THE IMPACT OF CUSTOMER RELATIONSHIP MANAGEMENT ORGANIZATIONAL PERFORMANCE IN THE TELECOMMUNICATION INDUSTRY IN NIGERIA USING MTN NIGERIA AS ITS CASE STUDY
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The basic reason for an organization’s existence is to satisfy the needs of the customers and through that make way for repeat patronage which will open the avenue for increased profit making. One of the factors affecting the performance of’ an Organization is customer relationship management, which is the main focus of the study.
Customer relationship management is concerned with the relationship between the organization and its customers and asserted customers arc the life-blood of any organization be it a global corporation with thousands of employees and a multi-billion turnover, or a sole trader with a handful of customers Beks, (2008). Customer relationship management is the same in the principle for these two examples. It is the scope of CRM which can vary drastically.
The organization and the customers both have sets of conditions to consider when building the relationship, such as wants and needs of both parties; organizations need to make a profit to survive and grow while customers want good services, a quality product and an acceptable price.
Thompson (2005) illustrated that customer relationship management is an effective tool for achieving positive organizational performance and which reflects an increase in profit, goodwill, better product and service delivery. In recent times, questions has been raised as regards the interaction between organizations and their customers but the result is that many organizations have poor relationship with their customers and this will lead to loss o goodwill and low profit earning in the organization.
Customer relationship management looks at the process of what an organization is involved in, whether it is a product or service driven organization and it must involve every aspect of what they do — from suppliers through to the end application, from their internal staff through to their customer’s customer KIM Jenner, (2008).
The ultimate purpose of CRM, like any organizational initiative, is to increase profit. In the case of CRM this is achieved mainly by providing a better service to customers than competitors do. CRM does not only improve the service to customers, a good CRM capability will also reduce costs, wastage, and complaints. CRM also reduces staff stress, because attrition – a major cause of stress – reduces as services and relationships improve. CRM enables instant market research as well: opening the lines of communications with your customers gives you direct constant market reaction to your products, services and performance, far better than any market survey. Good CRM also helps you grow your business: customers stay with you longer; customer churn rates reduce while referrals to new customers increase from the increasing numbers of satisfied customers; demand reduces on fire-fighting and trouble-shooting staff the organization’s service flows and the teams work more efficiently and more happily. Customer satisfaction is a vital CRM variable that must not evade our empirical scrutiny. Indeed, customer satisfaction is central to successful application of the marketing concept. Many company mission statements and marketing plans are designed around the goal of increasing customer satisfaction. (Claudia, et al 2001 )The concept of relationship is very complex because it relates to different disciplines but with regards to the topic at hand, relationship or business relationship can be viewed or described as being distinct from, but related to, concepts such as Enterprise relationship management, consumer behaviour and customer relationship management.
Customer relationship management seeks to provide a complete and holistic model of business relationships and business relationship value over time, in order to make the various aspects of business relationships both explicit and measurable (Parvatiyar et al 2000).A mature CRM model will ultimately support both:
i. Strategic business research and development efforts,-
ii. Tools and techniques that implement CRM principles.
As a result of the effectiveness and intensity of the concept of CRM, customers would benefit from it through experiencing enhanced product delivery and organizations themselves would gain from it through increase in customer database, increase in performance and profitability.
1.2 Statement of the Problem
Since the main goal of an organization is to satisfy the needs of customers which will lead to increased profit. This indicates that without the existence of customers business activities will be futile. Business owners often concentrate on the improvement of their products; this is one of the basic features of the production concept. Often they ignore their customer care and relationship; as a result, many of their customers move their purchasing interests to organizations who can serve them better. The problem here is that they fail to understand that customers” value, care and concern is far above the product quality. So organizations tend to try their best as much as possible to retain their customers and even attract more.
Organizations at times are faced with the problems of
i. Effectively targeting customers
ii. Developing strategy to achieve target behaviours.
iii. Behaviour maintenance.
iv. Segmentation of customers based on customer profile and customer life-cycle stage.
Various methods and strategies have been employed by organizations in order to make sure that they will achieve the above stated. But their efforts seem futile. It is on this premise that this study wants to examine the impact or effect of customer relationship management on organizational performance.
1.3 Research Questions
i. To what extent does customer relationship management enhance a high level of performance in the organization?
ii. How does a good customer service affect the level of productivity in an organization?
iii. How does customer relationship management affect customer loyalty?
iv. What class of customer or classes of customer should enjoy the benefits of managing a customer relationship?
v. What strategies should organizations take in seeking to achieve a successful and effective customer relationship?
1.4 Objectives of the Study
The objective is to study the relationship between the Customer Relationship Management practices and customer loyalty in MTN Nigeria. The specific objectives this study is aimed at are stated as below:
i. To find out what propels customer loyalty;
ii. To bring out the distinction between customer relationship and organizational performance;
iii. To show that customer relationship management is a tool for acquiring high organizational performance.
iv. To determine the role customer service relation plays in every organization
1.5 Hypothesis of the Study
Below are the hypothesis that will guide the researcher in making assumptions and analysis.
Hypothesis 1
H0: Customer relationship management has no significant effect on customer loyalty to an organization.
l-I: Customer relationship management has significant effect on customer loyalty to an organization.
hypothesis 2 .
II: Good customer relations/service does not have positive impact on productivity level of an organization.
Ili: Good customer relations/service has positive impact on productivity level of an organization.
1.6 Scope of the Study
This research work focuses on the impact of customer relationship management organizational performance in the telecommunication industry in Nigeria using MTN Nigeria as its case study. A good CRM system is very vital and of utmost importance in every business organizations, but for the purpose of this research, the concern of the researcher is been geared towards the Impact of Customer Relationship Management in the telecommunications sector of the economy.
1.7 Significance of the Study
‘Phis research study will be useful for consumers, producers, managers and government. This work is carried out because recent research findings show that customers still complain of ill- treatment by company attendants and those entangled in service deliveries. This means that in some organizations, the customer is not yet the king as the saying goes that “the customer is always the King”.
