Impact of Data Integration on Crm in the Electronic Commerce of Smes

Abstract

ABSTRACT Customer Relationship Management (CRM) has been discussed in literature as a data integration system that can provide a strategic advantage via customer loyalty to small and medium-sized enterprises (SMEs). Although CRM promises increased revenues and profits, SMEs face potential failure because of complex relationship issues. This study is a theoretical and empirical examination of the impact of data web integration on the relation between CRM (which includes customer prospecting, empowerment and understanding customer expectations) and customer loyalty. Data collected from 224 SMEs in the USA and processed with Partial Least Square (PLS) show that the use of data web integration reduces the impact of customer prospecting on customer loyalty. In contrast, the use of data web integration increases the impact of empowerment and understanding customer expectations on customer loyalty. The implications of the results for the study are discussed. INTRODUCTION Customer Relationship Management (CRM) was easier in earlier times when it was based on relationship marketing (RM) (Goodhue et al., 2002; Shin, 2003). RM has established itself as an information system (IS) reference discipline. The four Ps (product, price, place and promotion) of the marketing mix have become the universal marketing model or even theory (Gronroos, 1994). The four Ps of the marketing mix are a clinical approach, which makes the seller the active party and the buyer passive (Gronroos, 1994). No personalized relationship between the seller and the buyer is supposed to exist (Gronroos, 1994). The concept of RM has emerged because (1) it personalizes the relationship between the seller and the buyer, and (2) it relies on a two-way dialogue between a company and a customer to develop a deep relationship. Unfortunately, this two-way dialogue proved to be labor intensive and thus had to be limited to a small subset of customers. Today, the use of information technology (IT) has modified RM into CRM, thereby making CRM feasible across a wide range of customers (Goodhue et al., 2002). CRM is driven by the availability of data web integration and advances in business-to-business (B2B) electronic commerce. In particular, IT based on data web integration has made CRM efficient and effective. The meaning of CRM refers to relationships between small and medium-sized enterprises (SMEs) and their customers. There has been a large increase in SMEs in the world of B2B electronic commerce (U.S. SBA, 2000). The transaction value of B2B electronic commerce over the Internet is expected to be $2.0 trillion by 2003 and an additional $780 billion in purchases will be made over private networks using EDI (Electronic Data Interchange) (U.S. SBA, 2000). Although EDI concepts can be traced all the way back to the 1970s with American Airlines (SABRE) and American Hospital supply, the move away from proprietary systems towards using the web and data web integration technologies has reduced the cost and increased the number of SMEs using B2B systems (Poon, 2000). The growth of Internet and data web integration technologies has opened up numerous opportunities for SMEs to penetrate new markets and forge a new CRM (Li and Williams, 1999). Since a number of authors have suggested that loyalty is a relational phenomenon, our intention was to link CRM between SMEs and their loyal customers. Although CRM is on the rise and holds tremendous promise for building mutually beneficial relationships with customers, SMEs often struggle with their CRM efforts. Many SMEs with CRM projects are either experiencing difficulties or close to failure (Goodhue et al., 2002). We believe SMEs can minimize their risks of failure by first having data web integration as a CRM enabler and then linking it to customer loyalty. In addition, there is a little existing research that has empirically tested the impact of data web integration on CRM which leads to customer loyalty. …