1. GROUP 2 PRESENTATION
STRATEGIC, OPERATIONAL AND ANALYTICAL
CUSTOMER RELATIONSHIP MANAGEMENT:
ATTRIBUTES AND MEASURES
Author: Reiny Iriana
Macquarie Graduate School of Management
WHAT IS CRM
LITERATURE REVIEW
METHODOLOGY
CONCLUSION
Huynh Thanh Phong M987Z242
Le Thi Ngoc Mai M987Z243
Nguyen Thuy Hang M987Z236
Bui Thi Thuy M987Z204
Pham Thi Nguyet M987Z241

2. WHAT IS CRM?
WHAT IS CRM?
LITERATURE REVIEW
METHODOLOGY
CONCLUSION
CRM is a business strategy combined with technology to
effectively manage the complete customer life-cycle
(Smith 2001)
CRM is the establishment, development, maintenance and
optimization of long-term mutually valuable relationships
between customers and organizations (CRM (UK) 2001)
A CRM system is comprised of 2 major components: a set of
functions that allows the organization to build an
understanding of customer behavior, and a second set of
functions that allow us to communicate with customers,
across many channels, to meet their service requirements,
and to try to persuade them to behave more profitably
(Forsyth 2001)
CRM is an e-commerce application (Khanna 2001)
CRM aligns business processes with customer strategies to
build customer loyalty and increase profits over time
(Rigby 2002)

3. BUT……
“There is no one correct
definition of CRM. Moreover,
the definition of CRM will
evolve and change over time”
(Goldenberg 2000)
WHAT IS CRM?
LITERATURE REVIEW
METHODOLOGY
CONCLUSION

4. WHAT IS CRM?
Payne(2001) developed a strategic framework for
CRM, consisting of five interrelated cross-
functional processes:
1. Strategic Development Process
2.Value Creation Process
3. Multi Channel Integration Process
4. Information Management Process
5. Performance Assessment Process
Four of these 5 processes are subsumed within
three forms of CRM
1. Strategic CRM
2. Operational CRM
3. Analytical CRM
WHAT IS CRM?
LITERATURE REVIEW
METHODOLOGY
CONCLUSION

5. WHAT IS CRM?
LITERATURE REVIEW
METHODOLOGY
CONCLUSION

6. 1. Strategic CRM
Operational CRM
WHAT IS CRM
Analytical CRM
METHODOLOGY
CONCLUSION
LITERATURE
REVIEW
Strategic CRM

7. 1. Strategic CRM
- In Payne’s (2001) view, the strategy development
and value creation processes jointly represent
Strategic CRM
- A top down perspective on CRM, which views
CRM as a core customer centric business strategy
that aims at winning and keeping profitable
customers (Buttle ,2004)
- The goal is to align the broader business strategy
with the customer strategy
Operational CRM
WHAT IS CRM
Analytical CRM
METHODOLOGY
CONCLUSION
LITERATURE
REVIEW
Strategic CRM

8. 1. Strategic CRM
- In the value creation process, business and
customer strategy decisions are translated into
implementation programs that generate value for
customers and company alike.
- The value the customer receives is delivered by
the company’s value proposition(s)
- The value the organization receives is the
company’s return on investment from its customer
management strategy.
Operational CRM
WHAT IS CRM
Analytical CRM
METHODOLOGY
CONCLUSION
LITERATURE
REVIEW
Strategic CRM

9. 2. Operational CRM
- Is a perspective on CRM which focuses on major
automation projects” (Buttle, 2004).
- Focus on the automation of selling, marketing,
and service functions but not limited at back office
functions such as human resources and finance
- Is to improve the efficiency and effectiveness of
customer management processes
Operational CRM
WHAT IS CRM
Analytical CRM
METHODOLOGY
CONCLUSION
LITERATURE
REVIEW
Strategic CRM

10. 2. Operational CRM
Operational CRM
WHAT IS CRM
Analytical CRM
METHODOLOGY
CONCLUSION
LITERATURE
REVIEW
Strategic CRM

