southern taiwan university department of business administration the study of the relationship...

Southern Taiwan UniversitySouthern Taiwan University

Department of Business AdministrationDepartment of Business Administration

The study of the relationship between The study of the relationship between KM capability, customer life cycle KM capability, customer life cycle

activities, activities, and CRM performanceand CRM performance

Kuo-Wei Lee

Date: Oct. 22, 2009

Maneesap Rojdamrongratana

The study of the relationship between KM capability, customer life cycle activities, and CRM performanceMaster’s Thesis Presentation @ Southern Taiwan Universityby Maneesap Rojdamrongratana

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Background & MotivationBackground & Motivation

Various researchers have discussed about customer

relationship management (CRM) in order to improve firm’s

performance. CRM helps firm to reduce cost through improved

efficiencies in managing customer interaction (Hansotia,

2004).

In this study, we try to discuss the relationships between

customer life cycle activities management (CACAM) and CRM

performance.

The concept of Customer Life Cycle (CLC) is increasingly

discussed in the recent years (Hansitia, 2002).

Similar to Product Life Cycle (PLC), Customer Life Cycle (CLC) has

been segmented to four stages (Thomas,1998) :

1. Acquisition : Attracting new customer

2. Assimilation : Turning the first time buyers into repeat

customers

3. Cultivation : Cementing life-long customer bonds

4. Reactivation: Bringing lost customer back.


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The company should know about the natural of four stages in

the CLC to achieve better CRM performance. By creating and

delivering the suitable marketing activities to each stage,

firms can improve CRM performance (Hansotia, 2002).

One of the purpose of this study is to discuss the impact of

CLCAM on CRM performance.


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In addition, CLCAM are supported by the firm’s ability in

leverage customer data creatively, effectively and efficiently to

design and implement its strategies.

Hence, the customer knowledge is one crucial resource for

CLCAM. Companies need to gather a lot of information and

create various kind of knowledge to make CLCAM successful.

Knowledge should be managed well in order to utilize the

information more effectively (Menon & Varadarajan, 1992).


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In prior research, it indicated that four dimensions of knowledge

architecture, including Knowledge Acquisition, Conversion, Application,

and Protection are essential organizational capabilities for effective

knowledge management (Gold, Malhotra, & Sehars, 2001).

There are some studies mention the importance of CLCAM and highlight

CLCAM will help the business get succeed (Thomas, 1998). However,

there are no scholars discuss the linkage of using KM to manage CLCAM

to achieve the CRM performance.

This study will also prove the relationship between KM capability and

CLCAM.


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Furthermore, in recent years, the information technology (IT)

has help firms to leverage and utilize the data to support the

firm’s decision, especially in marketing field (Shaw,

Subramaniam, Tan & Welge, 2001) .

So, IT is one of most important factors that affect the

relationship between KM capability and CLCAM. In our study,

the moderating effect of IT on KM capability and CLCAM will be

also examined.


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Finally, the customer relationship is also built on the

foundation of trust (Berry, 1995) .

Trust is an important feature in the building and development

of quality relationships through a process of making and

keeping promises (Dwyer, Schurr & Oh, 1987; Gronroos, 1990;

Hewett, & Bearden, 2001).

The empirical evidence in prior research also show that trust

relates to the CLCAM and CRM performance.


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Research objectivesResearch objectives

1. To identify interrelationship between KM

capability, CLCAM, and CRM performance

2. To investigate how the interaction of KM capability

and Information Technology will affect CRM

performance

3. To investigate how the interaction of CLCAM and

Trust will affect CRM performance


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FrameworkFramework

H4KM

Capability

•Acquisition

•Conversion

•Application

•Protection

Customer life cycle

Activities

management

(CLCAM)

• New customer

Acquisition

• Cross sales for

customer

• Customer retention

• New Product

development

CRM

performance

•Customer

Satisfaction

•Customer Loyalty

H1 H2

H3

H5

Moderator

IT

Moderator

Trust


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HypothesesHypotheses

H4KM

Capability

•Acquisition

•Conversion

•Application

•Protection

CLCAM

• New customer

Acquisition

• Cross sales for

customer

• Customer retention

• New Product

development

CRM

performance

•Customer

Satisfaction

•Customer Loyalty

H1 H2

H3

H5

Moderator

IT

Moderator

Trust

H1: KM capability has significant effect on CLCAM•H1.1: KM capability has significant effect on new customer acquisition activity management.•H1.2: KM capability has significant effect on cross sales activity management.•H1.3: KM capability has significant effect on retention activity management.•H1.4: KM capability has significant effect on new product development activity management

H2: CLCAM has significant effect on CRM performance•H2.1: CLCAM has significant effect on customer satisfaction•H2.2: CLCAM has significant effect on customer loyalty

H3: KM capability has significant effect on CRM performanceH3.1: KM capability has significant effect on customer satisfaction.H3.2: KM capability has significant effect on customer loyalty.

