Multiple channel integration process in CRM: Contribution to firm-customer relationships: Case study of a UK retail bank

ABSTRACT This thesis investigates the role and contribution of multiple channel integration, as one of the five key processes of customer relationship management( CRM) in building and maintaining firm-customer relationships. The multiple channel integration process is the most dynamic of the five CRM processes because it facilitates firm-customer interaction (Payne and Frow, 2005; Knox et al., 2003). While practitioner work and anecdotal evidence about the importance of multiple channel integration continues to grow, there is, however, little academic published work on the topic -a fact acknowledged within the CRM and channel literatures( cf. Paynea and Frow, 2004;Rheault and Sheridan2, 002).This thesis seeks to address this gap by exploring issues of multiple channel integration strategy, implementation and customer experience of service encounters with people and processes within and across channels. The research draws upon literature from relationship marketing and CRM, strategic marketing, multiple channels, services marketing and consumer psychology to develop the theoretical concepts and shape the research objectives. This research study was undertaken in the context of the retail banking industry in the UK with three stakeholders in the channel integration process: a retail bank planning and undertaking channel integration, technology partner firms enabling channel integration implementation and customers of the retail bank experiencing multiple channel usage. A qualitative case-study research approach was adopted, given the exploratory nature of the research issues. Data was collected over employing multiple sources of evidence such as

documents , archival records, in-depth interviews and critical incident technique embedded in the interviews. This research study uncovers evidence of customer contact management as a strategic need, the role of multiple channels in facilitating successful customer contact management and the importance of multiple channel integration to successfully deliver on the same. This research study has also across the three data sets found empirical evidence that multiple channels can

contribute to firm-customer relationship strengthening or termination depending on the way events, activities and processes are structured within and across channels as part of the multiple channel integration process. On that basis, channels and channel strategy become critical elements of the CRM process. Given the strategic role and contribution of multiple channels in maintaining and building relationships this thesis argues that channels should not be considered merely as routes to markets for goods, services and information, rather as strategic resources to be deployed effectively to deliver on the tenets of CRM. This study is one of the first attempts to empirically examine in depth one of the CRM processes- the multiple channel integration process. T he exploratory findings from this research make a conceptual contribution by identifying and adding new dimensions to the extant literature. The empirical and methodological contributions rest in its attempt to provide a holistic picture of the research phenomenon emerging across three perspectives . In addition, the research findings identify strategy, implementation and customer experience issues with managerial implications for streamlining the multiple channel integration process in business practice. Future research can take these findings as a starting point and investigate them further to broaden our understanding of an emerging research phenomenon.

CHAPTER 1: INTRODUCTION TO THE RESEARCH STUDY 1.0 Research background This thesis is concerned with the role and contribution of multiple channel integration process in building and maintaining firm-customer relationships in the context of the retail banking industry. The marketing literature argues that the customer relationship management (CRM) concepts ,its processes and activities enable better firm-customer relationships and deliver on the central t tenets of relationship marketing( Ryals and Payne, 2001; Winer, 2000). Within the embryonic literature on CRM, multiple channel integration as a key CRM process is increasingly gaining recognition (cf. Payne and Frow, 2004). Literature asserts that technology developments have led

to a multiple channel environment with complex two-way buyer-seller interaction and the need for consistent and seamless customer experience across channels for building and maintaining firm-customer relationships( Payne and Frow, 2005; Knox et al., 2003; Payne,2001). Further, customer experience within and across channels determines service satisfaction, relationship continuation or termination ( Payne and Frow, 2004; Bearden, Malhotra and Uscategui, 1998). Contemporary business practice driven by technological advancements and the need for newer business models to counter competition also provides impetus to the development of multiple channel integration as a CRM process. However, despite its importance, academic research on multiple channel integration process continues to remain scarce, a fact acknowledged within the literature( Payne and Frow, 2004). Chapter I provides an introduction to the research study. This chapter is in five parts. First, the justification for the research study is outlined. Second, the research aims and objectives are delineated. Third, the research approach in terms of methodology and scope of the study is presented. Fourth, the research contribution of the thesis is outlined. The fifth section presents an overview of the thesis structure.

1.1 Research justification The research study poses a number of questions and builds the justification on the basis of the research gaps emerging from the literature review.

