Travel Reference
In-Depth Information
The mediating effect of superior CRM capability: The impact
on profitability
H.Y. Liu & T.B. Phung
Department of Business Administration, National Dong Hwa University, Hualien, Taiwan, P.R. China
ABSTRACT: Customer Relationship Management (CRM) continues to be an important research
topic, especially its training orientation and organizational wide adoption because these two aspects seem
to have significant effect on profitability. However a careful review of the literature reveals that the effect is
directly affected by superior CRM capabilities which are generated by the two aspects. The paper proposes
the first unified framework describing the relationships among superior CRM capabilities, CRM training
orientation, organizational wide implementation and profitability. The framework was tested through
Structural Equation Modeling (SEM) approach and Baron and Kenny method. Our data consisted of 314
questionnaires from 339 hotels in Vietnam. The study revealed that the effect of CRM training orienta-
tion on CRM profitability was fully mediated by superior CRM capabilities, whereas the effect of CRM
organization-wide was only had partial. Moreover, the study found the size of firm and educational levels
also have significant impact on superior CRM capability and CRM profitability.
Keywords
: CRM training orientation, CRM organization-wide, superior CRM capability, CRM profit-
ability, mediating effects, hotels, Vietnam
1 INTRODUCTION
with customers (Gulati & Galino, 2000; Rein-
artz, Krafft & Hoyer, 2004). The coordination
of departments and activities will improve com-
munication among employees (a key indicator of
CRM capability) and hence a better understand-
ing of customers. Training orientation is to help
new staffs get to adapt the new environment that
they will work with. It aims to increase the knowl-
edge, skills and attitude of employees to meet
customer demands. CRM training orientation
standardizes and simplifies works tasks and con-
sequently achieves higher profitability. The links
among CRM organizational wide implementa-
tion, training orientation and profitability may
seem direct. But a closer review reveals that the
increased profitability is actually directly linked
to superior CRM capabilities but only indirectly
linked to CRM organizational wide implemen-
tation and training orientation. Focusing on
the CRM capability creates higher profitability
because manager and employees try to reach out
all potential customers and maximize the value of
the customers (Blattberg, Getz & Thomas, 2001).
This study aims to examine the mediating effects
of superior CRM capability on the CRM training
orientation, CRM organization-wide and CRM
profitability in hotel industry.
CRM is a business strategy that aims to main-
tain and cultivate relationship with customers. It
focuses on the flow of vital, timely, and accurate
customer information that is helpful for compa-
nies to cultivate customer intimacy to achieve
higher profitability (Day, 1994; Kim, Suh &
Hwang, 2003). A global CRM study conducted
by IBM Business Consulting Service shows that
over 50 percent of companies believed CRM can
increase performance and 65-75 percent looking
to CRM as an important element in delivering
revenue growth. However, only 15 percent of com-
panies are fully successful. The companies did not
succeed because they fail to consider CRM as a
strategy to foster customer relationships (Day &
Van den Bulte, 2002) especially they ignored the
importance of CRM training orientation and
CRM organizational wide adoption (Buttle, 2009;
Kim, 2008).
CRM organizational wide adoption is “a higher
level process that includes all activities that firms
undertake in their quest to build durable, profit-
able, mutual beneficial customer relationship”
to offer customization, simplicity and conven-
ience for employees to keep a good relationship
Search WWH ::
Custom Search