CRM FACTORS ASSESSMENT USING ANALYTIC HIERARCHY PROCESS

641 CRM FACTORS ASSESSMENT USING ANALYTIC HIERARCHY PROCESS Marketa Zajarosova 1* *Ph.D. VSB - Technical University of Ostrava, THE CZECH REPUBLIC arketa.zajarosova@vsb.cz Abstract Custoer relationship anageent (CRM) has becoe a key strategic tool for any copanies, especially in the current copetitive environent. Custoer relationship anageent is a relatively young and new approach not only in the world but ainly in the Czech Republic. It provides appropriate support for the anageent and efficient product and service offer to existing corporate custoers. The goal of CRM is to build and active anageent of custoer relationship. If a copany decides to ipleent CRM systes, it is expected that this syste will bring benefits. These benefits should lead to aintain or increase current turnover and profit. These factors are not aong the objectives of the ipleentation of CRM systes, but the benefits resulting fro its successful use. CRM brings easurable benefits and effects that can be observed only after a certain tie, but also benefits anifested iediately after the ipleentation of CRM systes (Finnegan, Willcocks, 2011; Goldenberg, 2008). After the copany ipleent specific CRM syste is a atter of ost of the, how to easure and evaluate the level of the ipleented syste. The ai of this paper is to analyze the degree of factors' influence that affect the perforance easureent of CRM systes using AHP ethod. Within the hierarchical structure of decision-aking factors of CRM systes ipleentation are evaluated in six key areas: quality of custoer inforation, support of CRM systes, effects of the CRM syste ipleentation, custoer satisfaction, profitability and processes. There has been setting up the evaluation atrix, which served as a basis for personal interviews, based on the identification of key areas and factors. Expert saple consisted of 5 selected anagers of B2B copanies in the Czech Republic. The purpose of these interviews was to deterine the weights of individual criteria and sub-criteria using Saaty's ethod of pairwise coparison. The preliinary results suggest that the ost influential factor is increase in sales to existing custoers on the other hand investent support by the copany anageent to further expansion of CRM does not play significant role in CRM systes evaluation. Keywords: MADM ethods, Analytic hierarchy process (AHP), Criteria, CRM, Factors evaluation 1. INTRODUCTION CRM is an interactive process, which ais at achieving an optial balance between corporate investent and satisfaction of custoer needs. Optiu balance is deterined by the axiu profit of both sides (see Chlebovsky, 2005; Storbacka and Lehtinen, 2002; Dohnal, 2002). A prerequisite to achieve this optiu is to create long-ter relationships with custoers. Long-ter prospective cooperation brings both parties significant oney's value. CRM is a syste that tracks custoer interactions with the copany and allow eployees to find inforation about the custoer, such as past orders, service history, proble solving, etc. All records are kept and used with the only ai to ake the custoer happy, because it is the custoer through which trade runs (see Nguyen, Sherif and Newby, 2007). According to Wessling (2003) Custoer Relationship Manageent is a proactive approach and aintaining long-ter beneficial relationships with custoers. Counication with custoers is ensured by appropriate technologies, which represent for the shareholders and eployees of the copany separate processes with added value. The three ain eleents are the people (huan capital, custoers), processes (focus, blending) and technology (type, scope, and consistency of the application area). The eaning and

