The Impact of Customer Relationship Management Implementation on the UK Commercial Banking Industry

The Impact of Customer Relationship Management Implementation on the UK Commercial Banking Industry

1. Introduction:
The impact of customer relationship management (CRM) implementation on firm performance is an issue of considerable debate. This study proposes to examine the impact of the implementation of CRM on two functions of firm performance – cost efficiency and the ability of firms to generate profit – profit efficiency – using a large sample of UK commercial banks. The cost and profit efficiencies of the UK commercial banks will be estimated using a time and probability analysis method and linear modelling will be employed to assess the effect of CRM implementation on cost and profit efficiencies. The intention of the paper is to demonstrate the different ways CRM implementation influences cost and profit measures in order to provide insights to CRM researchers and managers.

1.1 Background of the Study
Many firms have implemented customer relationship management over the past decade to enable the development of firm-customer relationships through the introduction of a set of information processes and technology tools (Rogers, 2005). The academic literature in general suggests that CRM provides a firm with strategic benefits in terms of better customer satisfaction and higher levels of customer loyalty (Kumar and Shah, 2004). CRM also offers a firm with higher levels of response in their cross-selling efforts (Anderson, 1996), along with better word-of-mouth publicity. There is a strong sense in the available literature that CRM efforts improve firm performance.
However, in the more recent years there have been incidences of highly publicized failures of CRM implementation, which has led to the birth of doubtfulness among managers about it’s much written about potential to generate firm value (Ryals, 2005; Zablah et al., 2004). These reports are disturbing and disconcerting from the perspective of managers in firms that have recently implemented

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