The Impact of Market Orientation and IT Management Orientation on Customer Relationship Management (CRM) Technology Adoption

Transcription

1 The Impact of Market Orientation and IT Management Orientation on Customer Relationship Management (CRM) Technology Adoption James E. Richard, Peter C. Thirkell and Sid L. Huff, Victoria University of Wellington Abstract A conceptual model is developed and presented depicting both Market (MO) and IT Management (TO) orientations as impacting the adoption of CRM technology. Ten company sales and marketing managers were interviewed. There is evidence that the extent of MO may impact CRM technology adoption within a firm. IT management orientation appears to influence the initial adoption of CRM technology, but may not positively affect the subsequent user acceptance or adoption. This study contributes toward understanding factors that might shape and influence success or failure of CRM technology implementation in different firm settings (MO and TO). Keywords: CRM, customer relationship management, conceptual model, information technology, business-to-business, relationship strength, relationship performance Introduction CRM continues to attract research and business investment aimed at managing more profitable and long-lasting relationships with customers (Krell, 2006; Payne and Frow, 2006; Pozza and Noci, 2006). The increased adoption of CRM systems to help manage customer information and knowledge is perceived by some practitioners and researchers as not delivering proven business value (IDC, 2004; Raman and Pashupati, 2004). In many cases CRM faces serious difficulties and implementation failures (Davids, 1999; Raman and Pashupati, 2004). These include the inability to deliver profitable growth, and in some cases even damaging existing customer relationships (Reinartz, Krafft and Hoyer, 2004; Rigby, Reichheld and Schefter, 2002). Underlying the growing acceptance and adoption of CRM technology in business are the concepts of marketing orientation (MO) and relationship marketing (RM)(Grönroos, 1995; Kohli, Jaworski and Kumar, 1993). However, differences in CRM technology adoption and outcomes within a firm may also reflect the firm s IT management orientation and IT management sophistication (Karimi, Somers and Gupta, 2001). Much of the IT related research is focused on the functional aspects of implementation and there continues to be a call from marketers for additional research in order to understand, explain and benefit from the CRM phenomenon (Ngai, 2005; Reinartz et al., 2004). The limited number of CRM specific empirical studies and theories available today needs to be expanded and explored further (Goodhue, Wixom and Watson, 2002). This paper explores how market orientation (MO) and IT management orientation (TO) may affect the subsequent adoption of CRM technology within the firm. Market Orientation (MO) Market orientation is characterised by (a) continuous customer data collection, (b) collecting competitor capabilities information, (c) sharing information across departments and (d) using

2 the information to create customer value (Kohli et al., 1993). More importantly MO has been shown to positively influence customer satisfaction (Singh and Ranchod, 2004), leading to customer retention and increased profitability (Storbacka, Strandvik and Grönroos, 1994). Market orientation is the top-down culture that permeates throughout the organisation influencing business decisions and customer relationship orientation and focus (Day, 1994; Slater and Narver, 1995). It is proposed that the degree of MO within the firm may influence the functionality, acceptance and level of integration of the CRM technology solution within that firm. IT Management Orientation (TO) A firms IT management orientation (TO), characterised by the extent of the role of IT within the organisation and the level of IT planning, control, organisation and integration, influences the acceptance and adoption of information technology solutions (Karimi et al., 2001). The firm s IT management sophistication and practices have been shown to affect the organisation s ability to benefit from technology and to utilise technology in support of marketing (Karimi, Gupta and Somers, 1996; Karimi et al., 2001). Therefore it is proposed that IT management orientation may influence the decision to implement CRM technology as well as the functionality, acceptance, and level of integration of the CRM solution within firms. CRM Technology Adoption (CA) CRM technology adoption (CA) is defined in this study as a higher order construct comprised of user acceptance, CRM functionality and CRM integration within the firm (Davis, Bagozzi and Warshaw, 1989; Dishaw and Strong, 1999). CRM acceptance relates to the habitual use of the technology as part of the job function and to achieve results. For example using CRM customer information on a regular basis to complete the job requirements (Kim, Choi, Qualls et al., 2004). CRM functionality refers to the type of CRM technology adopted and is often overlooked by researchers or not considered as a primary factor affecting the successful adoption of CRM within a firm. Variety in functionality ranges from simple PDA contact management applications to sophisticated enterprise-wide databases (Payne, 2006; Raman and Pashupati, 2004; Speier and Venkatesh, 2002). CRM technology integration with legacy IT systems and business processes, has been identified by IT researchers as an important factor in the successful adoption of CRM within a firm (Ling and Yen, 2001). The integration aspect reflects how well the CRM technology is linked to other aspects of the business to provide a seamless user and customer experience. Conceptual Model Figure 1 depicts the CRM Technology Adoption conceptual model. It is proposes that Market Orientation (MO) and IT Management Orientation (TO) positively affects a firm s decision not only to adopt CRM technology, but what to adopt (CRM functionality), level of integration and subsequent user acceptance of the CRM technology.

