The Practice of CRM in BtoB Companies and Its Impact on Customer Retention

DAFFEUR NAWAL

【Abstract】Marketing academicians and practitioners have over the past years advocated the importance of customer relationship management principles within firms.This article present a summary of our research that investigates how companies can take use of relationship marketing management in order to enhance customer retention and affects repurchase behavior， its purpose is to provide a better understanding of this process and its impact on customer retention using case study of trading company engaged in business-to-business sales. Indeed， this article draws on adaptive theory to frame the CRM processes within companies and its advantage of maintaining customers.The study finds that in the case of trading company； CRM process become particular not matching exactly the theory， because of its particular organization structure and business nature， further， maintenance faithfulness and commitment appears to have more ultimate impact on customer retention. The study suggests that pursuing customer retention has limited effectiveness unless accompanied by a broader range of initiatives aimed at making the firm more customer-focused.

【Key words】Customer relationship management；CRM process；Customer retention program；Customer satisfaction；Trading company；Business-to-business

0.Introduction

Knowledge is the only meaningful resource and the only real competitive differentiator （Drucker，1996）.

Conquer new customers is every time a colossal task； retain him is a real challenge， which is just as important and sometimes more. It requires the establishment of a lasting relationship with him， as well as a robust methodology that encompasses all organizational structures. Relationship marketing， or Customer Relationship Management as its new concept name， attempts for some years now to meet this need.

Nowadays relationship marketing has become more and more important， customer relationship management （CRM） has gained increased value； most companies have to work extremely hard to keep customers over an extended period of time， indeed research studies have shown that retaining current customers is much less expensive than attracting new ones.

According to Kriengsin Prasongsukarn “One way for an organization to retain its client base and ensure repeat purchases is to develop a data-based， customer-focused management strategy that aims to increase customer satisfaction by cultivating long-term relationships. This strategy， known as Customer Relationship Management（CRM）， is widely recognized as a key ingredient in the creation of market value”.

In fact competing for customers on a globalised market like never before， nowadays the number of trading companies knows a fast growing in the international business sphere， the competition became voracious， a good value for money is no longer enough for maintaining customers， a good practice of customer relationship management appears as the key success for these companies to differentiate themselves， some of them are winning this race through the implementation of relationship management applications which help organizations assess customer loyalty and profitability adopting.

The practice of CRM within these particular organizations which engage in trade intermediation between countries may appear specific according to the diversity of their customers and the factors involved in maintaining the relationship with them.

To provide a better understanding of the use of CRM in Business to Business firms， using case study of company operating in the trading industry is the main objective of this paper research.

Due to the tremendous definitions of this concept， for our research， we relied on the definition given by Chen and Popovich （2003）“CRM is a combination of people； processes and technology that seeks to understand a companys customers.It is an integrated approach to managing relationships by focusing on customer retention and relationship development”.

In this manner the research is designed in accordance with the scale development literature.

It is composed of three sections： the first section gives an introduction of CRM： What is it？ Why it is used？ How CRM processes does it work？ How customer retention programs are developed based on CRM？ The second section provides a Conceptual framework of the case studied， finally， in the last section conclusions and potential further researches are determined.

1.Literature Review： Introduction of CRM

Customer relationship management： what is it？ Why？

As stated in the introduction Customer Relationship Management is hardly a new concept. Good businesses have been practicing it for centuries；remembering customers' names and family information， monitoring buying patterns and preferences， and promoting new business using this information. The difference today is electronic technology which has increased both the speed and the volume of information exponentially. However， customers are still customers and the key word in CRM is "relationship"（Richard White，1999）.

Many authors have stressed its benefits and advantages； According to Xu & Walton（2005），CRM improves customer satisfaction， retains existing customers， provides strategic information and improve customer lifetime value. Its primary usage is to collect information， with principal concern make a good use of the important amount of collected data through automation technology.

As Xu & Walton； Zeng， Weng & Yen； Sherif， Nguyen and Newby（2007）； Ghavami & Olyaei （2006）， Chen & Popovich （2003） and so on... point out with different ways of investigations that CRM has the ability to Increase customer satisfaction and loyalty by the numerous instant service following customer inputs and requirements； and through the use of smart I.T. also CRM delivers and provide a necessary information and estimation regarding various customer metrics， it offers a differentiated and customized service to customers in order better meet their needs.

CRM is characterized by being a complement of relationship marketing， an integrated approach with continuous improvement and re-engineering of customer value， indeed CRM is a Broader Management Concept， it is consists of 4 basic elements： customer knowledge， customer relationship strategy，communication， individualized value proposition.

