Strategic Firm Commitments and Rewards for Customer Relationship Management in Online Retailing

Abstract

Academic studies offer a generally positive portrait of the effect of customer relationship management (CRM) on firm performance, but practitioners question its value. The authors argue that a firm's strategic commitments may be an overlooked organizational factor that influences the rewards for a firm's investments in CRM. Using the context of online retailing, the authors consider the effects of two key strategic commitments of online retailers on the performance effect of CRM: their bricks-and-mortar experience and their online entry timing. They test the proposed model with a multimethod approach that uses manager ratings of firm CRM and strategic commitments and third-party customers' ratings of satisfaction from 106 online retailers. The findings indicate that firms with moderate bricks-and-mortar experience are better able to leverage CRM for superior customer satisfaction outcomes than firms with either low or high bricks-and-mortar experience. Likewise, firms with moderate online experience are better able to leverage CRM into superior customer satisfaction outcomes than firms with either low or high online experience. These findings help resolve disparate results about the value of CRM, and they establish the importance of examining CRM within the strategic context of the firm.