Customer Relationship Management: A Critical Literature Review

Introduction to Customer Relationship Management

A customer is the most prestigious stakeholder of any business organization. The success or failure of a business is entirely dependent on the consumption behavior and loyalty of its customers (Campbell, 2003). Therefore, building a long-term, strategic relationship with customers must be among the top priorities of any business organization (Mithas, Krishnan, & Fornell, 2005). This relationship is managed through a process known as Customer Relationship Management — a multi-faceted phenomenon and business strategy used by organizations to manage their interactions with customers in an effective and well-organized way (Homburg, Wieseke, & Bornemann, 2009).

It is essential for a business organization to maintain good relationships with its customers, as they are the primary source of profit (Krasnikov, Jayachandran, & Kumar, 2009). Customer Relationship Management (CRM) involves managerial efforts to attract new customers as well as retain existing ones (Ryals, 2005). It primarily aims to strengthen the company's image and contribute to reductions in the costs of marketing, promotion, and other business development activities.

Customer Relationship Management is not an old concept; it has emerged as a powerful management technique since the beginning of the 21st century (Robinson, Neeley, & Williamson, 2011). The existing literature explains it by drawing direct links to customer services, customer satisfaction, and overall organizational performance. However, the current literature contains notable voids that prevent it from doing full justice to this important and evolving topic. This paper presents a critical review of recent journal articles with the aim of identifying areas of CRM that are under-researched or not yet adequately covered in the literature. The major focus is to carefully review and critically analyze these voids and shortcomings.

Critical Review of CRM Research Articles

In order to conduct a thorough critical review, fifteen research papers were selected from a larger pool of available literature. The screening process ensured that only one paper was selected for each major aspect of Customer Relationship Management. Articles that define or explain CRM only as a general practice — without treating it as a specific, defined business strategy — were excluded. To broaden the scope of the review, articles were drawn from several different fields, including the Journal of Marketing, the Journal of Service Industry Management, the Industrial Marketing Management Journal, the Business and Economics Journal, the Journal of Management Studies, and the Journal of Applied Psychology.

After critically reviewing these articles, the first notable finding is that most researchers are unable to properly define the CRM concept. They tend to define it in terms of customer satisfaction, consumer behavior, service quality, relationship marketing, and other concepts related to marketing management or total quality management (Mithas, Krishnan, & Fornell, 2005). In reality, however, CRM is much more than merely intending to satisfy customers or improving the quality of business operations (Ryals, 2005).

Secondly, some researchers consider CRM to be solely the responsibility of the sales force, customer service representatives, and other employees who interact directly with customers (Waterschoot & Bulte, 1992). The real concept, however, requires the involvement of every member of the organization, from frontline workers to top-level executives.

A strong critique can therefore be directed at the divergent definitions of CRM found across the literature. Some researchers define it as the process by which organizations come to know who their customers are and what they want (Waterschoot & Bulte, 1992). Others view CRM as the use of advanced communication systems in customer services to better serve high-value clients (Mithas, Krishnan, & Fornell, 2005). A third group argues that it is the combination of advanced technology and human effort applied in the area of customer services. In this paper, CRM is treated as a broader concept that encompasses all of these perspectives.

Another common shortcoming across the reviewed literature is the failure to explain the consequences an organization may face if CRM is not implemented effectively (Waterschoot & Bulte, 1992). Most articles simply note that CRM processes and computerized CRM programs represent significant organizational investments (Krasnikov, Jayachandran, & Kumar, 2009), without examining what happens when those investments fail to deliver results.

Because CRM is a relatively new concept, few analytical frameworks or measurement tools exist to evaluate its performance over time. The limited literature on CRM also offers few implications for future research, partly because many researchers have addressed the same issues in similar ways, using comparable measurement instruments. There is a pressing need to introduce more diverse analytical tools that not only measure improvements brought about by CRM but also generate new insights for future inquiry.

The existing literature can also be critiqued for the CRM lifecycle stages it covers. Most articles address only the initial stages — marketing research, planning, and implementation — while neglecting the final two stages: control and evaluation. Research articles focusing on these later stages would represent a significant contribution to the field.

A further criticism concerns the limited generalizability and practical implications of the current literature (Verhoef, 2003). Each article tends to address only one specific aspect of CRM, applicable to a particular situation or organizational problem. A manager seeking guidance for a real-world problem would likely need to review multiple articles before arriving at a usable solution.

Conclusion and Future Research Directions

In concluding thoughts, it can be said that the literature on CRM is not as comprehensive as that available on other management topics. However, the research articles examined in this critical review have discussed the subject in an elaborative and reasonably comprehensive way. Looking ahead, there are many areas of CRM that remain to be studied and revisited.

Focusing on the most promising area — employee involvement in the CRM process — the following research questions are proposed for future investigation:

"Do customer service-oriented employees need motivation from their leaders to serve the company's clients in an effective and efficient way?"

"Is it essential to motivate service-oriented employees in order to develop them into excellent customer service providers?"

These questions concentrate directly on the role of employees in building and maintaining good customer relationships. Future researchers can adapt either question for a specific industry — for example, hospitality, banking, travel and tourism, or telecommunications. Employee roles in developing customer relationships represent a focused, manageable research area when examined through the lens of customer service literature (Hennig-Thurau, 2004). Many related topics can also be explored in connection with this area. For example, a productive research question might be: "What changes does employee training and development bring to the Customer Relationship Management process?"

In summary, organizations must maintain strong customer relationships in order to remain competitive and secure a sustainable future. This process fundamentally requires the full dedication and commitment of their employees (Boulding, Staelin, Ehret, & Johnston, 2005).

References

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