11. 3. Analytical CRM
- Is a bottom up perspective, which focuses on the
intelligent mining of customer data for strategic or
tactical purposes” (Buttle, 2004).
- Uses technology to accumulate and analyze
customer-related data, and to give direction to the
strategies and tactics that are implemented in the
channels and touch-points deploying Operational
CRM
- Standard technology applications within
Analytical CRM are data warehousing and data
mining solutions (Gebert, Geib, Kolbe, & Brenner,
2003).
Operational CRM
WHAT IS CRM
Analytical CRM
METHODOLOGY
CONCLUSION
LITERATURE
REVIEW
Strategic CRM

12. 3. Analytical CRM
- Doyle (2002) suggests that Analytical CRM
applications enable companies to perform 6 major
functions:
+ Analysis of the characteristics and behavior of
customers
+ Modeling to predict the behavior of customers
+ Communication management with customers
+ Personalized communication with customers
+ Interaction management
+ Optimization to determine the best
combination of customers, products and
communication channel
Operational CRM
WHAT IS CRM
Analytical CRM
METHODOLOGY
CONCLUSION
LITERATURE
REVIEW
Strategic CRM

13. 3. Analytical CRM
- Analytical CRM can increases an organization’s
revenue in a number of ways (SAS 2003):
+ Effective cross sell and up sell
+ Prediction of which customers are most likely
to buy
+ Identification of high value customers
+ Increased brand awareness
+ Increased customer satisfaction, loyalty and
referrals
Operational CRM
WHAT IS CRM
Analytical CRM
METHODOLOGY
CONCLUSION
LITERATURE
REVIEW
Strategic CRM

14. METHODOLOGY
The objective of the research was to develop a clearer
conceptualization of CRM, and, if feasible, to create a scale
that could be used to evaluate a company’s orientation
towards one or more of these three forms of CRM
The approach to creation of the scale was based on the
recommendations of Churchill (1979) for the development
of better marketing constructs.
3 Phases included:
- Phase 1: Generation of Scale Items
- Phase 2: Scale Refinement: Exploratory Factor Analysis
and Item-Total Correlations
- Phase 3: Scale Refinement: Confirmatory Factor Analysis
WHAT IS CRM
METHODOLOGY
METHODOLOGY
LITERATURE REVIEW

15. 1. Phase 1: Generation of Scale Items
- Based on the literature review of a set of
attributes that had been used to describe and
discriminate between different three forms of CRM
to generate a pool of 32 items for the research.
+ A set of questions on Strategic CRM
+ A set of questions on Operational CRM
+ A set of questions on Analytical CRM
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

16. 1. Phase 1: Generation of Scale Items
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items
Items Strategic CRM
S7
An important objective of our CRM program is to enhance the
lifetime value of our customers
S14
improve our understanding of customer needs, expectations
and preferences
S19 lift customer satisfaction and retention levels
S20 CRM provides the basis of our competitive advantage
S21
Our CRM strategy aims to win and keep carefully chosen
customers or customer segments
S22.
Our CRM strategy creates mutual benefits for both
customers and company
S26
Our company is using CRM to create a customer-focused
business culture
S28
Our company is using CRM to ensure that all our people
understand which customers we want to serve
S29.
Our company is using CRM to help us be more customer
focused than our competitors
S30.
Our company is using CRM to find better ways of offering
customers more value

17. 1. Phase 1: Generation of Scale Items
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items
Items Operational CRM
O4
An important objective of our CRM program is to enable us to adapt
our offer to suit different customers’ requirements
O6
Enable us to select the most appropriate communication channels for
interactions with customers
O9 help our marketing people run more effective and efficient campaigns
O10
help our sales people to have more effective and efficient interactions
with customers
O11
improve collaboration with our customers and channel
partners
O15 improve the productivity of our sales people
O16 reduce the cost of our customer-facing operations
O18
deliver consistent customer experience across all customer touch
points and channels
O23
Our company uses CRM to automate customer service
processes to make them more efficient and effective
O24
automate marketing processes to make them more efficient and
effective
O25
automate selling processes to make them more efficient and effective

