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1 The use of Customer Relationship Management to create and share knowledge within a professional services company. Philip Roth, PhD Student Umeå School of Business and Economics, Umeå University, Sweden Umeå School of Business and Economics S Umeå, Sweden Supervisors: Dr. Helena Renström Dr. Sofia Isberg Stage of doctoral research: Later This study aims towards the overarching problem that how companies create knowledge about their customers. The process of learning about customers is complicated to handle since there are a lot of dimensions influencing the process. The dynamic nature of the customer relationships affects the learning process, but also the fact that organizations are changing over time has an impact. CRM-strategies have been adopted by many companies to solve the problem of learning about customers, but research shows that several of these adoptions fail when they are used. Meeting observations and semi-structured interviews have been conducted in two different areas of the company. The empirical data-collection started in spring 2010 and is estimated to end in spring/fall Around 20 meeting observations and 16 interviews are conducted in the first round, with a second round to be started in spring The fundamental reason for choosing these methods is the view of knowledge where this study adopts a view of knowledge that requires presence, interaction and communication. This study is a single-case study where a Swedish professional services firm in the auditing and accounting business is followed. The empirical data-collection is conducted on site at two of the auditing firms offices.

2 Introduction to theoretical points of departure To be able to understand and create knowledge about customers, companies have to see the importance of the aspects that build and develop the customer relationship. If companies want to build and develop long-lasting relationships with their customers, it is important to understand the value of collecting and using the information about customers in different ways. According to Grönroos (2002) the customer relationship contributes with factors like trust, loyalty, commitment and stability in a relationship between two or more parties. However, to study customer relationships, which could be seen as the fundamental part to learn about customers, there are some difficulties that have to be addressed by managers. Within the marketing field, customer relationships, and to understand what factors that build and develop customer relationships has been an object for several studies during the last 30 years (see e.g. Arndt 1979; Christopher, Payne & Ballantyne 1991; Dwyer, Schurr & Oh 1987; Ford 1980; Frazier, Speckman & O Neill 1988; Grönroos 1982; 1990; 1994; Gummesson 1987; Webster 1992) and the concept relationship marketing was introduced first by Berry (1983). If companies want to learn about their customers, information has to be collected about their customers in various ways. However, just collecting information about customers is not really of any value for companies. The collecting of information has to be structured and with a clear purpose of using the information in order to build and develop long-term customer relationships. Also the sharing of the collected information between different departments and working groups, but also between individual employees is a crucial aspect if the use of information should be useful (see e.g. Kohli & Jaworski 1990; Jaworski and Kohli 1993). Customer relationships are by nature in constant change over time, where different factors influencing the change or development of the relationship (see e.g. Ford 1980). The dynamic nature of customer relationships make them hard to understand, however not less important. The aspect that customer relationships are dynamic makes them as hard to study as it is important for companies to understand how and why they change and to gain knowledge about them. This study tries to explore and understand how companies learn about customers and their customer relationships. Especially important to understand and learn about customer relationships is for professional services companies. Professional services companies characterizes by the higher demand from their customers on interaction and communication (Laing & Lian 2007) which per se demand a higher involvement from the company in the development process of the customer relationship. Examples on professional services are services given by lawyers, auditors, accountants, and financial advisors (Congram 1991; Edvardsson et al 2008). The overarching problem in this study is that companies have to learn about their customers and understand their customer relationships in order to be able to maintain and develop their business. A common used strategy by companies to gain knowledge about their customers during the last decades has been to implement customer relationship management (CRM) strategies, often in terms of CRM-databases. However, there have been problems in understanding why several CRM-strategies fail after been implemented and used. Several scholars have addressed the problem why such investments made in CRM-strategies fail (see e.g. Bohling et al 2006; Boulding et al 2005; Payne & Frow 2005). However, in contemporary research the focus has been at understanding how CRM can increase the customer perceived value, of the delivered performance of the company (see e.g. Reinartz et al 2004). The importance of combining already existing with new information about customers within a CRM-system is a key issue in order to understand what role the CRM-system should have in the company, and how it should be used in order to build, maintain, and develop customer relationships. According to Finnegan and Currie (2010) CRM-implementation often ignore 2

