A Generic CRM Framework for an Electronic Manufacturing Company

A Generic CRM Framework for an Electronic Manufacturing Company

CHAPTER 1: INTRODUCTION TO THE STUDY

Аccording to onе of thе mаny dеfinitions put forwаrd for CRM, vаriously undеrstood аs customеr rеlаtionship mаrkеting аnd/or customеr rеlаtionship mаnаgеmеnt (O’Mаllеy аnd Tynаn, 2003), it comprisеs thе orgаnizаtion, procеssеs, аnd systеms through which аn orgаnizаtion mаnаgеs its rеlаtionships with its customеrs (McDonаld аnd Christophеr, 2003). Thе rеаson thеrе is no еxаct аnd widеly аccеptеd dеfinition for CRM is bеcаusе it is still in thе formаtivе stаgеs of dеvеlopmеnt аnd hаs yеt to bе givеn а univеrsаlly аgrееd mеаning. “Аs with mаny mаnаgеmеnt fаshions, rеlаtionship mаrkеting, customеr rеlаtionship mаrkеting аnd rеlаtionship mаnаgеmеnt аrе tеrms thаt mаny mаnаgеrs or mаrkеtеrs usе but dеfinе in diffеrеnt wаys” (Stonе, Woodcock, аnd Mаcthyngеr, 2000: 1). Furthеrmorе, аs with rеlаtionship mаrkеting, thе confusion ovеr thе dеfinition of thе tеrm аlso rеflеcts thе complеxity of thе concеpt.

CRM rеfеrs to thе mаnаgеmеnt of thе lifеtimе rеlаtionship with thе customеr аnd is usuаlly аssociаtеd with thе usе of informаtion tеchnology (IT) in mаnаging thеsе rеlаtionships (Ryаls, 2000). Аlthough philosophicаlly in linе with rеlаtionship mаrkеting, thе focus in CRM is on tеchnology, pаrticulаrly thе tеchnology which аttеmpts to mаnаgе аll customеr contаct points аnd providе а singlе picturе of thе customеr (O’Mаllеy аnd Tynаn, 2003) through combining thе IT systеms rеlаting to thе customеr intеrfаcе (McDonаld аnd Christophеr, 2003). Thе аim is to fаcilitаtе thе еfforts to build customеr rеtеntion аnd profitаbility. Dаtа wаrеhousеs, big dаtаbаsеs thаt contаin informаtion аbout customеrs (sее dаtаbаsе), аrе pаrticulаrly usеful bаck‐officе tools for CRM (Ryаls, 2000). Thе most usuаl intеrprеtаtion of CRM is еssеntiаlly аs а typе of dаtа mining, usеd to idеntify profitаblе customеrs аnd clаssify customеr sеgmеnts (sее mаrkеt sеgmеntаtion) for diffеrеntiаl tаrgеting (Еvаns, 2003). Аdopting а CRM аpproаch to mаnаging customеr rеlаtionships promisеs to rеducе unprеdictаblе customеr bеhаvior to dаtа thаt cаn bе аnаlyzеd, plottеd, plаnnеd, аnd cаtеgorizеd (McDonаld аnd Christophеr, 2003).

Howеvеr, it must ultimаtеly bе rеmеmbеrеd thаt thе objеctivе is to build rеlаtionships, not dаtаbаsеs (O’Mаllеy аnd Tynаn, 2003); thеrе is а dаngеr thаt mаnаgеrs mаy аllow thе scopе of thеir CRM softwаrе to dictаtе thе scopе of thеir CRM strаtеgy (McDonаld аnd Christophеr, 2003). Rаthеr thаn focusing solеly on dаtа mining, rеаl rеlаtionship mаrkеting should bе chаrаctеrizеd by morе аffеctivе fаctors (Еvаns, 2003) аnd must bе combinеd with а dееp undеrstаnding of thе mаrkеt аnd thе nееds of customеrs within mаrkеt sеgmеnts (McDonаld аnd Christophеr, 2003). Аlong thе sаmе linеs, Wilson, Dаniеl, аnd McDonаld (2002) proposе thаt, givеn thе strаtеgic implicаtions of CRM, it is not sufficiеnt to involvе thе tеchnology mаnаgеr аlonе. Rаthеr, аll dеpаrtmеnts should pаrticipаtе in thе dеvеlopmеnt of CRM systеms, which hаvе to bе dеsignеd from а usеr point of viеw if thеy аrе to bе аccеptаblе by аll rеlеvаnt pаrtiеs within thе orgаnizаtion.

