Description
Social media are not only transforming private communication & interaction, they also will transform how people work. With social media knowledge work in organizations can be optimized extremely: like a better distribution/sharing and access to knowledge.
What are the Impact of Knowledge Management on Customer Relationship Management?
Abstract With the market shift toward customer-oriented approach, many corporations have invested heavily in customer relationship management systems. These systems can be implemented only through information technology (IT) and by utilizing knowledge management capabilities. Today, customer knowledge is the signboard of organization's policy makings and the basis of strategic decisions. Accordingly, implementation of customer relationship management systems involves acquisition, documentation, transfer and using knowledge inside and outside the organization. This article tries to examine the influence of knowledge management on the various aspects of customer relationship management (customer knowledge, customer interaction, customer satisfaction and customer value). Present research is applied and descriptive study. A researcher -made questionnaire is used for collecting the information. The population sample of the study is all the staffs of departments of marketing, sales and customer relationship management in Iran-khodro (Tehran). Hypotheses of the study will be analyzed using Structural Equation Modeling/Path Analysis and Tests of Fit with the help of LISREL 8.5 and SPSS 17 software. Results of the study show that, KM is effective on CRM and this relationship has impact on increasing of customer satisfaction and profitability.
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34 (2011) Keywords: Knowledge Management, Customer Relationship Management, customer knowledge, Structural Equation Modeling, Iran khodro
Introduction
Nowadays, companies have much awareness of the necessity of performing of customer relationship management in order to manage their customers' information. But, almost all of these companies encounter with some problems in many sale centers in spite of the facilitating role of information technology for establishing relationship with customers since, they do access customers' information about the product rather than the customer. The long-term and continuous participation of company branches in all interactions that customer may have with the company seems to be a rare case. Fortunately, nowadays, some service companies comprehend the vitality and necessity of the participation with every customer as they establish an up-to-date and complete web of customers in order to reply the customers' demands and requirements [36]. The rapid movements in the field of information technology lead to the growth of knowledge and the process of knowledge management [22]. The management of knowledge plays the key role in acquisition, documentation, creation, transfer, application and developing of knowledge. The management of knowledge helps the organization to study the customers' experiences intelligently and sharply. The organization properties will be protected by performing the knowledge management against destruction and will lead to the increase of the organization flexibility. The companies which have an eye on future understand this fact properly that their future labor force will have the maximum efficiency, if they can use their knowledge. The successful companies not only apply customer-oriented policies, but also, they are able to connect the customers' knowledge with the important decision makings of business and trade. Customer relationship management can be defined as the preparation of different goods and services for different and various people. According to this definition, a company should classify its customers and supply its goods and services based on the needs of every class [13]. Regarding the development of the knowledge management in companies, it is expected that these classification become smaller and special goods and services are presented for every customer. Nowadays, the big companies like automobile companies make use of customer relationship management as a new opportunity in order to increase the customers' satisfaction and consequently the increase of profit. The Iran-khodro as the leading company in the country's automobile industry defines its stability condition in the competition as the identification of the new opportunities based on the customers' knowledge. But the question which is arisen on the study of the objectives of this research is that whether the knowledge management has a meaningful relation with customer relationship management in an organization or not? And if there is such a relation, to what extent the dimensions of the knowledge management are important in customer relationship management?
Literature Review
Concept of customer relationship management: Various definitions of customer relationship management (CRM) are presented by thinkers in management, marketing and information technology domain. Baran et al (2008) defined customer relationship management as one of the business and trade strategies in order to improve customer's interest and satisfaction (by organizing resources based on customer's demands), training the customer's satisfactory behaviors and performing the customer oriented processes. This business and trade strategy makes use of information technology in a way to introduce the unified, reliable and comprehensive view points on customers which uses all processes and customer interactions in order to maintain and expand fruitful relations. The growth of CRM began in 1990 decade as it has created a revolution in the competitive style of organization [29-47]. relationship management philosophy is formed by the difference in the demands and needs of customers. As no people are similar and alike, no two customers are the same and have no the same behavior. Therefore, the customer relations are something beyond the usual marketing. A company
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should be able to change its products and services in accordance with customer taste in the customer relationship management. In other words, the necessity and central point of customer oriented is to focus on customers' needs based on establishing a one-to-one relation and the continuous interaction with each one of them [15]. These types of relations increase the customers' Loyalty. Because customer feel that they more important and are greatly valued by the companies. The customer relationship management system is a key element in justification with the environmental changes of organizations which supervise the external changes and justify the internal culture of organization with those changes [38]. These systems are based on interactive relationships between companies and clients. Successful implementation of CRM system requires specific actions on all parts of the organization [6]. Kim et al. (2003) divided CRM system into four stages: (i) Customer knowledge (CK); (ii) Customer Interaction (CI); (iii) Customer satisfaction (CS); and (iv) Customer Value (CV). Table 1 shows the dimensions of CRM and its related indices.
Table 1: Dimensions of Customer Relationship Management
Implications Understanding the Customers and analyzing their Data Promoting the effective paths Indices Customer attraction Appropriation Understanding customer needs , analyzing the customer data Cumber of responses, number of interactions, relationship management Communication routes maximizing operations profitability Customer retention, increasing repeated purchases, number of complaints Brand perception, servicing level, number of daily requests, and customer's trust towards the organization.