18. 1. Phase 1: Generation of Scale Items
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items
Items Analytical CRM
A1
An important objective of our CRM program is to create a
comprehensive customer-related database
A2
deliver customer data to our people at the right time so that
they can cross-sell and up-sell customers
A3
deliver customer data to our front line staff so that they can sell,
market and service our customers more effectively
A5
enable us to conduct intelligent analyses of customer data to
guide our marketing and sales efforts
A8
ensure that analysis of customer-related data underpins all
our customer interactions
A12
improve our ability to conduct real time analysis of data
when interacting with customers
A13 improve our forecasting capabilities
A17
the use of analytical tools to make sense of, and profit from,
customer data
A27
Our company is using CRM to enable us to obtain competitive
advantage from customer data
A31 Our company uses CRM help us identify high value customers
A32
uses customer information to construct customer profiles which are
used to improve the consistency of the customer’s experience

19. 2. Phase 2: Scale Refinement: Explanatory Factor
Analysis and Item – Total Correlations
- The initial stage of scale reduction was performed
using 2 statistical processes:
+ Exploratory factor analysis
+ Item-total correlations
- All 32 items were factor analyzed, using principal
component analysis with varimax rotation.
- This generated a 7- factor solution, with each
factor having an eigenvalue over 1. The 7 factors
solution accounted for 77.85% of the variance.
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

20. 2. Phase 2: Scale Refinement: Explanatory Factor
Analysis and Item – Total Correlations
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

21. 2. Phase 2: Scale Refinement: Explanatory Factor
Analysis and Item – Total Correlations
- The items with loadings of 0.4 or greater than one
of the factor were eliminated.
- 18 items remained: 3 items for Strategic CRM, 6
Items for Operational CRM and 9 items for
Analytical CRM.
- The resulting 3 factor solution accounted for
66.04% of the variance.
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

22. 2. Phase 2: Scale Refinement: Explanatory Factor
Analysis and Item – Total Correlations
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

23. 2. Phase 2: Scale Refinement: Explanatory Factor
Analysis and Item – Total Correlations
- At the end of Phase 2: Scale refinement, 14 items
remained, clustered and named as follows:
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

24. 2. Phase 2: Scale Refinement: Explanatory Factor
Analysis and Item – Total Correlations
Factor 1: Customer Orientation
5 items in total, made up of 3 items from the Strategic
CRM inventory (S19, S21 & S28), and 2 items with
the highest corrected item-total correlations, both
from the Analytical CRM inventory (A31 & A32).
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items
Items Customer Orientation Factor
S19 lift customer satisfaction and retention levels
S21 Our CRM strategy aims to win and keep carefully chosen
customers or customer segments
S28 Our company is using CRM to ensure that all our people
understand which customers we want to serve
A31 Our company uses CRM help us identify high value customers
A32 uses customer information to construct customer profiles which
are used to improve the consistency of the customer’s
experience

25. 2. Phase 2: Scale Refinement: Explanatory Factor
Analysis and Item – Total Correlations
Factor 2: Analytical CRM
5 items in total, made up of 4 items from the
Analytical CRM inventory (A1, A2, A3, & A5), and 1
item from the Operational CRM inventory (O15).
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items
Items Customer Orientation Factor
A1 An important objective of our CRM program is to create a
comprehensive customer-related database
A2 deliver customer data to our people at the right time so that
they can cross-sell and up-sell customers
A3 deliver customer data to our front line staff so that they can
sell, market and service our customers more effectively
A5 enable us to conduct intelligent analyses of customer data to
guide our marketing and sales efforts
O15 improve the productivity of our sales people

26. 2. Phase 2: Scale Refinement: Explanatory Factor
Analysis and Item – Total Correlations
Factor 3: Operational CRM
4 items in total, made up entirely of 4 items from the
Operational CRM inventory (O16, O23, O24, & O25).
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items Items Customer Orientation Factor
O16 Reduce the cost of our customer-facing operations
O23 Our company uses CRM to automate customer service
processes to make them more efficient and effective
O24 Automate marketing processes to make them more efficient
and effective
O25 Automate selling processes to make them more efficient and
effective