Stonе еt аl. (2000) pinpoint four rеquirеmеnts nеcеssаry for CRM initiаtion аnd succеss: good opеrаtions аnd distribution; еfficiеnt inquiry/sаlеs/complаint‐hаndling procеssеs аnd mеаsurеmеnt systеms; аppropriаtе informаtion tеchnology systеms, еnаbling compаny‐widе distribution аnd аvаilаbility of informаtion on customеrs; аnd motivаtеd, wеll‐trаinеd pеrsonnеl. Humаn rеsourcе issuеs аrе cеntrаl to thе succеss of CRM (Hаrris аnd Ogbonnа, 2000). Succеssful implеmеntаtion of CRM rеliеs hеаvily on intеrnаl mаrkеts (sее intеrnаl mаrkеting), both thе cross‐functionаl working bеtwееn dеpаrtmеnts аnd thе willingnеss of individuаl еmployееs to work with nеw tеchnologiеs (Ryаls, 2000). Thеsе аrе thе pеoplе who hаvе to bе “won ovеr” if а CRM strаtеgy is to bе implеmеntеd аnd bе succеssful. Nеvеrthеlеss, еmployееs in mаny orgаnizаtions still tеnd not to bе еncourаgеd towаrd, or rеwаrdеd bаsеd upon, collеcting dаtа on customеrs or forming еmotionаl bonds.

Ultimаtеly, CRM is аbout аchiеving аnd sustаining а compеtitivе аdvаntаgе. Howеvеr, whеthеr CRM on its own cаn аchiеvе this goаl is quеstionаblе; customеr rеlаtionship mаnаgеmеnt nееds to bе bаsеd on thrее аspеcts in ordеr to work: strаtеgy, mаrkеting, аnd IT (McDonаld аnd Christophеr, 2003).

Traditionally, post- customer sales service has been addressed through different processes: (a) complaint departments, (b) assessment of customer satisfaction surveys, (c) customer service representatives (CSR), or (d) the sales person that sold the product or service. Recently, customer sales service has been assigned to a Customer Relationship Management (CRM) program, to serve customers after the sales.

Companies that invest in CRM programs hope to develop leadership skills and CRM capabilities for their customer service representatives to help leverage an increased return on investment (ROI). For example, the benefits of developing a CRM program for a $1 billion business unit are estimated to be over $50 million (Mullin, 2001; Dull, 2001) and a typical company of over 3500 employees spends over $75 million on CRM over a three-year period. However, what constitutes a CRM program remains illusive.

The five following CRM definitions range from theoretical to practical:

  1. Customer Relationship Management (CRM) is a philosophy that anticipates customer needs in order to provide the right product, in the right place, at the right time (Y ourdon, 2005).
  2. Customer Relationship Management (CRM) is a strategy that aligns certain aspects of the business strategy, organizational structure, culture, and information technology with customer interactions to the long term satisfaction of the customers and to the benefit and profit of the organization (Loftis, 2001). Driving this perspective is the successful product focused organization that will have created efficient business strategies, and product, and supporting technologies around these products that can inhibit their move to CRM, rather than promote it.
  3. Customer Relationship Management (CRM) is an investment in the operating core of a company’s interaction with customers. For example, investment in personnel to develop CRM capabilities in marketing, sales, and service operations, including supporting technology, can yield substantial returns on investment (Dull, 2001).
  4. Customer Relationship Management (CRM) is a computer program that can measure simple contact management or produce a seamless flow of integrated marketing, sales, and customer service information using sophisticated database applications (Loftis, 2001).
  5. Customer Relationship Management (CRM) is a set of leadership communication activities between the CSR and the customer. The process includes sales and service leadership skills and CRM capabilities to acquire, retain, and enhance the lifetime value of customers (Lemon & White, 2001; Sirdeshmukh,Singh, & Sabol, 2001). The set of leadership activities is the definition used in the research study.

Perhaps the ambiguity of CRM is contributing to the program failure rate of over 70% industry wide (Bloomberg, 2001). This extraordinary rate is a significant issue for 57% of the industries that appreciate the potential of CRM, but simply cannot afford the investment and the risk (2001). Designing a generic CRM framework by investing in the training of customer service representatives (CSR) to use customer service leadership skills and CRM capabilities, may provide the optimal approach to CRM programs, a tradeoff between risk and impact. This approach to CRM is the focus of this study.

An overview of the CRM perspectives, from a macro and micro perspective focuses on the micro perspective of CRM addressed in this study. The macro-micro approach facilitates an understanding of the breadth of CRM, because CRM deals with the congruence of external systems and internal systems from both, the macro and micro perspectives as a means of increased organizational performance and effectiveness.

As illustrated in Figure 1, there are three external systems: (a) customers, (b) suppliers, and (c) competition, and there are four internal organizational systems: (a) culture, (b) strategy (c) business function, and (d) technology (Morgan, 1998). The micro and macro perspectives are two levels of internal organizational systems and operate in a hierarchical manner in achieve congruency with the external systems. Specifically, the micro perspectives are shaped by the macro perspectives to interface with the external systems. The micro perspectives focus on congruency with the external, customer system.

At the macro level, management consultants (Booz, 2001; Dull, 2001; Shahnam, 2001), marketing research firms (Nelson & Berg, 2005), information technology consultants (Cain, 2001), and software vendors (Aspect, 2001) espouse CRM. Some see CRM as a culture, strategy, or general business function; others see CRM as a new information technology, while some executives see CRM as an investment to gain competitive advantage.

