Customer relationshipmanagement implementation

An investigation of a scale’s generalizabilityand its relationship with business performance

in a developing country context

Mamoun N. AkroushDepartment of Management Sciences, Talal Abu-Ghazaleh College of Business,

The German-Jordanian University, Amman, Jordan

Samer E. DahiyatDepartment of Business Management, The University of Jordan,

Amman, Jordan

Hesham S. GharaibehDepartment of Finance, Talal Abu-Ghazaleh College of Business,

The German-Jordanian University, Amman, Jordan, and

Bayan N. Abu-LailAL-Hilal Drug Store, Tareq, Jordan

Abstract

Purpose – The purpose of this paper is to examine the generalizability of the customer relationshipmanagement (CRM) scale originally developed by Sin et al. as well as to investigate the strength oflinkages between CRM implementation components and business performance in Jordan’s financialservice organizations (FSOs).

Design/methodology/approach – Using a quantitative methodology, data were collected througha survey that included FSOs that are operating in the Jordanian market. The original adopted CRMscale was administered to 12 banks and 18 insurance companies that were found to be implementingCRM. An overall number of 320 questionnaires were sent to these banks and insurance companies’ topmanagement members who were directly involved in CRM implementation and performanceassessments. Exploratory and confirmatory factor analyses were used to assess the generalizability ofthe CRM scale developed by Sin et al. Structural path model analysis was also used to test the researchhypotheses concerning the relationship between CRM implementation and business performance.

Findings – The results suggest that the CRM implementation scale originally developed by Sin et al.does generalize to a Jordanian FSOs context. The findings indicate that there is a positive andsignificant relationship between CRM implementation components and FSOs’ business performancecomprised of financial and marketing performances. CRM organization and technology-based CRMare the strongest predictors of variations in FSOs’ business performance.

Originality/value – This paper is the first systematic research project in Jordan that isdevoted toinvestigating the scale and components of CRM implementation in Jordan and in the Middle East.

Keywords Customer relationship management, CRM implementation, Financial services,Technology management, Business performance, Jordan

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1056-9219.htm

IJCOMA21,2

158

International Journal of Commerceand ManagementVol. 21 No. 2, 2011pp. 158-191q Emerald Group Publishing Limited1056-9219DOI 10.1108/10569211111144355

IntroductionDrucker (1954) long held the belief that the sole purpose of businesses is to createand keep customers. This business philosophy, as Kim et al. (2004) indicate,is operationalized today through a firm’s strategy of customer relationship management(CRM). Two main drivers behind the surge of interest in CRM are advances ininformation technology (IT) and the increasing prominence of customer orientation as afundamental business philosophy. This explains the increasing research attention,which the CRM concept has received, culminating into the development of a scale tomeasure the various dimensions of the concept by Sin et al. (2005). Businessorganizations of different sizes are still motivated to adopt CRM to create and managethe relationships with their customers more effectively. An enhanced relationship withone’s customers can ultimately lead to greater customer loyalty and retention and, also,profitability (Ngai, 2005). Furthermore, the rapid advancements in communicationstechnology have greatly transformed the way relationships between companies andtheir customers are managed (Bauer et al., 2002). Despite such an interest in thebeneficial application of CRM, there is a serious limitation inhibiting the generalizabilityof the CRM scale to other economies/settings, for example, emerging ones, due to lack ofempirical studies investigating the applicability and generalizability of the CRMimplementation scale outside the setting in which it was originally developed, which isHong Kong. Given the importance of globalization in spreading awareness of theimportance of managerial/business concepts and practices and increasing theirapplicability and generalizability, there is an important need to test the applicability andgeneralizability of the CRM scale outside Hong Kong setting so as to expand ourpractical understanding of the construct and its expected influence on businessperformance, since its generalizability to other countries, economies, and industries isproblematic and cannot be straightforwardly assumed (Sin et al., 2005); a recommendedresearch idea that is also supported by other authors seeking to expand thegeneralizability of newly developed conceptual scales (Neubert and Wu, 2006), andimpact of particular business practices on performance (Lai et al., 2007).

The majority of work related to the conceptualization and development of a CRMmeasurement scale has recently taken place within an East Asian setting; namelyHong Kong and South Korea (Kim et al., 2004; Yim et al., 2004; Sin et al., 2005).This limits our understanding of the concept in global markets. Therefore, in order toprovide evidence on the generalizability of the CRM scale, Sin et al. (2005) call forreplicative and creative studies to be conducted on a wider scale with firms fromdifferent nations/economies in order to further assess the generalizability of the CRMscale developed by them to other business environments, including the adoption of theCRM construct in other nations. They also add that it would be useful to explore thecomplexities of the relationship between CRM and alternative dimensions of businessperformance in future studies.

Based on the preceding discussion, we must ask, are the constructs and dimensionsof CRM as proposed and developed in an East Asian setting reliable and valid forbusiness firms in other cultures or nations? In addition, is the relationship betweenCRM and business performance a universal phenomenon? To fill in the existing gap inthe literature, this study examines the applicability of the CRM construct in anemerging economy/developing country context. We believe that an investigation ofCRM in countries with varying national market environments can help to test

CRMimplementation

159

the generalizability of the CRM scale and enhance our overall understanding of theconcept of CRM. Our study comes as a contribution in this regard, particularly from anemerging market context and, thus, is classified as a study that aims to provideempirical validation of what constitutes CRM from an emerging market perspective.This becomes important especially in light of Sin et al.’s (2005) assertion that it is nolonger sufficient to advise practitioners or researchers that the key to successfulmarketing is through CRM, without providing information on what dimensionsactually constitute relationships upon which CRM can be considered to exist. Suchempirical validation is needed to provide sufficient advice as to how the CRM conceptcan be properly translated into a comprehensive set of concrete organizationalactivities conducive to CRM success (Zablah et al., 2004).

Given the diversity of today’s organizations and the increasingly global competitiveenvironment, conceptual measures such as those of CRM should be evaluated in culturesoutside the settings, in which they were originally developed, given the differences innational market conditions, such as cultural values, the pace of economic development,among others. This becomes especially important when we take into account theacknowledgement expressed by Kim et al. (2004), in that we know little about theeffectiveness of CRM and how CRM benefits customers, which makes the effectivenessof CRM as a marketing tool not well understood. Consequently, from an internationalmarketing perspective, one of the challenges facing the academic marketing research(Deshpande, 1999; Day and Montgomery, 1999; Varadarajan and Jayachandran, 1999;Akroush, 2006; Jain, 2007) is that the generalizability of the marketing models, scales,theories and concepts needs to be validated within different business cultures andcountries. Moreover, the extent to which strategy-performance relationships observedin a particular business context, such the Hong Kong one in the case of the CRM scale,are generalizable in the larger international context, and/or in other market contexts,remains under researched. Based on these calls, there is a need to conduct business aswell as marketing research projects in economic environments in developing countriesin order to examine the generalizability and validity of such concepts internationally.We respond to these calls by testing for the first time, the generalizibility of the CRMimplementation scale, which was originally developed by Sin et al. (2005), and itsrelationship with business performance in Jordan’s financial services industry.

Finally, as the implementation of CRM is widespread (Peppard, 2000) and moreadvanced (Ryals and Payne, 2001) in the financial services industry than in otherindustries, the findings of this study can provide some valuable and enlighteninginsights to organizations in other sectors. The financial services industry is in the middleof a structural change. Increasing competition and customer demands in the Jordanianfinancial services industry require that financial services companies operating in suchan industry focus on core competencies in order to deliver better value to theircustomers. On the other hand, many customers demand a complete range of financialproducts in order to satisfy their financial needs (Geib et al., 2006). The financial servicesindustry in Jordan is not alien to such changes, since it has gone through a lengthyprocess of modernization, regulation, and privatization over the past 15 years, whichhas opened it up to foreign and international competition and, thus, integrated itwith international financial services markets and industries. This has contributedto transforming Jordan and its economy into a promising regional services center inthe Middle East. For example, over the past four years, four international banks

IJCOMA21,2

160

entered the Jordanian market, and three insurance companies were also established inJordan that operate both in the Jordanian as well as regional/international markets.Consequently, taking Jordan as an example provides an interesting warranted caseagainst which the generalizability of the CRM implementation construct and its assumedrelationship with business performance can be tested, since this takes into accountdifferences in the economic profile between developed and emerging markets.Accordingly, this study provides international financial service organizations (FSOs)significant research and insights on the required scale, components and items of CRMimplementation from the Jordanian managers’ perspectives and may be a good indicatorof the required CRM implementation requirements in neighboring countries in theMiddle East. Consequently, differences in the economic profile between developedand emerging markets, taking Jordan as an example, provide an interesting warrantedcase against which the generalizability of the CRM implementation constructand its assumed relationship with business performance can be tested. Based on thisdiscussion and CRM literature review, this research is designed to achieve the followingobjectives:

(1) to test the generalizability of the CRM implementation scale, which wasoriginally developed by Sin et al. (2005), in FSOs operating in Jordan;

(2) to reveal the CRM implementation components in FSOs operating in Jordan;

(3) to investigate the relationship between the CRM implementation componentsand FSOs performance operating in Jordan; and

(4) to examine the most influential CRM implementation components on FSOsperformance operating in Jordan.

Literature reviewPhilosophical foundations of CRMThe philosophical rationale behind the importance of and the need for CRM lies in theimportance of cooperative and collaborative relationships between buyers and sellers.As Yim et al. (2004, p. 263) have stated, “underpinning the paradigm of CRM is thebasic belief that customer relationships, like other important assets in an organization,can be effectively developed and managed.” The result of this has been arguedin the CRM literature to have favorable effects on business performance andenhancing profitability (Gruen et al., 2000; Crosby and Johnson, 2001; Zikmund et al.,2003; Kennedy, 2004; Rigby and Ledingham, 2004). CRM’s emphasis on nurturingconstructive and beneficial relationships between an organization and its affluentcustomers explains the argument in the literature that considers CRM to have its rootsin relationship marketing and to share its principles, hence the reason why the termsCRM and relationship marketing are used almost interchangeably in the marketingliterature (Sheth, 2000; Parvatiyar and Sheth, 2001; Payne and Frow, 2006). Sin et al.(2005) indicate that the core theme of CRM and relationship marketing perspectivesrevolves around their focus on individual buyer-seller relationships; that theserelationships are longitudinal in nature; and that both parties benefit in the relationshipestablished. Thus, both concepts (CRM and relationship marketing) have come torepresent a business philosophy that puts the buyer-seller relationship at the center ofthe firm’s strategic or operational thinking. As for the emergence of these two-relatedconcepts, relationship marketing was introduced as early as 1983, when Berry (1983)

CRMimplementation

161

launched the term “relationship marketing,” which he defined as attracting,maintaining, and enhancing customer relationships. The emergence of relationshipmarketing, as indicated by Peppers and Rogers (1993) and Payne and Frow (2006),signaled a paradigmatic shift from mass marketing to individualized or “one-to-one”marketing, where the customer and supplier engage in a mutually beneficialco-production process.

