An Analysis of CRM, Satisfaction, and Loyalty: A Literature Review

This literature review explores the multifaceted relationship between Customer Relationship Management (CRM), customer satisfaction, and customer loyalty. It begins by defining CRM and its significance, emphasizing its role in fostering strong customer relationships and generating loyal, profitable customers. The review delves into various CRM models, including the process model, analytical model, and operational model, highlighting their functions and applications. It then examines the impact of CRM on customer satisfaction and loyalty, supported by numerous studies that demonstrate the positive correlation between effective CRM strategies and enhanced customer retention. The review also identifies critical elements of CRM, such as interaction management and relationship development, which are essential for building and maintaining successful customer relationships. Overall, the literature review underscores the importance of CRM in today's business environment, emphasizing its ability to drive customer satisfaction, loyalty, and ultimately, business success.

Literature Critique
Essay

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LITERATURE REVIEW................................................................................................................1
Meaning and significance of CRM..............................................................................................1
Various Models of CRM.............................................................................................................2
Relationship between effectiveness of CRM, Satisfaction and Loyalty......................................4
Critical elements of CRM............................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

LIST OF FIGURES
FIGURE 1: THE CRM PROCESS MODEL...................................................................................2
FIGURE 2: ANALYTICAL CRM MODEL...................................................................................3
FIGURE 3: OPERATIONAL MODEL OF CRM...........................................................................4

INTRODUCTION
Customer relationship management is based on the concept of developing healthy
relations with the people helps in generating more loyal and profitable customers for the
business. It is essential to put them at the centre of the business. In the present context,
companies not only works to satisfy their clients but also emphasize on retaining them for a long
period. The following study is a literature review on the subject of CRM. The main purpose is to
effectively review the relationship between CRM, satisfaction and loyalty.
LITERATURE REVIEW
Meaning and significance of CRM
Within the context of marketing, Baran and Galka, (2013), defines the concept as a
strategy which makes use of technology for the purpose of understanding the requirements of
people. It has been stated that CRM is having a great future ahead in the business industries. It
has the potential to deliver great value to the customers as well to the company.
According to Chary and et.al, (2012), it is a process used for managing the interaction
with the existing and potential customers within the business. There is a use of modern
technology and automation to establish health relationship with the clients. Gradually, it has
increased the level of loyalty and life time value for the companies. It facilitates holding of good
long term business relations with the clients. It is done by fulfilling customers’ needs and
satisfying them in the best possible manner.
According to Coltman, Devinney and Midgley, (2011), this concept is of high importance
to the companies. It can be analysed in form of value added services that decides the success and
failure of the business. It is evident that business environment is living with the concept of CRM.
The customers are considered as centre of attraction in all the corporate activities. Their taste and
preferences are of dynamic nature and change from time to time. In order satisfy the clients, the
firms go on adopting different types of consumer centric strategies. CRM model is one them, as
it tries to establish a link between the firms and clients.
It is also very effective in offering competition to the rivals. In order to gain competitive
advantages, companies are focusing on adopting those technology that manages communication
with consumers (Srideshmukh, Singh and Sabol, 2009). It is important because the relationship
does not ends with a purchase, rather it continues after the purchase also. The company must

assure that this relationship continues in the future for a long time period. It aids in enhancing
performance and increasing profitability.
Various Models of CRM
Process Model
Figure 1: The CRM Process Model
(Source: Hussain and et.al., 2014)
CRM systems are operated as an integral component of information technology. It
improves the relationship, enhances the satisfaction and provide support to the business (Kumar,
Ashok and Rajesh, 2013). This concept can be considered as an application of IT which act as a
collection tool, a system for delivery and a data store house. The above figure defines the process
model of CRM which is divided into 5 steps. They are as follows:
 Collecting data related to the clients in a continuous manner
 Using the collected data in order to manage relationships
 Developing strategic approaches
 Development of marketing programs
 Measurement of success while refining and increasing the database
According to Rust, Moorman and Dickson, (2012), in the above model, the relevant data is
collected, refined and enhanced in a continuous manner. They are required to be applied in an
appropriate manner from the organization. The collected data is used by the employees to