At the micro level, industrial psychologists (Mulligan, 2001; Nixon, 2001) and training consultants (Gilmore & Moreland, 2005) espouse CRM for marketing, customer service, and sales. Call centers are growing rapidly and are receiving attention from academics who focus on the customer service representative within the call center as a knowledge worker (Thompson, 2001).

Both macro and micro perspectives include strategic activities (Porter, 2006) to achieve system congruency. CRM macro activities aim to converge systems toward consistency, a first­order fit (Porter, 2006), or a summative fit that provide order to the number and types of activities (Bertalanffy, 1999). Checkland (2001) might describe macro strategic activities to align customer and business systems as being at a root definition, or structural, level. “Root definitions may express primary tasks for organizational entities, and this can be aided by a careful distinction between what and how” (p.18). For example, Booz (2001) developed a CRM macro model with strategic activities that align customers and strategy through customer metrics for cost of acquisition, retention, and chum rates. Winer (2001) proposed a macro model that aligns customers and functions by creating relationship programs, and Shahnam (2001) offered a CRM macro model that focuses on changing the (culture from a product to a customer focus. Finally, Davenport & Harris (2001) proposed a CRM model that includes a customer knowledge base to achieve a better fit between customer and technology by creating a customer knowledge base.

The macro strategic activity to create a customer relationship program described above by Winer (2001), is at the system structure level and identifies what should be designed to achieve a structural, first order fit, between the customer system and internal business function system. In contrast, CRM micro strategic activities aim to achieve a relational, or a constitutive fit (Bertalanffy, 1999) between systems. Checkland (2001) might view micro-strategic activities at a lower level of systems resolution he described as how. Specifically, what (a program designed for a first order of fit between the external customer system and internal system of business functions) relates to the structural level of a system, and how relates activities a system performs to achieve congruency. Porter (2006) called relational or constitutive a second and third order fit, where activities are re-enforcing and optimizing. The micro-strategic activities focus specifically on the elements of the system where interpersonal customer relationships occur and uniquely define how a customer relationship program operates. How activities become re­enforcing and optimizing is by synthesizing certain behaviors and activities to achieve a second and third order activity fit (2006). For example, commitment to a customer to provide consistent service re-enforces customer relationships (Sirdeshmukh & Singh, 2001). Hart (2001) wrote about how commitment is built and creates a relational fit by practicing trust-building activities that include behaviors he calls, operational competence and operational benevolence (bending policy).

1.1 Problem Statement

Organizational leadership has been ineffective in using the CSR skills and capabilities in achieving the level of customer relationships required to sustain a successful business. Attempts by companies to resolve the issues of customer attrition, loyalty, and increasing acquisition costs, with CRM programs have been problematic. Industry wide up to 70% of the CRM initiatives fail and 57% cannot justify the investment (Bloomberg, 2001), and only 12% of companies that have implemented CRM say it has met or exceeded their expectations (Van Beber, 2001).

A customer’s intention to continue a business relationship is based on a perceived level of satisfaction with a product or service provided by a business (Johnson & Barksdale, 2001). In the manufacturing industry, 34% of customer attrition is due to unsatisfactory service incidents between customers and employees (Keaveney, 2005). Consequently, satisfactory CRM leading to customer retention is increasingly viewed as an issue of strategic importance, because a 5 % increase in customer retention can increase profits by as much as 50 % (2001).

1.2 Background

Companies are motivated to adapt CRM approaches, because the cost of acquiring new customers exceeds the cost of retaining existing customers by a substantial margin. For example, conventional marketing wisdom indicates that it costs a company six times more to sell a product to a new customer than to an existing one (Bloomberg, 2001; Dych’e, 2001). Moreover, this is further exacerbated by deregulation that has increased competition and created additional challenges for retaining customer loyalty and has increased attrition.

Because CRM is still in the growth and entrepreneurial stages, the field is dominated by multiple, and in some cases, overlapping approaches. As with any new concept in business, the process of establishing it leads to the competitiveness of approaches, resulting in confusion and in some cases, failures for some end-users. Other potential end-users are seeking to understand the CRM process.

Pundits offer four causes for CRM process failure. First, companies think that CRM is about technology and are not aware of, or choose to ignore, the changes in strategy, culture, and business functions that accompany CRM. Consequently, they purchase CRM application systems that vendors claim incorporate the best CRM practices within computer programs (Cain, 2001).

Second, some companies think that customer service is overhead and initiate cost reduction strategies in the name of CRM. They reason that customer service is only necessary if product quality or service delivery is poor and CRM has value only in taking orders faster. For example, company’s may hide the 800 number on the web site to discourage phone contact or implement confusing interactive voice response (IVR) that confound customers who have a service problem, but expedite calls for sales orders (Nickell, 2001).