642 purpose of these four eleents is a coprehensive view of CRM. In order to ipleent CRM into existing organizational structures need to be addressed qualifications of personnel, technological equipent, focusing business processes and data anageent. However, no single definition has been accepted in the literature. Zablah, Bellenger and Johnston (2004) ention in their paper the existence of ore than 45 different definitions of CRM, which appear in the literature or derived fro an internal terinology leading independent software vendors. The researcher has investigated different CRM definitions and concluded that the ter CRM is generally understood corporate philosophy, or strategy, which focuses on reducing costs and increasing profitability of the copany by building long-ter relationships with its custoers. It is a suary of inforation processes and technologies (Rogers, 2005), which provides benefits in the for of loyal custoers (Kuar and Shah, 2004), better use of cross-selling activities, and help to build goodwill. Perforance easureent is used to evaluate the overall results of the past and identify the future position of the copany in the top level anageent, in the individual level, perforance easureent provides inforation about the shortcoings and otivate for the upcoing activities (Meyer, 2009). Current perforance evaluation in CRM literature can be analyzed in four groups: (i) indirect easures and operational indicators, (ii) self-assessent, (iii) bencharking with best practices, (iv) CRM Scorecards. There are several ethods how the CRM perforance can be easured. The choice of one of the ethods depends ostly on the experience of the copany. These ethods are for exaple Balanced Scorecard (Kaplan and Norton, 1992) or CRM Scorecard (Ki and Ki, 2009), CRACK odel (Chlebovsky, 2005), cost-oriented approach (Moedritscher and Mussnig, 2005), CRM Maturity odel (Sohrabi, Haghighi and Khanlari, 2010) or quantification of onitored factors without using any concrete odel. The purpose of this study is to copare the CRM perforances of B2B copanies using a ulti-criteria decision aking ethod. AHP is a ulti-criteria decision aking ethod (MCDM) that uses pairwise coparison of the factors or groups of factors (Ishizaka and Labib, 2011). AHP was applied in CRM perforance easureent for exaple by authors Ki and Ki (2009). 2. ANALYTIC HIERARCHY PROCESS METHODOLOGY AND MODEL SPECIFICATION The process of ipleenting CRM systes into the copany structure is coparatively explored and known on the arket. There are any studies and scientific publications describing this issue. After the copanies ipleent specific CRM syste is the issue of ost of the, how to easure and evaluate the level of the ipleented syste. Absolute generalization in this area is not possible. The easureent cannot create in absolute for, which will be useful in every copany. There ust be a certain adaptation of the structure and the environent in which the copany is located. Perforance is defined as the potential for future success of actions in order to reach the objectives and targets (Lebas, 1995). In this study, the perforance evaluation odel is proposed in accordance with literature review and interviews with experts and the perforance of CRM is analyzed in six related categories (criteria), the relationships between the criteria are identified and the sub-criteria under each criteria are defined. The criteria utilized in CRM perforance evaluation can be listed as: (i) quality of custoer inforation, (ii) support of CRM systes, (iii) effects of the CRM syste ipleentation, (iv) custoer satisfaction, (v) profitability and (vi) processes (see Fig. 1). The task is to select those groups of factors, which directly contributes to the success of CRM systes. It is the task of ulti-criteria selection, solution of these tasks are handled by different ethods for decisionaking, one of these chosen ethods is the ethod AHP (Analytic hierarchy process). Analytic hierarchy process (AHP) has been described in several publications Thoas L. Saaty, a professor at the University of Pennsylvania in Pittsburgh, USA, in the 80s and 90s. This ethod is now widely used in the decision-aking. For any years, especially in the social sciences uses Saaty ethod of paired coparisons, which fors the backbone of a consistent ethodology ulti-criteria decision called analytic hierarchy process. AHP is inherently general theory of easureents, these easureents to quantify the value of the subjective views of individuals or groups. Analytic hierarchy process (AHP) is one of the appropriate eans of ulti-criterial decision or assessent. The role of ulti criteria evaluation of alternatives is ainly finding the best variant and configuration variants fro best to worst see Saaty, Vargas (2012).