Customer Relationship Management Process： How does it work？

The implementation of CRM systems has been widely reported by both CRM software vendors and academic researchers.

The CRM process approach described by Injazz J.Chen and Karen Popovich（2003） appears as the one which fit our case study； indeed the authors have illustrated a CRM implementation model that integrates three key dimensions： people， process， and technology within the context of an enterprise-wide customer-driven， technology-integrated， cross-functional organization. The Authors have elaborated the essential roles of these three dimensions in building relationships.

Figure 1 A CRM Implementation Model

Source： Injazz J. Chen and Karen Popovich， 2003

How Customer Retention Programs Are Developed Based On CRM？

Many studies and researches have been conducted to empirically and theoretically examine the value that CRM can provide to the organizations especially its impact on customer metrics. They showed that major considerations for companies in using CRM are to improve customer satisfaction level， to retain existing customers and to improve customer lifetime value. This third point introduces and explains how customer relationship management process plays a role in developing customer retention programs and enhancing then the customer retention. Winer（2001）， Keramati et al.（2010）and Alireza Nili（2010） followed a logical way explaining the impact of CRM from its resources and through customer retention programs on firm performance and most importantly on customer retention. CRM provides to the firms a capability to develop powerful tools known as customer retention programs which are： customer service， loyalty/frequency programs， customization， and community.

Winer argued that these programs are determinants of customer satisfaction which finally leads to customer retention. The research shows that in the case of trading company， firms resources have a great contribution into developing CRM retention programs such as： Information integration，CRM Technology Use， Customer-focused structure.

2.Research Model

As the objective of this research is to understand the role of CRM process and the factors involved in enhancing customer retention in trading companies， we suggest a simple framework to link：

What firms do： it consists of CRM process set by the company， and the customer retention programs and strategies derived from.

What customers think then do： from unobservable construct： satisfaction； to behavioral outcome： repurchase and retention.

What firms get： Enhancing the retention rate for their existing customers.

Our conceptualization is illustrated in the figure below.

Observation and collecting data directly from the company studied were used as the primary data collection method； the questionnaire is the second instrument used for this study.

The sample which has been taken in order to conduct this research is French trading company； set up since more than 25 years now in Asia， it is now one of the biggest purchasing platform with foreign capitals in china. The analysis was about the CRM program set up for three former customers， the choice of former customers is in order to understand how CRM has contributed to retain them.

The choice of the customers sample taken to be analyzed follows a classification made by Marcus（2001）， indeed customer “A” follows the definition of “Benchmark” Customer or role model of the new companys products， customer “B” follows the definition of customer who inspire changes in the supplying company， and customer “C” follows the definition of customer who absorb a disproportionately high volume of fixed costs.

3.Conclusions and Implications

Customization requirements， technology use and information integration motivate and enable trading companies to maintain customers.

The research shows that the best route to progress is boosting the firm's information integration capabilities in mustering diverse sources of information to achieve an accurate picture of customer needs that allows the firm to forecast tailored products. Trading companies are being increasingly aware that they can develop closer customer relationships by using different tools and strategies through the available technology. The study revealed that the CRM program used is especially electronic one （e-CRM） due the largely use of internet when communicating with customers. It sheds light the use of different priorities when following developing relationships with customers， the customization take an important place for the tool using to keep customers.（as shown below）.

Figure 2 illustration of retention programs and the factors that influence the customer retention in trading companies

Source： authors own construction.

This study contributes to the CRM literature by clarifying this process within trading companies； Due to the business nature of these companies， developing CRM system appears quite complicated to set up. Analyzing their relationships with their suppliers can lead to a better understanding of this sphere of business. [科]

【References】

[1]Injazz J.Chen and Karen Popovich：Understanding customer relationship management（CRM）People，process and technology，Emerald Research，2003.

[2]Kriengsin Prasongsukarn；customer relationship management from theory to practice：implementation steps（date of publication not mentioned）.

[3]ThuyUyen H.Nguyen，Joseph S.Sherif，and Michael Newby：Strategies for successful CRM implementation，Vol.15 Iss：，emerald journal，2007，2：102-115.

[4]Ghavami & A.Olyaei：the impact of CRM on customer retention，2006.

[5]Mark Xu and John Walton：Gaining customer knowledge through analytical CRM，Industrial Management & Data Systems，Vol.105 Iss：，Emerald Journal，2005，7 ：955-971.