Understanding customer relationship management from managers' and customers' perspective: Exploring the implications of CRM fit, market orientation, and market knowledge competence

Customer Relationship Management (CRM) has received a lot of attention and come to occupy a central place as a vital strategy in organizations. Well-managed CRM systems have clear economic payoffs and offer significant possibilities for creating and sustaining ideal, highly satisfying customer relationships. On the flip side, however, poorly managed CRM can spell disaster. Given its potential and the high cost, the focus of CRM practice and research has been mostly on technology. The focus, however, has been shifting to other factors due to the high failure rate. Not many in-depth studies have been conducted to investigate the organizational and behavioral CRM factors that lead to usable and effective CRM systems that achieve the basic CRM goals of developing and maintaining good relationships with customers. This study attempts to answer such questions by examining CRM in multiple, multidisciplinary ways: businesses' and the customers' perspectives, and employing Marketing and MIS concepts. First, this study identified critical factors for successful CRM for a business including CRM Fit, Market Orientation, and Market Knowledge Competence. Because of its extensive reliance on CRM, the hotel industry was chosen as the empirical context. Based on hotel managers' responses, the relationships between these factors and CRM performance were examined. Second, based on the research model developed for the businesses, a reflected model of hotel customers' perspectives was developed and tested. As expected, not IT but well-designed CRM process was found to be critical for CRM performance in businesses. For customers, it was the maintenance stage of CRM process that mostly influenced customers' commitment/satisfaction. Market knowledge competence was found to have significant impact on CRM process. Interestingly, it was found that the influence of CRM practice worked differently for those customers who were reward-program members of hotel chains than for nonmembers. These findings highlight the importance of well-designed CRM processes and of understanding the perspectives of customers in relationship building. The results imply that managers should be aware of the different effects of each stage of CRM and of planning appropriate strategies for members and nonmembers to generate and reinforce satisfaction and commitment.