Dimensions of CRM Customer knowledge
Customer interaction
Customer satisfaction Customer value Source: Kim et al, (2003)
Achieving Business Value Increasing Loyalty and Profitability
A consideration of the four stages of CRM suggested by Kim et al. (2003) is more reasonably complete, which reveals that the ACSI model involves two full stages (CI and CS) and part of a fourth stage (CV). It is therefore that the present study refers to this extended CRM system. Moreover, the present study also suggests that CI phase can be divided into two sub-phases: (i) Customer interaction (CI); and (ii) Customer perception (CP). In addition to the four phases suggested by Kim et al. (2003), the phase "customer perception" is needed to emphasize in the CRM system. Each of the phases is discussed below. Customer Knowledge (CK): A necessary first step to a complete CRM system is the construction of a customer information file like data warehousing [45]. This means collecting appropriate customer information, analyzing customer data, acquiring new customers, improving skills of employee, improving CRM technique, and secure service. Customer knowledge in higher levels is the common interface of activity-based Knowledge Management and customer relationship management is at intermediate levels of the organization. CRM is based on the assumption that better customer knowledge makes for higher profits. This is achieved through the acquisition, creation, analysis and application of customer data such as Personal data, transaction data and soft facts, e.g., interests and hobbies. The data allow companies to customize customer contacts and product offers, and thus achieve a higher service quality. Moreover, by using the data it would be possible to discover new customer needs and requirement. Creating additional value for customers also improves customer retention and loyalty [35]. Customer Interaction (CI): Customers perceive value and service quality at the time of the service encounter [12], and their evaluations of service quality also involve evaluations of the process of service delivery [3-16-34-44]. In other words, interaction with customers is the turning point of business activity towards customer orientation and customer relationship management.
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It is therefore apparent that any importance of CRM process must take account of service process. By adding "service-provision processes" before the ASCI model, the aim of the extended model is active pursuit of higher perceived quality. Consequently, by managing CI more effectively, a company can create customer value and operational excellent [40]. This created value will make new opportunities for profitability in the business. Customer Satisfaction (CS): "Customer satisfaction" and "customer loyalty" are the results of the antecedents: customer knowledge input, service delivery and customer interaction. It is thus apparent that the highest priorities for any service organization must be a thorough understanding of customer needs and expectations, effective control of inputs, and successful operation of the service- provision processes. Customer satisfaction is the main mission of the present organizations. Consequently, CS phase represents the level of satisfaction achieved by perceived value [8]. Perhaps customer satisfaction could be conceived as the most important stage in this model. Customer Value: In CV phase represents the firms' benefits can be gained from loyal customers extended. CRM system involves the pursuit of customer satisfaction and customer loyalty, which are still expanding to the firms' revenue and profit [27]. Thus, the extended model aims to accentuate the essential benefits of the pursuit of customer loyalty. Therefore, customer value can be considered as the last segment in the model which links customer relationship management with knowledge management objectives. So, this means improving Customer retention, profits increase, improving customer service and support, building an attractive virtual community. KM as a tool for achieving objectives of CRM: Knowledge management is 'any process or practice of creating, acquisition, capturing, sharing and using customer knowledge, wherever it resides, to enhance learning and performance in organizations' [37]. According to Wiig (1997), the objective of KM is to "make an organization act as intelligently as possible to secure its viability and overall success and to otherwise realize the best value of its knowledge assets". Some KM scholars, such as Nonaka (1991), define KM as the process of capturing collective expertise and intelligence of organization and using them to foster innovation. In this definition, knowledge management is defined from intelligence organization perspective in the Information Age. So, KM consists of the processes an organization uses to acquire, create, document, transfer, and apply customer knowledge to achieve organizational goals [17]. Tiwana (2000) views knowledge Acquisition (KA) as the process of developing insights, skills, and relationships, enabling Customers of organization to go through a process of self-renewal and expand its boundaries. Knowledge acquision is the main factor in achieving the objectives of the organizations and has a close relationship with customer knowledge. Knowledge Documentation (KD) or codification refers to the mechanisms that an organization uses to institutionalize its customer knowledge so that it can be reused in the future. These mechanisms or forms, e.g., documents, databases, pictures, illustrations, spreadsheets on a disk, e- mails, video tapes, Web pages, make it explicit, portable, accessible and usable [14 P:68 -41]. The recorded knowledge is vital in modern organizations which deals with the improvement of knowledge management systems and predicts future trends. Argote and Ingram (2000) add that Knowledge Transfer (KT) is a process through which one unit (e.g. group, department, or division) is affected by the experience of another. Customer knowledge can be transferred through personal communication, codified communication, and embodied KT [1]. In knowledge Creation (KC) view, customer knowledge creation as processes that involve an ontological dimension, which is learning at the customers, group, and organizational level, and also an epistemological dimension, which includes the two complementary types of explicit and tacit knowledge [33]. Knowledge creation is performed in high, middle and operational levels of the organization. Knowledge Application (KP) describes the methods and mechanisms that an organization adopts to use available knowledge to improve its processes, products and services [7-41]. To achieve the above mentioned goals of providing a solution for the process of the customers, enterprises need to