H4: Interaction between KM capability and IT has significant effect on CLCAM

•H4.1: Interaction between KM capability and IT has significant effect on new customer acquisition activity management.•H4.2: Interaction between KM capability and IT has significant effect on cross sales activity management.•H4.3: Interaction between KM capability and IT has significant effect on retention activity management.•H4.4: Interaction between KM capability and IT has significant effect on new product development activity management.

H5: Interaction of CLCAM and Trust has significant effect on CRM performance

H5.1: Interaction of CLCAM and Trust has significant effect on customer satisfactionH5.2: Interaction of CLCAM and Trust has significant effect on customer loyalty


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HypothesesHypotheses

H1: KM capability has significant effect on CLCAM H1.1: KM capability has significant effect on new customer acquisition activity management.

H1.2: KM capability has significant effect on cross sales activity management.

H1.3: KM capability has significant effect on customer retention activity management.

H1.4: KM capability has significant effect on new product development activity management.

H2: CLCAM has significant effect on CRM performance H2.1: CLCAM has significant effect on customer satisfaction

H2.2: CLCAM has significant effect on customer loyalty

H3: KM capability has significant effect on CRM performance H3.1: KM capability has significant effect on customer satisfaction.

H3.2: KM capability has significant effect on customer loyalty.

H4: Interaction between KM capability and IT has significant effect on CLCAM H4.1: Interaction between KM capability and IT has significant effect on new customer acquisition activity

management.

H4.2: Interaction between KM capability and IT has significant effect on cross sales activity management.

H4.3: Interaction between KM capability and IT has significant effect on customer retention activity management.

H4.4: Interaction between KM capability and IT has significant effect on new product development activity management.

H5: Interaction of CLCAM and trust has significant effect on CRM performance H5.1: Interaction of CLCAM and trust has significant effect on customer satisfaction

H5.2: Interaction of CLCAM and trust has significant effect on customer loyalty


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Questionnaire DesignQuestionnaire Design

Responses were assessed using 7-point Likert

scales

12 items of KM capability

16 items of CLCAM

8 items of CRM performance

3 items of IT

3 items of customer trust


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Data CollectionData Collection

Method : Convenient Sampling

Samples: 500 Thai companies in related departments

Questionnaire: Email questionnaire survey

Data Collection Period: Early February,2008 to middle

April,2008 ( approximately 2.5 months)

Respondents: 107 survey questionnaires were responded.

(Responded rate is 21.4 %)

Missing data: 3 sets

Usable respondents: 104 respondents


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Characteristics of respondentsCharacteristics of respondents Characteristics Categories Frequency Percentage (%)

Company industryService industry 65 63.1

Manufacturing industry 38 36.9

Company size

< 100 employees 26 25.2

100-400 employees 27 26.2

400-1,000 employees 32 31.1

>1,000 employees 18 17.5

Years of company

< 5 years 13 12.6

5-10 years 22 21.4

10-20 years 30 29.1

> 20 years 38 36.9

Working time of respondent

< 5 years 66 64.1

5-10 years 29 28.2

10-20 years 7 6.8

> 20 years 1 1.0

Position level

Staff 38 36.9

Junior management 34 33.0

Medium management 26 25.2

Top management 5 4.9


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Results & FindingsResults & Findings

Note ： P*<0.1 、 P**<0.05 ， P***<0.01

KM Capability

Customer Life Cycle Activity Management ( CLCAM )

(H1)

CRM Performance(H3)

New Customer Acquisitio

n

CrossSales

Customer Retention

New Product Developmen

t

CustomerSatisfactio

n

CustomerLoyalty

Knowledge Acquisition **Knowledge Conversion **** **** **** ******Knowledge Application ****** ****** ****** ****** ******Knowledge Protection **** ****

AR2 0.368 0.463 0.276 0.223 0.537 0.488

F-Value 15.831*** 23.000*** 10.742*** 8.299*** 9.946*** 7.678***


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Note ： P*<0.1 、 P**<0.05 ， P***<0.01

Customer Life Cycle Activity Management(CLCAM)

CRM Performance(H2)