However, the focus of CRM is primarily on key customers (Christopher et al., 1991;Gummesson, 1999; Ryals and Payne, 2001). CRM’s focus on dealing with selected keycustomers is echoed in the CRM literature to the extent that it has come to characterizethe concept and has been reflected in its purpose, as Payne and Frow (2006, p. 136)state: “the purpose of CRM is to efficiently and effectively increase the acquisition andretention of profitable customers by selectively initiating, building, and maintainingappropriate relationships with them.” Despite the pioneering role of relationshipmarketing in advocating the relationship-oriented approaches to marketing, as Payneand Frow (2006) indicate, however, they point out that relationship marketing has notdeveloped as a well-identified and integrated body of research. This paved the way forthe emergence of CRM as the culmination of integrating both: popular modernmarketing ideas based on relationship-oriented approaches, and newly availableinformation technologies (Langerak and Verhoef, 2003; Yim et al., 2004; Boulding et al.,2005). Although CRM has become widely recognized as an important businessapproach, there is no universally accepted definition of CRM (Rigby et al., 2002;Yim et al., 2004; Zablah et al., 2004; Sin et al., 2005). As such, there is still much debateover exactly what constitutes CRM. In this context, Sin et al. (2005) explain that theCRM literature lacks a theoretical, integrative framework to delineate how the CRMconcept can be properly translated into a comprehensive set of concrete organizationalactivities conducive to CRM success. That is why a number of prominent authors inthis area have called for providing theoretical assistance (Gummesson, 2002), as well asprompt conceptual and measurement attention (Fournier et al., 1998; Yim et al., 2004;Sin et al., 2005) to CRM as an emerging discipline. Otherwise, the results would be poorunderstanding, as well as incorrect conceptualization and measurement, whichconsequently lead to improper application and eventually to abandonment and deathof the concept.

Many definitions of CRM have been emerging, with each successive definitionsupplementing the previous ones and adding more focus to the concept and delineationof its underlying principles and dimensions. An early focus in CRM definitionsappeared towards IT and its role in gathering and analyzing information aboutcustomers in order to identify their needs. These emphasized the contribution ofdatabase management in this regard (Krauss, 2002; Zikmund et al., 2003). However,such definitions were often accused of being too narrow and tactical in their approachto CRM (Payne and Frow, 2005), which often did not yield the expected results in termsof substantially higher customer retention rates (Thomas et al., 2004). Other narrowlybased conceptualizations of CRM included viewing it in terms of marketing initiatives,such as call centers, loyalty programs, web sites, or personalized e-mails (Kim et al.,2004; Yim et al., 2004). Broader perspectives began to emerge in a number of definitionsthat started to focus on considering CRM as an organization-wide effort that centeredon building and maintaining profitable customer relationships by identifying andsatisfying customer needs and expectations. For example, Kotler and Armstrong

IJCOMA21,2

162

(2004, p. 16) defined CRM as “the overall process of building and maintainingprofitable customer relationships by delivering superior customer value andsatisfaction.” Earlier, Swift (2001, p. 12) emphasized the role of communicationsbetween an organization and its customers in the context of how an organization canidentify the needs and expectations of its customers, when he defined CRM as an“enterprise approach to understanding and influencing customer behaviour throughmeaningful communications in order to improve customer acquisition, customerretention, customer loyalty, and customer profitability.” On their part, Parvatiyar andSheth (2001, p. 5) defined CRM as “a comprehensive strategy and process of acquiring,retaining, and partnering with selective customers to create superior value for thecompany and the customer.” They explain that the effective implementation of CRMrequires a cross-functional integration of marketing, sales, customer service, andsupply-chain to enhance value delivered to customers. In light of these definitions,Boulding et al. (2005) indicate that the field of CRM seems to be converging on acommon definition, which considers CRM as a strategy that is centered on managingthe acquisition of customer knowledge and the intelligent use of this knowledge todevelop appropriate long-term relationships with specific customers. This emergingconceptualization and understanding of the concept of CRM is in line with the so-called“customer-centric” perspective of CRM coined by Payne and Frow (2005), which is oneof three perspectives under which they categorize 12 definitions and descriptions ofCRM. The other two perspectives are viewing CRM “narrowly and tactically as aparticular technology solution,” and perceiving it as a “wide-ranging technology,”,respectively. It is the “customer-centric” perspective, Payne and Frow (2005) proposethat should inform the approach followed in implementing CRM, since viewing CRMfrom a limited technology perspective can contribute to the failure of a CRM project(Kale, 2004; Payne and Frow, 2005). This concern is also voiced by Yim et al. (2004),who warn against solely approaching CRM from a technological perspective and,as a result, urge managers to think beyond the technological components of CRM.Enhancing relationships with customers leading to better customer loyalty andretention, as well as sales growth, can only be achieved and sustained over the mediumand long-run by thinking of CRM from a more comprehensive perspective that isdriven by a business philosophy that focuses on the needs and requirements of thecustomers. As a result, a more mature conceptualization of CRM has been reflectedin various definitions of the concept that appeared in the literature, which, according toNgai (2005), emphasize the importance of viewing CRM as a comprehensive set ofstrategies for managing those relationships with customers that relate to the overallprocess of marketing, sales, service, and support within the organization. Moreover,IT and information systems (IS) can be used to support and integrate the CRM processto satisfy the needs of the customer.

Thus, it can be argued that CRM represents a more mature and systematic approachto managing the relationship between the organization and its customers, whichtranslates into a process whose stages or steps are reflected in Sin et al.’s (2005, p. 1266)definition of the concept as “a comprehensive strategy and process that enablesan organization to identify, acquire, retain, and nurture profitable customers bybuilding and maintaining long-term relationships with them.” The above definition ofCRM put forward by Sin et al. (2005) integrates and synthesizes the work andcontributions of a number of prominent authors on relationship marketing

CRMimplementation

163

(Berry, 1983; Harker, 1999; Gummesson, 2002) and CRM (Jackson, 1985; Payne, 2000;Kotler and Armstrong, 2004). It also builds on the contributions of Ryals and Payne(2001), Zablah et al. (2004), and Tuominen et al. (2004), by highlighting a number ofcharacteristics that distinguish CRM from relationship marketing, which revolvearound considering CRM as more managerial in its perspective by focusing on makingconcerted efforts in building relationships with key customers, through attracting,maintaining, and enhancing customer relationships.

Components of CRMIn response to the operational problem of CRM, in that no systematic attempt has beenmade to identify the behavioral dimensions upon which CRM can be considered to exist,two main studies were undertaken with the purpose of identifying key behavioralcomponents that underpin successful CRM implementation. These two studies wereconducted by Yim et al. (2004) and Sin et al. (2005), respectively. Both studies benefitedfrom, and were subsequently built on, the notion put forward by Crosby and Johnson(2001), Fox and Stead (2001), Ryals and Knox (2001), and elaborated upon by Day (2003)as well as Kotler and Armstrong (2004), in that successful CRM implementationrequires four key areas: strategy, people, technology, and processes, and that only whenall these four works in concert can a superior customer-relating capability emerge(Yim et al., 2004; Sin et al., 2005). As a result, Yim et al. (2004) as well as Sin et al. (2005)considered CRM to be a multidimensional construct that consists of four mainbehavioral dimensions, which are: key customer focus (KCF), CRM organization(CRMO)/organizing around CRM, knowledge management (KM), and technology-basedCRM (TBCRM). Conceptualizing CRM as a construct made up of these four componentsis consistent with Kincaid’s (2003, p. 41) view of CRM as “the strategic use ofinformation, processes, technology, and people to manage the customer’s relationshipwith your company (marketing, sales, services, and support) across the whole customerlife cycle.” It is also captured in Kim et al.’s (2004, p. 634) analysis of CRM as being “basedon the premise of integrating people, processes, and technology throughout the valuechain to understand and deliver customer value better.” An analysis of the mainthemes inherent in, and the rationales informing each of these CRM components,is discussed next.

Key customer focusThe main theme in the “KCF” component of the CRM construct is adherence to theneeds of selected key customers, through providing personalized/customized productsand/or services that meet such needs and expectations (Sheth et al., 2000; Ryals andKnox, 2001). An important condition that can enable the organization to be trulycustomer-focused is to adopt a cross-functional approach in the way in which itdelivers value to its customers, as Payne and Frow (2006) propose. Under such anapproach, cross-functional processes and capabilities represent a key means of linkingthe organization to its customers, instead of relying on scattered uncoordinatedindividual contributions from organizational functions, as argued by Webster (2002).These processes should be guided and driven by key performance objectives based oncustomer needs, as suggested by Ostroff and Smith (1992). In this way, the CRMOand its design is basically informed by a “KCF” philosophy, which streamlines thefunctioning of the organization into a value-adding whole.

IJCOMA21,2

164

CRM organizationThe identification of the aforementioned four dimensions of CRM came as a result ofsynthesizing relevant marketing, management, and IT literature. The managementliterature contribution highlighted the importance of laying down the necessarymanagerial and organizational infrastructural elements required to support the CRMeffort, through particular design choices. The aim here is to internalize the values thatfoster and facilitate orientation towards customers and fulfillment of their needs withinthe structure and culture of the organization. This can be achieved in a number of ways.For example, a team-based structure can be designed wherein a high-level ofcoordination and integration exists among all the different parts of the organization, withthe purpose of enhancing the value-created and added to customers. Such a structurewould include cross-functional teams, process teams, and customer-focused teams(Brown, 2000; Sheth et al., 2000; Ryals and Knox, 2001; Sheth and Sisodia, 2002). Also, acritical aspect pertaining to CRMO is an organization-wide commitment to allocate andexpend the necessary time, support, and resources required to identify and satisfy keycustomer needs (Nykamp, 2001; Ahmed and Rafiq, 2003, Yim et al., 2004; Sin et al., 2005).Furthermore, clear business goals that reflect a customer-centric orientation shouldbe established, and efforts should be made to ensure that the employees possessessential skills and capabilities pertaining to how effective relationships with customerscan be built and maintained, through designing effective training programs(Sin et al., 2005).

Knowledge managementKnowledge creation and knowledge utilization are the two main behavioral dimensionsthat often describe the basic functions of KM under a knowledge-based view of the firm(Grant, 1996; Zahra and George, 2002). Such functions are strongly related to CRM, sinceit is built on acquiring and analyzing information obtained from customers, andtransforming that information into useful knowledge that can be exploited in ways thatenhance business performance (Peppard, 2000; Sheth, 2000; Parvatiyar and Sheth, 2001;Yim et al., 2004; Sin et al., 2005; Payne and Frow, 2006). These KM functions are reflectedin basic CRM activities that include: capturing customer information about their needsand preferences both directly and indirectly; developing sound mechanisms for sharingcustomer knowledge to facilitate concerted actions by different departments; and actingon the knowledge generated and disseminated (Sin et al., 2005). These activitiescorrespond to knowledge learning and generation (Stefanou et al., 2003; Sin et al., 2005),knowledge dissemination and sharing (Schulz, 2001, Sin et al., 2005), and knowledgeresponsiveness (Kohli and Jaworski, 1990, Sin et al., 2005), respectively. All of this canenable organizational members to deliver an informed service to customers that isprompt, responsive, and based on well-utilized customer-specific knowledge (Kohli andJaworski, 1990; Zahay and Griffin, 2004).

Technology-based CRMIT and IS play an important role in the development of CRM (Ling and Yen, 2001;Kincaid, 2003). They represent an enabling and facilitating role in providing aninfrastructural basis, which supports the CRM effort inside the organization,by managing the data required to understand customers, as indicated by Ngai (2005).This supportive role of IT includes maintaining a database as well as an accompanying

CRMimplementation

165

hardware and software capability that can well enable the organization to serve itscustomers in an effective manner. The advances in IT provide organizations with theability to collect, store, analyze, and share customer information in ways that greatlyenhance their ability to respond to the needs of individual customers and thus to attractand retain customers (Butler, 2000). Payne and Frow (2006) point out to the increasingimportance of the role of IT in enabling organizations to manage one-to-onerelationships with potentially huge numbers of customers, and in assisting with thedevelopment of improved customer relationships. They call attention to the fact thatorganizations today have at their disposal a range of database, data warehouse, anddata mining technologies, as well as a growing number of so-called CRM applications,which make it possible to gather vast amounts of customer data and to analyze,interpret, and utilize such data constructively. Such a leveraging effect of IT isexemplified in the ability of CRM applications to provide decision makers with analyzeddata on customer patterns, develop prediction models, and efficiently customize anddeliver value offerings to individual customers (Peppard, 2000; Vrechopoulos, 2004;Yim et al., 2004). The end result would be better customer acquisition and increasedcustomer retention rates, which enhance business performance.

