Customer Relationship Management And Organizational Performance

1.0 INTRODUCTION

1.1 Background Information to the Study

In today’s business, customers are considered the key to the business, and customer relationship management (CRM) has become a priority for every business’s marketing strategy (Rahman et al., 2019). Both researchers and practitioners stated that, in this contemporary business environment, a relationship with customers is necessary for a firm’s survival and success (Rahman, Hussain, Moon, Tisha, & Lima, 2021). Therefore, organizations are very alarmed about their customers and customer relationship management. More so, in the modern business environments and challenging scenarios, the emphasis on maintaining customers has been regarded as the key strategy that shapes all marketing programs. In relation to that, customer relationship management (CRM) has emerged as a crucial marketing strategy for achieving business objectives (Hanaysha & Mehmood, 2019).

According to Shabir, Ghaffar, Nisar and Younas (2016) customer relationship management is a tactical approach considerate with establishing better shareholder value through the expansion of suitable relationships with key regulars and customer segments. Customer relationship management combine the prospective of relationship marketing strategies and IT (information technology) to generate profitable, enduring relationships with regulars and other key stakeholders. More accurately, customer relationship management provides superior opportunities to use data and information to both understand regulars and co-build value with them. This demands a cross-functional combination of processes, community, operations and marketing capabilities that is enabled through information, technology and applications (Shabir, Ghaffar, Nisar & Younas, 2016).

Mulyana (2020) asserted that customer relationship management is a business-customer connection and encompasses all facets of engagement an organization has with its customers, whether it is sales or service-related and this is a practical implementation of long-term relationship that was formed out of relationship management. The main goals of customer relationship management are to value long-lasting supportive relationships with the old customers and the upcoming customers. By doing this, it helps to retain old customers based on improvement gathered from the past experience; to win new customers; win new contacts; to increase profitability and reduce costs related in managing customer (Mustapha, Kareem, Adeniyi & Abdulwasiu, 2023).  Hence, CRM’s existing tactic as a business management tool is to institute channels and approaches to manage customer center information to improve organizational performance and thereby obtain better business results (Achar, 2018a; Islam, 2017). Therefore, constructing effective customer relationships allows an organization to improve its business portfolio and face intense competition from national and international competitors (Rahman, et al., 2021).

Customer relationship management is a comprehensive strategy and method of recruiting, retaining, and forming partnerships with targeted customers to provide higher value for the organization and the customer, it is centered on gathering data prior to decisions making and focuses on enhancing, maintaining, and developing long-term relationships with customers (Pakdaman et al., 2013). Therefore, the willingness of businesses in different sectors to establish and manage their relationships with their customers more effectively, their efforts to create customer loyalty and satisfaction, increased profitability and customer retention expectations transform customer relationship management practices into a necessity for businesses (Yapraklı & Aykut, 2021). As a result, organizations can provide a unique experience to their customers by focusing on the implementation of a customer relationship management strategy that aims to find, collect, and store the right information, share it across the organization, and then use all organizational levels to create a personalized structure (alem Mohammad, bin Rashid and bin Tahir, 2013).

Customer relationship management is a multifaceted concept with several behavioral components, which includes: customer orientation, customer handling, customer knowledge, etc,. Customer orientation refers to an organization’s inclination to know and satisfy the needs and wants of customers. Furthermore, customer orientation actions foster positive connections between organizations and consumers, resulting in increased business success (Yapraklı & Aykut, 2021); Customer handling provides ways for the organization to know about the needs and wants of the customer and also helps to interact with the new customer and retain the old customer loyal to the organization (Uduma, 2014). It helps the organization in building a solid and genuine relationship with the customer; customer knowledge involved the organization with the collecting, handling, and distribution of knowledge about the customer. Customer knowledge has two types: knowledge about the customer and knowledge from the customer (Chan, 2014). Cheng (2013) opined that customer knowledge helps the organizations to know about the needs and wants of the customer which helps them in formulating the marketing strategies. Hence, customer knowledge help in providing better quality goods, quality services as well as maintaining customer loyalty with the organization (Jarvinen, 2014).

Hanaysha (2019) conceptualized organizational performance as an organization’s evaluation based on its ability in achieving its financial and non-financial goals. As the competition between companies in various industries and business markets has been increasing in the recent years, the assessment of organizational performance has been considered to be important for safeguarding businesses and sustaining their operations. For this reason, the responsiveness towards continuously measuring firm performance is deemed vital. Therefore, every firm sets predetermined objectives for analyzing, evaluating, and measuring its performance, and the key purpose of measuring firm performance is directed towards increasing organizational effectiveness and its business process (Hanaysha, 2019).

According to Perera et al. (2013); Alam and Rubel (2014) organizational performance refers to how well an organization can achieve its market orientation and financial goals. Dugguh and Ayaga (2014) posits that it is distinct from the plan and is something exceeded by the individual. Organizational performance is a concept that has several dimensions. According to organizational theory, efficiency and effectiveness can be termed organizational performance. Hence, there is a tendency to include the customer in business to enhance performance (Rahman, 2021).

Every company transaction and activity depends on customers. In reality, how an organization treats or manages its customers determines whether it will survive. Therefore, businesses and organizations must make an effort to develop and keep strong customer relationship if they want to survive in today’s ever dynamic business environment. Regardless of the product or service that organization offers to its customers, if it doesn’t live up to customers’ expectations, it is not performing well. This is due to the fact that the company’s revenues, profits, market share, and even the salaries of its employees all is derived from just one source, namely its customers. Moreover, without customer support, businesses run the risk of seeing their profit margins decline, making it difficult for them to pay their employees and keep the company operating. Therefore, this makes using customer relationship management to create proper customer/organization relationships very important for every business organizations.

The background of this study highlight the CRM components that could affect organizational performance, thereby identifying and contextualizing the research problem. It also explained the reason organizations both manufacturing and service oriented need to have a well implemented customer relationship management in order to attract new customers and retain old customers and to gain their loyalty and give them ultimate satisfaction. Therefore, customer relationship management is seen as part of marketing strategy and how it is a huge contributor to the overall performance of an organization.