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focus on three sorts of knowledge in CRM processes [10]. They make up what we consider to be customer knowledge. • They need to understand the requirements of customers in order to address them. This is referred to as "knowledge about customers". • The information needs of the customers in their interaction with the enterprise require "knowledge for customers". • Finally, customers possess knowledge about the products and services they use as well as about how they perceive the offerings they purchased. This "knowledge from customers" is valuable as it feeds into measures to improve products and services. Efforts need to be made to channel this knowledge back into the enterprise. Therefore, Companies continue to use knowledge management as a process to achieve set of customer experiences [23-31]. Applying knowledge management to communicate with customers makes companies closer to customers and provides new opportunities for exhibiting the services and products [10]. So, organizations should reinforce their KM and CRM systems in a way that enables them to obtain value-added knowledge for their customers and themselves [39]. This integrates knowledge management systems and customer relationship management in the three management levels (high, middle and operational). This relation has named Customer Knowledge Management (CKM). Wayland & Cole (1973) believed that CKM means the sources and application of customer knowledge as well as how to build more valuable customer relationship by information technology, which plays a leverage role during acquisition, developing and maintaining profitable customer arrangement process [28].Customer knowledge management is the main core of customer relationship management systems and knowledge management is the new prospective of organizations in the Information Age. CKM can thus be viewed as a crucial domain of KM. Moreover, it connects KM and CRM closely together. CKM is an area of management where KM instruments and procedures are applied to support the exchange of customer knowledge within an organization and between an organization and its customers, and where customer knowledge is used to manage customer relationships, to improve CRM processes such as customer service, customer retention and relationship profitability. Using the metaphor of service exchange, in CKM, KM is the service provider, who offers the tools and procedures for knowledge exchange [24] and CRM the service buyer, who determines what knowledge, is needed and who generates and uses the knowledge in customer interaction. CKM is not only the purpose but also the essence of the CRM. Gebert et al?2002), Gibbert et al., (2003), Xuelan (2005), Campbell (2003), Yichen et al., (2006) considered that CKM is the extendibility and development of the knowledge management and CRM, CKM is linked with knowledge and relationship, which are two kinds of key resources in the business and current economy, on one side, the business can build closer and more valuable symbiosis relationship with the customers, on the other hand, they poured the knowledge and professional experience which are acquired from the communication with customers into products and services to the maximum, from which can they establish the stable foundation for sustainable advantage in competition. Swift (2000) emphasized the importance of customer knowledge in customer relationship. He figured that CRM is such kind of mutual process by which customer information can be converted into positive customer relationship.
Hypotheses
Hypotheses of the study are stated in form of one primary hypothesis and 4 secondary hypotheses. H1. Knowledge management is effective on customer relationship management. H1.1 Knowledge management is effective on promotion of customer knowledge in the or gani z at i on. H1.2 Knowledge management is effective on promotion of customer interaction in the or gani z at i on
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34 (2011) H1.3 Knowledge management is effective on promotion of customer satisfaction in the or gani z at i on H1.4 Knowledge management is effective on promotion of customer value in the or gani z at i on
Data Collection and Analysis Tools
The Questionnaire comprised four different sections. The first section questions have been used. 3 questions are related to personal information of the respondents. The second section contains 20 statements measuring the five KM activities: Knowledge acquisition, Knowledge documentation, Knowledge transfer, Knowledge creation, and Knowledge application. These statements are formulated by Filius eta al. (2000). Respondent were asked to indicate their extent of agreement using a five point likert scale (with 5 = completely agree, to 1 = completely disagree). The third section contains 12 statements measuring the four CRM dimensions: Customer Knowledge, Customer Interaction, Customer Satisfaction and Customer value. These statements are formulated by Kim et al., (2003). Respondent were asked to indicate their extent of agreement using a five point likert scale (where 5 = extensively covered, to 1 = weakly covered). For analyzing data derived from questionnaire Structural Equation Modeling / Path Diagram has been used and the software's which have been used for analyzing the data are LISREL 8.54 and SPSS 17.
Population and Sample Size
The population of this study is "all staffs of customer relationship management section, sales and marketing of Iran- khodro Company in Tehran city". To raise the accuracy and correctness of the analyses population samples has been estimated 171 people based on Morgan's table. Therefore, 200 questionnaires have been distributed in 50 days time span between population samples randomly. Afterwards, 177 questionnaires have been collected. After examining 171 questionnaires were selected for data analysis. For determining reliability of the study Cronbach's Alpha method has been used.
Table 2:
Reliability
Cronbach's Alpha 0 .83 0 .87 All 0 .89
Questions Technological dimension of customer relationship management Customer values questions
To determine the validity of the questionnaire content credit has been used [5].The questionnaire content credit has been approved by distributing the questionnaires among a group of professors specializing in the field of customer relationship management and marketing. It became clear that the questionnaire is to have the necessary credibility.
Description of Population-Sample
From 171 respondents, 4 people under high school graduation, 38 people high school graduates, 60 people had associated diploma, 44 with bachelor degree, 21 people with master degree, and finally 4 people hold a PhD degree. And this is while the age of 31 of these people were between 18-25, 38 people between 26-35, 57 between 36-45, 33 people between 46-55 and 12 people were more than 56 years old.
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Tests of Fit for Observed Model and Hypotheses Testing
The data was analyzed using LISREL, a software package based on structural equation modeling (SEM) techniques. The SEM approach was used to assess proposed causal model. The SEM technique allows us to multiple indicators to measure constructs and account for measurement errors. Another important advantage is that we can evaluate causal relationships among multiple interested constructs simultaneously [26-42]. Given that structural equation modeling has no single statistical test of significance for model fit [42], several goodness-of-fit m2easures were used to assess the fit of model. The relative chi-square (chi-square/degree of freedom;? /df), standardized root mean square residual (standardized RMSR), goodness-of-fit index (GFI), adjusted goodness-of-fit index (AGFI), normed fit index (NFI), and comparative fit index (CFI) were used as goodness-of-fit measures. Due to the sensitivity of the chi-square test to sample size, the relative chi-square was used (it should be 3 o less for an acceptable model [25], Standardized RMSR should not be greater than 0.10 and GFI, AGFI, NFI, and CFI should exceed 0.90 to be acceptable [30]. The rate of each index has come in the following Table3:
Table 3:
?2 /df 0 .69
Goodness of fit tests
Root Mean Square Residual (RM R) 0 .041 Goodness of Fit Index (GFI) 0 .96 Adjusted Goodness of Fit Index 0 .96 Root Mean Square Error of Approximation 0 .015 Normed Fit Index Noni-Nnrmed o (NFI) F t I dex 0 .96 0 .90 Comparative Fit Index (CFI) 0 .98
Measurement Model
The measurement model with all three constructs was using confirmatory factor analysis [26]. Table 4 presents factor loading and the corresponding t-values of indicators in the measurement model. All loading exceed 0.5 and each indicator is significant at 0.05 levels (expect KA, KD). The measurement model exhibited a good level of model fit.