This study intends to show the effect of customer relationship management on organizational performance so that the aims and objective of the organizations can be achieved with minimum error.
1.8 Limitations of Study
In carrying out this research there are possible constraints which may occur which pose little hindrance to the effective and successful completion of the project work by the researcher.
Such constraints are highlighted as follows; financial constraint i.e., there is limited finance available in harnessing research materials such as foreign journals, publications, etc. because the cost of getting research journals were quite enormous to be used in the research work.
Also, the stress of getting respondents to fill questionnaires being administered to them right on time were some of the challenges being encountered by the researcher-
1.9 Definition of Terms
i. Organizational Performance: Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). Specialists in many fields are concerned with organizational performance including strategic planners, operations, finance, legal, and organizational development.
ii. Customer Loyalty: This is defined as the degree to which customers are predisposed to stay with the product or service and resist competitive offers. Having a loyal customer base translates into lower costs, higher margins and greater profits.
iii. Customer Profiling: This is the analysis and classification of customers based on personal information such as shopping habits or behavioural patterns etc. The principle behind customer profiling is to gain customer loyalty at minimal cost by designing marketing plans that appeal to a larger percentage of target customers and initiate them into taking desirable action.
iv. Customer Centricity: This can be said to be a set of disciplines and practices that allows companies to treat different customers differently, thereby gaining strategic advantage leading to expansion of revenues and increase in profitability.
v. Customer Strategy: Customer strategy involves examining the existing and potential customer base and identifying which forms of segmentation are most appropriate.
vi. Customer Segmentation: This refers to the process of dividing customers into mutually exclusive groups, presumably because customers within each group are more similar lo each other than to others.
vii. Customer Relationship Management (CRM): CRM is a strategic approach that is concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments.
viii. Electronic Customer Relationship Management (ECRM): Electronic customer relationship management (E-CRM) is a comprehensive business and marketing strategy that integrates people, process, technology and all business activities for attracting and retaining customers over the internet and mobile phone to reduce costs and increase profitability by consolidation the principles of customer loyalty. Therefore, the results of electronic customer relationship management performance are repeat purchase, word of mouth, retention, cross buying, brand loyalty and customer satisfaction.
ix. Customer Satisfaction: This refers to the benefits derived by a customer after using a particular products or services over a certain period of time.
CHAPTER TWO
LITERATURE REVIEW
2.1 INTRODUCTION
Customer Relationship Management evolved from business processes like relationship marketing (RM) and the great amount of attention given to improving customer retention through the effective management of customer relationships. Winer S.(2001). He gave three developmental stages of customer relationship management, which are:
i. 1980: Database Marketing,
ii. 1990: Foundation of Customer Relationship Management
Iii, Present: The Future of Customer Relationship Management
1980: Database Marketing
The 1980s saw the emergence of database marketing, which was simply a catch phrase to define the practice of setting up customer service groups to speak individually to all of a company’s customers. In the case of larger clients, it was a valuable tool for keeping the lines of communication open and tailoring service to client’s needs. In the case of smaller clients, however it intended to provide repetitive survey-like information that cluttered databases and didn’t provide much insight. As companies began tracking database information, they realized that the bare bones (what customers wanted) were all that was needed in most eases; what they buy regularly, what they spend, and what they do. The promise of database marketing is to speak individually to countless customers. The reality was that, it’s too costly, too difficult, and doesn’t pay out on the bottom line, except in the ease of business-tobusiness key account marketing.
The compromise: a little database marketing goes a long way which is good news for everyone except for technology vendors.
1990: Foundation of Customer Relationship Management
The 1990s saw the introduction of advances in this system. It was during this time that the term customer relationship management was introduced. Unlike previous customer relationship systems, CRM was a dual system, instead of gathering data for their own use, they began giving back to their customers not only in terms of the obvious activity and spending patterns. CRM was now being used as a way to increase sales passively as well as through active improvement of customer service. Customer relationship management is the system that is responsible for introducing things such as frequent flyers, gifts, and credit card points. Before CRM evolved, this was rarely done, customers would simply buy from the company, and little was done to maintain their relationship. Before the introduction of CRM many companies didn’t feel the need to cater for their customers. In the minds of the executives, they have tremendous resources and could replace customers whenever it became necessary. While this may have worked prior to the l980s, the introduction of the information age allowed people to make better decisions about which companies they would buy from, and global competition made it easier for them to switch if they were not happy with the service they are getting. As of now Nigeria has up to four telecommunication companies which are facing intense competition. Each one of them are offering almost the same service and charging almost the same rate, and each of them know that for them to survive they must collect necessary information from customers as well as giving the customer information back in return too.
Present: The Future of Customer Relationship Management
Today, Customer Relationship Management is being used to achieve the best of both worlds.
Companies want to maintain strong relationships with their clients while simultaneously increasing their profits. The CRM systems of today could be called TRUE CRM systems.
They have become the systems that were originally envisioned by the pioneers of this paradigm. Software companies have continued to release advanced software programs that can be customized to suit the needs of companies that compete in variety of industries.
Instead of being static, the information processed within modern CRI\4 systems is dynamic.
This is important because we live in a world that is constantly changing, and organizations that want to succeed must constantly be ready to adapt to these changes. Real customer relationship management as we see it today began earnestly in the early years of this century. As software companies began releasing newer, more advanced solutions that were customizable across industries, it became feasible to really use the information in a dynamic way. Instead of feeding information into astatic database, for future reference, CRM became a way to continuously update understanding of customer’s needs and behaviour. Branching of information, sub-folders, and custom-tailored features enabled companies to breakdown information into smaller subsets so that they could evaluate not only concrete statistics, but information on the motivation and reaction of customers. Today, CRM is still being utilized most frequently by companies that rely on Iwo distinct features: customer service or technology. According to Anderson (2000), The three sectors of business that rely most heavily on CRM and use it to great advantage are:
i. Financial services sector
ii. A variety of high tech corporations and
iii. Telecommunications industry.
The telecommunications industry in particular, tracks the level of customer satisfaction and what customers are looking for in terms of changes and personalized features.
