CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

Research Topic:

CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

1. Research Problem Statement/Research Question Research is the formation of new thought in order to sort out the problems and to fill in the spaces in certain area of a chosen research topic. This formation not only cover the lacking points but also increase the knowledge and learning of the person involved who think critically and creatively. Andrew (2003) is of the view that a research should be started after figuring out the problem statement and a clear idea should be in the mind of the researcher as to what areas this specific research will cover and which question it will answer. This research is about customer relationship management and how it helps a company or a business to win loyal customers. Research Background CRM is an abbreviation used for Customer Relationship Management. Roberts-Witt, (2000), is of the view CRM tries to achieve a single integrated view of customers and a customer centric approach. CRM enables a company to understand the difference between their present and their upcoming time. This difference is understandable through the study of their loyal customers and the process involves technological solutions enhancing the capability of any company to understand their loyal customers. Innovation is one the many strategies involved to win customer loyalty. Innovation can be in customer orientated services, it can be in the formation of a new product or in the entire business setup. This innovative approach provides opportunity to the organization to gain productivity. Productivity is increased with the innovation of the internal and external structure of the company and this innovation is all due to CRM approach. The basic idea behind the effective use of CRM is to offer new ways to the company to win loyal customers. CRM focus is on the existing one rather than the new
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CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

customers. Human resources and technology are the main factors involved in CRM and these are as follows: Services of Consulting Services of Implementation Services of CRM Outsourcing Services of Training

CRM has a very broad perspective and several researches are being conducted in this vista. So to make the research more meaning full the CRM approach is narrow down in this research. An automobile company Saudi Suzuki is chosen for the study and to see the impact of CRM on their business and how it has helped them to win customer loyalty. Saudi Suzuki is a Saudi Arabian automobile company and they are the beginner of automobile business in Saudi Arabia. When they started their business there was almost no competition at hand as other famous automobile companies were not ready to start business in Saudi Arabia because of its poor economical and political unstable condition at that time. However in the past decade the economical condition of the country has been improved therefore several automobile are launching their business therefore giving competitive threats to Saudi Suzuki. Since now the competition is strong therefore Saudi Suzuki has thought of giving importance to CRM Inspite the fact that it was not the company agenda before this time. They have now understood that one way of having a competitive edge is to sharpen CRM skills and they have to form strong CRM model for their company to win customers loyalty. Reasons for Doing this Study Buying a car can be an important and expensive decision for any person. So it is even harder for the automobile businesses to keep their customer loyal. The room for mistakes is almost zero and there are almost no exceptions to rule. Furthermore in a
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CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

place like Saudi Arabia it is more difficult to predict customer loyalty as customers are given very less options to choose from and they have less power to purchase in the week economy of the country. On the other hand though the competitors are less but they are strong ones so it is even difficult to keep the customer loyal. So the reason for doing this study is to establish an understanding as how to build up a strong customer relationship in order to gain sustainability and viability in strong competitive market. Moreover, this study will help to understand how a company can maintain a healthy relationship with their customers and keep them loyal by providing them effective services that are the jist of CRM.
2. Literature Review:

Although there are several attempts has been made to research in the field of CRM and therefore plenty of literature is available on it. But as far as customer relationship management in automobile business especially in Saudi Arabia is concern there is not ample material available. So this research is new of its kind. This chapter will not only deal with literature on automobile business but also will examine the concept of CRM in relation with customer loyalty. Automobile Industry An automobile industry has become an important industry in this global world. Before 1980s this market was at its foundation and was not mature. However the tables were turned in 1980 with a transformation in this industry. Therefore those who were interested in automobile industry was to understand the growing need to stay competitive, practicable and to obtain higher market shares to maintain their position among the giants of this business. This transformation in 1980s was due to the changes in the government policies and laws in Saudi Arabia. The major clause in the rule was that the newcomers in the business specially the ones that come from outside of the country can only start their automobile business if they will join their hands with local automobile business. This clause was further supported by poor economy, weak infrastructure of the country, unstable political condition and weak links with

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CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

the neighbouring countries. So the ones who were interested were either not able to come or not willing to come. Therefore in this situation Saudi Suzuki was the only player in the country. Saudi Suzukis aim to become global company made the company to move from Saudi Suzuki to Saudi Suzuki Motor Company Limited (SSMC). This becomes possible with the merger of Saudi Suzuki with Saudi Arabia Automobile Corporation Limited who belongs to the Government.