Table 4: Factor loading and t-values of the measurement model
Factor Loading 0 .250 .360 .620 .630 .73 0 .630 .610 .650 .66 t-value 5 .848 .71 15 .431 5 .7711 .50 13 .541 3 .9414 .0613.9 3
Construct/indicator Knowledge Management (KM) Knowledge Acquisition (KA) Knowledge Documentation (KD) Knowledge Transfer (KT) Knowledge Creation (KC) Knowledge Application (KP) Customer Relationship Management (CRM) Customer Knowledge (CK) Customer Interaction (CI) Customer Satisfaction (CS) Customer Value (CV)
Hypotheses Testing Using Path Analysis Diagram Method of SEM
The specification of the model consists of the translation of the verbal hypotheses into a series of equations previously represented in the form of a causal or a path diagram. The path diagram shows the causal relationships among all variables in the system. It should be based upon a priori knowledge of such relationships which are ultimately related to previous experience or theoretical basis [19]. Thus, the path diagram represents the working hypothesis about the causal relationships among variables. Fig. 1 shows structural model of the study for confirming hypothesis of the study in standard estimation.
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Figure 1: Structural model of the study for confirming hypothesis
Fig.2 also shows significance and the resulted parameters from primary hypothesis test. Significance value of 13.89 is for the primary hypothesis was determined. Significance value of the primary hypothesis is placed out of (-1.96, 1.96) interval, therefore, formed relation is out of the null hypothesis and indicates the ratification of the primary hypothesis of the research. According to results of these two models (relation is based on standard estimation of 0.93 and is based on significance equal to 5.75) hence, primary hypothesis is confirmed.
Figure 2: Structural model of the study for confirming hypotheses in significance state
Based on analysis done using path analysis, results of testing hypotheses of the study can be seen in table 5. Standard estimation test and significance values in confirming or rejecting the considered hypotheses (significance of hypotheses) have been used.
Table 5: Results of testing the hypotheses of the study using path analysis
Pa th KM KM KM KM KM CRM CK CS CI CV Standardized coefficient 0 .93 0.93×0.63=0.58 0.93×0.61=0.57 0.93×0.65=0.60 0.93×0.66=0.61 The Significance of Values Out of (-1.96, 1.96) Out of (-1.96, 1.96) Out of (-1.96, 1.96) Out of (-1.96, 1.96) Out of (-1.96, 1.96) Testing of Hypotheses confirmed confirmed confirmed confirmed confirmed
Hypotheses of the study Main hypothesis First secondary hypothesis Second secondary hypothesis Third secondary hypothesis Fourth secondary hypothesis
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Discussion
CRM is a customer-oriented approach and is one of the strong organizational capabilities for knowledge and information management [12]. By creating knowledge management structures in organizations, we can maintain valuable customers and manage new ones [11]. Many studies have been done on knowledge management influences on CRM (Such as Campbell, 2001; Garcia-Murillo &Annabi 2002; Gibber et al., 2002; Stefanou et al., 2003). In all these studies, researchers have concluded that these two variables highly correlated and this correlation had a great impact on the business processes. According to Bose and Sugumaran (2003), CRM could be achieved only through integration of KM with it which as the result improves business processes and allows firms to have a good evaluation on their customer's level of satisfaction, profitability and loyalty'. They also pinpoint the lack of a simple and general framework for integration of CRM functionalities with knowledge management capabilities [9]. Although firms have access to huge amount of information about their customers like their behavioral actions, they still know little about how to manage this knowledge and use the best out of it [10]. Garcia-Murillo & Annabi (2002) acknowledges that successful CRM requires deep knowledge of customer (KM), but the ways that these two types of technology fit in together needs research. Alike past research the present study at a broader level showed that acquisition, transfer, creation and application of knowledge of customer knowledge in the organization on increasing customer satisfaction and profitability is effective on the profitability of organizations. This is the ultimate goal of examining knowledge management effect on CRM that showed Iran-khodro has fully benefited from knowledge management systems in materializing CRM goals in the organization. Conceptual model of the research results shows that this model has the necessary fitness. In other words, the proposed model is an efficient model for implementing knowledge management objectives and CRM in organizations. Conceptual model of the study showed that KM has had the greatest impact on employee learning and achievement of CRM objectives in the organization. Therefore, acquisition, transfer and knowledge creation in the organization on improving customer support has been more effective than the registration and application of the knowledge. So, customer knowledge, customer interaction, customer satisfaction and customer value can be outlined as a sustainable competitive advantage to increase and improve CRM performance to contribute in achieving organizational goals. These results also showed that research hypotheses were confirmed with a high correlation coefficient. So, CRM in Iran-khodro Company can be evaluated in respect to customer knowledge, interaction, satisfaction and value. Customer knowledge can be applied with data mining tool in an organization. Customer interaction leads to long term communications with customers and is the main element in increasing the customer's loyalty. Customer satisfaction is the main objective of the marketing, sales and after- sales services departments of Iran-khodro Company and is the main part of the function of CRM department. Customer value is a strategic procedure for product management, services and development of business and raising the competitive share of participation in the market.