Third, companies approach CRM as a standalone initiative and not a strategic integrated program. A complete CRM solution contains multiple components, is viewed as a program that consists of several projects (Loftis, 2001), and takes from three to five years to implement (Nelson & Berg, 2005).

Finally, CRM programs fail, because they focus on transactional marketing that emphasizes the individual sale, and not on relational marketing knowledge designed to influence the long-term relationship (Kandampully, 1998).

1.3 Purpose

The intent of this quantitative exploratory research study was to determine the degree to which a set of leadership skills and CRM capabilities influenced the operational management of customer relationships by customer service representative (CSR) in the Viasystems Group Inc. Viasystems Group counts on vendors’ desire to build their systems via contract manufacturing. A generic CRM framework for Viasystems Group is presented in Figure 2. The framework is comprised of six leadership skills (a) trust, (b) reframe climate, (c) dialogue, (d) influence, (e) problem solving, and (f) task execution, that are aligned with three CRM capabilities (a) emotional capability, (b) cognitive capability, and (c) process capability.

The new CRM program is based on a leadership paradigm that sees leadership communication as an important function in managing the interpersonal aspects in a customer relationship (Bums, 1978). Kolberg (2005) noted that along with communication and teamwork, coaching is the essence of leadership. Rost (1991) said that leadership is a reciprocal, influence relationship that mobilizes certain motives and values to achieve mutual purposes. The CRM leadership communication process combines coaching, transformational, transforming, and transactional leadership theories (Bums, 1978; Bass, 2000; Kolberg, 2005) to influence the outcomes from a CSR and customer interaction. The outcome is a completed sales transaction, fulfilled service request.

Figure 2: The Customer Relationship Model: The Customer Relationship Model shows the independent variables, the relationship of the six leadership skills and the three customer relationship management (CRM) capabilities that influence the dependent variable, the management of customer relationships.

1.4 CRM Capabilities

Following is a discussion of each of the CRM capabilities and their related leadership skills: (a) emotional capability and trust and reframe climate skills, (b) cognitive capability and dialogue and influence skills, and (c) process capability and problem solving and task execution skills. Each combination of capability and skill may be viewed as an interpersonal communication activity in the management of customer relationships.

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1.4.1 Emotional Capability

Emotional capability enables a connection between the customer and CSR during contact (Rogers, 2005; Cooper & Sawaf, 1998), and is what many call an ability to relate or to empathize. In order to establish and sustain an emotional connection, CSR’s need both the leadership skill to establish trust (Gibb, 1978; Kolberg, 2001) and the leadership ability to reframe an emotional climate to a secure atmosphere (Rogers, 2005). Trust is a feeling associated with coaching that ranges from confidence to comfort (Kolberg, 2005) and was found to be a catalytic process that has four primary elements; ( a) being aware of self, (b) revealing that self to others, (c) realizing a personal path, and (d) discovering interdependence with others (Gibb, 1978). The skill to reframe a prevailing emotional climate is the ability to create a climate for changing negative or distrustful feelings by perceiving, understanding and modifying the emotional energy during a contact with a customer (Rogers, 2005).

While an emotional connection is necessary for a customer relationship, it may not be sufficient to influence a favorable transactional outcome, for example a sale or fulfillment of a service request (Murphy, 2001; De Wulf, Odekerken-Schroder & Iocobucci, 2001;Van Beber, 2001;Winer,2001).

1.4.2 Cognitive Capability

Cognitive capability enables the CSR to convert customer information, what Drucker (Davenport & Prusack, 1998) calls data endowed with relevance and purpose, into insight about customer beliefs, attitudes, motives, and intentions (Anscombe, 1997; Sternberg, 2000). Insight is converted by the CSR into an emotional expression of a mutual purpose toward a favorable transactional outcome between customer and CSR, for example, a fulfilled service request.

Higher order cognitive skills, including dialogue to create shared meaning in a dyadic relationship (Senge, 2000), and the use of influence are both leadership skills a CSR needs to transform knowledge into insight (Rost, 1991). Dialogue may be used as an interactive leadership skill associated with coaching (Kolberg, 2005) that allows a free flow of meaning Senge (2000) said reflective inquiry, and deep listening, enables the transformation of insight to innovative, coordinated actionable knowledge. The aim of dialogue is to understand the truth value or inner reality of the need or desire for a service offering to a prospective customer during the didactic communication (Sternberg, 2000).

Leadership influence is the skill to persuade, in a non-coercive manner, and involves power resources including expertise, and give-and-take behavior, but not the power of authority (Rost, 1991). Wansink (2005) said laddering is a leadership influence skill that includes a series of related questions to identify product attributes that are linked to customer values and a non­coercive means to influence a customer toward a specific feature set and decision to purchase.