1.1.1 Why study CRM? The development of the academic literature on CRM has begun to gain momentum in the recent years, manifest in special journal editions (Industrial Marketing Management, 2004), conference themes and tracks (American Marketing Associations special interest group

conferences on Relationship Marketing and CRM,2002,2003; ICRM - international colloquiums on relationship marketing), research priority themes( Marketing Science In stitute,2 003,2004), specialist research centers for research on CRM (Teradata Centre at Duke University, USA; Centre for CRM research t Cranfield University, U K; CRM institute at Strathclyde

University,U K). The above mentioned researching interest in CRM has led to the emergence of a body of academic work that explores and examines the concept of CRM as a business practice, and its feasibility in operationalising the tenets of relationship marketing. Specifically, this body of literature asserts: "Customer relationship management builds on the philosophy of relationship Marketing .This emphasis on relationships, as supposed to transactions is redefining how companies are interacting with their customers(Sheth and Parvatiyar, 2000; Gummesson1,9 99; Kotler, 1990)" Payne and Frow (2004: 528) The extant literature on CRM conceptualizes CRM as a business process (Srivastava Shervania nd Fahey,1 999),tracesits roots within relationship marketing (Plakoyiannaki and Tzokas, 2002), acquaints us with the tenets of CRM (Zablah, Bellenger and Johnston, 2004), and identifies the facilitators and barriers to implementing the CRM concept in practice (Plakoyiannaki, 2005; Hart, Hogg and Banerjee , 2004; Bell et al., 2002; Wilson, Daniel and McDonald, 2002). While this body of work provides a foundation for research on CRM, however, a number of research need scan be identified from a review of this literature as well as research calls proposed by the authors themselves. Where we now know that CRM is a business process comprising of specific sub-processes (Payne and Frow, 2005; Knox et al., 2003; Plakoyiannakai nd Tzokas, 2000), the literature however, largely remains prescriptive. Further, in terms of specifics, research has focused on technology issues (studies by Kapoulas, Ellis and Murphy, 2004; Wilson, Daniel and McDonald, 2002), profitability of customer relationships (Reinartz and Kumar, 2000), or CRM performance measure (Sin, Tse and Yim, 2005). There is, however, no reported empirical research examining

each of these sub-processes and their contribution to the over-arching CRM concept. Consequently, there is a need to study specific CRM processes and activities. Where we now know that CRM as a business concept helps firms to build better and long-term profitable customer relationships (Winer et al., 2001), much of the literature however, focuses on organizational issues to be addressed in order to reap the benefits of the CRM concept. Barring a few empirical studies that research the customer perspective (studies by Kapoulas, Ellis and Murphy, 2004; Lemon, White and Winer, 2002; Reinartz and Kumar, 2000; Colgate and Danaher, 2000), there is little attention to the customer issues or customer views on the concept of CRM, or customer expectations from an organization in terms of the CRM related Processes and activities. Given that customers form the other half of the buyer-seller relationship dyad and the purpose of CRM is to help in developing customer-centric approaches to deliver on the tenets of CRM, this absence of the customer perspective appears to be a critical gap in the literature. Consequently, there is a need for research to focus on the customer perspective. Where we now know that relationships are governed by the dimension of time (Lemon, White and Winer, 2002),there is little by way of research capturing the temporal dimension of firmcustomer relationships and the implications for CRM processes and activities. Consequently there is a need for longitudinal studies. An extended discussion on the research gaps within CRM literature and the Emergent research focus of this study is presented in chapter2 , sections2 .6 and2 .7. 1.1.2 Why study multiple channels and channel integration? The multiple channel integration process is the most dynamic of the five CRM processes because it facilitates firm-customer interaction (Knox et al., 2003), and"takes the outputs of the business strategy and value creation processes and translates them into value-adding activities with customers" (Payne and Frow, 2005: 172). Further, technological advancements are constantly evolving channels and their capabilities. Where, on one hand, practitioner work and anecdotal evidence about the importance of multiple channel integration as a CRM process grows constantly, on the other hand, there is little academic published work on the topic -a fact acknowledged within the CRM literature (cf. Payne & Frow, 2004; Rheault & Sheridan2, 002).