References
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doc_226552171.docx
Social media are not only transforming private communication & interaction, they also will transform how people work. With social media knowledge work in organizations can be optimized extremely: like a better distribution/sharing and access to knowledge.
What are the Impact of Knowledge Management on Customer Relationship Management?
Abstract With the market shift toward customer-oriented approach, many corporations have invested heavily in customer relationship management systems. These systems can be implemented only through information technology (IT) and by utilizing knowledge management capabilities. Today, customer knowledge is the signboard of organization's policy makings and the basis of strategic decisions. Accordingly, implementation of customer relationship management systems involves acquisition, documentation, transfer and using knowledge inside and outside the organization. This article tries to examine the influence of knowledge management on the various aspects of customer relationship management (customer knowledge, customer interaction, customer satisfaction and customer value). Present research is applied and descriptive study. A researcher -made questionnaire is used for collecting the information. The population sample of the study is all the staffs of departments of marketing, sales and customer relationship management in Iran-khodro (Tehran). Hypotheses of the study will be analyzed using Structural Equation Modeling/Path Analysis and Tests of Fit with the help of LISREL 8.5 and SPSS 17 software. Results of the study show that, KM is effective on CRM and this relationship has impact on increasing of customer satisfaction and profitability.
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34 (2011) Keywords: Knowledge Management, Customer Relationship Management, customer knowledge, Structural Equation Modeling, Iran khodro
Introduction
Nowadays, companies have much awareness of the necessity of performing of customer relationship management in order to manage their customers' information. But, almost all of these companies encounter with some problems in many sale centers in spite of the facilitating role of information technology for establishing relationship with customers since, they do access customers' information about the product rather than the customer. The long-term and continuous participation of company branches in all interactions that customer may have with the company seems to be a rare case. Fortunately, nowadays, some service companies comprehend the vitality and necessity of the participation with every customer as they establish an up-to-date and complete web of customers in order to reply the customers' demands and requirements [36]. The rapid movements in the field of information technology lead to the growth of knowledge and the process of knowledge management [22]. The management of knowledge plays the key role in acquisition, documentation, creation, transfer, application and developing of knowledge. The management of knowledge helps the organization to study the customers' experiences intelligently and sharply. The organization properties will be protected by performing the knowledge management against destruction and will lead to the increase of the organization flexibility. The companies which have an eye on future understand this fact properly that their future labor force will have the maximum efficiency, if they can use their knowledge. The successful companies not only apply customer-oriented policies, but also, they are able to connect the customers' knowledge with the important decision makings of business and trade. Customer relationship management can be defined as the preparation of different goods and services for different and various people. According to this definition, a company should classify its customers and supply its goods and services based on the needs of every class [13]. Regarding the development of the knowledge management in companies, it is expected that these classification become smaller and special goods and services are presented for every customer. Nowadays, the big companies like automobile companies make use of customer relationship management as a new opportunity in order to increase the customers' satisfaction and consequently the increase of profit. The Iran-khodro as the leading company in the country's automobile industry defines its stability condition in the competition as the identification of the new opportunities based on the customers' knowledge. But the question which is arisen on the study of the objectives of this research is that whether the knowledge management has a meaningful relation with customer relationship management in an organization or not? And if there is such a relation, to what extent the dimensions of the knowledge management are important in customer relationship management?
Literature Review
Concept of customer relationship management: Various definitions of customer relationship management (CRM) are presented by thinkers in management, marketing and information technology domain. Baran et al (2008) defined customer relationship management as one of the business and trade strategies in order to improve customer's interest and satisfaction (by organizing resources based on customer's demands), training the customer's satisfactory behaviors and performing the customer oriented processes. This business and trade strategy makes use of information technology in a way to introduce the unified, reliable and comprehensive view points on customers which uses all processes and customer interactions in order to maintain and expand fruitful relations. The growth of CRM began in 1990 decade as it has created a revolution in the competitive style of organization [29-47]. relationship management philosophy is formed by the difference in the demands and needs of customers. As no people are similar and alike, no two customers are the same and have no the same behavior. Therefore, the customer relations are something beyond the usual marketing. A company
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should be able to change its products and services in accordance with customer taste in the customer relationship management. In other words, the necessity and central point of customer oriented is to focus on customers' needs based on establishing a one-to-one relation and the continuous interaction with each one of them [15]. These types of relations increase the customers' Loyalty. Because customer feel that they more important and are greatly valued by the companies. The customer relationship management system is a key element in justification with the environmental changes of organizations which supervise the external changes and justify the internal culture of organization with those changes [38]. These systems are based on interactive relationships between companies and clients. Successful implementation of CRM system requires specific actions on all parts of the organization [6]. Kim et al. (2003) divided CRM system into four stages: (i) Customer knowledge (CK); (ii) Customer Interaction (CI); (iii) Customer satisfaction (CS); and (iv) Customer Value (CV). Table 1 shows the dimensions of CRM and its related indices.
Table 1: Dimensions of Customer Relationship Management
Implications Understanding the Customers and analyzing their Data Promoting the effective paths Indices Customer attraction Appropriation Understanding customer needs , analyzing the customer data Cumber of responses, number of interactions, relationship management Communication routes maximizing operations profitability Customer retention, increasing repeated purchases, number of complaints Brand perception, servicing level, number of daily requests, and customer's trust towards the organization.