Research model and hypotheses developmentThis section discusses the general hypothesized relationship between CRMcomponents and business performance, from which the hypothesized relationshipbetween CRM components and business performance emerge. Figure 1 shows thehypothesized relationships between CRM implementation and business performance.

CRM implementation and financial performanceAs Osarenkhoe and Bennani (2007) explain, CRM aims to lower costs by keepingcustomers rather than acquiring new ones. This has resulted in the currency of anumber of terms such as customer retention, loyalty, and defection, which led to theemergence of economic arguments like customer profitability and lifetime value ofcustomers. Hence, firms have sought to improve their financial performance (FP) byincreasing their customer retention rate (Parvatiyar and Sheth, 2000; Bodenberg, 2001).This has led to the emergence of CRM as a management concept that has the potentialto positively impact the cost-revenue ratio by aligning the company with its customersand focusing its resources on high-value customers, as indicated by Geib et al. (2006).

Figure 1.The proposed researchmodel: CRMimplementation andbusiness performance

Independent variables Dependent variable

CRM organization

Knowledgemanagement

Technology-basedCRM

Key customersfocus

Businessperformance

IJCOMA21,2

166

Effective business performance is achieved by improving the customer relationship bymeeting diverse customer needs and increasing their involvement and participation inthe marketing process (Sheth and Parvatiyar, 1995; Bhattacharya and Bolton, 2000;Kim et al., 2004). This leads to enhancing business outcomes such as sales, profitability,and repeat purchases (Christy et al., 1996). Hence, we can hypothesize that:

H1. There is a positive and significant relationship between the CRMimplementation components (KCF, CRMO, KM, and TBCRM) and FSOs’ FP.

CRM implementation and marketing performanceStrong evidence indicated by CRM literature shows that organizations that successfullyimplement CRM receive CRM benefits. Consumers who develop a strong relationshipwith a firm and its offerings display a stronger sense of loyalty and intention to stay inthe mutually beneficial relationship (Reichheld and Sasser, 1990; Smith and Barclay,1997; Bolton, 1998; Wulf et al., 2001; Kim et al., 2004). They also continue to purchase thesame products or services and other related and/or more expensive offerings(Reichheld, 1996; Henning-Thurau and Klee, 1997). Improved customer retention andloyalty also reduces marketing expenses (Reichheld, 1993; Sheth and Parvatiyar, 1995;Christy et al., 1996) because it costs less to serve loyal customers (Reichheld and Sasser,1990; Reichheld, 1996). Hence, we can hypothesize that:

H2. There is a positive and significant relationship between the CRMimplementation components (KCF, CRMO, KM, and TBCRM) and FSOs’marketing performance (MP).

Constructs measurementsScales used to measure the research constructs were drawn from available literature onCRM implementation, and business performance. Appendix 1 shows the researchconstructs measurement and items. The CRM implementation components werecompletely adopted from the original developers of the scale, Sin et al. (2005), whofound that CRM implementation is a multidimensional construct consisting offour broad behavioral components: KCF, CRMO, KM, and TBCRM (Figure 1). Businessperformance measurement is a complex, multidimensional, and controversialphenomenon (Dess and Robinson, 1984; Venkatraman and Ramanujam, 1986;Venkatraman, 1990; Doyle, 1995; Clark, 1999). Operationalizing business performanceis very problematic and complicated because of the existence of multiple organizationalmeasures that have been presented by business strategy researchers (Ambler andKokkinaki, 1997; Clark, 1999; Ambler and Riley, 2000). In our study, and consistent withprevious literature (Sin et al., 2005), FSOs performance was assessed on the basis ofmanagers’ subjective evaluation for four reasons. First, it is argued that businessperformance can be assessed by using management self-report assessment (subjectiveassessment), which has been proved to be equivalent to those of quantitative assessment(objective assessment). The accuracy of objective measures in explaining differences inperformance between businesses is limited. Executives’ perceptions of performance,however, have been shown to exhibit high levels of consistency with objective measures.Second, research findings suggest that informant measures manifest less methodvariance than archival or historical figures, subjective assessments are stronglycorrelated to objective assessments of performance (Venkatraman, 1990).

CRMimplementation

167

Third, the literature advocated that the subjective approach is a reliable and validmethod of measuring performance (Doyle and Wong, 1998). Fourth, the financial data ishighly classified and confidential for FSOs in Jordan. The researchers made attempts toobtain FSOs financial data but the managers of FSOs were extremely reluctant toprovide hard data.

Many researchers argue that business performance measurement should go beyondthose of financial measures towards using marketing-based measures, for example,customer satisfaction and customer loyalty (Venkatraman and Ramanujam, 1986;Walker and Ruekert, 1987; Day and Wensley, 1988; Venkatraman, 1990; Doyle, 1995;Ambler and Kokkinaki, 1997). In our research, the business performance construct isoperationalized using multiple items rather than using single items in order to capturethe richness of this construct (Churchill, 1979). Since there has been no agreed set ofspecific criteria for measuring business performance, a researcher can use a specific setof criteria according to the research objectives, questions, and the marketing context inwhich the research is being conducted (Venkatraman and Ramanujam, 1986; Doyle,1995; Ambler and Kokkinaki, 1997). Consequently, Clark (1999) and Ambler and Riley(2000), independently, recommend researchers use standard business performancemeasures rather than inventing new measures for each study. Business performance isdefined as a multidimensional construct including financial and marketing-basedmeasures (Doyle, 1995; Vorhies and Morgan, 2005). The financial measures are vital toreveal the ability of an organization’s ability to utilize its resources effectively andefficiently to achieve predetermined objectives. The marketing-based measuresindicate the effectiveness of the organization in delivering value to its customers andstrengthening relationships with customers (Dess and Robinson, 1984; Venkatraman,1990). The dimensions of performance were operationalized using financial andmarketing-based measures as follows:

. the financial measures are sales volume, profitability, return on investment, andmarket share (Dess and Robinson, 1984; Sin et al., 2005); and

. the marketing-based measures are customer relational quality, trust, loyalty andreducing marketing costs (Day and Wensley, 1988; Sin et al., 2005).

To measure business performance, each manager (respondent) was asked to assesshis/her organization’s current performance in the Jordanian market relative to itsmajor/close competitors with respect to four items of FP and four items of MP(Appendix 1). The managers’ responses were made on a five-point Likert scale rangingfrom “better than” to “worse than” major/close competitors.

Research methodologyResearch population and sampleOur research population is the banks and insurance companies that are operating in theJordanian market and are registered in the Central Bank of Jordan and Jordan’s InsuranceFederation in 2008, respectively. There are 23 banks operating in the Jordanian market in2008 (Central Banks of Jordan, 2008). There are 29 insurance companies operating in theJordanian market in 2008 (Jordan Insurance Federation, 2008). Three banks and threeinsurance companies were not included in the research population since they were newlyestablished (less than three years in the market) and were not able to assess the impactof CRM implementation on performance. Therefore, the research population consisted

IJCOMA21,2

168

of 20 banks and 26 insurance companies. All the banks and insurance companies werecalled and invited to participate in our research survey. Since all the banks and insurancecompanies’ headquarters are located in Amman, all of them were invited to participate inthe survey. Consequently, 12 banks and 18 insurance companies agreed to be part of oursurvey. The researchers’ contacts with the banks and insurance companies that did notagree to participate in the surveys revealed that they are not implementing CRM or theyare in the process of internal restructuring to implement CRM. Further, they aresmall in size and operations in the Jordanian market. However, our examination on theparticipated banks and insurance companies found that they are all of big and mediumsizes in terms of invested capital and financial operations in the Jordanian market.Therefore, 60 percent of banks and 69.2 percent of insurance companies participated inour survey. Since the Jordanian economy has almost been liberalized and the Governmentof Jordan believes that the private sector takes the lead in the development process of theJordanian economy, all the banks and insurance companies in Jordan are privately heldand owned by the private sector.

Our research sample included marketing, sales, IT, CRM, quality managers, andother top management members who were directly involved in CRM implementationprocesses and activities and, performance assessment in banks and insurancecompanies. This is consistent with previous empirical studies that have been conductedin this research area (Yim et al., 2004; Plakoyiannaki, 2005; Reid and Catterall, 2005;Osarenkhoe and Bennani, 2007). This is also supported by the fact that the CRMimplementation requires an interdepartmental approach rather than a CRM departmentapproach (Payne and Frow, 2006; Osarenkhoe and Bennani, 2007). The essence of aninterdepartmental approach relies on the fact that CRM implementation requirescross-functional integration with and among other departments and units in modernorganizations. Therefore, multiple respondents from each bank and insurance companyheadquarters were included in the sample since they have a crucial effect on CRMimplementation, and the unit of analysis in this study was “the manager” rather than“theorganization.” This is consistent with CRM implementation literature that focused onunderstanding CRM implementation and its contribution to business performance frommanagers’ perspectives primarily. This study is designed to investigate if the CRMimplementation scale developed by Sin et al. (2005) is generalizable in Jordan’s FSOs, andto examine the effect of CRM implementation on FSOs performance from “managers”perspectives rather than an “organizational” perspective. This is supported by workdone in an early stage of this research where discussions with CRM and other managersin leading banks and insurance companies showed that several managers from eachorganization would provide concise and insightful information related to CRMimplementation and performance. The rationale behind this finding, and as is argued inthis research, is that choosing one manager or only CRM managers from each bankor insurance company would increase bias and exaggerate the effect of CRMimplementation on performance. Those managers were chosen to participate in thestudy since they were able to provide sufficient data related to CRM implementationand performance.

Research instrument and data collectionOur research instrument was developed based on relevant literature review of CRMimplementation and business performance which provided rich empirical material

CRMimplementation

169

to develop our CRM and performance questionnaire. The CRM implementationscale constructs, items and measurement, which is originally developed by Sin et al.(2005), is completely adopted in our research since it is valid, reliable, and is oneof the recommended areas of future research (Sin et al., 2005). Business performanceconstructs measurement was also developed based on recognized literature ofperformance. A small section was also included in our questionnaire to study oursample’s characteristics. The research instrument was piloted using personal interviewswith key CRM and other managers in FSOs to reveal ability of managers to understand itand to test its appropriateness for the research purposes. This pilot study was insightfulfor testing our instrument which led to making very minor alterations. The instrumentwas personally delivered to all the participated banks and insurance companies’headquarters where the research objectives were explained to the contacted managers.Several in-depth interviews were carried out with CRM and other managers on leadingFSOs in Jordan to get insights related to the research instrument and sampling designstrategy. The primary data collection process was carried out using a highly structuredquestionnaire that was adapted from the current CRM implementation and performanceliteratures to achieve the research purposes. The research items were measured onfive-point Likert-type scales ranging from 5 (strongly agree) to 1 (strongly disagree). Ourresearch respondents were reminded three times; via personal contacts, telephone callsand e-mail, respectively. We contacted banks and insurance companies through keycontacts that were established with them to administer our questionnaire. Thesecontacts enabled the researchers to examine banks and insurance companies’ structureto identify suitable CRM managers and other managers who participated in our survey.Jordan’s Banks Society and Insurance Federation cooperated with the researchers tofacilitate contacts with banks and insurance companies through providing cover lettersasking them to cooperate with the researchers during the process of administeringthe survey. We delivered 320 questionnaires to banks and insurance companiesfrom which 291 were returned; the response rate was 90.9 percent. The valid anduseable questionnaires for data analysis were 285; 97.9 percent from the returnedquestionnaires.

