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A measurement
A measurement tool for customer tool for CRM
relationship management processes
processes
943
Başar Öztayşi
Industrial Engineering Department, Received 15 January 2011
Istanbul Technical University, Istanbul, Turkey Revised 10 February 2011,
14 March 2011
Selime Sezgin Accepted 14 March 2011
Graduate School of Social Sciences,
Bahcesehir University, Istanbul, Turkey, and
Ahmet Fahri Özok
Industrial Engineering Department,
Kultur University, Istanbul, Turkey

Abstract
Purpose – Customer relationship management (CRM) projects have a low success rate, which can be
solved by better measurement of CRM process. The purpose of this paper is to define the CRM
processes within a company and propose a tool for CRM measurement.
Design/methodology/approach – An empirical study is conducted in industrial organizations in
Turkey. The research is designed according to scale development literature. The responses from
various industries (manufacturing, information technologies, tourism, service, retail, finance, logistics)
were collected. Using exploratory factor analysis, 167 valid responses are analyzed.
Findings – The paper provides a general understanding of CRM processes in customer-oriented
perspective and proposes a measurement tool that addresses seven main processes which are:
targeting management, customer information management, production/service customization,
expansion management, referrals management, termination management and win back.
Practical implications – The results of the analysis provides useful information for managers to
define, measure and improve CRM process.
Originality/value – The paper provides an enhanced review about CRM measurement literature.
Based on this review, the paper defines seven CRM processes and maintains a tool for evaluation of
these processes within a company.
Keywords Customer relationship management, CRM process, Measurement, Turkey
Paper type Research paper

1. Introduction
During the mass production age, the competition in the business world was about
efficient production and capturing the new customers in the market. The 4P (product,
price, place and promotion) was developed as a tool for marketing success and has been
the unchallenged paradigm for marketing management (Grönroos, 1989). But the Industrial Management & Data
changing environment, especially the energy crisis, progress in service industry and the Systems
Vol. 111 No. 6, 2011
focus on quality management, forced the companies to change their focus from customer pp. 943-960
acquisition to customer retention (Sheth, 2002) by building relationships with customers q Emerald Group Publishing Limited
0263-5577
and adding more value to goods and services (Lindgreen and Wynstra, 2005). DOI 10.1108/02635571111144982
IMDS In the late 1990s, customer relationship management (CRM) is formed as a popular
111,6 business term, which holds the same roots with relationship marketing and enhances
the paradigm with the emerging information technologies. Although the term is
accepted in the professional area, there is confusion about the definitions of the term.
In one of the enhanced studies, Zablah et al. (2004) define five perspectives of CRM
which are, strategy, process, capability, philosophy and technology. As a result of its
944 complex structure, the positive financial return rates of CRM related projects vary from
10 to 30 percent (Brewton and Schiemann, 2003; Krol, 2002; Richards and Jones, 2008).
Besides, the low level of success rates, the experiences show that unsuccessful CRM
implementations may lead to decrease in customer satisfaction (CS) and customer
loyalty (CL) (Richards and Jones, 2008).
As a result of the low success level of CRM, measurement models are proposed by both
academicians and professionals. The mentioned frameworks can be classified in two
groups: partial and holistic measurement models. Although the processes of a company
are defined as one of the main components of CRM (Chen and Popovich, 2003;
Mendoza et al., 2007) the process level CRM measurement is not covered in the
proposed models. While the partial measurement models do not mention the area,
the holistic models cover CRM process to some degree. Thus, the aim of this paper is to
define CRM processes and provide a tool that measures these processes within a company.
In this manner the research is designed in accordance with the scale development
literature. The study contains a survey application with 167 valid results from assorted
sectors, covering both business-to-business and business-to-consumers businesses.
This paper is composed of five sections. In the following section, CRM, the evolution
of CRM, effects of relationship management and information technologies, definitions,
perspectives and success rates of CRM are discussed. Section 3 focuses on previous
CRM measurement studies. Section 4 is composed of research context, hypothesis,
methods, results and discussion about process level CRM measurement. Finally, in the
last section managerial implications and potential further researches are determined.

