THE IMPACT OF CUSTOMER RELATIONSHIP MANAGEMENT ON ORGANIZATION (A CASE STUDY OF DANGOTE FLOUR MILL, KANO)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Customers are considered to be the central element of all marketing actions in the contemporary business environment, and customer relationship management (CRM) has become a priority for firms marketing strategy (Karakostas et al., 2009). The approach used in managing a company's interaction with current and potential future customers is known as Customer relationship management (CRM). To improve business relationships with customers, specifically focusing on customer retention and ultimately to drive sales growth the CRM approach tries to analyze data about customers' history with a company (Afsaneh Malkami, 2016). The aspect of the CRM approach that is important is the systems of CRM that compile information from a range of different communication channels, including a company's website, telephone, email, live chat, marketing materials, social media, and more (David Sims, 2007) Through the CRM approach and the systems used to facilitate CRM, businesses learn more about their target audiences and how to best cater to their needs. However, adopting the CRM approach may also occasionally lead to favouritism within an audience of consumers, resulting in dissatisfaction among customers and defeating the purpose of CRM (Saeed Saadat Nazarian, 2016). Academics and practitioners proclaimed that a customer relation is necessary for firms to survive and be successful in contemporary business environment (Heinrich, 2009). Billions of dollars each year are being spent by business firms regardless of the size of their organization on CRM systems or applications (Ngai, 2009; Zablah et al., 2008). The CRM gained importance as popular business tools of a number of CRM projects implemented successfully in the early 1990s. However, about 70% CRM projects resulted in loss or no bottom line improvement in firm performance (Richard et al., 2007). Additionally reports from Cheng & Dogan, 2008; Richard et al., 2007; Rigby et al., 2002 and many business reports have shown disappointing results on CRM itself which is one of the reasons that CRM is being regarded as an emerging field of inquiry (Richards & Jones, 2008). To remedy the situation, this study should first determine from where the problems stems. Although the concept of organizational performance is very common in the academic literature, its meaning varies. For this reason, there isn’t a universally accepted definition of this concept. In the '50s organizational performance was defined as extent to which organizations, viewed as a social system fulfilled their objectives. Performance evaluation during this time was focused on work, people and organizational structure. Later in the 60s and 70s, organizations have begun to explore new ways to evaluate their performance so performance was defined as an organization's ability to exploit its environment for accessing and using the limited resources the years 80s and 90s were marked by the realization that the identification of organizational objectives is more complex than initially considered. CRM is not common in most organizations and the system not implemented due to several reasons such as lack of knowledge about CRM and lack of financial resources to implement CRM systems. According to Ata and Toker (2012), Sudhakar and Sudharani (2012) Chuchuen and Chanvarasuth (2011), and Ko et al. (2008) the organizations that have adopted CRM systems as a corporate strategy are expected to grow at a faster pace than those firms who are non-adopters within the same industries. Therefore, organizations need to implement CRM in order to improve business values and gain more competitive advantage on which to base business prospects for longevity (Deros et al., 2015). Secondly, it is related to the concept of CRM. The current trend in competitive market, focusing on customer is becoming a key factor of manufacturers. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make a new purchase (Payne & Frow, 2015). Customer retention in CRM is important to manufacturers based on the organization’s limited resources (Baumeister, 2002). Kalakota and Robinson (2008) argue a firm’s strategy should focus on how to find and retain the most profitable customers instead of just providing superior services. The practices of CRM are necessary to ensure delivering better customer value, retaining customer and having a good relationship with customers. However, the practices of CRM is a commonly a success in services sectors, whereas a little attention has been paid to research on CRM in manufacturing sectors (Akroush et al., 2011). Akroush, Dahiyat, Gharaibeh, & AbuLail, (2011) have proposed that the direction for future research is to replicate modified scale of CRM implementation on other industries (e.g. manufacturing sector). Sin et al., (2009) addressed the moderating effect of environmental factors (e.g. market turbulence) on the association between CRM and business performance. Therefore, to fill the gap in the literature on CRM study this takes a broader, strategy focusing on Dangote Flour Mill in Kano. This study intends to look at the practices of CRM elements as to modify and suit with the organizations context and also to examine the incorporation of the aforementioned factors. This paper attempts to address the problems of organizations as why it needs a CRM solution to be adapted in business model and information technology structure instead of having a better relationship to retain customers. Therefore, the aim of this study is to explain the impact of CRM practices to organizational performance and proposed conceptual model.