identify what can be done for maintaining loyalty and satisfaction. The model act as a feedback
control system which is to be updated on a continuous basis.
Analytical Model
Figure 2: Analytical CRM model
(Source: Shibu, 2011)
An analytical model is developed to analyse the activities of the customers which are
occurred in the front office. It can also be regarded as the back office CRM. Under this type of
model, technology is needed to process and compiles the collected data related to the clients. It
makes data more effective so that it can be utilized for improving the satisfaction and increasing
the loyalty (Williams, 2014). In order to achieve loyalty, integration act as the key for success.
CRM can make effective association between the back office and front office.
According to Lee and et.al., (2010), analytical model is an approach to develop data store
houses, enhancing relationship and evaluating the captured data from the clients. The model can
be used for different objectives. They are as follows:
 To optimize the marketing effectiveness through developing appropriate target market
 To work on the customer inquiries and behaviour for taking decisions related to products
and services
 To design effective strategies such as customer acquisition, retention, cross selling and
up selling

 To perform churn analysis in order to predict the probability of customer turnover
Operational Model of CRM
Figure 3: Operational Model of CRM
(Source: Onut, Erdem and Hosver, 2014)
The model is also regarded significant in the front office areas of an organization. The
front office are identified as the areas that remains in the direct contact with the customers within
the company. These are also regarded as touch points. At primary level, this model consist of a
contact software which obtains data from the customers, stores and retrieves in a standalone
pattern.
Relationship between effectiveness of loyalty, satisfaction and CRM
Putney and Puney, (2013), analysed the impact of CRM on factors such as loyalty ,
retention within the telecom sector. The results were obtained from 100 telecom service users.
According to the findings, great commitment and vision from the side of the company is required
for achieving success with regard to CRM. More flexibility in the company’s policies is required
for instance, consistency is needed in pricing policies.
According to Rootman, Tait and Bosch, (2008), CRM helps in reducing the cost and
enhancing the business performance. Improved performance leads to profitability which
ultimately results in loyalty. For this research, the data was collected from internal and external
sources like different department within the organization such as sales, marketing etc. This

information helps employees to manage customers of the organization. It facilitates fast decision
making at all business levels.
According to Ryals and Knox, (2015), CRM is most effective in knowing the
expectations of people. If company functions according to the needs of the clients, then it results
into high level of satisfaction and loyalty. Hence, it is required that firms should focus on
deriving the needs of their clients and designing their policies accordingly so that profits can be
increased.
According to Sin, Tse and Yim, (2014), customer relationship management strengthens
relation with the people in order to gain competitive advantages. Many efforts are contributed
towards increasing the share of the company within the industry by achieving the integration
between different processes and advancements.
The major aim is to increase customer retention rate and loyalty. The author also focused
on business function transformation and concluded that satisfaction is the most important factor
to be considered in the application of CRM. According to Woo, Bae and Park, (2013), each
outlook of the CRM framework is analysed by set of factors. In that context, a study was
performed on an e-commerce retailer in South Korea. For that purpose primary data was
collected by using technique such as questionnaire, expert’s interview etc. The results concluded
that factors like loyalty, satisfaction and retention rate etc. highly affects the CRM strategy.
Through measurement of performance all the issues related to the top level can be avoided.
According to Achumba, (2014), model of CRM is based on two crucial aspects. The first
aspect, measures factors such as cross and up selling, acquisition rate and repurchasing. From the
second perspective, factors related to relationship quality such as satisfaction and loyalty are
measured.
Eisingerich and Bell, (2011), investigated the impact of CRM on different factors related
to customers. The findings explored that this concept is the backbone of any company. For the
study, data was collected from 300 randomly selected customers of two retail firms in US.
According to the results, emotional and functional behaviour has an positive impact on the factor
like satisfaction. Further the satisfaction is having a positive impact on the consumer behaviour
based CRM. The research also concluded that when CRM is established on the basis of client
then it creates a positive impact on consumers and loyalty.

