CRM: conceptualization and scale development

Abstract

Purpose: To develop a reliable and valid measuring scale for customer relationship management (CRM). Design/methodology/approach: A series of studies were conducted for the development and validation of multiple measures for the dimensions of CRM. Once the dimensions of CRM were identified, data from study 1 (n=150 business executives attending a part‐time MBA program) were used to select items based on factor analysis. Then, confirmatory factor analyses was used on data obtained from a mail survey of Hong Kong financial firms in study 2 (n=215) to examine factor structure, as well as to provide evidence of dimensionality, scale reliability and validity. Finally, in study 3, data from 276 business executives attending a seminar on CRM were used to test the scale generalizability of CRM measures in various industries. Findings: A reliable and valid scale was developed to measure the four dimensions of CRM: key customer focus, CRM organization, knowledge management and technology‐based CRM. Research limitations/implications: Since this study was conducted in Hong Kong only, the generalizability of the CRM scale has to be tested in other countries. In addition, cross‐sectional data were used in this study. Future studies should collect time‐series data for the testing of the causal relationship between CRM and business performance. Practical implications: The findings validate the long‐held belief that CRM is a critical success factor for business performance. Firms wishing to improve their relationships with customers need constantly to monitor their behavioral and internal processes. The proposed scale in this study could be used as a diagnostic tool to identity areas where specific improvements are needed, and to pinpoint aspects of the firm's CRM that require work. Originality/value: This is the first study to provide a comprehensive, psychometrically sound, and operationally valid measure of a firm's CRM.