3 Market orientation (MO) IT Management orientation (TO) +ve +ve CRM Technology Adoption (CA) CRM functionality CRM acceptance CRM integration Figure 1. CRM Technology Adoption conceptual model Research Methodology A qualitative approach was adopted, consisting of individual in-depth interviews of senior individuals responsible for sales or marketing contact with customers. The interviews were semi-structured with a combination of open-ended and closed questions. A sample of ten private sector organizations was selected for the study based on industry, employee size and CRM system implemented. A broad range of CRM systems, industries and firm size was solicited. Five firms were from the Business Services industry, two from the Financial industry, two from the Communications industry, and one from the Wholesale Trade industry. The interviews lasted 60 minutes on average. All of the interviews were recorded, transcribed, and an opportunity provided for the interviewees to check the transcriptions for accuracy. Each transcript was coded, data displays constructed and the results analysed for common themes and insights (Miles and Huberman, 1994). In addition Leximancer 2.21 software was used to help extract the main concepts contained within the transcriptions. Findings In general CRM technology was considered an enabler; a sales and marketing support tool that can facilitate superior processes for customer data collection, analysis, retrieval and dissemination. Perceptions of Market Orientation (MO) Although all participants indicated that their firms are market oriented, the interviews suggest there is a discrepancy between the participants perception of what constitutes market orientation. Nine of the ten interviewees believed that their firm s market orientation did have a bearing on their B2B customer relationships. I think it [market orientation] is essential. I think if you want to be respected by a customer I think that you need to be able to add value to them and I think if you re going to add value to a customer you need to understand their business and to understand their business you ve go to understand the market as a whole (Key Account Executive Recruitment firm). Six of the respondents agreed that their firm s MO had a positive effect on the functionality, integration and acceptance of CRM technology. One of the Financial Services firms indicated that their business and business processes now rely on it [CRM technology] for all our information. However four did not see the linkage as clearly with one firm indicating that a market orientation would have an effect over the long term, but not in the short term. One dissenting opinion was that CRM could not replace a relationship all they re left with is the data of the person s account, but not the relationship (Business Services Account Manager).

4 Perceptions of IT Management Orientation (TO) Half of the respondents thought their firms had a strong IT management orientation (TO). One large business services firm did not consider themselves highly TO but believed CRM was adopted in order to provide a competitive advantage. In the sales environment it [CRM] is used to keep you in front of your competitors. You analyse it down to what equipment they [potential customer] are currently using within their environment, what software, hardware, and so on (Key Account Manager Business Services). A small majority of the respondents indicated that TO did have an effect on the firm s CRM technology implementation and adoption both positive and negative. We don t go into any technology without understanding why, what the reasons for it are and our senior people especially now; some have fairly strong technology backgrounds. (Head of Credit Card Operations). We are technology oriented I just don t think there s a culture of using CRM systems. The sales force sees it as a possible penalty to them (Account Director Telecommunications) Levels of CRM technology adoption (CA) Each of the contacted firms had implemented some form of CRM technology. The range of CRM technology implemented included popular and simple CRM contact management systems, in-house custom system developments, a hosted CRM solution, an integrated credit card CRM application, and a sophisticated CRM system from a major CRM player. This broad distribution of CRM products provides a wide variety of user acceptance, CRM functionality and integration. CRM technology user acceptance varied from low to high, indicated by comments such as: I don t think it is well received amongst the sales force, I think most people find it a bugbear. It has become an administration thing, which they [sales people] resent to a certain extent (Account Director Telecommunications). [CRM] is a powerful tool that is probably not being well used (Client Relationship Executive). Respondents were asked to indicate, from a list of 27 CRM functions, those provided by the firm s CRM technology. Ninety percent used contact management, data collection, manual recording, and/or sales management applications. Customer lifetime value, customer selfservice and synchronising customer interactions were rarely used, comprising only 20 percent of the applications. Managers were asked to rate the perceived level of CRM technology integration implemented at their firm. Table 1 indicates that the majority of CRM users felt the CRM integration was at the lower end of the scale (i.e., less than 4.0). Some respondents indicated that CRM integration in their firm comprised of functions in more than one area along the scale. For example Firm 1 believed their CRM implementation included some integration with customer support, was not completely integrated, but offered more than sales support.

5 Table 1. Perceived CRM integration Only two firms thought the CRM technology implemented functioned at the Enterprise or Partner collaboration level (Rating of 6.0 and 6.5). From an optimistic point of view five of the 10 firms believed the CRM system was integrated with departments outside marketing and sales. The opportunity to maximise the benefit of customer information is leveraged by the integration of CRM throughout the firm. Interpretation of the respondent s interviews implied varying degrees of MO between firms. Those respondents that believed MO does little to affect CRM technology adoption shows the lowest CRM use, even though CRM functionality is in the medium range. A perceived positive effect of MO on CA does not appear to affect the level of CRM functionality adopted; yet CRM user acceptance appears higher. It may be the extent of MO that provides positive or negative impacts on CRM technology adoption, functionality and use. Firms that considered themselves TO showed either medium or low levels of CRM functionality adoption and either high or low levels of CRM technology user acceptance. Firms that did not consider themselves TO had a range of distribution from low to high for both CRM functionality and CRM user acceptance. Conclusion and Areas for Future Research This study contributes toward understanding factors that might shape and influence success or failure of CRM technology implementation in different firm settings (MO and TO). One firm appeared to embrace a holistic and cultural perspective of MO, while other firms took a more superficial perspective of MO, which may explain the wide variation in CRM functionality implemented. IT management orientation (TO) may facilitate the introduction of CRM technology into the firm, but inhibit CRM acceptance and use. Although the results are preliminary and not generalisable, marketing and IT practitioners ought to benefit from a better understanding of the relationship between CRM technology adoption (i.e., CRM functionality, integration and acceptance) and a firm s marketing and IT management orientations. In an interpretative sense the conceptualisation of the model shows promise and the results, preliminary as they are, are encouraging. The effects of MO on CA, and TO on CA provides a mixed picture. On balance however this line of research is promising. It remains to be seen if there are systematic variation between MO, TO and CA. Future research will involve developing a CRM technology adoption instrument, and extending and testing the conceptual model with a larger sample.

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