3 underlying aspects as people, corporate culture, process and technology and thus also neglect how these aspects can work as drivers or barriers for a successful CRM-implementation. The importance of customer information, in order to manage and learn about the relationship development has been discussed. Jayachandran et al (2005) discuss and argue for a relational information process and present different aspects of information that should be considered. Jayachandran et al (2005) discuss the role of information as a key process in developing customer relationships. Saimi et al (2010) conclude that too much un-used of the information collected as one of the major factors affecting if the CRM-strategy turns out in success or failure for B2B-firms. The strategic use of information gathered from the database is also highlighted by Jayachandran et al (2005) who argue that companies use the information in order to create value-propositions to the customer. However, even if several studies have discussed and argued for the importance in using the information that is collected, in terms of sharing information with the customers (Jayachandran et al 2006), using the information for strategic aspects (Saimi et al (2010), collect the information through communication with the customers (De Wulf et al 2001) there are still a major problem with too many CRM-strategies that fail. In their study however Finnegan and Currie (2010) argue that the people factor is important but should be combined with aspects as the existing corporate culture, and the technology factor, where again the exaggerate belief in the software itself is highlighted. Finnegan and Currie (2010) also highlight the process aspect, with what they mean that organizational changes have to be made continuously with the implementation. However, to implement a CRM-system is not a quick-solved change. Garrido-Moreno & Padilla-Mélendez (2011) stress the importance of experience for a successful CRM-strategy. In their study they have included organizational factors such as information (with knowledge management) and also how customer-oriented the company are in their strategy and relate this to experience in using a CRM-database and the gathering of information from the database. Research questions and overarching purposes This study tries to understand, that if companies fail to learn about their customers through an implementation of a CRM-strategy, what potential organizational barriers there are for successfully use a CRM-strategy. There is also a lack of research focusing on how to interpret the changes a business relationship may go through, especially in B2B-relationships, where several people and organizational units may be involved. One foundational aspect in companies work in learning about customers is to share the information collected about the customers to people who are relevant. However, the collection and storing of information in e.g. a CRM-database is not all, because information that is not shared to the right people is somewhat useless if it is not used in order to learn about the customer and the customer relationship. This study aims to explore and understand how firms manage the capturing and sharing of customer information over time to create a collective understanding of customer relationships, which in this study is called Systematic Relationship Learning. The following research questions and purpose are set for this study in order to explore and understand how companies learn about their customers. How do companies capture information about their customer relationships? Identify how firms manage systematic relationship learning, to create a collective understanding of customer relationships among the employees. How is the knowledge about customer relationships used for co-creating value? Identify organizational barriers for adopting a CRM-strategy from an employee perspective. 3

4 Methodological issues The ontological points of departure in this study build the structure of the study s methodological performance. As well as customer relationships, the world that is studied within social sciences is dynamic, in terms that the world is constantly changing in one way, or another (Alvesson & Sköldberg 1994). The development can be positive or negative, depending on who is the interpreter, which also is a central aspect, viz. that people are different and thus interpret different situations differently (see e.g. Alvesson & Sköldberg 1994). In this study the reality should be seen as socially constructed and by different people with different knowledge, the interpretation differs, and by this knowledge, experience is created. However, an important part to highlight is that even if the reality builds upon interpretation by people, generating knowledge by inter-subjectivity in interaction, reality exists even if people by gained experience and knowledge create another reality. Andersson (1982) means that when reality can be seen as both socially constructed, but also is allowed exist by its own, reality is socio-material. In this study the adopted ontology allows me as researcher, to perform the empirical material collection in an explorative way by experiencing and interpreting, but also observing what is actually happening, when companies try to understand and learn about their customers. The study has been influenced by its foundational problem, in order to choose the method for conducting the study and fulfill the studied purpose. There is a fundamental problem for companies to understand the importance of creating knowledge about their customers. As mentioned above the dynamic nature of customer relationships makes it difficult to study, since there are many aspects that potentially affect the dynamics of relationships. In order to study learning about customers from an employee perspective, and to acquire knowledge about how information about customers are captured and share within a professional service company, interaction and presence from the researcher within the empirical context become important. A quote by Babbie (1979:205) exemplifies how knowledge is created in this study. If you want to know about something, why not just go where it s happen and watch it happen The view of knowledge that mirrors this study is that interaction between people where they together share experiences and knowledge and through interaction generating new knowledge. It is important for me as researcher to be present and interact with the informants that I study, but it is also an important aspect for companies when the objective is to learn about customers, and the development of customer relationships. Gummesson (2005) means that a qualitative research approach tries to gain understanding about the complexity in the studied context, and the data collection is characterized by analyze and interpretations from the researcher during the data collection. The case study contextual aspects This study builds on a single-case study in a Swedish auditing and accounting firm. Due to changes in legislation regarding that auditing is no longer mandatory for a majority of Swedish firms, the auditing firm underwent a major organizational change in order to keep up with the changes in the market, to be able to approach their clients more relationship oriented. The organizational changes implied both implementing a CRM-database, combined with a major re-organization in daily work for employees, by putting together cross-disciplinary working teams. This re-organization started with the firm s key-accounts, but also a strategic plan regarding how the more client-oriented work should be performed for smaller clients is launched, and under way to be implemented. 4