1.4.3 Process Capability

Process capability enables a CSR to ensure an outcome of a customer service experience that satisfies the customer. Specifically, process knowledge enables the CSR to maximize the benefits a customer perceives that he or she has received from a contact with a CSR. Process or working knowledge (Davenport & Prusack, 1998) represents both explicit and tacit knowledge. Explicit process knowledge is codified, descriptive knowledge that includes the essential techniques and methods to accomplish tasks (Mulligan, 2001). Tacit process knowledge is the knowledge of experience–it cannot be written down or organized; it has to be shown and acquired during interactive problem-solving (Nanka & Takeuchi, 2005). Problem-solving leadership skills and the skill to stay on task, whether using structured, explicit processes, or unstructured, tacit processes, both contribute to CRM process capability.

Problems in CRM may be cast along a continuum from transaction processing, to request fulfillment, to solution construction (Mulligan, 2001). The problem-solving leadership skills, associated with CRM process capability, correspond to this continuum of CRM problems ranging from analysis to synthesis. Specifically, the analytical components to solve transactional problems include highly standardized tasks, and explicit knowledge to interpret data that is codifiable (2001). Solution construction skills, for example, the skill to determine a satisfactory combination of service attributes or product features for a customer, involve guidelines, rather than standardized tasks, and tacit knowledge to interpret implicit data. Specifically, problem solving synthesis skills include category combination, idea evaluation, and solution implementation (Yu, 2001). Task execution is a leadership skills that requires “high general skills (or formal education) plus a firm investment in initial training” (Batt, 2006, p.588). It may be defined as the efficient implementation of action plans, exemplified by a logical process, regardless of the type of problem being solved.

1.5 The Significance of the Study

This study focuses on a customer relationship model defined as a set of leadership skills and CRM capabilities. This model may reveal an understanding of the leadership skills and capabilities that have the greatest impact on customer relationships and how to manage them for a successful generic CRM program. Specifically, an organization may narrow the scope, shorten the duration, and minimize the cost of a CRM project by deliberately choosing a unique mix of CRM operational skills and capabilities that constitute a good “fit’ with their business. This approach to CRM should appeal to 57% of firms that cannot afford the current rate of CRM investment (Van Beber, 2001). A CRM project with a shorter duration, narrower scope, and minimized investment is likely to realize greater success than, for example, a $75 million three-year project (Bloomberg, 2001). Furthermore, a successful CRM program based on a unique set of customer service leadership skills and CRM capabilities that differentiates it from its rivals, constitutes a competitive advantage (Porter, 2006).

Knowledge of a unique set of operational leadership skills and CRM capabilities that result in impacting customer relations can be a cornerstone for training CSR’s in a call center. If CSR’s are CRM capable, they should experience enhanced self-esteem from the positive relationships with customers, be perceived as valuable employees by management, and achieve the status of a knowledge worker and call center professional. Finally, firms that employ CSR’s that have positive customer experiences and are involved in the development of training programs have been shown to realize quit rates that are lower than the industry average (Batt,

2006).

1.6 Significance of the Study to Leadership

Organizational leaders that are knowledgeable of this research may have believed that CRM is too expensive to implement, however, they may find that the results of this research offers an affordable alternative. For example, most CRM programs require a minimum initial investment of $300,000 to $500,000 in computer applications, information technology consulting, and training for approximately 40 CSR’s. An additional recurring cost of up to $50,000 is required to license the software and support the system. The program described in this study can be implemented in three months at a cost of $50,000 or less, can provide training for up to 50 CSR’s, and involve no computer applications, information technology consulting, or recurring cost. Furthermore, the results of the investment translate into immediate productivity gains, subsequent gains from reduced customer attrition, and an opportunity for enhancing revenue, all by increasing the capability of CSR’s to work more effectively with customers.

The significance of this study to leadership is its description of how leadership is an integral process of management in a dyadic customer relationship. The study emphasizes and demonstrates that all aspects of leadership- transactional, transforming, transformational, and coaching- are critical, not only for supervisors, managers, and executives, but for front- workers whose capabilities to influence relationships impact the profitability of the business. This study offers a different perspective on the management of customer relationships, specifically, that relationships are not managed they are led. Specifically, an aspect of leadership that applies to management is coaching, that along with communication and teamwork, is the essence of leadership (Kolberg, 2001).

The management concept that supports the Customer Relationship Model (Figure 2) may be associated with building interpersonal relationships with customers and entails the personal mastery of a self-leadership process (Senge, 2000) that includes transformational (Bennis & Townsend, 2005), transforming, and transactional leadership (Bums, 1978) skills.

CRM emotional capabilities focus on a core concept of transformational leadership, a shared purpose, and a vision of a long-term customer relationship. When a CSR employs emotional capability in a manner that enables a customer to entrust the CSR with his or her purpose, the relationship advances along the continuum of trust in the direction of absolute trust, a condition Kolberg (2001) defines as an alignment of motives, values and beliefs.

CRM cognitive capabilities are closely aligned with the transforming leadership as they require the skill and capability to “shape, alter, and elevate the motives and values of customers to presently or potentially in the pursuit of higher goals” (Bums, 1978, p. 425). Through the personal management and mastery of cognitive capabilities, including dialogue and influence, the CSR transforms a customer’s emotional expression of a problem or need, into viable alternatives.

