and development of CRM in sporting goods manufacturing industry. Most of these recommendations are stated according to the viewpoints of the managers of sports manufacturing companies and are ordered based on their priority. 1. Introducing different CRM systems to companies and manufacturers and laying more emphasis on methods that are less known by the manufacturing sector, such as the critical success factors. 2. Introducing various techniques of implementing each of these factors to companies and manufacturers. For example, the factor communication of the CRM objectives to the staff that includes the use of electronic media, bulletins, catalogs and audio visual devices that make possible the growth of CRM. 3. It is recommended that marketers invest more on information systems integration as, based on the research results; this factor had the lowest ranking among other factors which imposed a severe damage to the CRM system as a consequence. Recommendations for Future Studies With respect to the importance of the relationship between the sports manufacturing industries and the fact that the success in this field results in the 224

6 growth and advancement of the sports industry in terms of the enhancement of the quality and quantity of the products and improvement of the general level of sports in Iran, the following recommendations are offered for future studies: Constructs of the present study were measured merely based on the managers opinions; thus, it is recommended that some outerorganizational factors as well as customer opinions be also evaluated. Since CRM is a continual process, it is possible to investigate its quality and level at any time to evaluate its impact on service quality and customer loyalty and to determine the extent to which it has helped the organization attain its goals. It is recommended to examine the implementation of CRM strategies in other sports organizations and identify their weaknesses and strengths, which can be a stimulus for advancement in the sports industry. REFERENCE Alfonso G-H, Suzanne S (2008) crisis communications management on the web: how internet-based technologies are changing the way public relation professionals handle business crises, journal of contingencies and crisis management, volume 16 number 3, pp Beasty C (2006) How Sales Teams Should Use CRM: destination CRM Features, available at: Boyd T, Shank M (2004) Athletes as Product Endorsers: The Effect of Gender and Product Relatedness, Sport Marketing Quarterly 13:2, David K. S (2009) Developing Successful Sport Marketing Plan, 3rd Edition. Review Article, ISSN Doherty A, Murray M (2007) The strategic sponsorship process in a non-profit sport organization, Sport Marketing Quarterly. 16(1): Ghiami Rad A, et al (2008) Marketing strategies for the promotion and development of sports in Iran, Journal of motion. Volume 34, Issue 2 Pages Glynn M. W, David J. F (2009) Social media: The new hybrid element of the promotion mix, Business Horizons, Volume 52, Issue 4. Hassanzadeh M (2005) sports marketing, publishing wonder. Vol. 15 No. 2, pp Hicks D (2006) Customer focus meets business agility: the business case for SOA. International Business & Economics Research Journal Volume 6, Number 5, pp.8. Hosseini M. S (2009) Comparison of key success factors for a customer relationship management (CRM) in the Olympic and Paralympics National Academy of professionals, executives and experts- Master's thesis, University of North, 32(5), Kazemi M. R (2007) the price element of the marketing mix sports league professional football leagues in comparison with the situation in South Korea and Japan, Journal of Movement Science and Sport Magazine, Year VI, Volume II, No. 12, pp Kazemi M. R (2006) examining the marketing mix in the football industry in comparison with South Korea and Japan, Ph.D. thesis, University of Teacher Education. Kanellakis N (2005) Change Management and Customer Relationship Management (CRM) Implementations: Planning for Success University of Oregon Applied Information Management Program 722 SW Second Avenue Suite 230 Portland, OR Kevork E, Vrechopoulos A (2006) Defining, manipulating and measuring customer relationship management, paper presented at European Marketing Academy Conference, Athens, Mendoza L. E, Marius A, Pérez M, Grimán A. C (2006) Critical success factors for a customer relationship management strategy, Elsevier. Mir Hosseini H (2003) The Internet's Impact on Marketing Mix, comprehensive site management. Volume 52, Issue 4. Moghimi B (2008) Customer Relationship Management Reasons of Success or Failure of CRM Projects From the Perspective of Advisors, Tarbiat Modares University Faculty of Engineering Department of Industrial Engineering. Moharam zadeh M (2003) compared the academic sports marketing practices of Iran and Turkey, Journal of motion, pp Pérez-Gladisha B, Gonzalezb I, Bilbao-Terola A, Arenas-Parraa M (2010) Planning a TV advertising campaign: A crisp multi objective programming model from fuzzy basic data, Omega 38, Rahmati Mohammad M (2007) sociological reflection on the business of sport, travel publication, Issue 32, pp. 161 to Saidi H, Dailami S. H (2009) critical success factors in customer relationship management CRM. Journal of Industrial

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