Sample characteristicsTable I exhibits the research sample characteristics. As shown in Table I, 85.2 percentof FSOs managers are aged between 30 and 49, and 84.2 percent of them hold bachelorand graduate degrees. This would assist FSOs in implementing CRM initiatives tohave successful transactions with the Jordanian customers who also fall within similarage and educational level categories. As shown in Table I, 84.9 percent of FSOsmanagers have obtained business education backgrounds. This indicates that FSOsfocus on hiring business education managers who are, in general, business andcustomer-oriented. This would assist FSOs in developing and implementing successfulCRM strategies since their managers are young, well educated, and motivated tomake CRM successfully. Also, Table I shows that the majority of FSOs managers,76.1 percent have experience that ranges from five to 14 years. This indicates thatFSOs managers are well experienced in their business industry and would be of greathelp to implement CRM initiatives successfully. This holds a strategic implicationthat indicates that the FSOs have experienced managers to develop and implementCRM strategies.

IJCOMA21,2

170

Constructs validityThe validity of the research instrument was assessed through face validity, contentvalidity and construct validity. The face validity was achieved through the pilot workof our research instrument with CRM and other managers in leading FSOs, as well astwo academics from reputable business schools in Jordan who checked the relevanceand appropriateness of our instrument to achieve our research objectives providingevidence of face validity. The fundamental issue in content validity lies in theprocedures that are used to develop the research instrument (Churchill, 2001) that are:

. conducting a thorough examination on the previous empirical and theoreticalwork of CRM implementation and performance, upon which the operationaldefinition for each variable was conducted, using multiple items to capture all itsattributes; and

. conducting the pilot study before starting the fieldwork.

With regard to construct validity, as recommended by Hair et al. (1998), exploratoryfactor analysis (EFA) and confirmatory factor analysis (CFA) are used to assessconstruct validity. Thus, EFA was performed to test the CRM scale components andbusiness performance variables and to test the degree to which the items are tappingthe same concept. It has been recommended that CFA, derived from structural equationmodeling (SEM), is a more rigorous test of unidimensionality (Garver and Mentzer,1999, p. 40). Thus, CFA was also utilized to confirm or refine the unidimensionality

Frequency Percentage

Managers’ age,30 24 8.430-39 178 62.440-49 65 22.850-59 13 4.6More than 60 5 1.8Educational levelDiploma (college) degree 45 15.8Bachelor degree 201 70.5Master degree 37 13.0PhD degree 2 0.07Educational backgroundBusiness administration 43 15.1Marketing 37 13.0Economics 49 17.2Accounting 47 16.5Finance 66 23.5Others (e.g. IT and quality) 43 15.1Years of experience in business,5 years 20 75-9 64 22.410-14 153 53.715-20 41 14.4More than 20 7 2.5Total 285 100

Table I.Research sample

characteristics

CRMimplementation

171

of measurements that resulted from the EFA. To assess the EFA, four commonly usedassumptions were followed (Hair et al., 1998; Field, 2000): sampling adequacy(Kaiser-Meyer-Olkin measure .0.5); the minimum eigen-value for each factor to beone; considering the sample size, factor loading of 0.40 for each item was considered asthe threshold for retaining items to ensure greater confidence; and varimax rotationwas used since it is a good general approach that simplifies the interpretations offactors (Field, 2000, p. 449). Statistical Package for Social Sciences shows whichvariables “clump together.” To assess the CFA, goodness of measurement model fitusing SEM were followed (Chau, 1997, p. 318): x2 ( p $ 0.05); goodness-of-fit index(GFI $ 0.90); adjusted goodness-of-fit index (AGFI $ 0.80); normed fit index (NFI $0.90); non-normed fit index (NNFI $ 0.90); comparative fit index (CFI $ 0.90); and rootmean square error of approximation (RMSEA , 0.10). Factor loadings are thecorrelations of the variables with the factor, the weighted combination of variables,which best explains the variance. Higher values (e.g. more than 0.40) making thevariable representative of the factor (Hair et al., 1998, p. 106).

Table II shows the results of EFA for the CRM scale components. An index ofKaiser’s measure of sampling adequacy (overall MSA ¼ 0.844) and Bartlett’s test ofSphericity ( p # 0.00) suggested that factor analysis is appropriate for analyzing ourdata. Based on the eigen-value .1, the four factor model explains 65.05 percent of thetotal variance. As shown in Table II, results of EFA indicate that the 18 items of theCRM implementation scale loaded on four factors which are similar to the same CRMimplementation components developed by Sin et al. (2005). The EFA results providegeneral support for Sin et al.’s (2005) CRM implementation scale. After examining thepattern matrix of the EFA, all items had loadings .0.4 and communalities .0.5.However, the EFA results indicate that two items were deleted due to weakfactor loading. The first item is from KCF component, coded as KCF4, and the seconditem is from CRMO, coded as CRMO5. Examining the deleted items revealed that thedeletion of KCF4 is reasonable since FSOs need a higher level of interdepartmentalcoordination and integration in modifying their products to respond to customers’needs. The deletion of CRMO5 is also realistic since FSOs employees’ performancemeasurement and reward systems are still dominated by FP (e.g. sales) rather thanmeeting customers’ needs. One item of the KM component, coded as KM1, loaded onthe KCF component. KM1 is loaded on KCF since it is related to customer focus andusing its knowledge as one of the focal points of CRM implementation in FSOs.

To confirm and validate the findings that emerged from using EFA, the four CRMimplementation components were evaluated by CFA using EQS 6.1 software. Figure 2shows the measurements models of CRM implementation components and a summaryof the model goodness-of-fit. As shown in Figure 2, measures of goodness-of-fit weremet. It should be noted from Figure 2 that there were non-significant loadings; this isdue to the measurement model identification (Dunn et al., 1994, pp. 23-4). As shown inFigure 2, the results emerged from CFA support the findings that emerged from EFAand all items loadings well exceeded the cut-off point value 0.40. However, Figure 2shows that only one item deleted during CFA from TBCRM, coded as TBCRM5, due toweak factor loading. The deletion of TBCRM5 item seems to be reasonable sinceindividual customer information may not be available at every point of contact in FSOsat this stage of CRM among them. As shown in Figure 2, the modified final scale ofCRM implementation consists of 15 items measuring four components in FSOs.

IJCOMA21,2

172

These findings provide general support for the original CRM implementation scale(Sin et al., 2005), which is consisted of four broad behavioral components. To furthertest the structure of the CRM implementation scale, a second-order factor CFA wascompared to a four-factor CFA model. The CFA fit indices for the second-order factor

Exploratory factor analysisresultsa

No. CRM implementation components KCF CRMO KM TBCRM

KCFKCF1 My organization provides customized products and

services to our key customers0.68

KCF2 Through ongoing dialogue, we work with individual keycustomers to customize our offering through ongoingdialogue

0.86

KCF3 My organization makes an effort to find out what our keycustomer needs

0.77

KCF4 My organization fully understands the needs of our keycustomers via knowledge leaning

0.65

CRMOCRMO1 Our organizational structure is meticulously (thoroughly)

designed around our customers0.82

CRMO2 My organization has established clear business goalsrelated to customer acquisition, development, retention,and reactivation

0.90

CRMO3 My organization has the sales and marketing expertiseand resources to succeed in CRM

0.80

CRMO4 Our employee training programs are designed to developskills for acquiring and deepening customer relationships

0.78

KMKM1 My organization provides channels to enable ongoing two-

way communication between our key customers and us0.58

KM2 My organization’s employees are willing to helpcustomers in a responsive manner, e.g. through interactionand touch points

0.59

KM3 Customers can expect prompt service from employees ofmy organization

0.67

TBCRMTBCRM1 My organization has the right software to serve our

customers0.72

TBCRM2 My organization has the right hardware to serve ourcustomers

0.75

TBCRM3 My organization has the right technical personnel toprovide technical support for the utilization of computertechnology in building customer relationship

0.77

TBCRM4 My organization maintains a comprehensive database ofour customers

0.83

Sampling adequacy (Kaiser-Meyer-Olkin measure .0.5) 0.844Eigen-value for each factor 7.291 1.689 1.401 1.347

Notes: aExploratory factor analysis results; extraction method: principal component analysis;rotation method: varimax with Kaiser normalization; rotation converged in six iterations; varimaxrotation was used since it is a good general approach that simplifies the interpretations of factors

Table II.Exploratory factor

analysis results forCRM implementation

components

CRMimplementation

173

revealed that the model provides very reasonable fit to the data (Hu and Bentler, 1999);x2 ¼ 162.74; CFI ¼ 0.94; GFI ¼ 0.96; RMSEA ¼ 0.08 (Voss et al., 2003).

Construct validity for business performance. Table III shows the results of EFA thatindicate that the eight items of the business performance loaded on only two factors.These factors are financial and marketing measures of performance. As shown inTable III, all items of the two factors well exceeded the cut-off point value 0.40.These results provide general support for the business performance literaturereview that advocated that it is a multidimensional construct. To confirm and validatethe findings that emerged from using EFA, the two factors of business performancewere evaluated by CFA using EQS 6.1 software. Figure 3 shows the measurementmodel of the business performance and a summary of the model goodness-of-fit. Asshown in Figure 3, all measures of goodness-of-fit were met. The results emerged fromCFA support the findings that emerged from EFA all items loadings well exceeded thecut-off point value 0.40, and the CFA model is fit. The results of EFA and CFA indicate

Figure 2.CRM implementationmodified scale

KCF1

KCF2

KCF4

KM1

TBCRM2

CRMO3

KCF3

KM2

KM3

TBCRM1

CRMO4

CRMO1

CRMO2

TBCRM3

TBCRM4

Key customerfocus

modified scaleKCF

CRMKnowledge

ManagementModified Scale

KM

Technology-based CRM

modified scaleTBCRM

CRMorganization

modified scaleCRMO

CRMImplementation

componentsmodified scale

0.73

*0.77

*0.91

*0.64

0.68

*0.75

*0.82

*0.87

0.78

*0.76

*0.62

0.83

*0.66

*0.88

*0.64

Model goodness of fit

χ2 122.78; p = 0.03

GFI 0.965

AGFI 0.902

NFI 0.925

CFI 0.943

NNFI 0.935

RMSEA 0.085

IJCOMA21,2

174

Exploratory factoranalysis resultsa

Business performance FP MP

FPFP1 Sales volume 0.89FP2 Profitability volume 0.91FP3 Return on investment 0.90FP4 Market share 0.70MPMP1 Customer relationship quality 0.89MP2 Company’s customers trust 0.85MP3 Customers’ loyalty 0.87MP4 Reducing the required resources in performing our

services, e.g. reducing time, cost of our servicesdelivery

0.79

Sampling adequacy (Kaiser-Meyer-Olkin measure greater than 0.5) 0.866Eigen-value for each factor 5.241 1.610

Notes: aExploratory factor analysis results; extraction method: principal component analysis;rotation method: varimax with Kaiser normalization; rotation converged in three iterations; varimaxrotation was used since it is a good general approach that simplifies the interpretations of factors

Table III.Exploratory factor

analysis results forbusiness performance

components

Figure 3.Confirmatory factoranalysis results for

business performance

FP1

FP2

FP3

FP4

Financial performance

0.89

0.87*

0.94*

0.71*

MP1

MP2

MP3

MP4

Marketing performance

0.90

0.82*

0.91*

0.75*

0.50*

Model goodness of fit

χ2 8.62; p = 0.15

GFI 0.942

AGFI 0.890

NFI 0.956

CFI 0.979

NNFI 0.955

RMSEA 0.075

CRMimplementation

175

that the CRM implementation scale encompasses four components and businessperformance is multidimensional in FSOs in Jordan. These findings provideempirical evidence from a developing business environment, Jordan, to support theCRM implementation scale and business performance literature review.The importance of the EFA and CFA findings comes from the fact that thisresearch is the first empirical work in the field of CRM, in a developing countrybusiness environment, that has investigated CRM implementation components andbusiness performance dimensions in FSOs in Jordan.