2. Literature review
2.1 CRM success
While companies prone to make investments on CRM related projects, the success rates
of the current projects have been disappointing. The success rates cited in the literature
are listed in Table I. In these researches, success definitions of CRM projects are
also diversified. The highest success rate (65 percent) is observed in a research by
CRMGuru.com that is accomplished in 2001. The CRM success definition in this research
is based on expectation about forthcoming two years, so this rate cannot be interpreted
as an observed success. Besides, the unsuccessful financial results, a research done by
Bain and Company shows that unsuccessful CRM implementations may end up with
damaged long-standing customer relationships (Rigby et al., 2002).
The primary difficulty in CRM measurement is the confusion around CRM definitions, so
before going on with the, CRM has to be clarified and the expected benefits should be defined
(Richards and Jones, 2008). In a META Group’s global research 64 percent of the companies
identified that lack of techniques to measure the business value of CRM and only 10 percent
of the respondents observed tangible return on CRM investments (Agrawal, 2003). Meagher
(2002) specifies that the results of a research around 40 percent of the Australian companies
are not able to identify if CRM has a positive effect on the company or not.
 A measurement
Success rate (%) Success definition Resource References
tool for CRM
10 Positive return on CRM Meta Group Brewton and processes
investments Schiemann (2003)
10 Reaching desired outcomes Forrester Research Richards and Jones
(2008)
25 Enhancement in customer Gartner Group Brewton and 945
experience Schiemann (2003)
25 Meeting the implementation goals Meta Group Krol (2002)
30 Observing positive financial Gartner Group Richards and Jones
return 2003 (2008)
30 Successfully finished CRM Cap Gemini Ernst Brewton and
initiatives & Young Schiemann (2003)
45 Reaching desired outcomes Gartner Group Caulfield (2001),
2001 Hellweg (2002)
55 Satisfaction from CRM Merrill Lynch Dignan (2002)
implementation Table I.
65 Expectation to have a RIO in the CRMGuru.com Krol (2002), Lee (2003) CRM success rates
next two years and references