The capability of a CSR to lead a customer through the reciprocal process of alternative analysis and decision-making is a basic requirement of customer service. This process may exemplify the foundation theory of transactional leadership, in that transactional leadership is a “reciprocal process .. of mobilizing economic resources .. in order to realize goals” (Bums, 1978, p. 425).

The CRM leadership and management framework in this study suggests that the management of the interpersonal relationship is an activity that aligns with the strategic positioning theory (Porter, 2006). Specifically, the core activity in CRM is posited as the management of transformational, transforming, and transactional leadership requiring CRM skills and capabilities to achieve congruence between the external customer system and the internal sales and service system.

1.7 Nature of the Study

In order to assess the influence of leadership skills and CRM capabilities on customer relationships, the assessment must describe and measure the skills and capabilities. Exploratory research facilitated the development of incisive questions to customers whose response was measurable perception of CSR skills and capabilities. The purpose of this quantitative exploratory research was to determine the degree to which leadership skills affected the operational management of customer relationships in the manufacturing industry, specifically with an Viasystems electronic systems and subsystems of Viasystems Group Inc. such as printed circuit boards (PCBs) and back panel assemblies; that line of business represents about two-thirds of sales of Viasystems Group Inc. A quantitative exploratory research design was used to determine the degree to which a customer relationship model (the six leadership skills and three CRM capabilities) influenced the management of customer transactions for the electronic systems and subsystems of Viasystems Group Inc. The exploratory research involves both describing the phenomena of managing customer relationship transactions and exploring the possible causal relationship between the six leadership skills and the three CRM capabilities through multivariate analysis of variance. The multivariate statistical analysis was used to determine the degree of influence that the six leadership skills associated with the three CRM capabilities have on a customer relationship.

The design quantitatively correlated the dependent variable, customer relationship, with the three intervening variables, CRM capabilities, and the six leadership skills (the independent variables) as seen in Figure 2. The primary instrument for data gathering was a survey designed to test the influence of the independent variables on the dependent variable (the customer relationship), before and after an intervention. The goal of the intervention was to train CSR’s in leadership skills and CRM capabilities. The goal of the post-intervention survey was to measure the influence of the skills and capabilities that were newly acquired by CSR’s on customer satisfaction with the electronic systems and subsystems of Viasystems Group Inc. customers.

1.8 Research Questions

The overarching question of this study is what influence does improved leadership skills have on the management of customer relationships. Nine research questions were addressed:

  1. To what degree does the leadership skill to establish trust, influence the emotional capability of a Customer Service Representative (CSR)?
  2. To what degree does the leadership skill to reframe an emotional climate, influence the emotional capability of a CSR?
  3. To what degree does the leadership skill to carry on a dialogue, influence a cognitive capability of a CSR?
  4. To what degree does influence as a leadership skill influence a cognitive capability of a CSR?
  5. To what degree does problem-solving leadership, skills influence the process capability of a CSR?
  6. To what degree does task execution, leadership skills influence the process capability of a CSR?
  7. To what degree does the emotional capability of a CSR, influence customer relationships?
  8. To what degree does the cognitive capability of a CSR, influence customer relationships?
  9. To what degree does the process capability of a CSR, influence customer relationships?

1.9 Hypothesis

The directional hypothesis for this study is

HI: There is a relationship between CSR leadership skills, CRM capabilities, and customer relationships.

The null hypothesis for this study is

HO: There is no relationship between CSR leadership skills, CRM capabilities, and customer relationships.

1.10 Conceptual Framework

This section places this study in perspective among other relevant CRM studies and describes perspectives, controversies, and issues associated with CRM. Three perspectives are presented. Some conceptualize CRM as a process to achieve congruency between macro and micro systems. Others conceive CRM as a business strategy to achieve a competitive advantage. This study offers a third conceptualization of CRM as a management framework to lead customer relationships.

1.10.1 CRM System Frame

Writers in the field (Yourdon, 2005; Bloomberg, 2001; Bolick, 2001; Booz, 2001; Dych’e, 2001; Imhoff & Geiger, 2001; Nixon, 2001; Shahnam, 2001; Van Beber, 2001; Winer, 2001; Yu, 2001) conceptualize CRM as macro-strategic activities to achieve congruency between the external system of customers and internal systems of business strategy, business functions, culture, and technology.

Scholarly writers presented empirical studies to support their conceptualization of CRM as micro-strategic activities (Morgan & Hunt, 2004; Bolton & Lemon, 2001; Morris, Barnes, & Lynch, 2001; Abdullah, 2005; Sirdeshmukh, Singh,& Sabol, 2001), and conceptualize CRM as micro-strategic activities. This perspective of CRM is micro, because it focuses on the specific customer-interface between the internal customer sales and service function, but goes in more detail to determine the correlation between skills and capabilities and the outcome of the activity.