Convergent validity is examined by using the Bentler-Bonett NFI (Bentler, 1990).All of the constructs have NFI values above 0.90. Furthermore, as shown in Figure 2,indication of the measures’ convergent validity is provided by the fact that all factorloadings are significant and that the scales exhibit high levels of internal consistency(Gerbing and Anderson, 1988; Fornell and Larcker, 1981). Also, as shown in Table V,the values of composite reliability and average variance-extracted (AVE) for eachconstruct are all above the threshold suggested by Bagozzi (1980): 0.70 and 0.50,respectively. Evidence of the measures’ discriminate validity is provided based on theassessment of lower correlations between distinct constructs compared to the AVE,as shown in Tables IV and V.

Structural analysis and findingsAfter validating the research constructs, summated rating scales were formed for eachconstruct by averaging the scores on the items belonging to each construct.Reliabilities of the constructs were satisfactory (Table V). We tested our hypotheses

KCF CRMO KM TBCRM

The independent variablesKCF (M ¼ 3.56, std ¼ 0.60) 1CRMO (M ¼ 4.15, std ¼ 0.80) 0.464 * 1KM (M ¼ 4.11, std ¼ 0.67) 0.663 * 0.462 * 1TBCRM (M ¼ 3.66, std ¼ 0.72) 0.576 * 0.491 * 0.678 * 1

The dependent variables FP MPFP (M ¼ 4.17, std ¼ 0.75) 1MP (M ¼ 4.16, std ¼ 0.70) 0.50 * 1

Note: Correlation is significant at: *0.01 level

Table IV.Correlations among theindependent variables,the dependent variables

Research constructs No. of items Composite reliability AVE

CRM implementation componentsKCF 4 0.84 0.58CRMO 4 0.96 0.63KM 3 0.96 0.53TBCRM 4 0.83 0.63Business performance componentsFP 4 0.87 0.64MP 4 0.88 0.65

Table V.Composite reliability andAVE for the researchconstructs

IJCOMA21,2

176

using a structural path model with business performance comprised of financial andMP, as the dependent variables, and the four components of CRM implementation inFigure 1, as the independent variables. The analysis procedures to test the researchhypotheses required evaluating the model goodness-of-fit to check if the hypothesizedmodel is similar to the observed data. In addition, the significance of the parameterestimates was evaluated through constants, b coefficients, the calculated t-values foreach coefficient, and the coefficient of determination. One structural path model wasrun to examine the research hypotheses:

H1. There is a positive and significant relationship between the CRMimplementation components (KCF, CRMO, KM, and TBCRM) and FSOs’ FP.

Figure 4 shows the structural path model that examined the relationship between theCRM implementation components and FSOs’ business performance comprised of FPand MP. The review of the goodness-of-fit measures indicates that they well exceededthe cut-off values. The structural path findings indicate that there is a significant andpositive relationship between the CRM implementation components and FSOs’ FP.Table VI exhibits results of the structural path model of CRM implementation on FSOs’FP. In the overall model, R 2 is 0.385. Table VI shows that 38.5 percent of the variation

Dependent variables in the regression path are FP and MPDependent variable is FP Dependent variable is MP

R 2 0.385 R 2 0.286

Independent variablesb a t-value Sig. T b a t-value Sig. T

KCF 0.05 0.83 0.423 0.08 1.21 0.231CRMO 0.40 7.20 0.000 0.19 3.20 0.002KM 0.14 1.98 0.048 0.01 0.07 0.940TBCRM 0.15 2.25 0.026 0.36 4.97 0.000

Note: aStandardised coefficients

Table VI.Structural path models

results: CRMimplementation and

business performance

Figure 4.Model of the relationship

between CRMimplementation and

financial and marketingperformance

CRM organization

Knowledgemanagement

Key customers focus

Technology-basedCRM

0.15*

0.05

0.40*

0.14*

0.36*

0.08

0.19*

0.01

Marketing performance

Financial performance

Model goodness of fitChi-square

GFIAGFINFICFI

NNFIRMSEA

12.345; p = 0.190.9760.9580.9770.9790.9680.03

CRMimplementation

177

in FSOs’ FP is explained by CRM implementation components. The findings indicatethat CRMO is the strongest predictor of variations in FSOs’ FP (b is 0.40, significant at:0.000). Next, in sequence, are TBCRM (b is 0.15, significant at: 0.026), and KM (b is 0.14,significant at: 0.048). Again, KCF failed to show a significant relationship with FSOs’FP, but maintained a positive one. Consequently, the findings and results providesupport for H1:

H2. There is a positive and significant relationship between the CRMimplementation components (KCF, CRMO, KM, and TBCRM) and FSOs’ MP.

Figure 4 shows the structural path model that examined the relationship between theCRM implementation components and FSOs’ MP. The structural path findings indicatethat there is a significant and positive relationship between the CRM implementationcomponents and FSOs’ MP. Table VI exhibits results of the structural path model ofCRM implementation on FSOs’ performance. In the overall model, R 2 is 0.286. Table VIshows that 28.6 percent of the variation in FSOs’ MP is explained by CRMimplementation components. The findings indicate that TBCRM (b is 0.36, significantat: 0.000) and CRMO (b is 0.19, significant at: 0.006) are the strongest predictors ofvariations in FSOs MP. Once again, KCF and KM failed to show significantrelationships with FSOs’ MP, but maintained positive relationships. Consequently, thefindings and results provide support for H2.

Results and discussionThe results of both exploratory as well as confirmatory factor analyses provide generalempirical support for the original CRM implementation scale developed by Sin et al.(2005), which consists of four broad behavioral components, in the Jordanian context.More specifically, EFA resulted in the deletion of two items due to weak factor loading.The first item is from KCF component, and the second item is from CRMO. In addition,one item from the KM component loaded on the KCF component. Finally, one item wasdeleted during CFA from TBCRM due to weak factor loading. As shown in Appendix 1as well as Figure 2, the modified final scale of CRM implementation consists of 15 itemsmeasuring four components in FSOs, compared with 18 items measuring the same fourcomponents in the original scale developed by Sin et al. (2005). This finding suggeststhat the CRM implementation scale originally developed by Sin et al. (2005) is indeedgeneralizable to a Jordanian FSO context with slight modifications as explained above.

The CRM implementation construct was empirically tested and found to have asignificant and positive relationship with business performance comprised of financial(R 2 ¼ 0.385) and marketing (R 2 ¼ 0.286) performances. Thus, our study shares withthe CRM literature the long-held belief that CRM is a critical success factor for businessperformance (Kim et al., 2004; Yim et al., 2004; Sin et al., 2005). This perhaps can be bestexplained through the argument made by Wulf et al. (2001), in that an organization’sinvestments in developing and nurturing relationships with its customers often swaycustomers to its favor by making them feel obliged to reciprocate such a gesture bybecoming more loyal, which in turn, reflects positively on sales and profitability.Sin et al. (2005) have found that more specifically, the favorable impact of CRM on MPis larger than that on FP, especially for the financial service industry. However, ourstudy found that CRM significantly explained more of the variance in FP (R 2 ¼ 0.385),compared with MP (R 2 ¼ 0.286). In the course of emphasizing the importance

IJCOMA21,2

178

of skillful arrangement and organization of all behavioral components of CRM in orderfor superior CRM performance to be realized, Sin et al. (2005) highlight the paramountimportance of maintaining a genuine KCF to galvanize all parts of the firm to makethem work in concert in an effort designed to make the firm become indispensable tocustomers. However, our study’s findings have shown that KCF failed to show asignificant relationship with Jordanian FSOs’ performance comprised of the FP andMP. This is contradictory to the general belief in the CRM literature expressed bySin et al. (2005), in that maintaining an overwhelming customer focus on the part of themost senior levels in the organization is essential to the success of the CRM effort andits effect on a firm’s performance. This finding also differs from that of Yim et al.(2004), whose study pointed out that “focusing on key customers” significantly affectscustomer satisfaction, and indirectly affects customer retention, which are twoperformance metrics associated with the benefits of implementing CRM on theorganization.

It was also found that CRMO and TBCRM are the strongest predictors of variationsin FSOs’ performance comprised of the FP and MP. A possible interpretation of thisfinding might be lack of senior management ownership and leadership of the CRMinitiative in FSOs operating in Jordan, and solely focusing on IT-enabled CRM systemsand incorporating these systems within the overall organizational structure, withouttaking into consideration the importance of strategically aligning such IT tools andsoftware with an overall organizational CRM strategy that is driven by a philosophicalprinciple based on KCF. However, such a finding should not discredit the efforts ofJordanian FSOs in the vein of implementing CRM, since the “TBCRM” componentexemplifies the enabling and facilitating role of IT in providing an infrastructuralbasis, which supports the CRM effort inside the organization. This supportive role ofIT includes maintaining a database as well as an accompanying hardware andsoftware capability that can well enable the organization to serve its customers in aneffective manner and consequently enhance its MP in terms of customer relationshipquality, customers’ trust, loyalty, and increasing the efficiency with which theorganization’s services are performed. In this regard, Payne and Frow (2006) point outto the increasing importance of the role of IT in enabling organizations to manageone-to-one relationships with potentially huge numbers of customers, and in assistingwith the development of improved customer relationships. They call attention to thefact that organizations today have at their disposal a range of database and datawarehouse technologies, as well as a growing number of so-called CRM applications,which make it possible to gather vast amounts of customer data and to analyze,interpret, and utilize it constructively.

Such a growing importance of the role of IT in CRM is consistent with Ngai’s (2005)findings arrived at as a result of an extensive review and classification of CRMliterature, in that the majority of the articles reviewed by them on CRM (76 out of 205:37.1 percent) were related to IT and IS. This shows that IT and IS play an important rolein the development and implementation of CRM. In particular, the three most popularIT- and IS-related topics addressed in the CRM literature included “software, tools,systems,” “data mining,” and “KM.” Such a supportive role of IT includes databasecapabilities to collect and analyze customer information using statistical techniquessuch as data mining. This helps transform customer data into useful information andknowledge, which is considered to be a key organizational asset that is necessary

CRMimplementation

179

in today’s customer-centered business environment (Shaw et al., 2001; Rygielski et al.,2002). Despite this vital role of IT in supporting CRM implementation and success,viewing CRM from a limited technology perspective can contribute to the failure of aCRM project (Kale, 2004; Payne and Frow, 2005). This concern is also voiced byYim et al. (2004), who warn against solely approaching CRM from a technologicalperspective and, as a result, urge managers to think beyond the technologicalcomponents of CRM. They found in their study of CRM in service firms operating inHong Kong that “TBCRM” showed no significant effect on the performance metrics ofthese firms. Kim et al. (2004) concludes, in this regard, that “CRM is more than atechnology for managing customer information. It is a philosophy by which to guidemanagerial strategy” (Kim et al., 2004, p. 634). Moreover, Osarenkhoe and Bennani(2007, p. 139) state that “CRM is a strategic business and process issue, not merely atechnology solution as most often conceived in practice.” This highlights the point thatenhancing relationships with customers, leading to better customer loyalty andretention, as well as sales growth, can only be achieved and sustained over the mediumand long-run by thinking of CRM from a more comprehensive perspective that is drivenby a business philosophy that focuses on the needs and requirements of the customers.

