COVID-19 Impact on CRM Systems in the Middle East

Introduction

The COVID-19 pandemic has enormously changed the social, economic, healthcare, and business aspects of life. Not only has it caused huge disruptions in the supply chain, but it has led to an unprecedented disruption of commerce, forcing thousands of businesses to close down (Donthu & Gustaffson, 2020). Some industries, such as tourism and hospitality, were hit hard, while others continued to operate, although crucial areas such as cash flows, demand, supply chain, the workforce, and sales were all severely affected. Health sectors worldwide reported huge strains, with approximately 22 million cases reported and 777,000 lives lost by the end of August 2020 (Tosun, 2020). The required physical distance between people led to the imposition of curfews and restrictions on social gatherings, which had been a part of daily life before the pandemic (Tosun, 2020). To minimize physical contact, customers increasingly used the internet for their activities, and institutions were forced to restructure their business models to allow for remote working and minimize physical visits by customers (Mehta, Saxena & Purohit, 2020). Consequently, there has been a notable increase in the volume of e-commerce transactions in both the business-to-business and business-to-customer markets (Tosun, 2020).

At the same time, the mandatory social distancing rules changed the way companies relate with their customers (Aburumann, 2020). Customer relationship management (CRM) systems have been affected immensely across the board, as salespeople who initially met with their customers physically have had to develop innovative ways of maintaining those relationships with their most loyal customers (Aburumann, 2020). More and more organizations have been forced to move towards virtual environments and to embrace collaborative tools that support remote working (Eysenbach, 2020). The Bring Your Own Device (BYOD) model has become increasingly common throughout the world as sales professionals pursue mobile tools that enable them to serve their clients and prospects better amidst social distancing requirements (Rodriguez & Boyer, 2020). In a bid to boost productivity and efficiency, sales professionals in some industries have adopted automation tools in the form of mobile Customer Relationship Management (m-CRM) — CRM functions accessible via mobile applications (Rodriguez & Boyer, 2020).

This study seeks to assess the actual impact of the COVID-19 pandemic on the CRM function in the Middle East. The research questions guiding the study are as follows:

(i) How have remote working and social distancing regulations during the COVID-19 pandemic affected consumers' purchasing behavior in the Middle East?

(ii) In what ways have these changes affected the way organizations in the Middle East carry out CRM?

The study adopts a theoretical approach in which insights are obtained from empirical studies carried out within the context of the Middle East, and the findings are then compared to relevant selected theories. The aim is to assess whether the happenings in the Middle East are supported by, or deviate from, theory. The study is structured as follows: Chapter 1 covers the introduction and statement of the problem; Chapter 2 is a review of relevant literature, including the theoretical background to the study; Chapter 3 is the analysis and presentation of findings based on the views of other researchers; and the final section is the conclusion, which encompasses policy implications and considerations for future research.

The COVID-19 pandemic has severely affected business operations, forcing many businesses to close down and pushing millions of people out of employment. Commerce in most industries across the world has been disrupted, with companies facing serious challenges related to customer demand, marketing and sales, cash flows, the workforce, and the supply chain. While some businesses have completely collapsed as a result of these challenges, others have managed to navigate successfully. This, however, does not guarantee a rosy picture ahead for those that have survived, because the world that emerges after the pandemic will be significantly different from the one before it (Donthu & Gustaffson, 2020). It remains uncertain whether businesses will resume full physical workplaces, as some markets have been completely eliminated due to the outbreak, and hiring freezes are expected to continue as recovering companies try to reduce spending by postponing or eliminating non-essential tasks (Donthu & Gustaffson, 2020).

The COVID-19 pandemic serves as a reminder that pandemics have occurred in the past and will continue to occur in the future. It would be prudent, therefore, for businesses to be prepared for this reality and put in place measures to minimize the effect of such events. The findings of this study will go a long way towards informing organizational policymakers about the actual impact of the pandemic on customer behavior and the CRM function, helping them to prepare adequately for future pandemics.

