CRM in e-Business

2005:024 SHU

MASTER'S THESIS

CRM in e-Business

Jan Johansson J?rgen Sparredal

Lule? University of Technology MSc Program in International Business Administration Department of Business Administration and Social Sciences

Division of Industrial marketing and e-commerce

2005:024 SHU - ISSN: 1404-5508 - ISRN: LTU-SHU-EX--05/024--SE

CRM in e-Business

Preface

The work presented in this study was carried out during the fall of 2003 and spring of 2004 at Lule? University of Technology (LTU). These 20 weeks of hard work have been a very interesting period that has provided us with a deeper knowledge about the area customer relationship management in e-Business.

A study like this cannot be completed without help from other persons and therefore we would like to express our gratitude to all persons having contributed to the completion of this study.

First of all, we would like to thank our supervisor, Tim Foster at the division of Industrial Marketing at Lule? University of Technology, who has provided us with guidance, inspiration, perspective, and stimulating discussions throughout the writing of the study.

Additionally, we would like to express our gratitude to Marketing Director Pehr Boman at Ginza.Musik AB and Managing Director Mikael Olander at MTG Internet Retailing AB. Thank you for allocating some of your valuable time to answer our questions. This study would not have been possible to conduct without your help.

Finally, we would like to thank friends and family for their support and encouragement during these 20 weeks.

Lule?, January, 2004

Jan Johansson

J?rgen Sparredal

CRM in e-Business

Abstract

The purpose of this study is to gain a better understanding of CRM in e-Business. Our research explores, describes and begins to explain how CRM objectives are described, how CRM is managed, and how CRM is measured and evaluated. In our quest for answers, we have conducted a multiple-case study with two companies.

From conducting this study some main findings have been found. Firstly, e-Business organizations CRM objectives can be divided into three categories, which are cost saving, revenue enhancement, and strategic impact objectives. However, those objectives are not very detailed, instead e-Business organizations view CRM objectives as a part of their daily work. Secondly, e-Business organizations concentrate in three areas when managing their customer relationships, which are implementation, initiatives, and channel management.

Thirdly, we have found that e-Business organizations evaluate the effectiveness of their CRM in four areas, which van be divided into customer knowledge, customer interaction, customer value, and customer satisfaction. Finally, e-Business organizations consider improved customer satisfaction rates and establishing relationships with customers to be very important, but only measures and evaluate fragments of it.

CRM in e-Business

Table of Contents

1 Introduction............................................................................................................................1 1.1 Background .......................................................................................................................1 1.2 Problem Discussion ..........................................................................................................3 1.3 Research Purpose .............................................................................................................6 1.4 Demarcations....................................................................................................................6 1.5 Outline of the Study...........................................................................................................7

2 Literature Review ..................................................................................................................8 2.1 CRM Objectives ................................................................................................................8 2.1.1 Objectives by Burnett ................................................................................................8 2.1.2 Objectives by Wilson, Daniel, and McDonald ..........................................................8 2.1.3 Objectives by Greenberg............................................................................................9 2.1.4 Objectives by Bayon, Gutsche, and Bauer...............................................................10 2.1.5 Objectives by Ryals and Knox.................................................................................10 2.1.6 Objectives by Kim, Suh and Hwang........................................................................10 2.2 Management of Customer Relationships ........................................................................11 2.2.4 The ideal CRM organization....................................................................................11 2.2.1 Ten ways to initiate or improve your CRM .............................................................13 2.2.2 CRM initiatives........................................................................................................15 2.2.3 Internet customer interaction ...................................................................................18 2.2.5 Multi-channel customer contact...............................................................................19 2.3 CRM Evaluation..............................................................................................................20 2.3.2 Metrics of CRM effectiveness .................................................................................20 2.3.3 Supply chain and logistic functions measures .........................................................24 2.3.4 Web site as a measurement tool...............................................................................25 2.3.5 Web site measures....................................................................................................26

3 Conceptual Framework.......................................................................................................27 3.1 Conceptualization ...........................................................................................................27 3.1.1 CRM objectives .......................................................................................................27 3.1.2 Management of customer relationships ...................................................................28 3.1.3 CRM evaluation .......................................................................................................29 3.2 Emerged Frame of Reference .........................................................................................31

4 Research Methodology ........................................................................................................32 4.1 Research Purpose ...........................................................................................................32 4.2 Research Approach: Qualitative VS. Quantitative Research Approach ........................33 4.3 Research Strategy ...........................................................................................................33 4.4 Data Collection Methods ................................................................................................35 4.5 Sample Selection .............................................................................................................36 4.6 Data Analysis ..................................................................................................................37 4.7 Research Quality Criteria...............................................................................................38

5 Data Presentation.................................................................................................................40 5.1 Case Study ? Ginza.se.....................................................................................................40 5.1.1 Company presentation .............................................................................................40 5.1.2 How can Ginza.se's CRM objectives be described? ...............................................41

CRM in e-Business

5.1.3 How does Ginza.se manage their customer relationships?......................................42 5.1.4 How does Ginza.se evaluate the effectiveness of their CRM? ................................43 5.2 Case Study ? ..............................................................................................44 5.2.1 Company presentation .............................................................................................44 5.2.2 How can ?s CRM objectives be described? ........................................45 5.2.3 How does manage their customer relationships? ..............................47 5.2.3 How do organizations evaluate the effectiveness of their CRM?............................49 6 Data Analysis........................................................................................................................50 6.1 Within Case Analysis of Ginza.se ...................................................................................50 6.1.1 The objectives of CRM in Ginza.se.........................................................................50 6.1.2 Ginza.se management of customer relationship ......................................................51 6.1.3 Ginza.se CRM evaluation ........................................................................................53 6.2 Within Case Analysis of ............................................................................55 6.2.1 The objectives of CRM in .................................................................55 6.2.2 management of customer relationships .............................................56 6.2.3 CRM evaluation ................................................................................58 6.3 Cross Case Analysis........................................................................................................60 6.3.1 Analyzing CRM objectives......................................................................................61 6.3.2 Analyzing the management of customer relationships ............................................62 6.3.2 Analyzing CRM evaluation .....................................................................................63 7 Findings and Conclusions....................................................................................................65 7.1 Conclusions.....................................................................................................................65 7.1.1 How can organizations CRM objectives be described?...........................................65 7.1.2 How do organizations manage their customer relationships?..................................66 7.1.3 How do organizations evaluate the effectiveness of their CRM?............................67 7.1.4 Overall conclusions..................................................................................................67 7.2 Recommendations for Management................................................................................68 7.3 Recommendations for Theory .........................................................................................69 7.4 Recommendations for Further Research ........................................................................69

Appendix A: Interview Guide

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