Capabilities in CRM - an empirical analysis of situational capabilities of CRM Implementation

As market conditions change rapidly and competitive intensity in business environments increase, organizations are realizing the need to re-establish their connections to new and existing customers in order to enhance customer loyalty (Chen, I. J. und Popovich, K. 2003, p.672; Helmke, S. und Dangel-maier, W. 2001). Loyal customers are regarded as far more profitable than variety-seeking, price-sensitive switchers (Reichheld, F. F. 1996). Enabled by the rapid growth of the internet and its associ-ated technologies, opportunities to manage long-term customer relationships increased substantially (Bauer, H. H. et al. 2002). Customer Relationship Management (CRM) is intended to establish, de-velop, maintain and optimize long-term, mutually valuable relationships between customers and or-ganizations, thus constituing a precondition for profitability (Payne, A. und Ryals, L. 2001, pp.3-4). Thus, CRM can be regarded as a concept to improve marketing efficiency that at the same time en-hances the dual value for both parties involved. This can be achieved by a perpetual, organization-wide acquisition and dissemination of customer information and responsiveness to market imperatives (Kohli, A. K. und Jaworksi, B. J. 1993).
Substantiated by a most recent study of Pierre Audoin Consultants (PAC), CRM is therefore one of the most critical concepts in order to achieve competitive advantage (PAC 2006). An organization's ability to develop and maintain close relationships with their most valuable customers can thus be regarded as a basis for durable competitive advantage (Day, G. S. 2000b).
Yet experience shows that especially the implementation of CRM entails major difficulties (c.f. Bull, C. 2003; Chen, I. J. und Popovich, K. 2003; Kale, S. H. 2004; Payne, A. und Frow, P. 2006; Zablah, A. R. et al. 2004). About more than fifty percent of all CRM projects deliver unsatisfactory results (Dignan, L. 2002). According to a study accomplished by the Gartner Group, about 75% of all CRM-projects are expected not to deliver measurable success (Gartner Group 2003). Those studies reveal that organi-zations underestimate the complexities of CRM generally, lack clear strategic objectives and tend to overestimate the benefit of CRM-software specifically. Prompted by these numerous reports and stud-ies, academic research focused on the antecendents and consequences of CRM success, leading to the identification of a wide range of critical success factors (Boulding, W. et al. 2005; Payne, A. und Frow, P. 2006; Payne, A. und Frow, P. 2005). Several research results claim that, e.g., organizational alignment, exante strategy definition or cross-functional processes are the main drivers for success. While those proved some evidence on CRM's impact on performance (Reinartz, W. J. et al. 2003), the major body of literature on CRM missed to investigate the more fundamental question of why some organizations are actually better than others in implementing CRM. Furthermore, situational factors of the organization that might widen or narrow its ability to implement customer-orientation, e.g., fre-quency of customer interaction, personalization potential, market dynamics, are largely neglected (Hansotia, B. 2002,pp.122).
Despite its utmost importance in order to achieve and maintain competitive advantage from a practical standpoint, the research area of situational capabilities in CRM is investigated insufficiently at present (Day, G. S. 2000a; Plakoyiannaki, E. und Tzokas, N. 2002). Empirical research in the area of CRM-capabilities mostly provide first evidence of CRM-specific capabilities' impact on relative performance (c.f. Day, G. S. und Van den Bulte, C. 2002). The focus of those studies on only few CRM-capabilities of an organization and the comparatively disregard of critical situational factors falls short of the com-prehensive nature of CRM. The main challenge for academic research in CRM is not only to identify the relevant situational CRM-capabilities, but to uncover causal relationships between situational fac-tors, CRM-capabilities and CRM-success in particular. Thereupon, in-depth knowledge about their interrelations delivers starting point to ensure the succes of CRM-implementation.