5 One part of the study has been conducted and are currently conducted within the key-account group, where in-depth interviews and also participant meeting observations is the method. Research design As followed by the investment of the CRM-software a major organizational change was launched too, with a point of departure in the auditing firms key-account work. The organizational change contained of newly established key account teams where people from different areas of expertise were selected into the key-account teams. The firm is organized in 16 key account teams with the main task to develop the current relationship with the customer. For this study, eight of the teams were chosen and the purpose for choosing these teams, were to have a spread of the teams main ongoing service delivered to the client, in order to see if differences in how the teams perceived the organizational changes and the news with working cross disciplinary. To be able to answer the research questions and fulfill the purpose(s) participant meeting observations and in-depth interviews has been conducted. Meeting observations The purpose with participant observations has been to identify what actually is discussed in terms of sharing information regarding the customer relationship, during business meetings in the key-account teams, and how the involved people are discussing regarding the current relationship. The meetings have also the purpose for me as a researcher to be present over time and observe how the learning processes about customer relationships visualize during team meetings. Also it has given understanding in what organizational barriers there are in the practical use of the CRM-software, for example discussions regarding what type of information that is important to put in to the database. Gummesson (2007) discuss the importance of observational studies, in terms of the researcher s objective to view the reality, and he argues for an increased need of such studies within marketing and management. In total 20 meeting observations with key account teams were conducted during this time. The meeting observations started during fall 2010, with introductory meetings when the new team structure was launched. The meeting observations are scheduled to be finished during summer 2012, and will contribute with increased understanding for both the development processes within the key-account teams, but also increase understanding about the learning process around customer relationships over time. Interviews As a complement, 16 semi-structured interviews with members of the teams were conducted in order to gain more specific perceptions from team members regarding the importance of CRM and also understand what problems and possibilities the adoption of the CRM-system implies. This first round of interviews has focused specifically around perceptions about the re-organization itself and what potential barriers and drivers the involved people in the keyaccount team perceive for the customer relationship development process. The development process involves both technical adoptions to the CRM-database, adapting to a new work structure, and also the information and knowledge sharing process within the teams. All of these aspects have potential to affect the learning process about the customer. The interviews were conducted during time when the informants could manage it, and lasted between 45 and 75 minutes each. All interviews were recorded and transcribed as soon as possible after the interview had occurred. As previously mentioned the first round of interviews consisted of 16 interviews, and the objective is that during spring 2012 conduct a second round of interviews with the same people, in order to see how the re-organization process has affected the information and knowledge sharing process within the teams. 5

6 Empirical findings The findings presented below come from the first round of meeting observations and in-depth interviews in the key-account group. More data will be collected during spring 2012, and if needed fall Below a summarized preliminary conclusion from the first round in the keyaccount group is discussed. The focus in this part of the empirical has been the structural reorganization in the key-account group, with the CRM-strategy implementation, which has been discussed earlier in this paper as one way on learning about customer relationships. The results show the identified organizational barriers for adopting a CRM-strategy perceived by the employees in the key-account teams. From the case-study there are six organizational barriers that affect adoption of CRM. Communication as a barrier has several implications. The communication about the purpose and value of the CRM database system has to be communicated before launching the system. There also needs to be a clear idea of how the system should be used in daily work life. Here an issue regarding the purpose with the implementation itself is found. What is it for, controlling the employees work, or for supporting the employees work with developing customer relationships? The other level of communication that is found crucial is the communication and information sharing within the key-account teams. The lack of knowledge on what information that should be communicated is found as a barrier, since some of the teams has not agreed upon what information that is considered as important for the team development. Differences are found, in the attitude towards CRM-systems that have to be solved in order to overcome organizational barriers perceived by employees. One way of looking at CRM-systems are as systems for value creation, where important aspects as people, process, culture and technology (Finnegan & Currie 2010) are emphasized. This discussion can be connected to what value the employees actually perceive when using the system in their daily work, when theses aspects interplay. As Garrido-Moreno & Padilla-Mélendez (2011) argue it should be stressed from the findings that the importance of experience in using the database, and I mean, based on the findings that this have to be given time in order to work supportive in the relationship development process, and help the teams to collect and share information. The time factor has also been found as a potential barrier. The level of reward for actually conducting activities that potentially develop the relationship are connected to this issue, since team members do not perceive that they have the time they need to develop the relationship as much as they want. According to the findings, the time aspect that many of the interviewed people have several roles within the organization acts as a barrier. When relationship developing activities should be performed, which is not directly related to project there are perceptions regarding that some members do not feel that they have the time, and more important do not feel that they are rewarded, in terms of the measuring of their delivered performance. However the level of appreciation from both team members and management, is visible here, and perceptions according to do easy projects are more appreciated than more long-term relational developing activities. The next step of the study is to conduct the second round of interviews in the key-account group and continue with meeting observations. There will also be involvement in a new group of auditors, who have small companies as their responsibility. This part of the study will have a method of diaries, where the auditors are going to write about their encounters with their customers in order to understand how the capturing of customer information process works. What I am especially interested in discussing about this paper is the future steps that should be taken regarding further analysis of the empirical material, in order to answer the research questions and the purposes. 6