On the other hand, CRMO emerged as the strongest predictor of variations in the FPof Jordanian FSOs, and the second strongest predictor of variations in the MP of theseFSOs (Table VI). Such a finding might be due to those FSOs’ belief that central to thesuccess of the CRM effort undertaken by the organization are the actions, which theorganizing function of management entails, in terms of properly allocating the requiredresources and aligning the essential capabilities necessary to transform customerrelationship-related objectives into a strong, profitable relationship with customers.Such a belief has been strongly supported by Yim et al. (2004), who found in their studythat “organizing around CRM” exerts significant direct effects on customer retention aswell as significant indirect effects on sales growth. They cite Homburg et al. (2000) in thecourse of explaining such an important role of CRMO, in that top management mustinvest resources and make concerted ongoing efforts to align all involved organizationalcomponents and resources toward a CRM orientation. Such actions undertaken under a“CRMO” effort collectively play a crucial role in achieving concrete results on theground, which translate into financial gains that appear on the organization’s financialstatements (sales volume, profitability volume, return on investment, market share).In this way, the aforementioned results suggest that only having a customer focus alonedoes not necessarily translate into concrete financial results for the organization, sincesuch an orientation or attitude remains obsolete without taking proper action tocapitalize on such an attitude and transform it into tangible results for the organization.This might also explain the insignificant relationship found to exist betweenmaintaining a KCF and business performance comprised of FP and MP of FSOs inJordan. KM, in the sense of creating an organizational learning environment that fostersacquiring and creatively using customer knowledge to support long-term relationshipsand, thereby, business performance, was not found in our study to have a significantrelationship with the MP of FSOs in Jordan.

ConclusionsThe purpose of this research was to examine the generalizability of the CRM scaleoriginally developed by Sin et al. (2005), as well as to investigate the strength of linkages

IJCOMA21,2

180

between CRM implementation components and business performance. The results of bothexploratory as well as confirmatory factor analyses provide general empirical support forthe original CRM implementation scale developed by Sin et al. (2005), which consists offour broad behavioral components, in the Jordanian context. This finding suggests thatthe CRM implementation scale originally developed by Sin et al. (2005) is indeedgeneralizable to a Jordanian FSO context with slight modifications. Moreover, the CRMimplementation construct was empirically tested and found to have a significant andpositive relationship with business performance comprised of FP and MP.

Jordanian FSOs’ CRMO and TBCRM emerged as the most influential components ofCRM impacting their performance; FP and MP. On the other hand, FSOs’ KCF and KMhad no significant influence on any aspect of those FSOs’ performance (FP and MP),except for a positive and significant relationship between KM and FP. This highlightsthe conclusion that Jordanian FSOs seem to focus more on the organizing and technicalaspects of CRM implementation, in terms of expending the necessary amount ofresources and efforts deemed vital for reaping the benefits of installing a CRM system(CRMO), and giving priority to customer information acquisition and utilization. Thisseems to take precedence over devising an overall CRM implementation strategy thatis driven by a KCF and effective management of knowledge gained from gathering andanalyzing data and information gained from customers via IS and IT. Thus, JordanianFSOs need to pay more attention to approaching CRM implementation form a moreholistic perspective. This echoes one of the findings reached earlier, in that only havinga customer focus alone does not necessarily translate into concrete financial results forthe organization, since such an orientation or attitude remains obsolete without takingproper action to capitalize on such an attitude and transform it into tangible results forthe organization. This might also explain the insignificant relationship found to existbetween maintaining a KCF and the performance (FP and MP) of FSOs in Jordan.

ImplicationsThis study can serve as an attempt to provide FSOs with practical advice as to how suchorganizations can build and sustain their competitiveness in an increasingly competitivesector such as theirs, which is marred by structural change and increasing competitionand customer demands that require financial services companies to focus on certain corecompetencies in order to deliver better value to their customers. Managers will be wellserved to understand that the CRM components are indeed generalizable to the Jordanianemerging financial services market context with very slight modifications, whichdemonstrates similarity in conceptualization and practice concerning CRMImplementation components between the Jordanian context and the original setting inwhich the CRM construct was developed (Hong Kong). Furthermore, for the first time,FSOs managers in Jordan acquired strategic insights concerning the CRMimplementation components which would help them in developing and implementingsuccessful CRM strategies. Other service industries among developing countries couldalso benefit from the study’s findings. This becomes important especially in light ofSin et al.’s (2005) assertion that it is no longer sufficient to advise practitioners orresearchers that the key to successful marketing is through CRM, without providinginformation on what dimensions actually constitute relationships upon which CRM canbe considered to exist. Such empirical validation is needed to provide a sufficient adviceas to how the CRM concept can be properly translated into a comprehensive set

CRMimplementation

181

of concrete organizational activities conducive to CRM success. In particular, CRMO(coordinating the resources and efforts required for CRM implementation) and TBCRMemerged as playing pivotal roles in enhancing the business performance of aCRM-implementing firm. From an international business and marketing perspectives,our empirical findings offered empirical insights for international organizations that areconsidering entering the Jordanian/Middle Eastern financial services market, throughproviding a deeper empirical understanding of CRM implementation components andtheir relationships with dimensions of business performance. This could reveal newbusiness opportunities (e.g. increasing customer loyalty and retention throughcross-selling) or provide clues in understanding financial service markets inneighbouring countries that share similar characteristics with those of the Jordanianmarket. From a marketing research in emerging and developing markets perspective, ourpaper is the first systematic research project in Jordan that is devoted to investigating thescale and components of CRM implementation in Jordan and in the Middle East.

Contribution to CRM knowledgeThe researchers of this paper believe it has contributed to the CRM implementationliterature in some perspectives. From a theoretical perspective, first, this study hasaddressed perceived gaps in the CRM implementation literature and responded to callsthat advocated that CRM implementation lacks empirical research and there is a need tounderstand its components and their impact on business performance especially inemerging markets. This study has tested a valid and reliable scale of CRMimplementation, which was originally developed by Sin et al. (2005), in FSOs in Jordanas an emerging market. Our major theoretical contribution is that the components of CRMimplementation scale of Sin et al. (2005) are generalizable in FSOs in Jordan with slightmodifications on the scale’s items due to some characteristics of FSOs in Jordan. Wefound that CRM implementation components are four: KCF, CRMO, KM, and TBCRM.Our study has added to the already emphasized value offered by CRM implementation fororganizations in general and its contribution for business performance in particular.Second, this is one of the very few CRM implementation studies conducted in emergingmarkets especially in the Middle East region. In Jordan, this is the first research effortdevoted to investigate CRM implementation and business performance in FSOs inJordan. Our empirical research has extended our understanding of CRM components andtheir impact on business performance which have not been addressed together inprevious empirical studies in Jordan. From a practical perspective, our research is the firstsystematic empirical project that is aimed at understating CRM implementationcomponents in FSOs in Jordan and their impact on performance. Our findings haveoffered FSOs executives and managers strategic insights in relation to CRMimplementation, CRM items and, more importantly, the most influential components ofCRM implementation on FSOs performance. CRMO, TBCRM and KM of CRMimplementation are major drivers of FSOs performance from which FSOs, CEOs andmanagers can greatly benefit while developing their CRM implementation initiatives andstrategies. These practical and strategic insights were not available to FSOs executivesand managers before conducting this research project. Finally, our empirical findingshave opened up a research avenue in CRM implementation in Jordan and perhaps in otheremerging markets to examine CRM implementation in different business environmentsand cultures.

IJCOMA21,2

182

Limitations and future researchAs with any empirical study, some limitations result from trade-off decisions in researchdesign. First, our research has addressed CRM implementation adopting a scale developedby Sin et al. (2005), who found only four components of CRM implementation. Meanwhile,CRM implementation could involve more than four components and other elements mightbe added. However, we used this scale in our study since it was claimed as a valid andreliable scale in a research area that lacked well established scales in which research anddebate is still going on. We also found that the scale of CRM implementation of Sin et al.(2005) is valid, reliable, and is generalizable in FSOs in Jordan. A potential area of futureresearch is to expand the four components of CRM implementation and investigate if othercomponents could add value to its implementation and investigate their impact onbusiness performance. Second, our study is conducted in FSOs in Jordan, which come froma single service industry, financial services. This implies that the generalizibility of thisstudy’s findings is limited to the FSOs in Jordan and cannot be applied to other marketswithout a further validation. Although the generalizability of this research is limited toFSOs in Jordan, this research is consistent with and supportive to the literature of servicesmarketing which strongly recommended conducting research projects in single serviceindustries (Knight, 1998; Appiah-Adu, 1999; Akroush, 2006) in order to develop adistinctive body of marketing literature for single service industries. A fruitful area offuture research is to replicate our modified scale of CRM implementation on otherindustries (e.g. tourism, telecommunications, and even manufacturing) in Jordan and otherdeveloping and developed countries to examine the generalizibility of our modified CRMimplementation scale. Third, this study has investigated the direct relationship betweenCRM implementation and business performance in FSOs in Jordan. A valuable area offuture research is to investigate antecedents and consequences of CRM implementationand their effect on business performance. Fourth, the major focus of this study was onCRM implementation from CRM and marketing perspectives. A valuable area of futureresearch is to examine interactions between CRM implementation and other functionalareas of business and examine how they affect performance. Finally, an empiricalinvestigation of the CRM implementation scale components and their effect on customersatisfaction and loyalty from customers perspectives could be a valuable research area inthe future especially in developing countries, e.g. Jordan and the Middle East.

References

Ahmed, P.K. and Rafiq, M. (2003), “Internal marketing issues and challenges”, European Journalof Marketing, Vol. 37 No. 9, pp. 1177-86.

Akroush, M. (2006), “The services marketing mix paradigm: is it still appropriate fortoday’s service business?”, AL-Balqa Journal for Research and Studies, Vol. 11 No. 2,pp. 49-74.

Ambler, T. and Kokkinaki, F. (1997), “Measures of marketing success”, Journal of MarketingManagement, Vol. 13, pp. 665-78.

Ambler, T. and Riley, D. (2000), Marketing Metrics: A Review of PerformanceMeasures in Use in the UK and Spain, The Marketing Science Institute, Cambridge,MA, pp. 1-30.

Appiah-Adu, K. (1999), “The impact of marketing mix decisions on performance: a study offoreign and domestic firms in a liberalized economy”, Journal of Global Marketing, Vol. 32No. 2, pp. 7-30.

CRMimplementation

183

Bagozzi, R.P. (1980), Causal Models in Marketing, Wiley, New York, NY.

Bauer, H.H., Grether, M. and Leach, M. (2002), “Building customer relations over the internet”,Industrial Marketing Management, Vol. 31 No. 2, pp. 155-63.

Bentler, P.M. (1990), “Comparative fit indices in structural models”, Psychological Bulletin,Vol. 107 No. 2, pp. 238-46.

Berry, L.L. (1983), “Relationship marketing”, in Berry, L.L., Shostack, G.L. and Upah, G. (Eds),Emerging Perspectives on Services Marketing, American Marketing Association,Chicago, IL, pp. 25-8.

Bhattacharya, C.B. and Bolton, R.N. (2000), “Relationship marketing in mass markets”,in Sheth, J. and Parvatiyar, A. (Eds), Handbook of Relationship Marketing, Sage, ThousandOaks, CA, pp. 327-54.

Bodenberg, T.M. (2001), Customer Relationship Management: New Ways of Keeping theCustomer Satisfied, The Conference Board, New York, NY.

Bolton, R.N. (1998), “A dynamic model of the duration of the customer’s relationship witha continuous service provider: the role of satisfaction”, Marketing Science, Vol. 17 No. 1,pp. 45-65.