2.2 CRM measurement tools and frameworks

Academics and professionals proposed frameworks in order to measure CRM. In this
study, the proposed methods are categorized in ten groups according to their common
understanding of CRM and the measurement process:
(1) Indirect measurement models. In this group of models, CRM is measured by brand
building or customer equity terms and methods (Kellen, 2002; Richards and Jones,
2008). It is rational to believe that the components of brand equity; brand loyalty,
brand awareness, perceived quality and brand associations (Aaker, 1991); are
related to CRM activities. On the other hand, customer equity is broken down into
three groups; value equity, brand equity and retention equity and researchers
defined the relations between each component and CRM (Richards and Jones, 2008).
(2) Measurement of customer facing operations. As the importance of information and
information management increase, CRM software collect data from customer facing
activities, consolidate the data and share within the company. These operational
CRM systems automate customer-related processes that why companies evaluate
process metrics in order to measure the success of CRM (Kellen, 2002).
(3) Critical success factors scoring (CSFS). The tool proposed by Mendoza et al. (2007)
uses critical success factors as the basis for scoring. The model is improved with
the contribution of a group of advisors that is formed by both professionals and
academicians. There are 13 critical success factors, and over 50 metrics defined in
the model. Owing to the variety in the nature of the factors and the metrics, the
model also provides the options for each metric.
(4) Behavioral dimensions of CRM effectiveness. Jain et al. (2003) identify the need for
a tool that focus on behavioral dimensions for measuring the CRM effectiveness.
Behavioral dimensions are defined in ten factors that are: attitude, understanding
expectations, quality perceptions, reliability, communication, customization,
recognition, keeping promises, satisfaction audit and retention.
IMDS (5) CRM scale. The CRM scale proposed by Sin et al. (2005) conceptualizes CRM in
111,6 four dimensions which are: key customer focus, CRM organization, knowledge
management and technology based CRM. Key customer focus is the dimension
that emphasizes the customer centric marketing, personalization and
communication between the company and the customers. CRM organization
focuses on organizational structure, commitment of resource, human resource
946 management. Knowledge management highlights the creation, transfer and
application of the knowledge in a company. The last perspective,
technology-based CRM stresses the companies’ technology availability.
(6) Relationship quality (RQ). The quality of relationship between the customer and
the vendor has been in the interest area of researchers (Dwyer and Oh, 1987;
Crosby et al., 1990; Lagace et al., 1991; Kumar et al., 1995; Dorsch et al., 1998).
The aim of RQ measurement models define and measure the issues that
compose customers’ perception about the relationship. The models are based on
statistical studies and utilize a survey as a measurement tool. Roberts et al.
(2003) identify the dimensions of RQ in consumer services as; trust in partner’s
honesty, trust in partner’s benevolence, affective commitment, satisfaction and
affective conflict (negative relation).
(7) Customer measurement assessment tool (CMAT). CMAT is developed by
QCi consultancy as a customer assessment tool that considers a questioner
composed of 260 questions. The questions and the scoring of the tool is based on
the best practices of each category (Starkey et al., 2002). The tool defines nine
crucial areas of customer management assessment that are: information
technology, people and organization, process, analysis and planning, the
proposition, customer management activity, measuring the effect, customer
experience and competitor (Woodcock et al., 2003).
(8) Customer management process (CMP). CMP is a part of balanced scorecard
(BSC) (Kaplan and Norton, 1992) is one of these processes that focus on
customer management. The four sub-processes of this category is defined as;
customer selection, customer acquisition, customer retention and customer
growth. For each sub processes, companies define objectives and metrics that
are used for measurement. CMP is a not a fixed measurement model, depending
on companies strategies and goals, the objectives and the measures should be
identified for each company.
(9) Relationship management assessment tool (RMAT). The assessment tool generated
by Lindgreen et al. (2006), aims to help managers to make self-assessments about
the stages of relationships. The elements analyzed in RMAT are; customer
strategy, customer-interaction strategy, brand strategy, value-creation strategy,
culture, people, organization, information technology, relationship management
process and finally, knowledge management and learning.
(10) CRM scorecards (CRM-SC). BSC is originally developed in order to provide an
outline for organizational performance measurement. CRM-SC are the CRM
performance measurement models that are based on BSC. In the CRM-SC,
the main dimensions are defined, the elements in each dimension are identified
and a map that specifies the relationship between the dimensions and the
elements are maintained (Kim et al., 2003; Kim and Kim, 2009).
3. Measurement of process level CRM A measurement
CRM processes have been largely investigated by academicians (Day and van den Bulte, tool for CRM
2002; Kohli et al., 2001; Parvatiyar and Sheth, 2001; Leigh and Tanner, 2004; Zablah et al.,
2004; Payne and Frow, 2005; Bueren et al., 2005). In their research Zablah et al. (2004) processes
analyzed these processes in two levels as macro and micro. The macro-level process
approaches CRM process as companywide process. Payne and Frow (2005) defined these
processes as strategy development, value creation, channel integration, knowledge 947
management and performance evaluation process. On the other hand micro-process
approach focuses on customer interaction management in order to maintain long-term
profitable customer relationships (Day and van den Bulte, 2002; Kohli et al., 2001).
Measurement of CRM in the process level focuses on the achievement level of CRM
related processes and tries to find an answer for the question: “how good are we doing in
CRM process?” When analyzed from this point of view, the current CRM measurement
process provides deficiency. While indirect measurement models, CRM scale, RQ show
no evidence about the answers of the question, the rest of the frameworks perform slight
information about how well the CRM processes are achieved. Measurement of customer
facing operations has a similar goal in measurement but the model does not focus
on quality of the operations. In the CSFS model, the process dimension is viewed as a
success of automation and the key automation areas are defined as sales, marketing and
customer contact management. RMAT handles the question with only one question,
which does not provide sufficient insight.
CMAT, CMP and CRM-SC are closer to give insight about how the CRM processes are
managed. CMAT provides one of the closest model for the research question. The model
is based on the best practices and there is a need for an authority to evaluate the
interviews. Another deficiency of the model is there are no information about how
the tool is developed and no statistical background are provided. CMP focuses on
customer management but it provides only in four topics that are consequent measures
of CRM processes. CRM-SC proposed by Kim and Kim (2009) took the process as a model
dimension but just like CMP, it focuses on retention, acquisition and expansion that are
subsequent measures for the processes.
The CRM literature does not provide a single process model for CRM and the proposed
models are not suitable for all types of companies. The diversified process approaches
make it impossible to develop a measure that is based on current process models. The aim
of this study is to generate a generalized measurement tool applicable for all companies.