7 References Abbott, J. Stone, M & Buttle, F (2001) Customer relationship management in practice A qualitative study. Journal of database marketing. 9 (1) Alvesson, M & Sköldberg, K (1994) Tolkning och reflektion vetenskapsfilosofi och kvalitativ metod. Lund, Studentlitteratur Andersson, S (1982) Positivism kontra hermeneutik. Lund, Bokförlaget Korpen Babbie, E R (1979) The practice of social research. 2 nd edition. Belmont, Wadsworth Arndt, J (1979) Toward a concept of domesticated market, Journal of marketing, Vol 43 (fall) pp69-75 Berry, LL (1983) Relationship marketing, i Berry, LL. Shostack, GL. & Upah, GD (eds.) Emerging perspective on service marketing. Chicago, American marketing association Bohling. T, Bowman. D, LaValle. S, Mittal. V, et al (2006) CRM implementation: Effectiveness issues and insights. Journal of service research, 9 (2) Boulding, W. Staelin, R. Ehret, M & Johnston, WJ (2005) A customer relationship management roadmap: What is known, potential pitfalls and where to go. Journal of marketing. Vol. 69, October, Christopher, M. Payne, A & Ballantyne, D (1991) Relationship marketing: bringing quality, customer service and marketing together, Oxford, Butterworth-heineman Congram, C (1991) Professional services. i Congram, C & Friedman, ML (eds.) The AMA handbook of marketing for services industries. (1991) pp New York, American management association De Wulf. K, Odekerken-Schröder. G, & Iacobucci. D (2001) Investments in consumer relationships: A crosscountry and cross-industry exploration. Journal of marketing, 65 (October), Dwyer, RF. Schurr, PH & Oh, S (1987) Developing buyer-seller relationships, Journal of marketing, Vol.51 (April) pp11-27 Finnegan. D J, & Currie. W L (2010) A multi-layered approach to CRM implementation: An integration perspective. European management journal. 28, Ford, D (1980) The development of buyer-seller relationships in industrial markets, European journal of marketing, Vol. 14, (5/6) pp Frazier, GL. Spekman, RE & O Neal, C (1988) Just-in-time exchange relationships in industrial markets, Journal of marketing, Vol.52 (4) pp52-67 Garrido-Moreno. A, & Padilla-Meléndez (2011) Analyzing the impact of knowledge management on CRM success: The mediating effects of organizational factors. International journal of information management. 31, Gummesson, E (1987) The new marketing- developing long-term interactive relationships, Long range planning, Vol.20 (4) pp10-20 Gummesson, E (2005) Qualitative research in marketing road-map for a wilderness of complexity and unpredictability. European journal of marketing. Vol. 39, No. 3/4, pp Gummesson, E (2007) Access to reality: observations on observational methods. Qualitative market research: an international journal. 10 (2), Grönroos, C (1982) Strategic management och marketing in the service sector, Forskningsrapport No.8, Svenska handelshögskolan, Helsinki Grönroos, C (1990) Relationship approach to marketing in service contexts: The marketing and organizational behavior interface, Journal of business research, Vol, 20 (1) pp3-11 Grönroos, C (1994) Quo vadis marketing? Toward a relationship marketing paradigm, Journal of marketing management, Vol, 10 (5) pp Grönroos, C (2002) Service Management och marknadsföring: en CRM-ansats. Malmö. Liber Ekonomi Jaworski, BJ & Kohli AK (1993) Market orientation: Antecedents and consequences. Journal of marketing. Vol. 57 pp53-70 Jayachandran. S, Sharma. S, Kaufman. P, & Raman. P (2005) The role of relational information processes and technology use in customer relationship management. Journal of marketing, 69 (October), Kohli, AK & Jaworski BJ (1990) Market orientation: The construct, research propositions, and managerial implications. Journal of marketing. Vol. 54, (No.2) pp1-18 Laing, P CS. & Lian, AW. 2007, Relationship in the purchasing of business to business professional services The role of personal relationships. Industrial marketing management. No.36, pp Payne, A. & Frow, P (2005) A strategic framework for customer relationship management. Journal of marketing. 69 (October) Reinartz. W, Krafft. M, & Hoyer. W D (2004) The customer relationship management process: Its measurement and impact on performance. Journal of marketing research, XLI (August), Saini. A, Grewal. P, & Johnson. J L (2010) Putting market-facing technology to work: organizational drivers of CRM performance. Marketing Letters, 21, Webster, FE (1992) The changing role of marketing in the corporation, Journal of marketing, Vol.56 (October) pp1-17 7

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