Review of Theoretical Literature

This study analyzes the judgments and decisions of salespeople in the CRM function in response to the COVID-19 pandemic, which unpredictably changed the way companies relate with their customers. It draws from decision theory, which studies an agent's choices and judgment when faced with unexpected situations (Clemen, 2001). For the purposes of this study, judgment is defined as the assessment of alternatives or the process of choosing between alternatives. Shaban (2005) holds that if a decision is to be considered sensible, the decision-maker ought to have some knowledge about what the future might look like after the decision is made. Thus, decision theory assumes that when making decisions, individuals draw on a range of information sources, including stored facts or knowledge, as well as the expertise and experiences of others (Shaban, 2005). As such, decisions are not always made with true or complete objectivity, and often encompass some expectations about the future (Pitz & Sachs, 1984).

Decision theory can be broken down into two subcategories: normative and descriptive decision theory, both of which carry several theories within them. Normative theories focus on how rational agents make decisions and judgments, with the aim of determining how decisions ought to be made in an optimal situation (Zsambok & Klein, 1997). An optimal situation is one where agents make decisions based on known and logical conclusions supported by clear evidence, which in most cases is grounded in probabilities and statistics (Einhorn & Hogarth, 1981). The aim of normative theory, as Shaban (2005) points out, is to propose rational decision-making procedures that may be theorized and are logical.

Common decision theories under the normative approach are the subjective expected utility theory and the expected utility theory (Shaban, 2005). Both theories assume rationality on the part of the decision-maker, such that they choose the decision that maximizes their utility. The subjective expected utility theory postulates that a rational decision-maker will identify the optimum decision by assigning weights and probabilities to their beliefs, values, and attitudes in a rational context (Shaban, 2005). The expected utility theorem, on the other hand, quantifies the probabilities of various alternatives and selects as the optimum decision the option whose outcome is most likely and most desirable (Shaban, 2005). Researchers have used the expected utility theorem in many different contexts — for instance, Lanza and Bantley (1991) conducted a clinical study that made use of the expected utility theorem to identify the best intervention for violent and aggressive psychiatric patients.

Descriptive theories are behaviorist and naturalistic, and focus on identifying why agents make certain choices or decisions (Shaban, 2005). They consider decision-making agents as ordinary individuals and hence do not place restrictions on whether they are rational or irrational (Shaban, 2005). The descriptive theorist seeks to determine why an agent makes a certain choice or decision in a real-world context based on real conditions and environments (Shaban, 2005). Of particular relevance is the information processing theory, which suggests that human reasoning and decision-making is limited and bounded by cognitive capacity and reasoning ability (Shaban, 2005). An agent's cognitive and reasoning ability influences their capacity to positively process information within their environments and hence make the most desirable decisions (Thompson & Dowding, 2000; Chapman & Sonnenberg, 2000).

Based on the precepts of the information processing theory, the study hypothesizes that consumers' purchasing decisions and the subsequent organizational responses in crises are influenced by the prevailing situations at the time, not by the expected utility of anticipated outcomes. In times of crisis, survival — not rationality — is the primary influencer of agents' decision-making. As such, agents act to address the challenges that arise in the moment and may not focus extensively on the future consequences of such actions, as suggested by the normative theories.

Conclusion

This research paper sought to determine the impact of the COVID-19 pandemic on the buying habits of customers in the Middle East and to analyze the steps that companies have taken to adapt their CRM strategies to better serve customers during the pandemic. The findings will go a long way towards informing organizational policymakers about the actual impact of the pandemic on the CRM function, helping them to prepare adequately for future pandemics. The study derives its theoretical framework from descriptive and normative decision theories. The literature supports the idea that customers across the world, including in the Middle East, have become more appreciative of online shopping and have prioritized the purchase of essential commodities over discretionary commodities amidst falling incomes. Companies in the Middle East have responded swiftly by adapting their CRM strategies to make greater use of online ordering and shopping, mobile payments, shopping via mobile apps, cinema drive-ins, and the use of robots or virtual employees. All of these strategies are targeted at enhancing engagement and maintaining relationships with customers as a means of keeping them satisfied and retaining their loyalty.

From this study, it is evident that the COVID-19 pandemic has had the effect of revolutionizing CRM systems in the Middle East to better reflect customers' changing buying patterns. Overall, there is a clear need for organizations to develop strategies that increase customer engagement through digital systems.

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