A Brief’ History of MTN Nigeria
Mobile Telecommunication Network (MTN Nigeria) is part of the MTN Group, Africa’s leading cellular telecommunications company. On May 16, 2001, MTN became the first GSM network to make a call following the globally lauded Nigerian GSM auction conducted by the Nigerian Communications Commission earlier in the year. Thereafter the company launched full commercial operations beginning with Lagos, Abuja and Port 1-larcourt. MIN paid $285m for one of four GSM licenses in Nigeria in January 2001. To date, an excess of US$ 1 .8 billion has been invested building mobile telecommunications infrastructure in
Nigeria. Since its launching in August 2001, MTN has steadily deployed its services across
Nigeria. It now provides services in 223 cities and towns, more than 10,000 villages and communities and a growing number of highways across the country, spanning the 36 states of the Nigeria and the Federal Capital Territory, Abuja. Many of these villages and communities are being connected to the world of telecommunications for the first time ever.
The company’s digital microwave transmission backbone, the 3,400 Kilometre Yello Banner was commissioned by President Olusegun Obasanjo in January 2003 and is reputed to be the most extensive digital microwave transmission infrastructure in all of Africa. The Yello Banner has significantly helped to enhance call quality on MTN network. The company subsists on the core brand values of leadership, relationship, integrity, innovation and “can-do attitude”. It prides itself on its ability to make the impossible possible, connecting people with friends, family and opportunities.
MIN Nigeria also recently expanded its network capacity to include a new numbering range with the prefix 0806, 0703, 0706, 0816 and 0813 making MTN the first GSM network in Nigeria to have adopted additional numbering systems, having exhausted its initial subscriber numbering range – 0803. In its resolve to enhance quality customer service, MTN Nigeria has also introduced a self-help toll-free 181 customer-care line through which subscribers can resolve their frequently asked questions free of charge. Now you can also use 180 to reach the customer care.
MTNTh overriding mission is to be a catalyst for Nigeria’s economic growth and development, helping to unleash Nigeria’s strong developmental potential not only through the provision of world class communications but also through innovative and sustainable corporate social responsibility initiatives. (Source MTN contribution quota 2010).
Core Values of MTN NG
i. Leadership: MTN as a key player in the telecommunications industry tries to position itself as a leader while other companies follow.
ii. Integrity: MTN also operates on a principle that is based on integrity i.e. delivering what they have promised to deliver. Although the Nigerian trend as regards the economy and state of the country is affecting their services, yet they still try their best to deliver.
iii. Innovation: MTN as a leader in the industry has been innovative in their delivery of service. They come up with innovative ideas and services that make them stand on the platter of innovation in the industry. Other companies follow their innovations.
iv. Relationships: Relationship is needed between organizations and their customers and that is what MTN as an organization is doing trying to build relationships with their customers through their customer relationship management efforts.
v. Can Do Attitude: MTN as an organization has a spirit of possibility, believing that everything can be done and achieved once it has being tried.
Services Offered By MTN Nigeria:
i. E-Charge: MTN e-charge allows you recharge your phone and pay your phone bills through the easiest and most convenient channels for you. With MTN e-charge you can recharge and pay your phone bills: From an application downloaded onto your phone, from any ATM point nearest to you and from your laptop or desktop when you visit e-charge on the MTN Online web site
ii. MTN E-Care: An interactive account management portal for post-paid customers to view and manage their accounts conveniently while online. MTN E-care provides instant access to itemized bills. It is a quick way to view the services you use on your phone. With an E-care account, managing your account is easier and faster. It’s free to sign up for E-care.
Once you’ve registered, you can login anytime to check and pay your bills, update your account details and get more from your mobile services.
iii. MTN 3.5G Broadband Access: MTNTh 3.5G Mobile Broadband is the fastest and most reliable way to access the internet. It helps you stay connected at almost any time, and makes your business and personal information and entertainment as mobile as you are, when you’re working within MTN”s coverage areas. With 3.5G Broadband MTN customers will benefit from download data speed up to 4-5 times faster than currently available, offering for the first time a mobile experience that can truly be described as broadband. MTN”s 3 .5G
Mobile Broadband access provides convenient, mobile High Speed Internet access for;
Browsing, Blogging, Checking e-mails, chatting and Social Networking, Online Banking,
Music Downloads, etc. It is simple and easy to use. You get broadband speeds without the need for cables. You can access the Internet from your home, office, car, the beach and everywhere you go within MTN’s 3.5G coverage network area.
iv. MTN Pulse: MTN Pulse is a social networking portal that provides you with one single platform to connect with others, chat, upload photos and videos, join a group or post a blog, as well as sync with my existing social networks such as Facebook, YouTube and Twitter.
v. ShARE AN1) SELL: Share ‘n’ Sell allows you to send credit from your prepaid account to another MTN customer’s prepaid account using SMS or USSD. That way, you can keep your family and friends topped up and connected. In addition, transferring credit does not cost you anything.
vi. MTN BACKUP: MTN Backup is a service that provides MTN subscribers a simple way to keep phone and SIM contacts safe on a secure MTN online account. It enables you save both the contacts on your SIM, and those on your handset. You can backup up to 200 contacts on your SIM and up to 5000 contacts on your mobile phone. This means that, if anything happens to your phone or SIM, you can simply restore your data to your new mobile phone or SIM.
vii. M’EN TALK ON: If you make long calls to lots of people, MTN Talk-On is the best plan for you. On MTN Talk-On, your first minute of call during the day will be charged at 50 kobo per second. After your first minute of calls, your MTN-to-MTN will then be charged at 25 kobo per second. No access fee, no hidden charges!!! Now that is what TRUE VALUE is! Also on MTN Talk-On, you will have access to life-enriching services, value adding bundles, and the lowest international call rates.
viii. MTN FAMILY and FRIENDS: MTN Family and Friends is a special service that is exclusive to the MTN Happy-Link plan. With Family and Friends, you can register up to 8
MTN numbers as your Family and Friends numbers for free, 1 international number and any other network \Vhen you make calls to these numbers, you get a 50% discount on the total cost of the call.