Dimensions of CRM Customer knowledge
Customer interaction
Customer satisfaction Customer value Source: Kim et al, (2003)
Achieving Business Value Increasing Loyalty and Profitability
A consideration of the four stages of CRM suggested by Kim et al. (2003) is more reasonably complete, which reveals that the ACSI model involves two full stages (CI and CS) and part of a fourth stage (CV). It is therefore that the present study refers to this extended CRM system. Moreover, the present study also suggests that CI phase can be divided into two sub-phases: (i) Customer interaction (CI); and (ii) Customer perception (CP). In addition to the four phases suggested by Kim et al. (2003), the phase "customer perception" is needed to emphasize in the CRM system. Each of the phases is discussed below. Customer Knowledge (CK): A necessary first step to a complete CRM system is the construction of a customer information file like data warehousing [45]. This means collecting appropriate customer information, analyzing customer data, acquiring new customers, improving skills of employee, improving CRM technique, and secure service. Customer knowledge in higher levels is the common interface of activity-based Knowledge Management and customer relationship management is at intermediate levels of the organization. CRM is based on the assumption that better customer knowledge makes for higher profits. This is achieved through the acquisition, creation, analysis and application of customer data such as Personal data, transaction data and soft facts, e.g., interests and hobbies. The data allow companies to customize customer contacts and product offers, and thus achieve a higher service quality. Moreover, by using the data it would be possible to discover new customer needs and requirement. Creating additional value for customers also improves customer retention and loyalty [35]. Customer Interaction (CI): Customers perceive value and service quality at the time of the service encounter [12], and their evaluations of service quality also involve evaluations of the process of service delivery [3-16-34-44]. In other words, interaction with customers is the turning point of business activity towards customer orientation and customer relationship management.
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It is therefore apparent that any importance of CRM process must take account of service process. By adding "service-provision processes" before the ASCI model, the aim of the extended model is active pursuit of higher perceived quality. Consequently, by managing CI more effectively, a company can create customer value and operational excellent [40]. This created value will make new opportunities for profitability in the business. Customer Satisfaction (CS): "Customer satisfaction" and "customer loyalty" are the results of the antecedents: customer knowledge input, service delivery and customer interaction. It is thus apparent that the highest priorities for any service organization must be a thorough understanding of customer needs and expectations, effective control of inputs, and successful operation of the service- provision processes. Customer satisfaction is the main mission of the present organizations. Consequently, CS phase represents the level of satisfaction achieved by perceived value [8]. Perhaps customer satisfaction could be conceived as the most important stage in this model. Customer Value: In CV phase represents the firms' benefits can be gained from loyal customers extended. CRM system involves the pursuit of customer satisfaction and customer loyalty, which are still expanding to the firms' revenue and profit [27]. Thus, the extended model aims to accentuate the essential benefits of the pursuit of customer loyalty. Therefore, customer value can be considered as the last segment in the model which links customer relationship management with knowledge management objectives. So, this means improving Customer retention, profits increase, improving customer service and support, building an attractive virtual community. KM as a tool for achieving objectives of CRM: Knowledge management is 'any process or practice of creating, acquisition, capturing, sharing and using customer knowledge, wherever it resides, to enhance learning and performance in organizations' [37]. According to Wiig (1997), the objective of KM is to "make an organization act as intelligently as possible to secure its viability and overall success and to otherwise realize the best value of its knowledge assets". Some KM scholars, such as Nonaka (1991), define KM as the process of capturing collective expertise and intelligence of organization and using them to foster innovation. In this definition, knowledge management is defined from intelligence organization perspective in the Information Age. So, KM consists of the processes an organization uses to acquire, create, document, transfer, and apply customer knowledge to achieve organizational goals [17]. Tiwana (2000) views knowledge Acquisition (KA) as the process of developing insights, skills, and relationships, enabling Customers of organization to go through a process of self-renewal and expand its boundaries. Knowledge acquision is the main factor in achieving the objectives of the organizations and has a close relationship with customer knowledge. Knowledge Documentation (KD) or codification refers to the mechanisms that an organization uses to institutionalize its customer knowledge so that it can be reused in the future. These mechanisms or forms, e.g., documents, databases, pictures, illustrations, spreadsheets on a disk, e- mails, video tapes, Web pages, make it explicit, portable, accessible and usable [14 P:68 -41]. The recorded knowledge is vital in modern organizations which deals with the improvement of knowledge management systems and predicts future trends. Argote and Ingram (2000) add that Knowledge Transfer (KT) is a process through which one unit (e.g. group, department, or division) is affected by the experience of another. Customer knowledge can be transferred through personal communication, codified communication, and embodied KT [1]. In knowledge Creation (KC) view, customer knowledge creation as processes that involve an ontological dimension, which is learning at the customers, group, and organizational level, and also an epistemological dimension, which includes the two complementary types of explicit and tacit knowledge [33]. Knowledge creation is performed in high, middle and operational levels of the organization. Knowledge Application (KP) describes the methods and mechanisms that an organization adopts to use available knowledge to improve its processes, products and services [7-41]. To achieve the above mentioned goals of providing a solution for the process of the customers, enterprises need to