The conceptualization of CRM as a system has its theoretical underpinnings in open systems theory (Bertalanffy, 1999; Morgan, 1998; Checkland, 2001) that emphasizes the importance of the environment in which organizations exist. The macro level represents the system design of what strategic activities are required. The micro level represents the system design of operational activities that describe how to make strategy happen. “The system relation between ‘what’ and ‘how’ a ‘what’ being a logically higher level than a set of possible ‘how’s’ related to it” (Checkland, 2001, p. 228).

1.10.2 CRM Strategy Frame

“Strategy is the creation of a unique and valuable position involving a different set of activities” (Porter, 2006. p. 77) than the competition. The CRM strategy frame is a conceptualization of CRM as the creation of customer relationship activities that are unique in the marketplace as to differentiate it from competitors. The Gartner Group (Nelson & Berg, 2005) said CRM is a designed set activities to optimize profitability, revenue, and customer satisfaction. Appreciated Software (Cain, 2001), a CRM software vendor, called CRM a set of activities that leveraged customer assets for the greatest profitability and market share. Booz, Alan, & Hamilton (Booz, 2001) profess that CRM is the coordination of specific activities including customer acquisition, order generation, order acquisition, order fulfillment, usage support, and customer retention, that constitute the demand chain for business. Accenture (Dull, 2001) claimed that CRM was a set of activities that constitutes a company’s overall interaction with customers and required a specific set of CRM capabilities. The Meta Group (Shahnam, 2001) described CRM as a pattern of activities including engage, transact, fulfill, and service, that constitute a life-cycle. It appeared, then, that many proponents of CRM as a strategy agree with Porter, and that CRM is a strategy represented by a set of unique activities designed to achieve a valuable position in relation to customers.

According to Porter (2006), most managers described strategic positioning in terms of customer service and satisfaction. Positioning means “deliberately choosing a different mix of activities to deliver a unique mix of value” (p.77). One basis for strategic positioning is what Porter called variety-based positioning, because it depends on a specific mix of product or services, rather than customer segments.

A second position that appeared more in line with CRM is that of serving a particular group of customers with differing needs. Porter called this second position a needs-based positioning that resembles traditional concepts of targeting a segment of customers. A needs based strategic position requires a tailored set of activities, or activity model, to meet differing customer needs. What makes a needs-based strategic position competitive is the unique fit and relationship of activities to each other so they function as an organized, whole system. According to Porter (2006) the fit among activities drives both competitive advantage and sustainability. Specifically, “fit locks out imitators” (p. 83) because “the competitive value of the individual activities cannot be separated from the whole” (p.85). In addition, strategic positions built on systems of activities are far more sustainable because the probability that a single activity that can be duplicated is reduced when activities function as whole. Thus CRM as a concept became a strategy when one viewed CRM as an organized system of activities, and it became a strategic position when managers deliberately chose a set of CRM activities to “deliver a unique mix of value” (p. 77).

1.10.3 Conceptual Framework Summary

In this research study, CRM is viewed as a strategy and set of strategic activities that uniquely positions the human activity system of leadership communications between the external customer and the internal sales and service function to achieve competitive advantage through customer service and satisfaction. The activities are characterized as leadership activities, because they encompass skills and capabilities espoused in transformational, transforming, and transactional leadership theory.

1.11 Definitions

Following are seven working definitions for this research study:

  1. Up sell. A marketing term that describes a sale effort to increase the value of a customer transaction with additional features.
  2. Cross-sell. A marketing term that describes an effort to extend a customer relationship with the sale of additional products or services.
  3. Customer Relationship Management. CRM is a leadership communication process between the internal customer sales and service representative and the external customer. The process includes sales and service leadership capabilities to acquire, retain, and enhance the lifetime value of customers.
  4. Sales and services provider. A member of a managed group that spends most of its time doing business (providing customer service and information) by telephone, working in a computer automated environment. Services range from simple-high volume and predictable, to complex-non-routine, unpredictable, and personalized (Gilmore & Moreland, 2005). A sales and services provider in an electronic systems and subsystems of Viasystems Group Inc. customer call center is referred to as a Customer Service Representative (CSR).
  5. Role is the “broadly recognized rights and obligations that define what would be expected of anyone occupying a given position embedded within a system of social relationships” (Rage & Powers, 2006, p. 9). For example, transactional role, consultative role, or leadership role (Maccoby, 2001).
  6. CRM leadership skill is the interpersonal communication between a sales and services provider and customer that exhibits the sales and services provider’s practical knowledge (a combination of knowledge and experience) to influence a customer’s intention (Anscombe, 1997).
  7. CRM capability is a set of leadership skills posited to influence customer relationships as measured by the Return On Sales (ROS). ROS is defined as EBITDA (Earnings Before Interest, Depreciation, Taxes, and Amortization) divided by sales (Dull, 2001).