ix. MTN GOOGLE SMS: Google sms is a mini version of Google search via your MTN mobile phone. It is ansms-bascd search which does not require any form of internet connection. Google sms can give definition of words, News headlines, Sports information and more all via sms. Google srns is also available through MTN Sim Plus. The search is keyword—based.
x. MTN CALL ME BACK: MTN has improved the sure way to get your message across whenever you want someone to call you. With unlimited Call Me, you can say what you want to say even when you are out of airtime. The text message will arrive as if you sent it directly from your phone i.e. if the recipient has stored your number on her/his phone, your name will appear as the sender. With Unlimited Call Me, you can now seHd an unlimited number of Call Me messages every day. Even more, with your MIN line, you can send messages across to your family and friends to call you when you have run out of credit or during an emergency.
xi. MTN PAYGO: MTN Pay Go is a simple tariff plan that we designed with the aim of empowering you to do so much more with your mobile phone without having to pay more.
2.2 Conceptual Framework
The Customer Relationship Management (CRM) concept refers to a business strategy focused on the customer, to the extensive process that integrates sales, marketing and client’s service that creates value for both the customer and company. CRM is a strategy based on developing relationships with clients. In recent years, CRM has flourished and now can be considered necessary for any company that wants to succeed. CRM is focused on retaining customers by collecting data from any contact with by phones, e-mail, and internet. The company can use this information for specific purposes such as marketing, sales and after sale services. The underlying philosophy is that everyone in the company should focus on the customer. One of the first references to CRM is that is a marketing oriented approach of strong stable relationship with individuals specific customer (Jackson, 1985).
2.2.1. Concept of (Independent variable and the proxies)
Customer relationship management is widely described as a strategy, processes and practices or methodology. Customer relationship management is not just something that is done once to new customers it is a continuous process. Customer Relationship Management is an essential part of modern business management.
As pointed out by Claudia et al (2001), “customer relationship management can be seen as the alignment of business strategy, organization structure and culture, and customer information and technology so that all customer interactions can be conducted to the long term satisfaction of the customer and to the benefit and increase in performance of the organization”.
Newell (2000) viewed Customer Relationship Management as one of the newest innovations in customer service today. Customer relationship management helps management and customer service staff to cope with customer concerns and issues. The strategy involves gathering a lot of data about the customer, data collected are used to facilitate customer service transactions by making the information needed to resolve the issue or concern readily available to those dealing with the customers. This will often lead to more customer satisfaction and, a better business operation in terms of profit and performance. In essence,
Customer Relationship Management systems are of great help to the management in deciding on the future course of the organization. (Gummesson, 2004).
A commonly cited definition of CRM is that by Antonides et al (1999), which goes thus as:
Customer Relationship Management is the establishment, development, maintenance and optimization of long-term mutually valuable relationships between customers and organizations.
Greenberg (2001) noted that Customer Relationship Management (CRM) includes the methodologies, strategies, software, and web-based capabilities that help an enterprise organize and manage customer relationships. It is the collection and distribution of all customer data to different areas of the business.
Customer Relationship Management (CRM) is a concept to enhance a company’s ability to retain customers and gain strategic advantage over its competitors. It is focused on creating and managing relationships with customers more effectively through detailed and accurate analysis of consumer data using various information technologies, (Gosney G. et al 2000).
Customer relationship management helps to achieve organizational goal as well as improve the experience that customers get from the organization.
According to a research carried out in the United States in 2006, the conclusion was adopted that the quality of services that an organization renders to its customers will affect their profitability and that is why they have to manage these customers so as to get the best from them.
CRM as a strategy goes beyond increasing transaction volumes and level of sales. Its main objective is to increase profitability, revenue and customer satisfaction. Simply put, CRM is a strategic process rather than a technical issue. This is a significant change of paradigm and a quantum leap in terms of how we look at our business activity.
In the marketing literature the terms customer relationship management and relationship marketing are used interchangeably. Nevin (1995) argues that, these terms have been used to reflect a variety of themes and perspectives. Some of these themes offer a narrow functional marketing perspective while others offer a perspective that is broad and somewhat paradigmatic in approach and orientation. A narrow perspective of customer relationship management is database marketing emphasizing the promotional aspects of marketing linked to database efforts. Bickert (1992).
According to Boulding et al. (2005), CRM represents an evolution beyond the existing idea.
They examined that Customer Relationship Management goes beyond existing ideas as it includes the integration of all activities across the firm, linking these activities to both firm and customer value, extending this integration along the value chain and developing the capability of integrating these activities across the network of firms that collaborate to generate customer value while creating shareholder value for the firm. In addition, due to the newness to organizations which have not adopted it before and the technological aspect of the
CRM definition, CRM is viewed as an innovation in this research.
Customer Relationship Management (CRM) is a managerial philosophy that seeks to build long term relationships with customers. CRM can be defined as “the development and maintenance of mutually beneficial long-term relationships with strategically significant customers” (Buttle, 2001). There are certain parameters or yardsticks which can be used to qualify a good customer relationship management strategy. These parameters are:
i. Should be integrated to the business process throughout the enterprise.
ii. Must be accessible to every personnel involved in a customer’s interaction with the organization.
iii. Must measure, analyse and improve process effectiveness.
iv. Must have coordinated process and strategies.
v. Must have a single and universally shared data pertaining to a customer.
vi. Must be web-based and possess real-time analytics with closed loop reporting.
vii. Should anticipate the customer’s needs accurately enough to be in the right place, at the right time, with the right product for them.
Barnes (2002) points out that CRM consists of three components which are:
i. The customer.
ii. Relationship (between Company and Customer).
iii. Management.
The customer relationship management process is a continuum that does not just end when a customer is won. Rather it should continue throughout the time that the customer will last in the organization. So with this in mind, Barnes (2002), once more gives a little explanation on what the components of customer relationship management are;
Customer: The customer is the only source of the company’s present profit and future growth. .
However, a good customer, who provides more profit with less resource, is always scarce because customers are knowledgeable and the competition for them is fierce. Sometimes it is difficult to distinguish who the real customer is because the buying decision is frequently a collaborative activity among participants of the decision making process. (Wyner 1999).