4. Research methodology
The process level CRM measurement tool is developed according to scale development
literature. The steps, that are adopted from Churchill (1979) and Devellis (2003),
are followed in the study. These steps are:
Step 1. Domain identification and generation of items.
Step 2. Expert validation and review of the statements.
Step 3. Application of the survey.
Step 4. Evaluation of the items and optimization of the scale.
Step 5. Construct validity.
IMDS In the first two steps are the preparation process which leads to better definition of the
111,6 measure and items used in the scale. The data are gathered in the third step and the
statistical analysis is utilized in remaining steps.
Explanatory factor analysis is used in the fourth step, in order to evaluate the items
and optimization of the scale. The aim of this step is to define the factors of the CRM
measure and purify the items according to the rules defined by Worthington and
948 Whittaker (2006). As a result of this step, the CRM process and the statements used to
measure them are selected, besides the items that are useless are deleted.
As the factors are defined with EFA, validity of the scale should be controlled
(Devellis, 2003). The validity of the scale is controlled by reliability, nomological
validity and convergence validity tests. In order to control the reliability of the scale,
internal consistencies of the factors are investigated.
The second validity test is the nomological validity, in this test a control model
containing both the construct to be measured and outer constructs which maintain
causal relations with it, is built. If the expected relationships are observed, the scale is
proved to be valid (Bagozzi, 1979). In the proposed control model, the CRM processes
are related to CL, CS and the CRM outputs (COs) and the hypothesis are built.
As defined in CRM literature one of the main goals of CRM is to maintain CS (Winer,
2001; Verhoef, 2003; Zikmund et al., 2003; Buttle, 2004; Yim et al., 2004; Mithas et al.,
2005). If the CRM processes show high performance, it is expected to see an increase in
CS. As a result hypothesis one emphasizes the expected positive relationship between
the processes and CS. In the study perceived CS is measured:
H1. There is a positive relationship between the factors and perceived CS.
CL is the represents customers’ commitment to the company. As the customer become
loyal, the profitability of the repeated transactions is increased. CRM literature
provides researches about the relationship between CRM and CL (Winer, 2001;
Verhoef, 2003; Buttle, 2004; Tanner et al., 2005; Yim et al., 2004; Eid, 2007). As a result,
it is expected to observe a positive relationship between the CRM processes and CL;
so H2 is formed in this manner:
H2. There is a positive relationship between the factors and perceived CL.
Besides, the effects of CRM on customers’ attitude, CRM promises other outputs to
companies such as customer retention, improvement in cross-sell, increase in customer
acquisitions and gain profitable customers (Grönroos, 2000; Mosad, 2006; Ghahfarokhi
and Zakaria, 2009; Jarrar and Neely, 2002; Ko et al., 2008; Buttle, 2004). Becker et al. (2009)
investigate the relationship between CRM implementation and customer acquisition and
retention. Reinartz et al. (2004) define cross sell as one of the process to gain customers in
CRM. In the study these results are named as COs in order to represent the performance
of CRM activities. In the study the COs is taken as the average of four mentioned items.
As the CRM processes are performed successfully it is expected to observe increase in
these outputs and H3 is form as follows:
H3. There is a positive relationship between the factors and the average COs.
The last validity test is the convergence validity which indicates that a scale
measuring a construct is expected to be highly correlated with another measure of
the same construct (Hinkin, 1998). Since the aim of the study is to define and measure
the CRM processes, another question covering the overall judgment about CRM A measurement
processes is added to the questionnaire. A forth hypothesis is proposed and the tool for CRM
relationship between the factors and the overall judgment question is investigated:
processes
H4. There is a positive relationship between the factors and the overall judgment.

5. Results 949
5.1 Domain identification and generation of items
Determining clearly what to measure is a vital point of the study and sometimes more
difficult that it may initially appear (Worthington and Whittaker, 2006). Since the main
goal of the study is to measure process level of CRM, previous studies in the CRM
literature are investigated (Kohli et al., 2001; Parvatiyar and Sheth, 2001; Day and van
den Bulte, 2002; Woodcock et al., 2003; Leigh and Tanner, 2004; Zablah et al., 2004;
Reinartz et al., 2004; Payne and Frow, 2005; Bueren et al., 2005; Sin et al., 2005).
In this stage, face-to-face interviews with professionals and business consultants
are conducted in order to get the insight about which of the mentioned approaches will
be appropriate. The results of the interviews show that a customer-oriented approach
will be more applicable for the research because:
.
terms such as knowledge management, channel integration, customer strategy
show a possibility to misunderstanding;
.
the structure of the companies are probably not suitable with the defined
processes; and
.
questions that focus on customer are more likely to be answered.