Foss and Stone, (2009), established a triangle strategy between three elements that are
quality, CRM and loyalty. The study was done to evaluate the satisfaction by analysing two
conditions. The first condition states that client’s database information and CRM strategy must
be structured in well manner. The second condition states that system must produce adequate
data for accurate analysis.
As per the findings, service quality can be used as a parameter for the purpose of
identifying the loyalty level. It is a well-structured relationship strategy. It was also discovered
that if factors such as infrastructure, environment and interaction have close relation with process
quality, then it will be easier to determine what kind of changes are needed in the strategy.
Gan, and et.al., (2010), established a model under which case related to car repair and
maintenance were undertaken. It was discovered that long term customer relationship is
frequentative. The hypothesis were developed and evaluated by using a path analysis. The main
objective was to develop association between relationship marketing activities and economic
performance. The findings suggested that implementation of CRM along with loyalty programs
such as bonus, complaints, contacts etc. resulted in increase in loyalty and improvement in the
economic performance.
According to Christodoulides and de, Chernatony, (2010), companies have become more
technology oriented rather than doing the business in a traditional manner. Use of technology has
become very essential these days. In this manner, different technological tools can be used within
the context of customer relationship management. Lot of evidences suggest that CRM has a great
impact on satisfaction, profits and loyalty. However, there is a need to do more of research on
this subject. The findings showed that different companies were using different CRMs.
According to Kheng and et.al., (2010), CRM and satisfaction shares very close
relationship. It ultimately leads to increase in loyalty. Although all the characteristics does not
affect the satisfaction with regard to implementation of this model. Some of them are very
effectual and some creates less impact.
Critical components of Customer Relationship Management.
By doing the above analysis, some crucial elements of this concept can be identified
which are as follows:
Interaction management

According to Malefyt, (2009), if a company make efforts to develop healthy relations
with its clients, there can be different ways to make interaction with them. Here the main focus is
to identity how and when the people would like to be interacted with the company. The
interaction activities from the side of organization should be well organized and customized. It
can be done through various touch points and distribution channels. According to Neal and
Quester, (2007), touch points are regarded as effective tool in making good communication with
the customers. The interaction management can be implemented by these methods:
 Offering different types of entertainment and promotion services to the users
 Obtaining feedbacks from the consumers
 Increasing interaction with the clients through innovative medium such as social media
marketing
 Measuring the purchasing power of an individual for the purpose of evaluating their
bonuses and vouchers entitlement (Singh, 2012)
Relationship Development
According to Srideshmukh, Singh and Sabol, (2009), the study of relationship
development majorly requires research from different structures. It evaluates intellectual
relationship between customer and supplier. Authors argues that this process is concerned with
the interaction where connections are developed between two parties. It is to be noted that, the
most important activity which helps in achieving the company’s objectives and relationship
development is complaint management. According to Torres and Kline, 2013, under this activity,
monitoring of the services are performed. There are some key performance indicators that are to
be used by the firms which retention, level of satisfaction etc. he process of relationship
development includes procedures, activities and mechanisms under which the products and
services that are to be delivered to the customers.
According to Coltman, Devinney and Midgley, (2011), the above process can be
implemented into the business through several activities. Customers can be informed about
promotions, discount and other facilities provided by the company. They can be encouraged to
purchase more through showing appreciation. They can be assured that client’s feedbacks are
being responded in a positive manner.
Quality of services

According to Kumar, Ashok and Rajesh, (2013), concept of service quality plays an
important role for every business. In order to understand the satisfaction, it has become a very
common subject.
Several studies have shown that quality carries a positive impact on the loyalty which
ultimately leads to increase in profitability. According to Rust, Moorman and Dickson, (2012),
quality of services can be facilitated by adopting different types of approaches. Keeping wide
range of products and services will definitely attract the minds of different buyers. Designing
services as per the expectations of people is a very good strategy. Offering products along with
reasonable price is another effective option. Complaints of the clients regarding to the products
can be handled in a tactful manner.
Behaviour of the employees against customers
According to Onut, Erdem and Hosver, (2014), Behaviour of the employees towards
customer can strengthen the association between the firm and its clients. While on the other side,
a reverse pattern can be noticed. In such cases, consumer may be of the opinion that firm is not
giving the symbolic benefits. They may evaluate the company in a more negative manner. The
behaviour of the employees towards customers also gives a strong impact on the reputation of
the business within the society. According to Putney and Puney, (2013), satisfaction and loyalty
can be achieved in different manners. The rate of employee’s response towards the customers
can be increased. They are required to behave in a friendly and respectful manner. A sign of
concern and care can be seen in the interaction with the clients.
CONCLUSION
.The study focuses on subject of CRM. The study concludes that there are various models
of CRM such as process, operational and analytical model. High impact of it can be noticed on
loyalty and satisfaction. It helps in decreasing the costs and enhancing the business performance.
Improved performance leads to profitability that ultimately results in loyalty. The customers are
taken as the centre of attraction in all the corporate activities. In order to satisfy the clients, the
companies adopt different types of consumer centric strategies.

REFERENCES