Likewise, a review of the channel literature too uncovers conceptual and empirical research gaps. A chasm is evident between the literatures on channel structures. O n one hand is the mature literature stream on vertical channel systems. On the other hand, the literature on multiple channel systems is fragmented and Under developed despite its growing importance in business practice( cf. McKinsey,2000) and evolving academic interest manifest in research priority themes (Marketing Science Institute, 2004) and workshop and conference track themes (International Colloquiurn on Relationship Marketing ICRM, 2005; European Institute for Advanced Studies in Management EIASM, 2005). The literature is prescriptive in nature with little empirical validation of the proposed concepts. Consequently there is a need for theory development. Further, there is a lack of consensus on conceptualizing channel integration and diverse perspectives abound. Additionally, the discussion in the literature is primarily from the organisational. Perspective with little light on customer experience of multiple channel usage. To an extent, the services marketing literature sheds light on the concept of multiple channels from both organisational and customer perspective in terms of multiple channel as a distribution strategy as well as customer usage of the same. There too, some research gaps become evident. The focus of extant research has been on the provision and use of multiple channels for information search and purchase of products and services. The long term service maintenance role of channels though acknowledged in literature ,remain empirically unexplored. Additionally, the organisation perspective on channel strategy and customer perspective on channel usage is captured in separate studies. We now know from the extant literature the importance of multiple channels as a distribution strategy and channel integration as a key CRM process. However, whether organizations recognise the same as a strategic need, conceptualise and implement the same in business practice remains empirically unexplored. Likewise, from the customer perspective, though we know that customers channel usage and preferences have been empirically explored, whether customers feel the need or organisations to offer channel integration or have experienced the usage of the same in some form remains unknown. Consequently, there is a need to study, shifts in channel usage, its outcomes and challenges for

1.1.3 Why embody multiple aspects in a single study? Past research on CRM and channels does not capture in a single study the Organization and customer view of a phenomenon Research as focused on either of the perspectives captured in separate studies. Previous research evidence, however, acknowledges multiple stake holders in the CRM process and indicates that multiple stake holders have divergent opinions on CRM, its objectives, success and reasons for failure (cf. Hart, Hogg and Banerjee,2 002). Building on this understanding derived from the extant literature, this research study intends to explore multiple perspectives in a single study to uncover multiple facets of a single phenomenon.

1.1.4 Why study the retail banking industry? The focus of this research study on the retail banking industry is primarily underpinned by indications from two main aspects: > The use of multiple channels in the retail banking sector, and > The adoption of CRM in the financial services industry sectors such as retail banking The financial services sector has undergone enormous transformation due to Regulatory changes and competitive pressures and one of the consequences of these changes has been the migration of the sector to multiple channel usage (Sarel and Marmorstein, 2002). Additionally, the

characteristics of the financial services industry lend themselves to multiple channel usage because there is no 'physical' product to deliver, which is a significant advantage and the industry has traditionally had the infrastructure and capabilities (human resource and technological) necessary for multiple channel adoption (Kimber, 2001). These industry trends and characteristics have led to an interest in multiple channels and generated a body of academic work. This literature base provides a useful foundation for further enhancing the understanding of the evolving multiple channel structure particularly since the multiple channel literature by itself is in nascent stages. A detailed discussion of the financial services characteristics and their influence on multiple channel usage can be found in chapter 3, section 3.2.1.

From the CRM perspective too, the financial services industry driven by its characteristics industry situation and technology usage has been one of the major industries investing in CRM technology initiatives (Herschel et al., 2004; Datamonitor,2002). However, despite the interest and investment in CRM in retail banking, the desired results have not been achieved (Stone et al., 2003). As part of a renewed focus on re-conceptualising CRM more as a business philosophy and less of a technology implementation program, the role of multiple channel integration in building customer relationships has been put forward in the industry (Datamonitor2003;

Saunders2, 001). Barring anecdotal mentions and isolated discussions such as the multiple channel initiative of Abbey National Bank reported by Siebel the technology solutions firm on its website ,www. Siebel. com, there is little systematic empirical evidence from the industry on the strategy and implementation of multiple channel integration in the retail banking industry. Much of what is discussed in the public domain is prescriptive in nature. An extended discussion of CRM in the retail banking industry can be found in chapter 4. 1.2 Research aims and objectives The preceding section has highlighted the research gaps and led to the development of the research aims and objectives.