After this decision, items are generated depending on the CRM literature (Bose, 2002;
Reinartz et al., 2004; Lages et al., 2005; Mendoza et al., 2007; Kim and Kim, 2009;
Lin et al., 2010) and the insight from conducted interviews.

5.2 Expert validation and review of the statements

After the item pool is generated, it should be validated through experts (Devellis, 2003).
Grant and Davis (1997) proposed a survey study for content validation which is conducted
to experts. But in this study, the content validation is realized by face-to-face studies with a
group of experts which is composed of two professors, two PhD candidate, two
consultants and three professionals. The items were first divided into groups; the items
that do not belong to any groups are deleted. Then the items with similar meanings are
determined and consolidated. The content validity stage ended up with 39 items.
Since the rest of the study depends on the survey questions, review of the statements
is a fundamental part of the study and may affect the rest of the study. In order to verify
the written statements are perceived as intended, the questionnaire form is reviewed and
pilot tests were conducted. The statements with a possibility to misunderstanding are
identified and rewritten.

5.3 Application of the survey

In the application stage of the study, a webpage is built in order to maintain online
participation. In order to maintain the participation via fax and e-mail, an MS Word
survey form is prepared and sent with the invitation e-mail. The addresses are gathered
from the member databases of selected associations. A total of 2,000 valid e-mails were
IMDS sent and 274 responses were collected which maintains a response rate of 13.7 percent.
111,6 However, the responses with at more than seven missing data were discarded; as a result
only 167 of these responses are found as valid and used in the analysis.
Before going on to the analysis sample size and factorability tests are accomplished.
Worthington and Whittaker (2006) emphasize that a sample size between 150 and
200 and a ratio of 1:10 between the sample size and the expected factors are acceptable for
950 factor analysis. In the study, the sample size is denoted as adequate because, the expected
factor number is nine and the sample data is 167 which provide the desired ratio.
Factorability of the correlation matrix must also be checked before the factor analysis.
In this manner Barlett’s test of sphericity and Kaiser-Meyer-Olkim (KMO) measure of
sampling adequacy is utilized. The result of the KMO test is determined as 0.91 while a
result of 0.60 and above is defined as adequate (Tabachnick and Fidell, 2001). Barlett’s
test of sphericity was also conducted and the results were observed as significant.

5.4 Evaluation of the items and optimization of the scale

The aim of this step is to determine the factors by explanatory factor analysis and
discard the useless items. Characteristics of the companies that contributed to the
survey and found to be valid are listed in Table II.
In the analysis stage, main component analysis is conducted with varimax rotation
(McDonald, 1985). The factors are listed according to their eigenvalues, and the factors
that have an eigenvalue lower than 1 is eliminated. As a result, seven factors are

No. of employee
1-9 17.90
10-19 8.02
20-49 16.05
50-99 16.05
100-199 12.96
200-499 9.88
500 þ 19.14
Annual income
Euro 30 mil. þ 22.78
Euro 10-30 mil. 10.76
Euro 5-10 mil. 12.03
Euro 2-5 mil. 20.25
Euro 500 K-2 mil. 17.72
Less than 500 K 16.46
Sector
Manufacturing 0.38
Information Technologies 0.16
Tourism 0.14
Service 0.11
Retail 0.10
Finance 0.07
Logistics 0.04
Table II. Type of business
Characteristics of B2B 0.58
the respondents B2C 0.42
selected which defines the 75 percent of the overall variance. The factors, descriptive A measurement
names, eigenvalues and explained variance can be seen in Table III.
After the factors are determined the items in the factors are purified. In this phase,
tool for CRM
the rules defined by Worthington and Whittaker (2006), are employed. The items that processes
have a factor load over 0.50 in more than one factors are deleted and the items that does
not provide 0.50 factor load in any of the factors are deleted. Since item purification is
critical for scale development, the rules were applied twice and in different orders each 951
time and the results show that the same items were deleted in both applications.
Results of the exploratory factor analysis are shown in Table IV.
5.5 Construct validity
Measurement errors such as random error and method variance provide potential
threats to the validity of the research findings. In order to avoid this threat it is important
to validate construct measures (Bagozzi et al., 1991). In this study, internal consistency
(reliability) of the factors, convergence validity and nomological validity are controlled.
Internal consistency (reliability) is conducted by Cronbach alpha values of each
factor (Cronbach, 1951). The Cronbach alpha values were determined as varying
between 0.743 and 0.941 (Table V) which were acceptable (Nunnally, 1978).
In order to check the nomological validity, a model containing both, the construct to
be measured and other constructs (satisfaction, loyalty and COs) it is built and
hypothesis defined in Section 4 is investigated. The relations between the factors
and the constructs are observed to be significant in six of the factors. In only one factor,
the expected relations could not be observed. The results shown in Table VI, determine
that the proposed measure provides partial nomological validity.
In the previous studies (Loiacono et al., 2007; Parasuraman et al., 1988), convergence
validity is checked by a question that aims to get the overall judgment about the
construct that is measured. In this study, “How do you evaluate the overall performance
of the CRM processes?” Question is added to the survey. This question is utilized as
the overall judgment in H4 which is defined in Section 4. The correlation between
the answers of the question and the arithmetic average values of the factors are
analyzed. The correlation coefficient is determined as 0.787 which is defined as a high
correlation (Cohen, 1988). The expected correlation is observed so the proposed measure
provides the convergence validity. Since the results of the validity tests provide positive
results, the proposed measurement construct is can be declared as valid.