Customer Satisfaction

Customer Loyalty

New Customer Acquisition Activity ****

Cross Sales Activity

Customer Retention Activity

New Product Development Activity ****** ******

AR2 0.287 0.164

F-Value 11.267*** 6.010***


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IT * KM Capability

Customer Life Cycle Activity Management ( CLCAM )(H4)

New Customer

Acquisition

CrossSales

Customer Retention


t

IT*Knowledge Acquisition **** ****** ****IT*Knowledge Conversion ****** ****** ******IT*Knowledge Application ** ****** ******IT*Knowledge Protection **

Note ： P*<0.1 、 P**<0.05 ， P***<0.01

AR2 .329 .357 .290 .321

F-Value 51.031*** 57.627*** 42.628*** 49.293***


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Trust * CLCAM

CRM Performance(H5)

Customer Satisfaction Customer Loyalty

Trust*New Customer Acquisition Activity ** **Trust*Cross Sales Activity **Trust*Customer Retention Activity **

Trust*New Product Activity *** **

Note ： P*<0.1 、 P**<0.05 ， P***<0.01

AR2 .394 .284

F-Value 67.319*** 41.390***


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4

4.2

4.4

4.6

4.8

5

5.2

5.4

5.6

5.8

Acquisition

Conversion

Application

Protection

New Customer Acquisition

Cross Sales

Retention

New Product

Satisfaction

Loyalty

IT

Trust Small

Medium

Large


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4

4.2

4.4

4.6

4.8

5

5.2

5.4

5.6

5.8

Acquisition

Conversion

Application

Protection

New Customer Acquisition

Cross Sales

Retention

New Product

Satisfaction

Loyalty

IT

Trust Small

Medium

Large


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KM Capability


CRM Performance(H3)

New Customer

Acquisition

CrossSales

Customer Retention

New Product Development

Satisfaction

Loyalty

Knowledge Acquisition **Knowledge Conversion **** **** **** ******Knowledge Application ****** ****** ****** ****** ******Knowledge Protection **** ****

Customer Life Cycle Activity ManagementCRM Performance (H2)

Satisfaction Loyalty

New Customer Acquisition Activity ****Cross Sales Activity

Customer Retention Activity

New Product Activity ****** ******


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IT * KM Capability


New Customer

Acquisition

CrossSales

Customer Retention


t

IT*Knowledge Acquisition **** ****** ****IT*Knowledge Conversion ****** ****** ******IT*Knowledge Application ** ****** ******IT*Knowledge Protection **Note ： P*<0.1 、 P**<0.05 ， P***<0.01


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Trust * CLCAM

CRM Performance(H5)

Customer Satisfaction Customer Loyalty

Trust*New Customer Acquisition Activity ** **Trust*Cross Sales Activity **Trust*Customer Retention Activity **

Trust*New Product Activity *** **

Note ： P*<0.1 、 P**<0.05 ， P***<0.01


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ContributionContribution

This study contributes to the theoretical development of a

relationship model of KM and CRM as customer life cycle

activity management (CLCAM) and CRM performance.

It provides the view of which KM capability is valued to concern in

each CRM activity which related to CLCAM and CRM performance.

Also, the CLCAM affects CRM performance significantly.

The results of this research can make more understanding about

how KM effect CLCAM and how to use KM capability with

CLCAM more effectively to enhance CRM performance.


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LimitationLimitation

This study uses the convenient sampling because it is quite difficult to

balance the characteristics of samples.

Only a few prior research to discuss the concept of the customer life

cycle activity management (CLCAM). It has some theoretical limitation.

Due to this few prior research, it would be argued that the validity and

reliability of the construct and questionnaire design is quite weak.

However, since factor analysis is examined in this study, we believe

that the reliability and validity of this construct is still acceptable.


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Managerial ApplicationManagerial Application

At first, new customer acquisition activity management should be

concerned in knowledge acquisition and knowledge conversion more

than others. Since the two variables have a significant effect on this

activity.

Second, from the empirical evidence, it indicates that cross sales

activity management need to synergize more knowledge capability.

That is to say, managers who handle this kind of activity should

enhance the knowledge management to make it more productivity.


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Managerial ApplicationManagerial Application

Third, for managers, customer retention activity management mostly

depend on if the knowledge can be used very well or not. For them,

how to convert , apply and protect the existing knowledge in the

right way is very important.

Finally, the most important capability for new product development

is knowledge application because this activity needs to translate the

new knowledge into tangible things. It means that the team of new

product development should consist of different background persons

in order to have different and broader views to develop new concept.

Thank You For Your Thank You For Your AttentionAttention

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