27. 3. Scale Refinement: Confirmatory Factor Analysis
- Gerbing & Anderson claim that Confirmatory
Factor Analysis provides a stricter assessment of
uni-dimensionality than Exploratory Factor Analysis
and item-total correlations . So it is employed in this
phase to check the result in the phase 2.
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

28. 3. Scale Refinement: Confirmatory Factor Analysis
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

29. 3. Scale Refinement: Confirmatory Factor Analysis
Analysis of Model Fit
Overall fit
Chi-square (CMIN) is the most fundamental measure of
overall fit, but the chi-square statistic is sensitive to sample size.
Chi-square is recommended for sample sizes between 100 and
200
Goodness-of-fit Index (GFI) generates a statistic between 0 to
1, where 0 indicates zero fit and 1 indicates perfect fit
The Root Mean Square Residual (RMSEA), values between
0.05 and 0.08 are acceptable. RMSEA is a better measure for
larger samples
Incremental Fit: measures compare the proposed model with
the null model
Adjusted Goodness-of-fit Index (AGFI), Tucker-Lewis
Index (TLI), and Normed Fit Index (NFI) are measures of
incremental fit. The recommended level for these three indexes
is 0.90
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

30. 3. Scale Refinement: Confirmatory Factor Analysis.
Analysis of Model Fit
- Chi-square was not statistically significant (X2= 84.68, d.f. =
74, p = 0.186). However, sample size means that this statistic
can be an unreliable indicator of fit.
- The RMSEA statistic is less than 0.1, which demonstrates an
acceptable level of fit
- Neither GFI nor AGFI reach the recommended minimum of
0.90
- TLI statistic indicates a very close fit, being above the
recommended minimum of 0.90, and NFI a close fit
Conclusion: the model provides an adequate level of fit.
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items

31. 3. Scale Refinement: Confirmatory Factor Analysis.
Scale Reliability
- The reliability of each component (Customer Orientation,
Operational CRM and Analytical CRM) and the overall
(combined) scale is assessed by computing Cronbach alpha
- Reliabilities of the component scales are in the range of 0.751
to 0.891.
- The overall Cronbach alpha for the scale being 0.904
Conclusion: Reliability is satisfied.
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW
Phase 2: EFA + ITC
Phase 3: CFA
Phase 1: Scale Items
Scale Items
Customer
Orientation
Analytical Operational
Cronbach alpha 0.871 0.891 0.751
Overall alpha 0.904

32. CONCLUSION
The results support the assertion that three forms of
CRM can be identified: Strategic (in this paper,
Customer Orientation), Operational and Analytical.
- Strategic CRM focuses on customer orientation, with
the objectives of a CRM implementation being:
+ to lift customer satisfaction and retention levels;
+ to win and keep carefully chosen customers or customer
segments;
+ to ensure that all employees understand which
customers the organization chooses to serve;
+ to identify high value customers; and
+ to construct customer profiles from customer
information, which can then be used to improve
the consistency of the customer’s experience
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW

33. CONCLUSION
- Analytical CRM focuses on customer data, with the
objectives of a CRM implementation being:
+ to create a comprehensive customer-related database
+ to deliver customer data to employees at the right time
so that they can cross-sell and up-sell customers
+ to deliver customer data to front-line staff so that they
can sell, market and service our customers more
effectively;
+ to conduct intelligent analyses of customer data to guide
marketing and sales efforts; and
+ to improve the productivity of sales people.
- Operational CRM focuses on the automation of
customer service, marketing, and selling processes,
with the objective of reducing the cost of customer-
facing operations
WHAT IS CRM
METHODOLOGY
CONCLUSION
LITERATURE REVIEW

34. THANKS FOR
YOUR
LISTENING
WHAT IS CRM
LITERATURE REVIEW
METHODOLOGY
CONCLUSION