643 Figure 1. The AHP odel Source: self-elaboration AHP ethod is based on the innate huan ability to use inforation and experience to estiate the relative iportance through pairwise coparisons. These coparisons are used to construct ratio scales in different diensions, both tangible and intangible. The arrangeent of diensions in a hierarchical or network structure allows a systeatic approach to the organization of the basic considerations and intuition for help divides the proble into saller parts. AHP leads fro siple pairwise coparisons to the priorities in the hierarchy see Saaty, Vargas (2012). The theoretical procedure of the AHP ethod consists of four steps: (i) hierarchy design (goal definition, identification of alternatives, identification of evaluation factors, assignent of criteria and factor relationships and finishing of the hierarchy), (ii) identification of priorities (application of pair-wise coparison, point evaluation of significance, repeating of the procedure for all hierarchy levels), (iii) cobination and (iv) evaluation (weighted values of alternative solutions) and coparing alternatives (calculate final values for each variant and their coparison) see Saaty, Vargas (2012). The Saaty s ethod of pair-wise coparison has to be applied on each level of the hierarchy structure. The first level of the hierarchy is the goal of the evaluation (deterine the weights of criteria and ranking factors). The second level of the hierarchy represents evaluation criteria (the goal of the evaluation depends

644 on which evaluation criteria will be used). The third level of the hierarchy is ade of evaluation sub-criteria. Prioritization (evaluation) is based on an expert estiate at which copares the influences of factors. Rating scale has nine stages, which are listed in Tab. 1. Table 1. Saaty s coparison fundaental scale Degree Descriptor 1 Criteria i and j are equal 3 Low preference of criteria i before j 5 Strong preference of criteria i before j 7 Very strong preference of criteria i before j 9 Absolute preference of criteria i before j 2, 4, 6, 8 Mediu values for ore precise preference deterination. Source: Saaty (1994) The rank of alternatives and selection of the optial one is based on weighted su criteria (total weighted utility) of the alternative. Then for the weighted su criteria of noralized weights following forula can be applied: U( a ) w x, (1) i j1 j where xij represents the evaluation of the ith alternative according to the jth criterion. The wj represents the noralized weight of the jth criteria. The weights wj can be obtained through an algorith based on the geoetric ean ethod (ethod of least logarithic squares) under the sae necessary condition then the solution is a noralized geoetrical ean of the atrix as follows w j j1 j1 ij s ij 1 s j1 ij 1, (2) for i=1,,. The geoetrical ean can be calculated using MS Excel function GEOMEAN. This function will be eployed for calculations in the application part. In the AHP ethod, decision akers or experts who ake judgents or preferences ust go through the consistency test. In order to deterine that if the judgent of the respondents satisfies the consistency, which are conducted based on the consistency ratio (CR) of the coparison atrixes. CR is calculated using following forulas CR CI RI ax n n 1 RI, (3) where RI is a rando index see Table 2. When CR 0.1, it can be regarded as the valuation process satisfies the consistency. To calculate CR it is necessary to calculate the consistency index CI first. If CI = 0, satisfies the consistency. If CI > 0, eans the experts have conflicting judgents. If CI 0.1, a reasonable level of consistency. λ ax is axiu eigenvalue and can be calculated as follows: where w is a vector and (S.w) i is an i-eleent of the vector. 1 n S w i i n, (4) ax w i Table 2. Rando index n 1 2 3 4 5 6 7 8 9 10 RI 0.00 0.00 0.58 0.9 1.12 1.24 1.32 1.41 1.45 1.49 Source: Saaty (1977) The resulting local and global scales evaluated criteria were calculated in MS Excel. There has been

645 setting up the evaluation atrix, which served as a basis for personal interviews, based on the identification of key criteria and sub-criteria. So the evaluation of the criteria and sub-criteria has been done by a panel of experts. Expert saple consisted of 5 selected anagers of B2B copanies in the Czech Republic. The purpose of these interviews was to deterine the weights of individual criteria and sub-criteria using Saaty's ethod of pairwise coparison. Aggregation was perfored at the response experts level and then weights have been calculated using Row Geoetric Mean Method to deterine local and global priorities. 3. RESULTS AND DISCUSSION In order to use the analytical hierarchical process was copiled evaluation for contains six criteria. Within each criterion was defined ore sub-criteria, the nuber against each criterion was different in each group (see Fig. 1). The result is an evaluation syste of coponents with the highest priority. All the experts evaluated the criteria and sub-criteria and deterine the size of each preference according to Saaty ninepoint scale. To obtain quality and relevant results it was necessary to respect the requireent of consistency Saaty atrices according consistency ratio (CR). It was found that all Saaty atrices are consistent. Values of the consistency ratio were lower than 0.1 in all cases of coparing. Criteria Quality of custoer inforation (0,103) Support of CRM systes (0,037) Effects of the CRM syste ipleentation (0,111) Custoer satisfaction (0,258) Profitability (0,362) Processes (0,129) Table 3. Results of AHP Sub-criteria Local Global weights weights Inforation availability about custoers 0,138 0,0142 Custoer inforation usefulness 0,146 0,0149 Estiation of the potential purchasing power of custoers 0,219 0,0224 The overall