Information technologies can provide the abilities to distinguish and manage customers;
CRM is more of a marketing approach that is based on customer information.
Relationship: The relationship between a company and its customers involves a continuous bi-directional communication and interaction. The relationship can be short-term or long- term, continuous or discrete, and repeating or one-time. Relationship can be attitudinal or behavioural. Even though customers have a positive attitude toward the company and its products, their buying behaviour is highly situational. For example, the buying pattern of airline tickets depends on whether the person buys it for family vacation or corporate business trip. CRM involves managing relationships that exist among customers and business owners, so that it will be profitable and mutually beneficial to both parties. Customer lifetime value (CLV) is a tool for measuring such a relationship.
Management: Customer Relationship Management (CRM) is not an activity only within a marketing department. Rather, it involves continuous corporate change in culture, attitude and processes. The customer’s detail that is obtained is being transformed into corporate knowledge that leads to activities that take advantage of the details and of market opportunities. CRM requires a comprehensive change in the organization and its people. (Ngai, 2005).
2.2.2 Concept of (Dependent variable and proxies)
According to Parvatiyar et al, (2001), they fundamentally examined that the, CRM application architecture must combine operational (transaction-oriented business process management) technologies and analytical (data mart-centered business performance management) technologies. Besides, the enterprise also needs to cater to the interaction needs of its customers across multiple channels using various collaborative technologies.
A balanced CRM approach requires that all three sides of the equation be implemented to form the CRM backbone.
CRM can be broadly categorized under three heads:
i. Operational CRM: Automation of the basic business processes (marketing, sales, service)
ii. Analytical CRM: Support to analyse customer behaviour, implements business intelligence like technology.
iii. Collaborative CRM: Ensures the contact with customers (phone, email, fax, web, sms, post, in person)
Operational CRM: The goal here is to achieve the automation of horizontally integrated business processes including customer touch points, point of sales, Enterprise Resource Planning (ERP), and the legacy systems integration. (While ERP forms the back office automation, CRM covers the front office. Typical applications include sales force automation, call centre automation, channel automation, enterprise marketing automation and proposal generation. Operational CRM is covered by customer-facing applications that integrate the front, back, and mobile offices, including sales force automation, enterprise marketing automation, and customer service support. Operational CRM is capable of integrating with financial and HR suites of ERP, thus making it possible to have end-to-end functionality from lead management to order tracking).
Analytical CRM: Analytical CRM is the use of customer data for analysis, modelling and evaluation to create a mutually beneficial relationship between the company and the customer. CRM analytics comprises all programming that analyses data about an enterprise’s customers and presents it so that better and quicker business decisions can be made. Almost every organization has collected and stored a wealth of data about their customers, suppliers, and business partner, (Parvatiyar et al, 200 l).The differentiating factor of a successful progressive enterprise is its ability to discover valuable information hidden in this data an transform this data into knowledge. This involves capturing, storing, extracting, processing, analysis and interpretation of customer data to the corporate user. The purpose of these tools is to draw inferences regarding customer preferences, attitudes, behaviour etcetera. They allow corporate customer managers to differentiate and segment customers to gain competitive advantage. It involves the use of customer intelligence management technique.
Analysis of Customer Data
Processes managed by an analytical CRM environment include data acquisition, cleansing/integration, loading/unloading, aggregation and distribution. Analysis of customer data essentially takes two forms — predictive and retrospective. One form enables companies to predict or forecast future behaviours or values of customers while the other provides a multidimensional view of customer activity.
Predictive analysis: Uses historical customer data to uncover customer patterns, behaviour and relationships. The use of data mining and predictive analysis enable a company to focus on high-value customers.
Retrospective analysis: Provides capabilities such as online analytical processing (OLAP), query and reporting. When companies need to understand existing customer data by transaction, location, product and time, retrospective analysis is a good solution.
Collaborative CRM: Collaborative CRM refers to the strategies and technologies that enable multi-enterprise business process integration and content management, with the goal of creating, growing, and retaining profitable networks of customer and partner relationships. It focuses on giving visibility into enterprise sales, service, marketing, and product development to support customers better. This is the application of collaborative services to facilitate interactions between the customer and the organization. Examples are, portals, partner relationship management (PRM) application, e-communities or customer interaction centre (CIC). Collaborative CRM facilitates interactions with customers through all channels (personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. Collaborative CRM is used to establish the lifetime value of customers beyond the transaction by creating a partnering relationship.
Collaborative CRM enables an organization’s internal customer facing and support stafl mobile sales people, partners and customers themselves to access, distribute and share customer data/activities (Copulsky and Wolf 1990). The above types of customer relationship management have their constituents or what they are made up. A CCL fosters a people-centric collaboration which permits any user to access any relevant data on any system, internal or external, as long as that access will enhance that user’s job performance or function (Myers, 2002).
Collaborative CRM is also an approach in which the various departments of a company, such as sales, technical and support, and marketing, share any information they collect from interactions with customers. For example, customer feedback gathered from technical support section could inform marketing staff about products and services that might be of interest to the customers. The purpose of collaboration is to improve the quality of customer service, and as a result increase customer satisfaction and loyalty.
Perspectives of Customer Relationship Management
According to Janice (2003), customer relationship management can be viewed conventionally from the following perspectives; CRM from the Information Technology Perspective.
From the technology perspective, companies often buy into software and that will help to achieve their business goals. For many, CRM is far more than a new software package, the renaming of traditional customer services, or an IT-based customer management system to support sales people. However, IT is vital since it underpins CRM, and has the payoffs associated with modern technology, such as speed, case of use, power and memory, and so on. CRM from the Customer Life Cycle (CLC) Perspective. The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle. However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looking at the products or services that customers need throughout their lives. It is marketing orientated rather than product orientated. Essentially, Customer Life Cycle is a summary of the key stage sin a customer’s relationship with an organization. CRM from the Business Strategy Perspective.