Contribution of Automobile Industry in Saudi Economy Automobile industry is one of the major contributing industries in the GDP of Saudi Arabia and they are holding their position for last ten years. The GDP increase has decreased the interest rate which in returns has enhances the motor car demand. The trade of cars and light vehicles has grown up to 17% in the year 2008 (Saudi Suzuki annual report 2008). In the year 2008 the automobile industry was responsible for producing 198504 units and in year 2009 it produces 170131 units. Therefore investors heavily invested in this business which not only has decreased the gap between supply and demand but also has decreased the waiting period. (Saudi Suzuki annual report 2009) Saudi Suzuki Saudi Suzuki foundation was laid in 1983 with the agreement of Suzuki Motor Corporation of Japan and Saudi Arabia Automobile Corporation to work together. It is a public limited company and was started with the aim to become the number one automobile business in the entire country with the help of strong customer based foundation. The first step taken to reach at the number one position was to start the manufacture of cars in 1984(Saudi Suzuki website). To further make their footing strong in the country Saudi Suzuki thought of establishing an automobile plant. This plant was developed in 1989 with investment at
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CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

Bin Qasim Karachi through green field. Development of this plant was complete in 1990 and for the first time the company begins to produce all sorts of engines for Suzuki. The next step of the company was to buy shares in Saudi Arabia Automobile Corporation. This decision for the addition of shares was initiated by the government policy of privatization and it increased the percentage of Saudi Suzuki shares from 40% to 72.8 %. In 1992 a major change occurred in the history of the company and it was the privatization of the company. It was taken over by Japanese management in September 1992. This privatization was beneficial for the company in a sense that it increases the car manufacturing number from 50,000 per annum in 1994 to 150,000 per annum in 2008. Furthermore the invention of double shift in their plant and increase in the facility related with the production the company became able to enter into market of central Asia and Central Africa (Saudi Suzuki website). Customer Retention and Loyalty Saudi Suzukis early beginning in the automobile business in Saudi Arabia and SSMC decision to make cars provide the company a strong competitive edge over the others in the business. The result was that Saudi Suzuki acquires 57% of the shares in the automobile business in the entire country (Saudi Suzuki website). However later on Honda and Toyota make it harder for Saudi Suzuki to keep this level of market shares with them. Another of the major and potential competitors for Saudi Suzuki was Renault and Volkswagen. So to fight for the position Saudi Suzuki thought of introducing innovative ideas in their business structure to attract more customers. Therefore the main focus of this new strategy was customers and their loyalty. Contribution from Researcher: According to Bergeron (2002, p.3) CRM is: The dynamic process of managing a customer-company relationship such that customers elect to continue mutually beneficial commercial exchanges and are dissuaded from participating in exchanges that are unprofitable to the company. But as far Freeland (2003, p.8) is concerned the outstanding factor in CRM is ability to understand customer needs and accurately
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CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

predict customer behaviour. On the other hand Shani and Sujana (1992) are of the view that CRM is: An integrated effort to maintain, and build up a network with individual consumers and to continuously strengthen the network for the mutual benefit of both sides, through interactive, individualized and value-added contacts over a long period of time. For Berry (1995, p.237) CRM is, attracting, developing and retaining customer relationships. But for Gordon (1999) the customers can be divided in parts in accordance with their financial status and the value they are adding to the company. According to Dyche (2002, p.290), CRM is, The infrastructure that enables the delineation of an increase in customer value, and the correct means by which to motivate valuable customers to remain loyal indeed, to buy again. People-Driven CRM As the number of years grows the importance of CRM has grown with it. Technology has become a centre of attraction. But there are few negative aspects are linked with this approach and the important one is that the focus on technology has decreased the importance of people who are in reality responsible for the execution of CRM and its success. People-driven CRM emphasizes the responsibility of executives and operational staff in using nearly face-to-face communication to process relationship management (Goldenberg, 2006). One of the major organizations that help companies with the implementation of CRM to increase their performance is Siebel Systems. According to them, CRM is an integrated approach to identifying, acquiring, and retaining customers. By enabling organisations to manage and coordinate customer interactions across multiple channels, departments, lines of business, and geographies, CRM helps organisations maximize the value of every customer interaction and drive superior corporate performance. Those organizations that start executing CRM activities are actually strengthening their infrastructure to provide their customers with high quality products and high quality services. So in other words CRM enables a company to become customer orientated not only in the manufacturing of their products but also in their services. To
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CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