6. Findings
In accordance with its aim, the study provides a measurement tool with seven factors
and 30 items. The resulting factors define the processes which form the process level

Factors Descriptive name Eigenvalue Variance (%) Cumm. variance (%)

F1 WBM 6.190 16.9 18.757

F2 PSC 3.782 11.9 30.217
F3 CIM 3.626 11.6 41.204
F4 RM 3.300 10.5 51.203
F5 Expanding 3.084 9.9 60.548
F6 Targeting 2.686 8.1 68.689 Table III.
F7 Terminating management 2.151 6.8 75.208 Factors and variances
IMDS
Factor structure
111,6 Item code Items F1 F2 F3 F4 F5 F6 F7

Item_17 Win-back valued lost customer [. . .] 0.807

Item_7 Evaluate re-activating cost [. . .] 0.796
Item_6 Determine value of lost customers [. . .] 0.777
952 Item_19 Re-activate the inactive customers [. . .] 0.762
Item_5 Evaluate win-back cost [. . .] 0.730
Item_15 Propose customized offers [. . .] 0.850
Item_16 Differentiated acquisition efforts [. . .] 0.796
Item_25 Customized product/service [. . .] 0.794
Item_26 Manage expectations [. . .] 0.612
Item_24 Differentiated response/customer
service [. . .] 0.559
Item_13 Connection with potential customers [. . .] 0.775
Item_11 Trace customer relationships [. . .] 0.683
Item_14 Affect potential cust. segments [. . .] 0.630
Item_12 Identify nonprofitable customers [. . .] 0.576
Item_10 Evaluate retaining cost [. . .] 0.547
Item_23 Capture and integrate customer data [. . .] 0.536
Item_31 Manage customers’ referrals [. . .] 0.787
Item_29 Trace customer referrals [. . .] 0.783
Item_28 Motivate customers’ referrals [. . .] 0.690
Item_30 Reward customer referrals [. . .] 0.658
Item_36 Maintain up-sell activities [. . .] 0.776
Item_35 Maintain cross-sell activities [. . .] 0.738
Item_38 Increase the sales of valued
customers [. . .] 0.632
Item_37 Improve cross/up-sell possibilities [. . .] 0.591
Item_1 Define potential customers [. . .] 0.746
Item_2 Identify valued potential customer [. . .] 0.726
Item_3 Determine value of potential cust [. . .] 0.703
Table IV. Item_33 Passively finalize nonprofitable cust [. . .] 0.834
Results of the exploratory Item_34 Orientate customer to terminate [. . .] 0.798
factor analysis Item_32 Actively finalize nonprofitable cust [. . .] 0.617

Factors Alpha values

WBM 0.941
PSC 0.893
CIM 0.867
RM 0.866
Table V. Expanding 0.920
Reliability analysis Targeting 0.872
of the factors Terminating management 0.743

