CUSTOMER RELATIONSHIP MANAGEMENT AND FIRMS PERFORMANCE


CUSTOMER RELATIONSHIP MANAGEMENT AND FIRMS PERFORMANCE: A CASE STUDY OF Small AND Medium scale ENTERPRISES IN BENIN CITY

ABSTRACT

This study was carried out to examine the impact of Customer relationship management on firms’ performance. The main objective was to examine the effect of Customer relationship management on firms’ performance in small and medium scale enterprises in Benin City. The study adopted the descriptive survey design using percentage and regression. The population of the study comprised of all small and medium scale enterprises in Benin-City and a sample of ten small and medium scale enterprises was selected and data were collected by means of a questionnaire. Data for this study were analyzed using the percentage and regression model. The findings of the study revealed that there is a positive relationship between Customer relationship management and firms’ performance and that components of Customer relationship management such as information technology infrastructure, business architectural capability, the superior capability of the customer relationship, and Human analytics of customer relationship management positively affects firms performance. The study recommended that firms should focus on building a solid Customer relationship management culture in other to positively improve their performance.

TABLE OF CONTENTS

Title Page                                            ii

Certification                                            iii

Declaration                                             iv

Dedication                                            v

Acknowledgments                                        vi

List of Tables                                        xi

List of Figure                                        xii

Abstract                                             xiii

Chapter One: Introduction

1.0     Introduction                                        1

1.1    Background of the Study                                1

1.2    Statement of the research Problem                        4

1.3     Objective of the Study                                 5

1.4    Research Question                                    5

1.5     Significance of the Study                                6

1.6     Hypotheses                                        7

1.7     Scope of the Study                                    7

1.8    Limitation of the Study                                8

Chapter Two: Review of Related Literature

2.1    Introduction                                        9

2.2    Conceptual Framework                                10

2.2.1    Customer Relationship Management                         10

2.2.2    Parts of Customer Relationship Management                    13

2.3    Literature Review on Variables                            14

2.3.1 Customer Relationship Management and Firm Performance         14

2.3.2 Customer Relationship Management Information Technology

    Infrastructure and Firm Performance                        15

2.3.3    Customer Satisfaction of Customer Relation Management and Firms

    Performance                                        17

2.3.4    Social Bonding of Customer Relationship Management and Firms

    Performance                                        18

2.3.5    Total Quality Management of Customer Relationship Management

    and Firm Performance                                 20

2.4    Previous Studies                                    20

2.5    Conceptual Model                                    27

Chapter Three: Research Methodology

3.1    Research Design                                    35

3.2    Population of the Study                                35

3.3     Sample Size and Sampling Technique                        35

3.4     Method of Data Collection                             36

3.5     Research Instruments                                 36

3.6    Reliability and Validity                                38   

Chapter Four: Data Presentation, Analysis, and Discussion

4.0    Introduction                                        39

4.1     Presentation of Data                                39

4.2     Presentation of sensitive questions                        40

4.3    Questions Based on Research Hypothesis                    33

4.4     Regression Analysis                                49

4.4.1    Model Summary                                    49

4.4.2    Analysis of Variance                                50

Chapter Five: Summary of Findings, Conclusions, and Recommendation

5.1    Summary of the Findings                                54

5.2    Conclusion                                        55

5.3    Recommendations                                    55

    References                                         57    Appendix I                                         64

    Appendix II                                         65

CHAPTER ONE

INTRODUCTION

1.1        Background of the study

Developing customer relationship has historical antecedents going back into the pre-industrial era. Much of it was due to direct interaction between producers of agricultural products and their customers. Similarly, artisans crafted customized items for each customer. Such direct interaction led to relational bonding between the provider of the good and the customer. Much recently however, the tightening of competitive conditions in markets that have become more globalized and the development of information and telecommunication technologies have contributed to a large extent to the rapid development and evolution of customer relationship management (CRM) allowing producers to directly interact with end users.

The emergence of customer relationship management can be traced back from 1990 as opined by many authors (Parvatiyar & Sheth 2001; Stoklasa 2011; Rababah, 2011). Almost all authors agreed that relationship management (RM) is the origin of CRM. In addition to that, Parvatiyar and Sheth (2001) assert that growing intermediation process is one among the factors that gave room for the emergence of CRM. They further affirmed that, introduction of computer and telecommunication technologies contributed a lot towards the development of CRM. Total quality management (TQM) is another single-minded factor in developing CRM as it focus on improved quality and reduces cost which in turn gave room for relationship management to exist between customers, suppliers etc. The main motive for development of CRM is for the purpose of shifting business focus from transactional marketing (1950 -1970) to relationship marketing. Similarly, Paul and Gery (2003); Chen and Popovich (2015) affirmed that prior to evolution of CRM, there exist two main market; sales force automation SFA and customer service CS but with the existence of CRM in all enveloped all issues relating to retaining customer, CS and SFA inclusive.

CRM is considered an important ingredient for an organization to maximize its profit through increase in sales volume (Hassan & Parves 2013). CRM refers to a process of achieving maximum customer value and profit through the creation, enhancement and development of mutual relationships with targeted customers. Rababah, et al (2011) collectively came out with a unified definition of CRM based on three perspectives as we would see in the review of literature.

In industries such as the airline industry, banking industry, insurance or household appliances, the intermediation process is fast changing the nature of marketing and making relationship marketing more popular. In the current era of hyper-competition, markets appear to focus more and more on customer retention and loyalty. As several studies indicate, retaining customers perhaps offers a more sustainable competitive advantage than acquiring new ones.