The Business Strategy perspective has most in common with many of the concepts and topics contained in customer transaction with the organization. It contains three key phases — customer acquisition, customer retention and customer extension, and three contextual factors — marketing orientation, value creation and innovative IT.
Customer Relationship Management and Service in Tile Telecommunications Industry
Customer service is a component of business as viewed by both the deliverer and user of such service. According to (Schneider and Bower 1995), a service oriented industry comprises of• customers who are the foundations of the business. Without the customers, there would be no business, because they are the people that make use of the products and services that are produced by the organizations. The objective of the business now is to cater for the needs and expectations of the customers and also service them as the need arises. In every organization, according to Zablah et al (2003), there are criteria and expectations that customers use to judge them depending on the type of service they render. The parameters that customers expect to be available in telecommunications industries are:
i. Security: Customers need to be secured in their dealings with the telecommunications industry. For example, MTN during their periods of promotion usually warn customers or winners of any prize not to disclose their account or contact information to anybody other than their authorized representatives. This is so because when customers are not properly secured, they would be deceived into thinking that they are doing the right thing by disclosing their account or contact information to anybody.
ii. Trust: 1-laying the trust that the telecommunications industry will not fail in times of service is a reason that will make customers to want to remain with companies like MTN and others.
iii. Fairness in Dealing with Customers: Due to low call charges, limited tariffs and subsidized data bundle packages, MIN has tried its best to become the market leader in terms of telecommunications and this gives them the chance to deal fairly with customers.
iv. Adequate Service Provision: Because the issue of services is of great concern to customers, they need adequate services to be rendered to them. MIN NG has tried in the recent years to make sure that the services that they provide are the ones that would satisfy the curiosity of their customers. The ability to manage customer relationships and satisfy them continuously and sustainably is of a paramount importance to any enterprise. It involves getting in contact with the customers in order to know their needs and satisfy them. Service delivery is an important aspect of customer satisfaction. At this point, customers begin to experience what true service means, since their needs and expectations are met. Service delivery is the first and last of a customer experience or relationship with an organization. Every organization has to encourage their employee on how important quality is in everything they do and must make sure that the long-term survival of the organization depends on its ability to satisfy its customers” needs and wants effectively.
Purposes of Customer Relationship Management
CRM in its broadest sense, means managing all interactions and business with customers.
This includes, but is not limited to, improving customer service and response. A good CRM program will allow a business to acquire customers, service the customer, increase the value of the customer to the company, retain good customers, and determine which customers can be retained or given a higher level of service. Wyner (1999), explained that a good CRM program can improve customer service by facilitating communication in several ways:
Provide product information, product use information, and technical assistance on websites that are accessible 24 hours a day, 7 days a week.
Identify how each individual customer defines quality, and then design a service strategy for each customer based on these individual requirements and expectations.
Provide a fast mechanism for managing and scheduling follow-up sales calls to assess post purchase cognitive dissonance, repurchase probabilities, repurchase times, and repurchase frequencies.
> Provide a mechanism to track all points of contact between a customer and the company, and do it in an integrated way so that all sources and types of contact are included, and all users of the system see the same view of the customer (reduces confusion).
> Help to identify potential problems quickly, before they occur.
> Provide a user-friendly mechanism for registering customer complaints (complaints that are not registered with the company cannot be resolved, and are a major source of customer dissatisfaction).
> Provide a fast mechanism for handling problems and complaints (complaints that are resolved quickly can increase customer satisfaction).
> Provide a fast mechanism for correcting service deficiencies (correct the problem before other customers experience the same dissatisfaction).
> Use internet cookies to track customer interests and personalize product offerings accordingly.
> Use the Internet to engage in collaborative customization or real-time customization.
> Provide a swift mechanism for managing and scheduling maintenance, repair, and on-going support (improve efficiency and effectiveness).
> The CRM can be integrated into other cross-functional systems and thereby provide accounting and production information to customers when they want it.
2.3 Theoretical Framework and Base
Since CRM is an organization wide strategy, it is important that its business strategy comprises of target market that it will be focusing on for attracting them, developing long term relations with them and then taking adequate measures to make them loyal to the company for a long period.
There is no concrete definition available for understanding the concept of CRM as it has been defined by many researchers in different ways. For instance, Buttle (2008) defined the concept CRM as an overall process used by a firm for creation and maintenance of customer relationships that are profitable by fulfilling the promise of delivering excellent customer value proposition and satisfaction. This definition has more emphasis on the marketing aspect that focuses on value creation and employee.
On the other hand Becker, Greve and Alber (2009) give a more technical perspective definition of CRM by stating that it is a strategy used by an organization that relies on information technology to assist in providing a detailed, genuine and integrated perspective of its customers which can help it in ensuring that all business processes and interaction with customers support it in maintaining and enhancing relationships that are equally favourable for both parties ( customers and organization).
There are two theoretical perspective of CRM i.e. Technical or Technological perspective and Business i.e. customer centric perspective. From technical aspect, CRM is important both for operational and analytical purposes that implies that proper system needs to be implemented in the organization so that they can provide proper foundations for analysis of different customer segments while, Business perspective of CRM emphasizes that relationship marketing should be integrated with marketing mix.
2.4 Review of Empirical Studies
Around the world, many studies have been conducted to determine the factors affecting organizational performance on several types of organizations. Accordingly, previous studies are reviewed in levels in order to determine factors affecting organizational performance.
Samson Nwankwo and Sunday Stephen Ajemunigbohun (2013): Customer Relationship
Management and Customer Retention: Empirical Assessment from Nigeria’s Insurance Industry. The purpose of this study was to draw the attention of insurance practitioners in Nigeria to interrelationships that exist among CRM, customer retention and value creation. For this purpose, researchers have evaluated the relationship that exist between CRM and customer retention; and also ascertained if value creation was in any way extended to insuring populace in Nigeria.
Study Design:
The study employed cross-sectional survey design
Place and duration of study: Study was conducted in Lagos metropolis. Duration of study was from October, 2012 to February, 2013.