CRM. Appropriate names from the CRM literature are selected for these processes in
order to represent the meaning of the contained items. As the first finding of the study
is to define the process level CRM, the seven processes can be defined as follows:
 (1) Targeting management (TM). TM focuses on acquiring information and A measurement
evaluation of the potential customers. As the companies target and acquire the tool for CRM
right customers, CS and CL can be easily maintained and economic performance
increases. processes
(2) Customer information management (CIM). As the potentials become customers
the companies should try to capture and manage their information. This
information is used for segmentation of the customers and determining the life 953
time values and appropriate communication channels.
(3) Production/service customization (PSC). Customization refers to be able to make
differentiation on the products or services according to customer needs.
Customization can be interpreted as a tool for maintaining CS and CL. Generally,
high-value customers are focused in customization efforts. CIM should be done
properly in order to maintain an effective customization.
(4) Expansion management (EM). By expansion companies aim to increase the
relationship with the high-value customers. Cross-sell and up-sell opportunities
are the primary ways to increase the income and profitability. While cross-sell
refers to sell additional products or services to an existing customer, up-sell
refers to sell related products such as upgrades or add-ons to the current salary.
(5) Referrals management (RM). Word of mouth has become an important factor of
new customer acquisitions. RM refers to the processes that aim to enhance the
customers to make referrals.
(6) Termination management (TeM). Especially, in the strategic perspective of CRM
refers to the termination of the relationships that are not profitable. TeM contains
direct and indirect activities that try to banish the unprofitable customers.
(7) Win back management (WBM). WBM refers getting in interaction with the lost or
inactive customers. Since the profitable customers are subject to WBM, proper
customer information is needed for analysis and targeting of the lost customers.

The second aim of the study is to provide a tool for measurement of CRM processes.
As a result of the steps followed, a measurement questionnaire including 30 questions
is maintained and represented in the Appendix. Each question is related to a single
process and a process is measured with at least three questions. The proposed
measurement tool is passed through reliability and validity tests, which proves that the
tool is valid and reliable.

CS CL COs

WBM 0.194 * * 0.239 * * 0.306 * *

PSC 0.303 * * 0.319 * * 0.397 * *
CIM 0.237 * * 0.363 * * 0.462 * *
RM 0.282 * * 0.406 * * 0.365 * *
Expanding 0.218 * * 0.300 * * 0.390 * *
Targeting 0.166 * 0.217 * * 0.299 * *
Terminating management 20.022 2 0.006 0.053 Table VI.
Results of the
Note: Correlation is significance at: *0.05 and * *0.01 levels nomological validity
IMDS The relationships between the processes and CS, CL and COs are investigated
111,6 as mentioned in Section 4. Correlation analysis is utilized in the analysis and the results
are represented in Table VI. Analyzing the absolute value of correlation coefficients,
Cohen (1988) defines 0.10-0.29 as a low relation, 0.30-0.49 as a medium relation
and 0.50-1 as a high relation. Using these definitions the findings of the analysis can be
listed as follows:
954 .
None of the process show high level of relation with the outcome constructs
(CS, CL and CO). Terminating management process does not provide significant
relationship with any of the constructs. Besides, the correlation coefficient of
terminating management with CS and CL is negative.
. CS. Product/service management process provides medium level of correlation
with CS, other processes (excluding TeM) provides low level of correlation. While
product/service management shows the highest relation, TM provides the lowest
level of correlation.
.
CL. CL has the highest correlations with RM and CIM processes. RM, CIM, PSC
and EM provide medium level of correlation with CL on the other hand WBM
and TM provides low correlation.
.
COs. CIM process shows the highest correlation with COs which is followed by
product/service customization. All of the process excluding TM provides
medium level of correlation with COs.

7. Conclusion and limitations

As defined in Section 2.2 literature provides instruments for measurement of CRM.
Some of these instruments aim to maintain a tool for process level CRM however has
some fallbacks:
.
Measurement of customer facing operations, focus only on the process that
interact with customers.
.
CMAT is a professional tool which aims to measure the processes based on
best practices, thus it is not applicable for a single company to use as a measurement
tool.