Boulding, W., Staelin, R., Ehret, M. and Johnston, W.J. (2005), “A CRM roadmap:what we know, potential pitfalls, and where to go”, Journal of Marketing, Vol. 69 No. 4,pp. 155-67.

Brown, S.A. (2000), Customer Relationship Management: A Strategic Imperative in the World ofE-Business, Wiley, Toronto.

Butler, S. (2000), “Changing the game: CRM in the e-world”, Journal of Business Strategy, Vol. 21No. 2, pp. 13-14.

Central Bank of Jordan (2008), “The annual report”, Annual Statistical Bulletin, Vol. 44,available at: www.cbj.gov.jo

Chau, P. (1997), “Reexamining a model for evaluating information center successusing a structural equation modelling approach”, Decision Sciences, Vol. 28 No. 2,pp. 309-33.

Christopher, M.G., Payne, A. and Ballantyne, D. (1991), Relationship Marketing:Bringing Quality, Customer Service, and Marketing Together, Butterworth Heinemann,Oxford.

Christy, R., Oliver, G. and Penn, J. (1996), “Relationship marketing in consumer markets”,Journal of Marketing Management, Vol. 12 Nos 1-3, pp. 175-87.

Churchill, G. (1979), “A paradigm for developing better measures of marketing constructs”,Journal of Marketing Research, Vol. 16 No. 1, pp. 64-73.

Churchill, G. (2001), Basic Marketing Research, 4th ed., The Dryden Press, Orlando, FL.

Clark, B. (1999), “Marketing performance measures: history and interrelationships”, Journal ofMarketing Management, Vol. 15, pp. 711-32.

Crosby, L. and Johnson, S.L. (2001), “High performance marketing in the CRM era”, MarketingManagement, Vol. 10 No. 3, pp. 10-11.

Day, G. (2003), “Creating a superior customer-relating capability”, MIT Sloan ManagementReview, Vol. 44 No. 3, pp. 77-82.

Day, G. and Montgomery, D. (1999), “Charting new direction for marketing”, Journal ofMarketing, Vol. 63, pp. 3-13 (special issue).

Day, G. and Wensley, R. (1988), “Assessing advantage: a framework for diagnosing competitivesuperiority”, Journal of Marketing, Vol. 52, April, pp. 1-20.

IJCOMA21,2

184

Deshpande, R. (1999), “Foreseeing marketing”, Journal of Marketing, Vol. 63, pp. 164-7(special issue).

Dess, G. and Robinson, R. (1984), “Measuring organisational performance in the absence ofobjective measures: the case of privately-held firm and conglomerate business unit”,Strategic Management Journal, Vol. 5 No. 3, pp. 265-73.

Doyle, P. (1995), “Marketing in the new millennium”, European Journal of Marketing, Vol. 29No. 13, pp. 23-41.

Doyle, P. and Wong, V. (1998), “Marketing and competitive performance: an empirical study”,European Journal of Marketing, Vol. 32 No. 5 pp. 514-35.

Drucker, P. (1954), The Practice of Management, Harper & Row, New York, NY.

Dunn, G., Everitt, B. and Pickles, A. (1994), Modelling Covariances and Latent Variables UsingEQS, Chapman & Hall, London.

Field, A. (2000), Discovering Statistics Using SPSS for Windows-advanced Techniques for theBeginner, Sage, London.

Fornell, C. and Larcker, D.F. (1981), “Evaluating structural equation models withunobservable variables and measurement error”, Journal of Marketing Research, Vol. 18,pp. 39-50.

Fournier, S., Dobscha, S. and Mick, D.G. (1998), “Preventing the premature death of relationshipmarketing”, Harvard Business Review, Vol. 76 No. 1, pp. 42-9.

Fox, T. and Stead, S. (2001), “Customer relationship management: delivering the benefits”,White Paper, CRM (UK) and SECOR Consulting, New Malden.

Garver, M. and Mentzer, J. (1999), “Logistics research methods: employing structuralequation modelling to test for construct validity”, Journal of Business Logistics, Vol. 20No. 1, pp. 33-47.

Geib, M., Kolbe, L.M. and Brenner, W. (2006), “CRM collaboration in financial services networks:a multi-case analysis”, Journal of Enterprise Information Management, Vol. 19 No. 6,pp. 591-607.

Gerbing, D.W. and Anderson, J.C. (1988), “An updated paradigm for scale developmentincorporating unidimensionality and its assessment”, Journal of Marketing Research,Vol. 25, pp. 186-92.

Grant, R.M. (1996), “Prospering in dynamically-competitive environments:organizational capability as knowledge integration”, Organization Science, Vol. 7 No. 4,pp. 375-87.

Gruen, T.W., Summers, J.O. and Acito, F. (2000), “Relationship marketing activities, commitment,and membership behaviors in professional association”, Journal of Marketing, Vol. 64No. 3, pp. 34-49.

Gummesson, E. (1999), Total Relationship Marketing, Butterworth Heinemann, Oxford.

Gummesson, E. (2002), “Relationship marketing in the new economy”, Journal of RelationshipMarketing, Vol. 1 No. 1, pp. 37-57.

Hair, J., Anderson, R., Tatham, R. and Black, W. (1998), Multivariate Data Analysis, 5th ed.,Prentice-Hall, Upper Saddle River, NJ.

Harker, M.J. (1999), “Relationship marketing defined? An examination of currentrelationship marketing definitions”, Marketing Intelligence & Planning, Vol. 17 No. 1,pp. 13-20.

CRMimplementation

185

Henning-Thurau, T. and Klee, A. (1997), “The impact of customer satisfaction and relationshipquality and customer retention: a critical reassessment and model development”,Psychology & Marketing, Vol. 14 No. 8, pp. 737-64.

Homburg, C., Workman, J.P. and Jensen, O. (2000), “Fundamental changes in marketingorganization: the movement toward a customer-focused organizational structure”, Journalof the Academy of Marketing Science, Vol. 28 No. 4, pp. 459-78.

Hu, L. and Bentler, P.M. (1999), “Cutoff criteria for fit indexes in covariance structuralanalysis: conventional criteria versus new alternatives”,Structural EquationModeling, Vol. 6,pp. 1-55.

Jackson, B. (1985), “Building customer relationships that last”, Harvard Business Review, Vol. 63,pp. 120-8.

Jain, S. (2007), “State of the art of international marketing research: directions for the future”,Journal of Global Business Advancement, Vol. 1, pp. 4-19.

Jordan Insurance Federation (2008), “The annual report”, pp. 1-71, available at: www.joif.org

Kale, S.H. (2004), “CRM failure and the seven deadly sins”, Marketing Management, Vol. 13,September/October, pp. 42-6.

Kennedy, M.E. (2004), “Using customer relationship management to increase profits”, StrategicFinance, Vol. 85 No. 9, pp. 37-41.

Kim, J.W., Choi, J., Qualls, W. and Park, J. (2004), “The impact of CRM on firm- andrelationship-level performance in distribution networks”, Communications of theAssociation for Information Systems, Vol. 14, pp. 632-52.

Kincaid, J.W. (2003), Customer Relationship Management: Getting it Right!, Prentice-Hall, UpperSaddle River, NJ.

Knight, G. (1998), “International services marketing: review of research, 1980-1998”, Journal ofServices Marketing, Vol. 13 Nos 4/5, pp. 347-60.

Kohli, A.K. and Jaworski, B.J. (1990), “Market orientation: the construct, research propositions,and managerial implications”, Journal of Marketing, Vol. 54, April, pp. 1-18.

Kotler, P. and Armstrong, G. (2004), Principles of Marketing, 10th ed., Prentice-Hall, Upper SaddleRiver, NJ.

Krauss, M. (2002), “At many firms, technology obscures CRM”, Marketing News, Vol. 36No. 6, p. 5.

Lai, F., Hutchinson, J., Li, D. and Bai, C. (2007), “An empirical assessment and application ofSERVQUAL in mainland China’s mobile communications industry”, International Journalof Quality and Reliability Management, Vol. 2 No. 3, pp. 244-62.

Langerak, F. and Verhoef, P.C. (2003), “Strategically embedding CRM”, Business Strategy Review,Vol. 14 No. 4, pp. 73-80.

Ling, R. and Yen, D.C. (2001), “Customer relationship management: an analysis frameworkand implementation strategies”, Journal of Computer Information Systems, Vol. 41 No. 3,pp. 82-97.

Neubert, M. and Wu, J. (2006), “An investigation of the generalizability of the Houghton and neckrevised self leadership questionnaire to a Chinese Context”, Journal of ManagerialPsychology, Vol. 21 No. 4, pp. 360-73.

Ngai, E.W.T. (2005), “Customer relationship management research (1992-2002): an academicliterature review and classification”, Marketing Intelligence & Planning, Vol. 23 No. 6,pp. 582-605.

IJCOMA21,2

186

Nykamp, M. (2001), The Customer Differential: The Complete Guide to Implementing CustomerRelationship Management, AMACON, New York, NY.

Osarenkhoe, A. and Bennani, A. (2007), “An exploratory study of implementation of customerrelationship management strategy”, Business Process Management Journal, Vol. 13 No. 1,pp. 139-64.

Ostroff, F. and Smith, D. (1992), “The horizontal organization”, The McKinsey Quarterly, Vol. 1,pp. 148-68.

Parvatiyar, A. and Sheth, J.N. (2000), “The domain and conceptual foundations of relationshipmarketing”, in Sheth, J.N. and Parvatiyar, A. (Eds), Handbook of Relationship Marketing,Sage, Thousand Oaks, CA, pp. 3-38.

Parvatiyar, A. and Sheth, J.N. (2001), “Conceptual framework of customer relationshipmanagement”, in Sheth, J.N., Parvatiyar, A. and Shainesh, G. (Eds), Customer RelationshipManagement: Emerging Concepts, Tools, and Applications, Tata McGraw-Hill, New Delhi,pp. 3-25.

Payne, A. (2000), “Customer relationship management”, The CRM-Forum, available at: www.crm-forum.com

Payne, A. and Frow, P. (2005), “A strategic framework for customer relationship management”,Journal of Marketing, Vol. 69 No. 4, pp. 167-76.

Payne, A. and Frow, P. (2006), “Customer relationship management: from strategy toimplementation”, Journal of Marketing Management, Vol. 22, pp. 135-68.

Peppard, J. (2000), “Customer relationship management (CRM) in financial services”, EuropeanManagement Journal, Vol. 18 No. 3, pp. 312-27.

Peppers, D. and Rogers, M. (1993), The One to One Future, Piatkus, London.

Plakoyiannaki, E. (2005), “How do organisational member perceive CRM: evidence from a UKservice firm”, Journal of Marketing Management, Vol. 21, pp. 363-92.

Reichheld, F.F. (1993), “Loyalty-based management”, Harvard Business Review, Vol. 71,March/April, pp. 64-73.

Reichheld, F.F. (1996), The Loyalty Effect, Harvard Business School Press, Boston, MA.

Reichheld, F.F. and Sasser, W.E. (1990), “Zero defections: quality comes to services”, HarvardBusiness Review, Vol. 68 No. 5, pp. 105-11.

Reid, A. and Catterall, M. (2005), “Invisible data quality issues in a CRMimplementation”, Database Marketing and Customer Strategy Management, Vol. 12No. 4, pp. 305-14.

Rigby, D. and Ledingham, D. (2004), “CRM done right”, Harvard Business Review, Vol. 82 No. 11,pp. 118-27.

Rigby, D., Reichheld, F.F. and Schefter, P. (2002), “Avoid the four perils of CRM”, HarvardBusiness Review, Vol. 80 No. 2, pp. 101-9.

Ryals, L. and Knox, S. (2001), “Cross-functional issues in the implementation of relationshipmarketing through customer relationship management”, European Management Journal,Vol. 19 No. 5, pp. 534-42.