Methodology: The research was started with literature survey. The study employed stratified random sampling technique and thus, gathered data through the use of structured questionnaire. The sample population consisted of 58 respondents made up of marketing managers and underwriting managers drawn from 35 insurance companies which were randomly selected from the directory of member companies. The statistical instruments employed for this study were Simple linear regression and Kolmogorov-smirnov test. Two hypotheses were tested in this study.
Results: The study found that CRM positively influences customer retention in the Nigeria’s
Insurance Industry, and thus helps create values for insuring populace in Nigeria.
Conclusion: The study evidenced interlink between various constructs understudied.
Revenio Jalagat 2016 “Evaluating the Extent of Customer Relationship Management (CRM) of Bank Muscat: A Case Study in Sultanate of Ornan”.
This study aimed to evaluate the extent of CRM application in Bank Muscat, Sultanate of Ornan. Specifically, it sought to address the following questions:
(1) What is the role of Customer Relationship Management factors on service quality provided by Bank Muscat?
(2) What are the different tools and techniques Bank Muscat uses in order to practice relationship management and how they use it?
(3) How customer relationship management tools and techniques can contribute customer loyalty and customer retention?
The research utilized the mixed method research that employs both the quantitative and qualitative approach. The SPSS package was used to analyse the demographic profile of the respondents and the role of CRM in assessing the service quality provided by Bank Muscat with the use of Likert Scale. The other part of this research dealt with the qualitative aspect with the use of interview to the customer respondents and the 3 Bank Muscat staffs. The data gathering was made to the 80 customer respondents and three staff respondents. The findings of the study showed that majority of the respondents are male and majority have attained bachelor’s degree. In the aspect of evaluating the role of CRM to service quality the findings showed the following factors positively impact the service quality: On-time bank statement; employee efficiency customer service; value for the money; the role of promised excellent services with promised times and regular interaction in quality banking services; role of employee’s effective communications with the customers; role of extensive knowledge on products and services of the employees are essential in providing quality services; role of using technology and c-banking services helps to develop the quality of the services in thi industry; and the role of the availability of the senior manager to increase the service quality of the bank.
Based on the findings and conclusions of the study, it was recommended that the top management should support the maintenance of CRM system; increase the rate responsiveness of the management to the concerns of the customers and incorporate in the strategic planning; periodic evaluation of the CRIVI system for improvement; allocation of budget to sustain the CRM implementation; and embraced the concept of continuous improvement emphasizing on customer-focused operation.
Fadi Mahawrah, Issa Shehabat, Emad Abu-Shanab (2O6) “the impact of knowledge management on customer relationship management: A case from the fast food industry in
Jordan’’
The aim of this study is to test the relationship between knowledge management (KM) and customer relationship management (CRM).The impact of KM on CRM is the core of this study. KM systems are considered one of the critical management information systems that are utilized in a wide range of business sectors. KM provides an overall image on how to use customer knowledge (CK) and to develop a close relationship with them. It also plays a significant role in developing CRM. This paper attempted to investigate the effect of customer satisfaction, CK and trust towards customer retention (CR) in the fast food industry in Jordan. The study also aimed at exploring the factors influencing the level of CR within the fast food industry in Jordan. The study utilized a survey that probed the perceptions of customers towards the previously mentioned factors. Results indicated that CK and trust are important factors in predicting customers’ satisfaction. The results clearly show that customer satisfaction plays an important role in CRM.
Nor azila and mohd noor, 2011 “Electronic Customer Relationship Management
Performance: It’s Impact on Loyalty from Customers’ Perspectives”
Undeniably, the telecommunication industry is changing radically. Today, communication is becoming the nerve of the life. In particular, mobile phone service industry is gaining popularity and importance all around the world and as mobile usage is growing rapidly, telecommunication marketers are developing new strategies to take advantage of the potential customers. Companies including communication companies are putting much more emphasis on customer relationship management (CRM) as a tool for managing customer relationship and to increase customer satisfaction and loyalty. E-CRM emerges from the internet and web technology to facilitate the implementation of CRM. E-CRM performance as the amount of improvement that companies achieve in customer relationship strength, sales effectiveness, and marketing efficiency after implementing CRM technology. This study examines the influence of e-CRM performance on customer loyalty in Jordanian telecommunication industry. Data were gathered from students in various universities in Jordan using survey method. Using regression analysis, the results supported that e-CRM performance significantly related to customer loyalty
2.6 EXISTING GAP
Explicitly, the study has unveiled some silent literatures that have some degree of relevance to the matter under study. These literatures have concentrated mainly on general issues on
Customer Relationship Management, with little emphasis on the impact on organizational performance. This study therefore intends to cover this gap by examining in details further on the impact of Customer Relationship Management on organizational performance. These reviews were quite helpful to identify the gap and it provides an insight to carry out the study in the right perspective. Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). According to Richard et al. (2009) organizational performance encompasses three specific areas of firm outcomes:
a) Financial performance (profits, return on assets, return on investment, etc.);
b) Product market performance (sales, market share, etc.); and
c) Shareholder return (total shareholder return, economic value added, customer service, etc.).Specialists in many fields are concerned with organizational performance including strategic planners, operations, finance, legal, and organizational development.
In recent years, many organizations have attempted to manage organizational performance using the balanced scorecard methodology where performance is tracked and measured in multiple dimensions such as: Financial performance (e.g. shareholder return), Customer service, Social responsibility (e.g. corporate citizenship, community outreach), Employee stewardship, and Profit maximization.
2.6 SUMMARY OF THE REVIEW
This chapter has examined the knowledge base on which the study was developed. The origin and definitions about relationship marketing and customer relationship management were reviewed. Key literature review papers about customer relationship management have been referenced throughout the sections.
The area of customer relationship management and how it relates to customer loyalty and organizational performance is an area that is growing in business and organizational research.
This paper examined customer relationship management in the context of customer service quality and organizational performance. The various parts that were examined in this paper includes: what customer relationship management is, types of customer relationship management, what customer service entails, how it can be improved upon and how customer relationship management can be implemented.
Customer relationship management branches off into many other significant areas such as; value added services, use of technology or information systems to serve customers better.