The methodology used in the study is also utilized by other studies in the field of CRM
but with different purposes. Sin et al. (2005) provide a similar approach to conceptualize
overall CRM and ends up with four perspectives that are key customer focus,
organization, knowledge management and technology. Roberts et al. (2003) utilized scale
development methodology in order to measure the quality of relationships with
customers. As a result, the main contribution of the study is the development of process
level CRM measurement instrument and to our knowledge this is the first study that
applies scale development methodology to process level CRM measurement.
The study provides several important implications both for the managers and
academicians. The primary outcome of the study is the process level CRM measurement
tool. The instrument can easily be used by managers as a self-evaluation form. The results
of such an application can show the performance of the organization in fulfilling the CRM
processes. On the other hand, academicians can benefit from the instrument as a CRM
processes construct and build models for further studies. The second implication of the
study is the seven CRM processes defined as: targeting customers, customer information,
product or service customization, expanding customers, RM, wining back the lost A measurement
customers and termination of unprofitable relationships. These processes provide an tool for CRM
understanding of CRM in the process level. Each organization has specific structure and
business processes, the mentioned CRM processes may guide the managers to redesign or processes
refine their existing processes. Another implication may be driven the relationship
analysis; as a result of the analysis, product/service customization, CIM and RM processes
are found to be the most important processes which show highest correlation with the 955
desired outcomes. PSC is found to be the most effective process for CS. The results also
provide that, RM and CIM is the key processes to maintain CL.
The relationship between the processes and desired outcomes leads to some important
implications. Identification of unprofitable customer and termination of the relationship
with them is highly mentioned in the literature. However, in the study, terminating
management process does not show any significant relationship with the outcomes. Based
on this result, it can be proposed that termination of the relationship is not at the in core of
CRM processes but it is a decision about the profitability of the organization. Another
finding of the study is that none of the processes shows a high level of relation with COs.
This leads to a conclusion that, the processes alone are not enough for organizations to
reach the desired CRM outcomes, which is in line with current literature that proposes
CRM is a combination of technology, organization and people (Chen and Popovich, 2003).
Although the research provides a measurement tool, it should be noted that CRM has
a dynamic structure, changes in the formation and the functions can be observed by
time. Thus, the instrument should be updated periodically. Based on this measurement
tool, the performance of processes in different industries can be investigated; the
differences between BtoB and BtoC companies can be analyzed as further studies.
The study provides limited information about the relationship between the processes
and outcomes of CRM (such as CS, CL). A comprehensive model can be constructed and
the relationship between, CRM results, CRM processes and other organizational factors
can be investigated. The effect of organizational culture, structure and other
organizational characteristics on CRM processes and results can be analyzed.

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Appendix. Final questionnaire form

Win-back management
.
We have processes (or tools) to win-back valued lost customer.
.
We have processes (or tools) to evaluate the cost of re-activating inactive customers.
.
We have processes (or tools) to determine the life time value of lost customers.
.
We have processes (or tools) to re-activate the inactive customers which have high life
time values.
.
We have processes (or tools) to evaluate the cost of wining back the lost customers.

Production/service customization
.
We have processes (or tools) to propose customized offers to customers based on their life
time value.
. We have processes (or tools) to differentiate the customer acquiring efforts based on their
life time value.
.
We have processes (or tools) to provide customized product/service to customers based on
their life-time value.
.
We have processes (or tools) to manage expectations of high valued customers.
.
We have processes (or tools) to provide differentiated response/customer service to
customers based on their life-time value.

Customer information management

.
We have processes (or tools) to get in connection with potential customers using various
channels.
.
We have processes (or tools) to trace the status of our relationship with customers.
.
We have processes (or tools) to identify and affect different potential customers segments.
.
We have processes (or tools) to identify nonprofitable customers.
.
We have processes (or tools) to evaluate the cos of retaining each customer.
. We have processes (or tools) to capture and integrate customer data from whole contact
points (email, call-center, web site, fax, face-face).
IMDS Referrals management
111,6 .
We have processes (or tools) to manage customers’ referrals.
.
We have processes (or tools) to trace customer referrals.
.
We have processes (or tools) to motivate customers referrals.
.
We have processes (or tools) to reward our customers based on their referrals.
960
Expansion management
.
We have processes (or tools) to maintain up-sell activities with customers with high
life-time value.
.
We have processes (or tools) to maintain cross-sell activities with customers with high
life-time value.
.
We have processes (or tools) to increase the sales from customers with high life-time value.
.
We have processes (or tools) to improve the relationship with high life-time value
customers in order to provide cross-sell and up-sell possibilities.

Targeting management
.
We have processes (or tools) to define potential customers.
.
We have processes (or tools) to distinguish high-value potential customer from other
potential customers.
.
We have processes (or tools) to determine life-time value of potential customers.

Termination management
.
We have processes (or tools) to passively finalize the relationship with nonprofitable,
problem customers (e.g. increased fees).
.
We have processes (or tools) to orientate the nonprofitable customer to terminate their
relationship with our company (e.g. delay in service).
.
We have processes (or tools) to actively finalize the relationship with nonprofitable,
problem customers.

Corresponding author
Başar Öztayşi can be contacted at: oztaysib@itu.edu.tr

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