higher quality of custoer inforation 0,497 0,0510 Investent support fro anageent 0,153 0,0057 Ipleentation of CRM by ideas and plans 0,362 0,0134 Full integration of inforation systes into CRM 0,484 0,0179 Save tie at work 0,059 0,0065 The increase in labor productivity 0,132 0,0146 Savings in counication costs 0,254 0,0281 Iproving sales forecast 0,254 0,0281 Iproving the planning and anageent of sales 0,302 0,0334 Increasing the nuber of custoer contacts 0,040 0,0104 Increasing brand value /copany value 0,171 0,0442 Decrease the nuber of custoer coplaints 0,152 0,0393 Increasing the nuber of loyal custoers 0,286 0,0738 Increase overall custoer satisfaction 0,351 0,0906 Increasing the nuber of new custoers 0,131 0,0476 Increasing the nuber of sales to existing custoers 0,479 0,1735 Increase in the arket share of the copany 0,243 0,0880 Increase sales productivity 0,147 0,0533 Flexible production planning 0,200 0,0258 Better links between suppliers and anufacturers 0,206 0,0265 Iproved control of dealers/distributor 0,213 0,0274 Siplification workflow 0,154 0,0198 Optiizing the planning of arketing capaigns 0,124 0,0159 Siplification contract anageent 0,048 0,0062 More effective data anageent 0,057 0,0073 Source: self-elaboration The results presented in the Tab. 3 show allocation of priorities aong criteria and sub-criteria. The greatest weight experts attribute the criterion of profitability and custoer satisfaction. This result is not surprising, since the profit is usually the ain objective of business operations and ipleentation of CRM

646 systes can be increased. Custoer satisfaction leads to loyalty and a greater likelihood of an increase in sales and cross-selling opportunities. The iniu weight of only 3.70% is assigned to support of the CRM syste ipleentation. All coefficients of global weights are provided in Tab. 3 in the last colun. Hundred percent was divided aong all factors considering the iportance coefficient of the group of factors. For CRM perforance easureent are the ost iportant factors: i. Increasing the nuber of sales to existing custoers (17.35%) ii. Increase overall custoer satisfaction (9.06%) iii. Increase in the arket share of the copany (8.80%) iv. Increase sales productivity (5.33%) v. The overall higher quality of custoer inforation (5.10%) vi. Increasing the nuber of new custoers (4.76%) vii. Increasing brand value /copany value (4.42%) An iportant finding is that an increase in the nuber of sales to existing custoers is ore iportant than acquiring new custoers. It is generally known that retain custoer is less expensive than getting a new custoer. Through Saaty ethod, this view was supported. Much ore iportant is that existing custoers to increase the aount of their purchases within a copany. If increasing overall custoer satisfaction, we can assue that also a growing nuber of loyal custoers who will return regularly and buy the products of the copany. Satisfied custoers are also uch less likely to switch to copetitors and can save the copany, for exaple, in ties of econoic crisis. It is logical that the highest iportance was deterined precisely by these factors. Increasing the nuber of custoer contacts is not the ai of CRM systes, it is ainly an effort to strealine this relationship. It is not iportant to contact the custoer often, but effectively with offerings to better eet their needs and preferences. Iportance of 1.04% in this case is very low, but it corresponds to the requireents of copanies in relation to CRM systes. Factors such as investent support fro anageent (0.57%), siplification contract anageent (0.62%), save tie at work (0.65%) and ore effective data anageent (0.73%) are less iportant for CRM perforance easureent. If the chosen CRM syste best eets the requireents of copanies, it is logical that its further expansion is not so crucial for businesses. There are not obvious expectations to siplify the contract anageent of and ore efficient data anageent. The results clearly show that is not crucial for anagers, whether the ipleentation of CRM systes contribute to saving tie at work, far ore iportant factor is the iproveent in sales. CONCLUSION The ai of the paper was to define rank of factors easuring CRM perforance. This research was based on application of the AHP ethod for the perforance easureent of CRM systes in the B2B arket. This approach helped to scale down the nuber of easures and helped to deterine the ost iportant criteria which lead to the achieveent of fir s strategic goals. The iportance weights were deterined via experts. The coefficients for each group of factors and for each factor (local and global weights) were calculated. The obtained results clearly show that the best iportant factors are increasing the nuber of sales to existing custoers (17.35%), increase overall custoer satisfaction (9.06%), increase in the arket share of the copany (8.80%), increase sales productivity (5.33%), the overall higher quality of custoer inforation (5.10%), increasing the nuber of new custoers (4.76%), increasing brand value /copany value (4.42%). The expert group considered least iportant in the context of CRM systes support investents ade by the copany's anageent to further expansion of CRM, siplify anageent contracts. Neither saving tie at work by ipleenting CRM systes and ore efficient data anageent experts do not consider to be very iportant, since the value of iportance in both cases is less than 1%. Further research is planned to investigate other cobinations of ultiple attribute decision-aking ethods and especially ultilevel decoposition ethods of AHP and ANP with arketing odels together with theoretical and practical applications. ACKNOWLEDGEMENT This paper is supported within Operational Prograe Education for Copetitiveness Project No. CZ.1.07/2.3.00/20.0296.