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focus on three sorts of knowledge in CRM processes [10]. They make up what we consider to be customer knowledge. • They need to understand the requirements of customers in order to address them. This is referred to as "knowledge about customers". • The information needs of the customers in their interaction with the enterprise require "knowledge for customers". • Finally, customers possess knowledge about the products and services they use as well as about how they perceive the offerings they purchased. This "knowledge from customers" is valuable as it feeds into measures to improve products and services. Efforts need to be made to channel this knowledge back into the enterprise. Therefore, Companies continue to use knowledge management as a process to achieve set of customer experiences [23-31]. Applying knowledge management to communicate with customers makes companies closer to customers and provides new opportunities for exhibiting the services and products [10]. So, organizations should reinforce their KM and CRM systems in a way that enables them to obtain value-added knowledge for their customers and themselves [39]. This integrates knowledge management systems and customer relationship management in the three management levels (high, middle and operational). This relation has named Customer Knowledge Management (CKM). Wayland & Cole (1973) believed that CKM means the sources and application of customer knowledge as well as how to build more valuable customer relationship by information technology, which plays a leverage role during acquisition, developing and maintaining profitable customer arrangement process [28].Customer knowledge management is the main core of customer relationship management systems and knowledge management is the new prospective of organizations in the Information Age. CKM can thus be viewed as a crucial domain of KM. Moreover, it connects KM and CRM closely together. CKM is an area of management where KM instruments and procedures are applied to support the exchange of customer knowledge within an organization and between an organization and its customers, and where customer knowledge is used to manage customer relationships, to improve CRM processes such as customer service, customer retention and relationship profitability. Using the metaphor of service exchange, in CKM, KM is the service provider, who offers the tools and procedures for knowledge exchange [24] and CRM the service buyer, who determines what knowledge, is needed and who generates and uses the knowledge in customer interaction. CKM is not only the purpose but also the essence of the CRM. Gebert et al?2002), Gibbert et al., (2003), Xuelan (2005), Campbell (2003), Yichen et al., (2006) considered that CKM is the extendibility and development of the knowledge management and CRM, CKM is linked with knowledge and relationship, which are two kinds of key resources in the business and current economy, on one side, the business can build closer and more valuable symbiosis relationship with the customers, on the other hand, they poured the knowledge and professional experience which are acquired from the communication with customers into products and services to the maximum, from which can they establish the stable foundation for sustainable advantage in competition. Swift (2000) emphasized the importance of customer knowledge in customer relationship. He figured that CRM is such kind of mutual process by which customer information can be converted into positive customer relationship.
Hypotheses
Hypotheses of the study are stated in form of one primary hypothesis and 4 secondary hypotheses. H1. Knowledge management is effective on customer relationship management. H1.1 Knowledge management is effective on promotion of customer knowledge in the or gani z at i on. H1.2 Knowledge management is effective on promotion of customer interaction in the or gani z at i on
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Data Collection and Analysis Tools
The Questionnaire comprised four different sections. The first section questions have been used. 3 questions are related to personal information of the respondents. The second section contains 20 statements measuring the five KM activities: Knowledge acquisition, Knowledge documentation, Knowledge transfer, Knowledge creation, and Knowledge application. These statements are formulated by Filius eta al. (2000). Respondent were asked to indicate their extent of agreement using a five point likert scale (with 5 = completely agree, to 1 = completely disagree). The third section contains 12 statements measuring the four CRM dimensions: Customer Knowledge, Customer Interaction, Customer Satisfaction and Customer value. These statements are formulated by Kim et al., (2003). Respondent were asked to indicate their extent of agreement using a five point likert scale (where 5 = extensively covered, to 1 = weakly covered). For analyzing data derived from questionnaire Structural Equation Modeling / Path Diagram has been used and the software's which have been used for analyzing the data are LISREL 8.54 and SPSS 17.
Population and Sample Size
The population of this study is "all staffs of customer relationship management section, sales and marketing of Iran- khodro Company in Tehran city". To raise the accuracy and correctness of the analyses population samples has been estimated 171 people based on Morgan's table. Therefore, 200 questionnaires have been distributed in 50 days time span between population samples randomly. Afterwards, 177 questionnaires have been collected. After examining 171 questionnaires were selected for data analysis. For determining reliability of the study Cronbach's Alpha method has been used.
Table 2:
Reliability
Cronbach's Alpha 0 .83 0 .87 All 0 .89
Questions Technological dimension of customer relationship management Customer values questions
To determine the validity of the questionnaire content credit has been used [5].The questionnaire content credit has been approved by distributing the questionnaires among a group of professors specializing in the field of customer relationship management and marketing. It became clear that the questionnaire is to have the necessary credibility.
Description of Population-Sample
From 171 respondents, 4 people under high school graduation, 38 people high school graduates, 60 people had associated diploma, 44 with bachelor degree, 21 people with master degree, and finally 4 people hold a PhD degree. And this is while the age of 31 of these people were between 18-25, 38 people between 26-35, 57 between 36-45, 33 people between 46-55 and 12 people were more than 56 years old.
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Tests of Fit for Observed Model and Hypotheses Testing
The data was analyzed using LISREL, a software package based on structural equation modeling (SEM) techniques. The SEM approach was used to assess proposed causal model. The SEM technique allows us to multiple indicators to measure constructs and account for measurement errors. Another important advantage is that we can evaluate causal relationships among multiple interested constructs simultaneously [26-42]. Given that structural equation modeling has no single statistical test of significance for model fit [42], several goodness-of-fit m2easures were used to assess the fit of model. The relative chi-square (chi-square/degree of freedom;? /df), standardized root mean square residual (standardized RMSR), goodness-of-fit index (GFI), adjusted goodness-of-fit index (AGFI), normed fit index (NFI), and comparative fit index (CFI) were used as goodness-of-fit measures. Due to the sensitivity of the chi-square test to sample size, the relative chi-square was used (it should be 3 o less for an acceptable model [25], Standardized RMSR should not be greater than 0.10 and GFI, AGFI, NFI, and CFI should exceed 0.90 to be acceptable [30]. The rate of each index has come in the following Table3:
Table 3:
?2 /df 0 .69
Goodness of fit tests
Root Mean Square Residual (RM R) 0 .041 Goodness of Fit Index (GFI) 0 .96 Adjusted Goodness of Fit Index 0 .96 Root Mean Square Error of Approximation 0 .015 Normed Fit Index Noni-Nnrmed o (NFI) F t I dex 0 .96 0 .90 Comparative Fit Index (CFI) 0 .98
Measurement Model
The measurement model with all three constructs was using confirmatory factor analysis [26]. Table 4 presents factor loading and the corresponding t-values of indicators in the measurement model. All loading exceed 0.5 and each indicator is significant at 0.05 levels (expect KA, KD). The measurement model exhibited a good level of model fit.