What marketers are realizing is that it costs less to retain customers than to compete for new ones (Rosenberg & Czepiel, 1984) and it pays more to develop closer relationship with a few suppliers than to work with more vendors. Many marketers today are concerned with keeping customers for life rather than making only a one-time sale. There is greater opportunity for cross-selling and up-selling to a customer who is loyal and committed to the firm and its offerings. Customer expectations also have been changing rapidly over the last decades. Fueled by new technology and the growing availability of advanced product features, customers are less willing to compromise on quality. Therefore building cooperative and collaborative relationships seem to be the most prevalent way to keep track of customers changing expectations. CRM is the process that addresses all aspect of identifying customers, creating customer knowledge, building customer relationship and shaping their perception of the organization and its products. In order to have a more efficiently-managed customer relationship, CRM focuses on effectively turning information into intelligent business knowledge. That information can come from anywhere inside or outside the firm. This requires successful integration of multiple database and technologies such as the internet, call centers, sales force automation and data warehousing (John and Fredrick, 2002). CRM integrates sales, marketing services, resources planning and supply chain management through business process automation, technology solutions, and information resources to maximize each customer’s contact. But all these activities need to be used in combination. It is an enterprise approach to understanding and influencing customer behavior through meaningful communications in order to improve customer acquisition, customer retention, customer loyalty and customer profitability.

Firms are spending a tremendous amount of time and money to attract new customers as well as retaining old ones through promotional activities. Financial institutions for example are employing researchers to study and discover customer needs and wants. They recognize now that customer satisfaction is a critical success factor.

The objective of this study is to examine whether customer relationship management enhances the performance of small and medium scale enterprise in Benin City, Nigeria. Furthermore, for the purpose of this study, in addition to financial performance (profitability), customer retention will be used as another variable to measure performance.

1.2      Statement of the Research Problem

Research show that customer loyalty has definite benefits as it cost a lot more to attract new customer than to retain existing ones. Several studies have been carried out to examine the impact of customer relationship on firm performance. Some studies investigate the contribution of Information Technology (IT) to a CRM program and then probe whether a superior CRM (organisational) capability such as social bonding, customer retention strategy, product or service quality is a robust indicator of firm performance (Coltman, Devinney, and Midgley,2010). However, only few studies on the impact of CRM practices on Firms performance in the context of developing nations have been carried out, hence the need to fill Gap.

In view of this problem, this research is set out to fill a gap in the Study of CRM on Firm performance in Small and Medium Scale Enterprise in Benin City, Nigeria and to determine the impact of CRM on a Firms Performance.

1.3        Objectives of the Study

1.    To determine the relationship between Customer relationship management and Firm performance.

2.    To determine the relationship between Customer relationship management Information Technology Infrastructure and firm performance.

3.    To determine the relationship between Business Architecture of Customer relationship management and firm performance.

4.    To determine the relationship between customer relationship management strategic emphasis and Firm performance

5.    To determine the relationship between Superior capability of customer relationship management and firm performance.

6.    To determine the relationship between Human Analytic Capability of Customer Relationship Management and firms performance?

1.4        Research Question

1.    What is the relationship between Customer relationship management and Firm performance?

2    What is the relationship between Customer relationship management Information Technology Infrastructure and firm performance?

3    What is the relationship between Business Architecture of Customer relationship management and firm performance?

4    What is the relationship between customer relationship management strategic emphasis and Firm performance?

5    What is the relationship between Superior capability of customer relationship management and firm performance?

6    What is the relationship between Human Analytic Capability of Customer Relationship Management and firms’ performance?

1.5        Significance of the Study

Every researcher’s goal and aim is to add to the knowledge of the already existing work, to fill the gap and also serve as a solution to a given problem. This study will be of immense significance to the following; Leaders and management boards of industries whether business or non-business organisation whose responsibility it is to ensure that Customer relationship is properly managed to better improve the Firms performance. This study would also contribute to existing empirical studies on CRM and Firm performance, it would provide quantitative-based recommendations for policies and programs required to reposition CRM adopted by leaders in managing its organisation. This research work will be useful to future researchers and students because it would be a source of reference for materials with regards to Firm performance and CRM.

1.6        Hypotheses

1.     H0: There is no significant relationship between Customer relationship management and Firm performance?

2.    H0: Information Technology Infrastructure of Customer relationship management has no significant effect on firm performance?

3.    H0: Business Architecture Capability of Customer relationship Management has no significant effect on firm performance?

4.    H0: Strategic Emphasis of customer relationship management has no significant effect on Firm performance?

5.    H0: Superior Customer relationship management Capability has no significant effect on firm performance?

6.  H0: Human Analytic Capability of Customer relationship management has no significant effect firm performance.

1.7         Scope of the Study

This study examines the impact of CRM on Firms performance using Small and Medium Scale Enterprise (Sme’s) in Benin City as case study. As such, the scope of this study is limited to: Customer Relationship Management, Firm Performance and Small and Medium Scale Enterprise in Benin-city.

At present this study covers ten selected Sme’s in Benin-City, Edo State.

1.8    Limitation of the Study

This study is limited by its time scope, available literature on the subject matter and other geographical factors. A longer duration would have given the researcher time to study a broader cross-section of Customer Relationship Management in different firms and sectors of the economy. Also, some funding would have enabled the researcher to travel extensively to interview corporate employees to get a better insight on the topic of the study. Available materials on the subject matter was scarce to come by hence the researcher had to make do with the scarce material available. The study could then also have a higher coverage to include other organizations like Banks, Multinationals and other organizations or firms.

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