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M.S. Krishnan and Claes Fornell
  M.S. Krishnan and Claes Fornell

Firms Benefit from Sharing Customer-Related Information

1/3/2006 --

Companies realize greater benefits from investments in CRM applications when they share customer-related information with supply-chain partners.

ANN ARBOR, Mich.—Firms that invest in customer-relationship-management (CRM) applications are likely to realize greater gains in customer knowledge and customer satisfaction when they share customer-related information with their supply-chain partners, according to researchers at the University of Michigan Stephen M. Ross School of Business.

These findings, reported in a recent Journal of Marketing article, are important to consider when managers are evaluating or implementing CRM applications, the researchers say.

"Achieving customer-focused business objectives is a critical ingredient for success in increasingly competitive markets," said M.S. Krishnan, professor of business information technology. "Our results suggest CRM applications are likely to affect customer knowledge when they are well-integrated into the supply chain. This knowledge, in turn, helps firms improve their customer satisfaction."

CRM applications are used by companies to track customer-purchase behavior across transactions through different channels and customer touch points. This information provides insight into customer tastes and evolving needs in real time. By organizing and using this information, firms can design and develop better products and services.

Sharing relevant customer information with supply-chain partners ensures that products and services offered by various organizational units and suppliers are coordinated to provide a better customer experience.

Krishnan and colleagues Claes Fornell of the Ross School and Sunil Mithas of the University of Maryland analyzed data collected by InformationWeek based on surveys of the top information-technology managers at more than 300 large U.S. firms during 2001-2002, a period in which spending on CRM applications accelerated. They also utilized customer satisfaction data from the American Customer Satisfaction Index, tracked by the U-M's National Quality Research Center (NQRC). From these sources, the researchers obtained an archival measure of customer satisfaction for firms common in the InformationWeek data and the NQRC database.

Their findings reveal that, holding other factors at the mean level, firms reporting improvements in customer knowledge due to their customer-related IT systems have customer satisfaction scores 5.6 percent higher than firms reporting no gains in customer knowledge following investments in CRM applications. Their evidence also indicates that improvements in customer knowledge are greater when firms are electronically integrated in their supply chains and share customer-related data with their supply-chain partners.

The researchers caution, however, that it is not enough for firms just to collect customer information.

"Only when firms act on this knowledge by modifying service delivery or introducing new products or services will they truly benefit from their CRM applications," Fornell said. "Furthermore, firms may need to make changes in their incentive systems and institute complementary business processes to leverage CRM investments."

For more information, contact:
Bernie DeGroat
Phone: (734) 936-1015 or 647-1847