maintain and to harbor the customer relationship is important because it makes a company capable of holding and retaining their current customer by improving value for them. This management is not between the customer and organization but it is also a relationship and communication between different forums, departments, lines of business, and geographies which will help the organization to win more loyal customers. Additionally this relationship increases the capability of the company to differentiate between customers and valuable customers. This allows them to enhance these valuable customers to remain loyal or in other words to buy their products again. Needs for CRM: In the recent years customer relationship management has become an important platform for the organization to gain comparative advantage over their competitors. The effective implementation of CRM in the infrastructure is only possible through communication the top to bottom. Research Aims and Objectives: The core aim of this research is to find out the impact of CRM on customers loyalty. To further clarify the situation these aims and objective are divided and this division is as follow. The first step is to study the effect Customer Relationship Management on different organizations, their customers and on the overall market.
Secondly it will investigate in depth the development of CRM over the years and

how it has affected the loyalty of the customers.

The third aim is to find out the role of technology and information in the

successful implementation of Customer Relationship Management. In this regard internet and data base support will be taken to establish Customer Relationship Management authority in customer loyalty.

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CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

The fourth aim is to investigate and to pin point the impact of customer loyalty on the productivity of the organization.
The fifth and the final aim will be study Saudi Arabia Automobile Industry in

relation with Customer Relationship Management and how it has improved customer loyalty. Research Questions: The research questions shall be addressed as follow:

What is the current condition of Automobile industry in Saudi Arabia? What benefits did Customer Relationship Management execution give to Saudi Suzuki?

How Saudi Suzuki got and how it is maintaining the dealership What are the major fears and limitation for Saudi Suzuki Company? What necessary measures should be taken by Saudi Suzuki to

attained through Customer Relationship Management process?

maintain their strong market position?

3. Research Methodology

This chapter is vital because it will deals with the methods that are adopted to conduct this research. Case Study Approach The main approach of this research is a case study approach. For the case study Saudi Suzuki company and its Customer Relationship Management is chosen for in depth analysis. This analysis will then be analyzed against the existing literature on Customer Relationship Management. Secondary Data Secondary data collection is important method of collecting information. Secondary
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CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

data collection can be the base of any research. So the main method on which this research will rely is the collection of secondary data which will be collected through journals, articles, internet, books, libraries, EBSCO etc. journals are taken from business source premier, euro monitor and several other business insights. Primary Data The primary data collection is also important for the research along with the secondary data collection. Therefore the researcher will also gather primary data. The primary data can be collected through questionnaires. As far this research is concerned questionnaires can be given to several companies and to customers.
4. Expected Conclusion from Research:

As far as this study is concerned it is hard to give a statement of the conclusion and it is hard to say what will be the final result of the study. But an overview can be formulated on the basis of previous studies conducted in this filed and literature review. As this study will be examining in detail the materialization of customer relationship management and its progress. So it will see how customer relationship management and customer loyalty are linked and how they can be used by the organisations to improve their productivity and profitability or whether the relationship between customer relationship management and customer loyalty is negative or positive. 5. Dissertation outline Chapter one is the introduction of the topic and will give reasons behind the selection of this topic. Why this topic has been selected for research in detail? Chapter two is the chapter that will review the existing literature on customer relationship management and customer loyalty. These reviews are both positive and negative and are taken from famous analyst and critics. Chapter three will discuss the methods involved in collection of information and data in relation with this topic. The main method involved will be secondary data collection method. However small over view will also be given about primary data collection.
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Chapter four will work to establish a relationship between the previous literature reviewed in chapter 2 and information and literature collected on Saudi Suzuki. Chapter five will be concluding the research and some recommendation will also be given. Moreover it will contain certain limitation associated with the research. 6. Research Plan and Time Schedule: Time management is important to carry out any research. The approximant timing will be as following: Final formulization of objectives: 1 week Expanding literature review: 3 weeks Methodology selection: 1 week Data collection: 2 weeks
Request Data Collection Questionnaire Analysis of data: 3 weeks (Secondary) (Week- 1) (Week-2) Filling Questionnaire Data Collection (Week- Final overlook, amending: 1 week 3) (Primary) (Week- 4)

Preparation of questionnaires or interviews: 1 week Data (Week- 1)

Searching Secondary

Summarizing, recommending: 1 week

Submission

Assembling Primary Data (Week -5)

Time Scale

Data Analysis Contd. Data Analysis (Week -7) Research Findings Revising Data (Primary) Cross Checking (Week- 10) (Week- 8) Presentation (Week- 11) (Week- 6)

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(Week- 9)

CRM AND ITS EFFECTS ON CUSTOMERS LOYALTY

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