Organizations have a chance to learn from their customers so as to increase and improve upon their performance. The more customers teach organizations, the more effective these organizations become at providing exactly what the customers want and the more difficult it will be for competitors to lure them away from such organizations. This will help to increase the performance o-f the said organizations in terms of profitability increase, market share, customer retention, and even in their service to the target customers.
Learning and managing customers is what this whole customer relationship management topic is all about. The customers tell the organization what to do in order to manage and keep them. The strategy is for the organizations to learn how to listen, manage and retain customers in order to improve upon their performance.
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter focuses on the analysis of the methods and procedures that would be used in carrying out the research on the impact of customer relationship management on organizational performance ease study of MTN, Nigeria’s leading Telecommunications Company. It also outlined the methods and sequences, by which data for this study is collected, and to be analysed to test the hypothesis for this research work. The collection of data for this research study is done through the use of primary data source (Questionnaire).
3.2 Area of the Study
This is conducted in University of Abuja, Abuja. Abuja is the capital city of Nigeria located in the centre of the country within the Federal Capital Territory (FCT). It is a planned city and was built mainly in the 1980s, replacing the country’s most populous city of Lagos as the capital on 12 December 1991. Abuja’s geography is defined by Aso Rock, a 400-metre (1,300 fi.) monolith left by water erosion. The presidential complex, National Assembly,
Supreme Court and much of the city extend to the south of the rock Zuma Rock, a 792-metre (2,598 fi.) monolith, lies just north of the city on the express way of Kaduna (Wikipedia
2018).
The University of Abuja is a territory institution in the Nigerian capital Abuja. It was established on January 1, 1998 (under Decree No. 110 of 1992 as amended) as a dual-mode university with the mandate to run conventional and distance learning programs. Academic work begins in the university in 1990 with the matriculation of its pioneer students. Despite having a troubled past, the university is known to have significantly improved and is reportedly ranked amongst the top 10 universities in Nigeria by the National Universities Commission.
3.3 Research Design
The importance of design in a research study cannot be over emphasized and this is because it is used to guard against possible chances of failure in a study, this implies that when an enquiry is conducted, it is necessary and important to anticipate each research problem and decide on what to do, and then one can increase chances of controlling the research procedures. In this sense, research design is self-regarding and correction is made into the conduct of enquiry leading to an improvement and perfection of an integral part of every research effort. This undoubtedly led to the restriction of this research work to MTN NIG and its customers (which is a private organization) due to time and financial constraint. In this chapter, some steps in research, which require major attention and consideration during the design stage because of their relevance in the final outcome of such research are been examined. This research was causal in nature. That is, it tried to see what causal effect that a change in customer relationship management have on customer loyalty to an organization, that is any change in customer relationship management will also cause a change in customer loyalty to an organization. It was aimed at sharing the relationship that exists between customer relationship management of MTN NG and the performance of MTN NG.
3.4 Population of the Study
Population is a collection of all conceivable elements, subjects or observations with one or more attributes in common. It represents a specified segment of the real world with common definite specified characteristics relating to a particular phenomenon of interest to the researcher. The population of study was limited to the customers of MTN NIG in University of Abuja, Abuja. A number of 110 questionnaires were distributed to respondents who were selected through the use of random sampling at the University.
3.4.1 Sample Size and Sampling Technique
The population is defined as referring to all items, which come within the scope of research or investigation whether human or otherwise. While sample is a tool to infer something about a population by selecting a part from that population, (Adelusi, 2005). The size of the population was quite enough to achieve its aim and it was drawn from the customers of MTN NIG who are within the area of University of Abuja, Abuja.
A total number of 110 samples were taken from the population to test the validity and reliability of the stated and formulated hypothesis. The selected respondents cut across the staff and students, the academic and non-academic members of the university. All the three colleges in the university were also amply represented in the sample.
3.5 Sources of Data Collection
The sources of data collection were the primary and secondary sources.
Primary Data: The main source of data to be used is the questionnaire. To facilitate useful information, self-developed questionnaires will be administered. Questionnaire is one of the most useful tools for data collection, (Foddy, 1993). The data derived from this source is known as primary data.
Secondary Data: These are already existing data that can be easily gotten from various sources. They can be from journals, bulletins, textbooks, newspapers, periodicals etc.
3.6 Method of Data Collection
The instrument used for data collection in this study is questionnaire. Which will be distributed to the customers of MTN NIG in University of Abuja This method was chosen by the researcher because of its effectiveness as a means of personal contact. To have a valid and a reliable data, the researcher ensured that the questionnaires were well formulated to minimize errors. The questionnaire had two sections. The first section had questions that covered information (bio-data) of respondents and the second section questions on the general impact of customer relationship management on customer loyalty based on the selected area. The researcher will also use personal interviews as well as observation method in collecting data for the research work. The information obtained from the interviewed assisted in the data analysis. Vital information was also collected through secondary source like related textbooks, journals and periodicals amongst others.
3.7 Methods of Data Analysis
The data obtained in this study was analysed using chi-square (x2) as the major statistical tool. Chi-square (x2) is a non-parametric statistics. There are two types of chi-square (x2) tests: there is a chi-square (x2) of independence and homogeneity and there is one that test the goodness of fit. The chi-square (x2) of the goodness of fit version was used in this study.
The chi-square (x2) is given by:
x2= Z (O-E)2
E
Where: Z = Summation of
O = Observation frequency
E = Expected frequency
The expected frequency (E) was computed using the formula
E = Row total x Column total
Grand total
The Degree of freedom (DF) was computed using the formula:
DF = (R—i) (C—1)
Where: R = Number of rows
C = Number of columns
Level of Significance
The level of significance for this study was fixed at 0.05 alpha levels. This showed that the researcher was 95% confident that the decision taken was correct.
Decision Rule
Decision will be based on the degree of freedom (DF) and 0.05 significant levels in the table of critical value. If the calculated value is less than the table value of chi-square (x2), the Null hypothesis (H0) would be accepted, otherwise it will be rejected and the Alternative hypothesis (H1) would be accepted. In other words, the null hypothesis is rejected when the calculated value is greater than the table value.