Ryals, L. and Payne, A. (2001), “Customer relationship management in financial services:towards information-enabled relationship marketing”, Journal of Strategic Management,Vol. 9, pp. 3-27.

Rygielski, C., Wang, J.C. and Yen, D.C. (2002), “Data mining techniques for customer relationshipmanagement”, Technology in Society, Vol. 24 No. 4, pp. 483-502.

CRMimplementation

187

Schulz, M. (2001), “The uncertain relevance of newness: organizational learning and knowledgeflows”, Academy of Management Journal, Vol. 44 No. 4, pp. 661-81.

Shaw, M.J., Subramaniam, C., Tan, G.W. and Welge, M.E. (2001), “Knowledge management anddata mining for marketing”, Decision Support Systems, Vol. 31 No. 1, pp. 127-37.

Sheth, J.N. (2000), “Relationship marketing: paradigm shift of shaft?”, in Sheth, J.N. andParvatiyar, A. (Eds), Handbook of Relationship Marketing, Sage, Thousand Oaks, CA,pp. 609-20.

Sheth, J.N. and Parvatiyar, A. (1995), “Relationship marketing in consumer markets:antecedents and consequences”, Journal of the Academy of Marketing Science, Vol. 23No. 4, pp. 255-71.

Sheth, J.N. and Sisodia, R.S. (2002), “Marketing productivity: issues and analysis”, Journal ofBusiness Research, Vol. 55 No. 5, pp. 349-62.

Sheth, J.N., Sisodia, R.S. and Sharma, A. (2000), “The antecedents and consequences ofcustomer-centric marketing”, Journal of the Academy of Marketing Science, Vol. 28 No. 1,pp. 55-66.

Sin, L., Tse, A. and Yim, F. (2005), “CRM: conceptualisation and scale development”, EuropeanJournal of Marketing, Vol. 39 Nos 11/12, pp. 1264-90.

Smith, J.B. and Barclay, D.W. (1997), “The effects of organizational differences and trust onthe effectiveness of selling partner relationships”, Journal of Marketing, Vol. 61 No. 1,pp. 3-21.

Stefanou, C., Sarmaniotis, C. and Stafyla, A. (2003), “CRM and customer-centric knowledgemangement: an empirical research”, Business Process Management Journal, Vol. 9 No. 5,pp. 617-34.

Swift, R.S. (2001), Accelerating Customer Relationships: Using CRM and RelationshipTechnologies, Prentice-Hall, Englewood Cliffs, NJ.

Thomas, J.S., Blattberg, R.C. and Fox, E.J. (2004), “Recapturing lost customers”, Journal ofMarketing Research, Vol. 41 No. 1, pp. 31-45.

Tuominen, M., Rajala, A. and Moller, K. (2004), “Market-driving versus market-driven: divergentroles of market orientation in business relationships”, Industrial Marketing Management,Vol. 33 No. 3, pp. 207-17.

Varadarajan, R. and Jayachandran, S. (1999), “Marketing strategy: an assessmentof the field and outlook”, Journal of Academy of Marketing Science, Vol. 27 No. 2,pp. 120-43.

Venkatraman, N. (1990), “Performance implications of strategic coalignment: a methodologicalperspective”, The Journal of Management Studies, Vol. 27 No. 1, pp. 19-41.

Venkatraman, N. and Ramanujam, V. (1986), “Measurement of business performance in strategyresearch: a comparison of approaches”, Academy of Management Review, Vol. 11 No. 4,pp. 801-14.

Vorhies, D. and Morgan, N. (2005), “Benchmarking marketing capabilities for sustainablecompetitive advantage”, Journal of Marketing, Vol. 69, January, pp. 80-94.

Voss, K.E., Spangenberg, E.R. and Grohmann, B. (2003), “Measuring the hedonic andutilitarian dimensions of consumer attitude”, Journal of Marketing Research, Vol. 40,pp. 310-20.

Vrechopoulos, A.P. (2004), “Mass customization challenges in internet retailing throughinformation management”, International Journal of Information Management, Vol. 24No. 1, pp. 59-71.

IJCOMA21,2

188

Walker, O. and Ruekert, R. (1987), “Marketing’s role in the implementation of businessstrategies: a critical review and conceptual framework”, Journal of Marketing, Vol. 51, July,pp. 15-33.

Webster, F.E. (2002), “Marketing management in changing times”, Marketing Management,Vol. 11, January/February, pp. 1-17.

Wulf, K., Odekerken-Schroder, G. and Iacobucci, D. (2001), “Investments in consumerrelationships: a cross-country and cross-industry exploration”, Journal of Marketing,Vol. 65 No. 4, pp. 33-50.

Yim, F., Anderson, R. and Swaminathan, S. (2004), “Customer relationship management: itsdimensions and effect on customer outcomes”, Journal of Personal Selling & SalesManagement, Vol. XXIV No. 4, pp. 263-78.

Zablah, A.R., Bellenger, D.N. and Johnston, W.J. (2004), “An evaluation of divergentperspectives on customer relationship management: towards a commonunderstanding of an emerging phenomenon”, Industrial Marketing Management, Vol. 33No. 6, pp. 475-89.

Zahay, D.L. and Griffin, A. (2004), “Customer learning processes, strategy selection, andperformance in business-to-business service firms”, Decision Sciences, Vol. 35 No. 2,pp. 169-203.

Zahra, S.A. and George, G. (2002), “Absorptive capacity: a review, reconceptualization, andextension”, Academy of Management Review, Vol. 27 No. 2, pp. 185-203.

Zikmund, W.G., McLeod, R. and Gilbert, F.W. (2003), Customer Relationship Management, Wiley,Hoboken, NJ.

Further reading

Peppers, D., Rogers, M. and Dorf, B. (1999), “Is your company ready for one-to-one marketing?”,Harvard Business Review, Vol. 77 No. 1, pp. 151-60.

Pfeiffer, P.E. and Farris, P.W. (2004), “The elasticity of customer value to retention: theduration of a customer relationship”, Journal of Interactive Marketing, Vol. 18 No. 2,pp. 20-31.

(The Appendix follows overleaf.)

Corresponding authorMamoun N. Akroush can be contacted at: mamoun.akroush@gju.edu.jo

To purchase reprints of this article please e-mail: reprints@emeraldinsight.comOr visit our web site for further details: www.emeraldinsight.com/reprints

CRMimplementation

189

Appendix

No.

KCF

KC

F1

My

org

aniz

atio

np

rov

ides

cust

omiz

edp

rod

uct

san

dse

rvic

esto

our

key

cust

omer

sS

inet

al.

(200

5)

KC

F2

Th

rou

gh

ong

oin

gd

ialo

gu

e,w

ew

ork

wit

hin

div

idu

alk

eycu

stom

ers

tocu

stom

ize

our

offe

rin

gth

rou

gh

ong

oin

gd

ialo

gu

eK

CF

3M

yor

gan

izat

ion

mak

esan

effo

rtto

fin

dou

tw

hat

our

key

cust

omer

nee

ds

KC

F4

Wh

enm

yor

gan

izat

ion

fin

ds

that

cust

omer

sw

ould

lik

eto

mod

ify

ap

rod

uct

/ser

vic

e,th

ed

epar

tmen

tsin

vol

ved

mak

eco

ord

inat

edef

fort

sto

do

so(d

elet

edd

uri

ng

EF

Ad

ue

tow

eak

load

ing

)CRMO

CR

MO

1O

ur

org

aniz

atio

nal

stru

ctu

reis

met

icu

lou

sly

(th

orou

gh

ly)

des

ign

edar

oun

dou

rcu

stom

ers

CR

MO

2M

yor

gan

izat

ion

has

esta

bli

shed

clea

rb

usi

nes

sg

oals

rela

ted

tocu

stom

erac

qu

isit

ion

,d

evel

opm

ent,

rete

nti

on,

and

reac

tiv

atio

nC

RM

O3

My

org

aniz

atio

nh

asth

esa

les

and

mar

ket

ing

exp

erti

sean

dre

sou

rces

tosu

ccee

din

CR

MC

RM

O4

Ou

rem

plo

yee

trai

nin

gp

rog

ram

sar

ed

esig

ned

tod

evel

opsk

ills

for

acq

uir

ing

and

dee

pen

ing

cust

omer

rela

tion

ship

sC

RM

O5

Em

plo

yee

sp

erfo

rman

ceis

mea

sure

dan

dre

war

ded

bas

edon

mee

tin

gcu

stom

ern

eed

san

dsu

cces

sfu

lly

serv

icin

gth

ecu

stom

er(d

elet

edd

uri

ng

EF

Ad

ue

tow

eak

load

ing

)KM

KM

1M

yor

gan

izat

ion

full

yu

nd

erst

and

sth

en

eed

sof

our

key

cust

omer

sv

iak

now

led

ge

lean

ing

(loa

ded

onK

CF

)

(continued

)

Table AI.Original CRMimplementation scale andbusiness performancemeasurement items

IJCOMA21,2

190

No.

KM

2M

yor

gan

izat

ion

pro

vid

esch

ann

els

toen

able

ong

oin

gtw

o-w

ayco

mm

un

icat

ion

bet

wee

nou

rk

eycu

stom

ers

and

us

KM

3M

yor

gan

izat

ion

’sem

plo

yee

sar

ew

illi

ng

toh

elp

cust

omer

sin

are

spon

siv

em

ann

er,

e.g

.th

rou

gh

inte

ract

ion

and

tou

chp

oin

tsK

M4

Cu

stom

ers

can

exp

ect

pro

mp

tse

rvic

efr

omem

plo

yee

sof

my

org

aniz

atio

nTBCRM

TB

CR

MM

yor

gan

izat

ion

has

the

rig

ht

soft

war

eto

serv

eou

rcu

stom

ers

TB

CR

M2

My

org

aniz

atio

nh

asth

eri

gh

th

ard

war

eto

serv

eou

rcu

stom

ers

TB

CR

M3

My

org

aniz

atio

nh

asth

eri

gh

tte

chn

ical

per

son

nel

top

rov

ide

tech

nic

alsu

pp

ort

for

the

uti

liza

tion

ofco

mp

ute

rte

chn

olog

yin

bu

ild

ing

cust

omer

rela

tion

ship

TB

CR

M4

My

org

aniz

atio

nm

ain

tain

sa

com

pre

hen

siv

ed

atab

ase

ofou

rcu

stom

ers

TB

CR

M5

Ind

ivid

ual

cust

omer

info

rmat

ion

isav

aila

ble

atev

ery

poi

nt

ofco

nta

ct(d

elet

edd

uri

ng

CF

Ad

ue

tow

eak

load

ing

)B

usi

nes

sp

erfo

rman

ceA

uth

ors

FP

FP

1S

ales

vol

um

eW

alk

eran

dR

uek

ert

(198

7),

Day

and

Wen

sley

(198

8),

Doy

le(1

995)

,A

mb

ler

and

Kok

kin

aki

(199

7),

and

Sin

etal.

(200

5)F

P2

Pro

fita

bil

ity

vol

um

eF

P3

Ret

urn

onin

ves

tmen

tF

P4

Mar

ket

shar

eMP

MP

1C

ust

omer

rela

tion

ship

qu

alit

yD

ayan

dW

ensl

ey(1

988)

,an

dS

inet

al.

(200

5)M

P2

Com

pan

y’s

cust

omer

str

ust

MP

3C

ust

omer

s’lo

yal

tyM

P4

Red

uci

ng

the

req

uir

edre

sou

rces

inp

erfo

rmin

gou

rse

rvic

es,e

.g.

red

uci

ng

tim

e,co

stof

our

serv

ices

del

iver

y

Table AI.

CRMimplementation

191