Table 4: Factor loading and t-values of the measurement model
Factor Loading 0 .250 .360 .620 .630 .73 0 .630 .610 .650 .66 t-value 5 .848 .71 15 .431 5 .7711 .50 13 .541 3 .9414 .0613.9 3
Construct/indicator Knowledge Management (KM) Knowledge Acquisition (KA) Knowledge Documentation (KD) Knowledge Transfer (KT) Knowledge Creation (KC) Knowledge Application (KP) Customer Relationship Management (CRM) Customer Knowledge (CK) Customer Interaction (CI) Customer Satisfaction (CS) Customer Value (CV)
Hypotheses Testing Using Path Analysis Diagram Method of SEM
The specification of the model consists of the translation of the verbal hypotheses into a series of equations previously represented in the form of a causal or a path diagram. The path diagram shows the causal relationships among all variables in the system. It should be based upon a priori knowledge of such relationships which are ultimately related to previous experience or theoretical basis [19]. Thus, the path diagram represents the working hypothesis about the causal relationships among variables. Fig. 1 shows structural model of the study for confirming hypothesis of the study in standard estimation.
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Figure 1: Structural model of the study for confirming hypothesis
Fig.2 also shows significance and the resulted parameters from primary hypothesis test. Significance value of 13.89 is for the primary hypothesis was determined. Significance value of the primary hypothesis is placed out of (-1.96, 1.96) interval, therefore, formed relation is out of the null hypothesis and indicates the ratification of the primary hypothesis of the research. According to results of these two models (relation is based on standard estimation of 0.93 and is based on significance equal to 5.75) hence, primary hypothesis is confirmed.
Figure 2: Structural model of the study for confirming hypotheses in significance state
Based on analysis done using path analysis, results of testing hypotheses of the study can be seen in table 5. Standard estimation test and significance values in confirming or rejecting the considered hypotheses (significance of hypotheses) have been used.
Table 5: Results of testing the hypotheses of the study using path analysis
Pa th KM KM KM KM KM CRM CK CS CI CV Standardized coefficient 0 .93 0.93×0.63=0.58 0.93×0.61=0.57 0.93×0.65=0.60 0.93×0.66=0.61 The Significance of Values Out of (-1.96, 1.96) Out of (-1.96, 1.96) Out of (-1.96, 1.96) Out of (-1.96, 1.96) Out of (-1.96, 1.96) Testing of Hypotheses confirmed confirmed confirmed confirmed confirmed
Hypotheses of the study Main hypothesis First secondary hypothesis Second secondary hypothesis Third secondary hypothesis Fourth secondary hypothesis
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Discussion
CRM is a customer-oriented approach and is one of the strong organizational capabilities for knowledge and information management [12]. By creating knowledge management structures in organizations, we can maintain valuable customers and manage new ones [11]. Many studies have been done on knowledge management influences on CRM (Such as Campbell, 2001; Garcia-Murillo &Annabi 2002; Gibber et al., 2002; Stefanou et al., 2003). In all these studies, researchers have concluded that these two variables highly correlated and this correlation had a great impact on the business processes. According to Bose and Sugumaran (2003), CRM could be achieved only through integration of KM with it which as the result improves business processes and allows firms to have a good evaluation on their customer's level of satisfaction, profitability and loyalty'. They also pinpoint the lack of a simple and general framework for integration of CRM functionalities with knowledge management capabilities [9]. Although firms have access to huge amount of information about their customers like their behavioral actions, they still know little about how to manage this knowledge and use the best out of it [10]. Garcia-Murillo & Annabi (2002) acknowledges that successful CRM requires deep knowledge of customer (KM), but the ways that these two types of technology fit in together needs research. Alike past research the present study at a broader level showed that acquisition, transfer, creation and application of knowledge of customer knowledge in the organization on increasing customer satisfaction and profitability is effective on the profitability of organizations. This is the ultimate goal of examining knowledge management effect on CRM that showed Iran-khodro has fully benefited from knowledge management systems in materializing CRM goals in the organization. Conceptual model of the research results shows that this model has the necessary fitness. In other words, the proposed model is an efficient model for implementing knowledge management objectives and CRM in organizations. Conceptual model of the study showed that KM has had the greatest impact on employee learning and achievement of CRM objectives in the organization. Therefore, acquisition, transfer and knowledge creation in the organization on improving customer support has been more effective than the registration and application of the knowledge. So, customer knowledge, customer interaction, customer satisfaction and customer value can be outlined as a sustainable competitive advantage to increase and improve CRM performance to contribute in achieving organizational goals. These results also showed that research hypotheses were confirmed with a high correlation coefficient. So, CRM in Iran-khodro Company can be evaluated in respect to customer knowledge, interaction, satisfaction and value. Customer knowledge can be applied with data mining tool in an organization. Customer interaction leads to long term communications with customers and is the main element in increasing the customer's loyalty. Customer satisfaction is the main objective of the marketing, sales and after- sales services departments of Iran-khodro Company and is the main part of the function of CRM department. Customer value is a strategic procedure for product management, services and development of business and raising the competitive share of participation in the market.
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