Examining the Impact of Customer Relationship Management on Deconstructed Measures of Firm Performance

Abstract

The aggregate measures frequently used to evaluate customer relationship management (CRM) performance may mask the true impact of CRM activities and make it difficult to tease out which activities might be helping (or hurting) the relationship capabilities of the firm. We posit that examining the impact of CRM on individual firm performance indicators provides better diagnostic value for managers. To test our hypothesis, we examine the impact of 6 CRM activities on 4 dimensions of firm performance and compare the results with the impact of the same activities on a composite score of the 4 dimensions. As expected, the pattern of regression coefficients is different between the equation with composite performance as the dependent variable and each of the remaining 4 equations. Managerially speaking, our results provide direction for marketing and customer managers in decision making related to prioritizing CRM activities. Theoretically speaking, they imply that researchers should consider examining the impact of CRM on individual performance dimensions as well.