647 This paper is supported by Student Grant Copetition of the Faculty of Econoics, VŠB-Technical University of Ostrava, project s registration nuber is SP2014/126. All support is greatly acknowledged and appreciated. REFERENCE LIST Chlebovsky, V. (2005). CRM řízení vztahů se zákazníky. Brno, Czech Republic: Coputer Press. Dohnal, J. (2002). Řízení vztahů se zákazníky: procesy, pracovníci, technologie. Praha, Czech Republic: Grada. Finnegan, D. and Willcocks, L. P. (2011). Ipleenting CRM: Fro Technology to Knowledge. New Jersey: John Wiley & Sons. Goldenberg, B. J. (2008). CRM in Real Tie: Epowering Custoer Relationships. USA: Cyberage Books. Ishizaka, A. and Labib, A. (2011). Review of the ain developents in the analytic hierarchy process. Expert Systes with Applications, 38(11). Kaplan, R. S. and Norton, D. (1992). The balanced scorecard - Measures that drive perforance. Harvard Business Review, 70 (1). Ki, H. S and Ki, Y. G. (2009). A CRM Perforance Measureent Fraework: Its Developent Proces and Application. Industrial Marketing Manageent, 38 (4). Kuar, V. and Shah, D. (2004). Building and Sustaining Profitable Custoer Loyalty for the 21st Century. Journal of Retailing, 80 (4). Lebas, M. J. (1995). Perforance easureent and perforance anageent. International Journal of Production Econoics, 41 (1). Meyer, M. V. (2009). Rethinking Perforance Measureent. Cabridge: Cabridge University Press. Moedritscher, G. and Mussnig, W. (2005). Evaluating the long-ter benefit of CRM-Systes: A cost-oriented approach. International Journal of Innovation and Technology Manageent, 2(4). Nguyen, T. H., Sherif, J. S. and Newby, M. (2007). Strategies for Successful CRM Ipleentation. Inforation Manageent & Coputer Security, 15 (2). Saaty, T. L. (1977). A scaling ethod for priorities in hierarchical structures. Journal of Matheatical Psychology, 15 (3). Saaty, T. L. (1994). The Analytic Hierarchy Process: Planning, Priority Setting, Resource Allocation. New York: McGraw Hill. Saaty, T. L. and Vargas, L. G. (2012). Models, Methods, Concepts & Applications of the Analytic Hierarchy Process. New York: Springer. Sohrabi, B., Haghighi, M. and Khanlari, A. (2010). Custoer relationship anageent aturity odel (CRM3): A odel for stepwise ipleentation. International Journal of Huan Sciences, 7 (1). Storbacka, K. and Lehtinen, J. (2002). Custoer relationship anageent. Praha, Czech Republic: Grada. Wessling, H. (2003). Aktivní vztah k zákazníků poocí CRM. Praha, Czech Republic: Grada. Zablah, A. R., Bellenger, D. N. and Johnston, W. J. (2004). An Evaluation of Divergent Perspectives on Custoer Relationship Manageent: Towards a Coon Understanding of an Eerging Phenoenon. Industrial Marketing Manageent, 33 (6).