1.2 STATEMENT OF THE PROBLEM

Customer relationship management was not only associated with technology. It was combination of Human, technology and process at the same time. Organizations those think that the customer relationship management was only sale force or technological driven software leads fail to implement customer relationship management. Because they were not fully understand customer relationship management. To understand CRM and its capabilities fully was the key to business performance. Customer relationship management capabilities influence on business performance positively. Since the main goal of an organization is to satisfy the needs of customers which will lead to increased profit. This indicates that without the existence of customers business activities will be futile. Business owners often concentrate on the improvement of their products; this is one of the basic features of the production concept. Often they ignore their customer care and relationship; as a result, many of their customers move their purchasing interests to organizations who can serve them better. The problem here is that they fail to understand that customers’ value, care and concern is far above the product quality. So organizations tend to try their best as much as possible to retain their customers and even attract more. Organizations at times are faced with the problems of effectively targeting customers, developing strategy to achieve target behaviours, behaviour maintenance and segmentation of customers based on customer profile and customer life-cycle stage. Various methods and strategies have been employed by organizations in order to make sure that they will achieve the above stated. But their efforts seem futile. It is on this premise that this study wants to examine the impact of customer relationship management on organizational performance.  

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the impact of customer relationship management on organization. Other general objectives of the study are:

1. To examine the role of customer orientation on organizational performance
2. To investigate the effect of knowledge management on organizational performance
3. To examine the impact of customer relationship management on the organizational performance
4. To examine the relationship between customer relationship management and organizational performance
5. To determine the importance of technology on organizational performance
6. To examine the impact of market turbulence between CRM practices and organizational performance.

1.4 RESEARCH QUESTIONS

1. What are the roles of customer orientation on organizational performance?
2. How is the effect of knowledge management on organizational performance?
3. What is the impact of customer relationship management on the organizational performance?
4. What is the relationship between customer relationship management and organizational performance?
5. What is the importance of technology on organizational performance?
6. How is the impact of market turbulence between CRM practices and organizational performance?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: There is no significant impact of customer relationship management on the organizational performance.

H1: There is a significant impact of customer relationship management on the organizational performance.

Hypothesis 2

H0: There is no significant relationship between customer relationship management and organizational performance

H1: There is a significant relationship between customer relationship management and organizational performance

1.6 SIGNIFICANCE OF THE STUDY

This research study will be useful for consumers, producers, managers and government. This work is carried out because recent research findings show that customers still complain of ill-treatment by company attendants and those entangled in service deliveries. This means that in some organizations, the customer is not yet the king as the saying goes that “the customer is always the King”. This study intends to show the effect of customer relationship management on organizational performance so that the aims and objective of the organizations can be achieved with minimum error. This will also contribute to the general body of knowledge and form a basis for further research.

1.7    SCOPE OF THE STUDY 

The study is based on the impact of customer relationship management on organization, a case study of Dangote Flour Mill, Kano.

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Organizational Performance: Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). Specialists in many fields are concerned with organizational performance including strategic planners, operations, finance, legal, and organizational development.

Customer Loyalty: This is defined as the degree to which customers are predisposed to stay with the product or service and resist competitive offers. Having a loyal customer base translates into lower costs, higher margins and greater profits.

Customer Profiling: This is the analysis and classification of customers based on personal information such as shopping habits or behavioural patterns e.t.c. The principle behind customer profiling is to gain customer loyalty at minimal cost by designing marketing plans that appeal to a larger percentage of target customers and initiate them into taking desirable action.

Customer Centricity: This can be said to be a set of disciplines and practices that allows companies to treat different customers differently, thereby gaining strategic advantage leading to expansion of revenues and increase in profitability.

Customer Strategy: Customer strategy involves examining the existing and potential customer base and identifying which forms of segmentation are most appropriate.

Customer Segmentation: This refers to the process of dividing customers into mutually exclusive groups, presumably because customers within each group are more similar to each other than to others.

Customer Relationship Management (CRM): CRM is a strategic approach that is concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments.

Electronic Customer Relationship Management (ECRM): Electronic customer relationship management (E-CRM) is a comprehensive business and marketing strategy that integrates people, process, technology and all business activities for attracting and retaining customers over the internet and mobile phone to reduce costs and increase profitability by consolidation the principles of customer loyalty. Therefore, the results of electronic customer relationship management performance are repeat purchase, word of mouth, retention, cross buying, brand loyalty and customer satisfaction.

Customer Satisfaction: This refers to the benefits derived by a customer after using a particular products or services over a certain period of time.