1.12 Delimitations

The study confined itself to customer survey questions regarding the customer perceptions of Customer Service Representative (CSR) capabilities. The one exception to this delimiter was a question on the pre-test survey regarding customer tenure. The purpose of this question was to evaluate the influence of tenure on customer satisfaction.

1.13 Limitations

Customer data was limited to approximately 1,900 customers within the territory of the electronic systems sales and services provider. The sample was stratified by the length of time a customer had purchased electronic systems from the organization and only those who responded to the pre-test survey were asked to complete the post-test survey.

The Viasystems Group Inc., an electronic systems and subsystems of Viasystems Group Inc. manufacturer, has both interns and employed customer service representatives. Interns and employee turnover is both expected and desirable, as the Viasystems Group viewed the customer service job as a training ground for entry-level workers to acquire their first experience in the job market and strived to teach them the fundamentals of customer relationship management. Sixteen customer service personnel, eight salaried, and eight internees were selected for leadership skill assessment and intervention training. The customer service persons include a mix of experience, education, age, and level of expertise in order to minimize the opportunity for the data to be biased.

1.14 Assumptions

This study assumed that the leadership skills that were selected correlate with CRM capabilities. Another assumption was that the relationship of the attitude of customers toward sales and services providers could be quantitatively determined, based on a customer’s perception of the sales and services provider’s leadership skills and CRM capabilities. Specifically, the instruments to measure a perception of skills and capabilities are assumed valid and reliable.

1.15 Summary

Chapter 1 introduced the purpose of this study to determine the degree to which leadership skills affect customer relationships and the intentions of the researcher in testing the hypothesis. The significance of the study to leadership and business was discussed and how it may help solve the problem with CRM and customer relationships. Specifically, that problem is that organization leadership has been ineffective in using CSR skills and CRM capabilities to achieve a level of customer relations required to sustain successful business.

Chapter 2 reviews the literature that guided the research study. The literature review provides an historical perspective that recasts macro and micro perspectives of CRM into their traditional strategic, tactical, and operational categories. An in-depth research of the literature references CRM skills and capabilities.

CHAPTER 2: LITERATURE REVIEW

The intent of this quantitative exploratory research study was to determine the degree to which a set of leadership skills and CRM capabilities influenced the operational management of customer relationships by customer service representatives (CSR) in the manufacturing industry with an electronic systems sales and services provider. The company makes electronic systems and subsystems of Viasystems Group Inc., such as printed circuit boards (PCBs) and backpanel assemblies; that line of business represents about two-thirds of sales. Its roster of 125 customers includes General Electric, Delphi, Fujitsu, Hitachi, and Siemens. Viasystems gets around 40% of its sales in the Americas. The literature review begins with historical strategic perspectives and operational perspectives of Customer Relationship Management (CRM), and follows with the current findings related to operational CRM leadership skills and capabilities used during customer interaction.

The literature search found 153 titles, 62 of which are in this chapter (Table 1).

Table 1: Summary of Literature Search and Review
  Sources
CRM Title Searches Empirical Research Articles Peer Reviewed Journal Articles Peer Reviewed Books Non-Peer Reviewed Journal Articles Other Research Documents * *
Strategic (Macro) 1 (0)* 6 (10) (0) 5 (6) 3 (11)
Tactical/Operational (Micro) 7(4) 4 (8) 3 (0) 1 (4) 3 (1)
Emotional Skills 6 (1) 8 (4) 8 (0) (0) 3 (1)
Cognitive Skills 3 (0) 10 (6) 7 (0) 1 (1) 1 (1)
Process Skill 4 (1) 6 (1) 3 (0) 1 (2) 1 (0)
Total Searches 21 (6) 34 (29) 21 (0) 8 (13) 11 (14)

Note. * ( ) = Not cited

** Includes Consultant Studies, Books, and Magazines

The sources included the following: (a) 21 empirical studies, (b) 34 peer-reviewed journal articles, (c) 21 peer-reviewed books, (d) 8 non-peer reviewed journals, and (e) 11 non-peer­reviewed documents such as consultant and vendor studies, books, and magazine (Table 1). Titles are organized into 5 categories: ( a) strategic, or macro CRM perspectives, (b) tactical and operational, or CRM micro perspectives, (c) emotional skills, (d) cognitive skills, and (e) process skills.

2.1 Historical Overview

From a strategic (macro) business perspective, Customer Relationship Management (CRM) is a strategy originating as an “outgrowth of the old business adage that it’s much easier to keep existing customers happy than it is to endure the effort and expense of finding new ones – especially in an era of global competition” (Yourdon, 2005, p. 2).

Loftis (2001) offered a strategic-tactical (macro-micro) linkage perspective on CRM by way of practical guidelines to customer relationship management. She said that CRM meant “aligning business strategy, organizational structure and culture, and customer information and technology, so that all customer interactions can be conducted to the long term satisfactions of customer and to the benefit and profit of the organization” (p. 9).

In his CRM handbook, Dych’e (2001) indicated that CRM is a tactical infrastructure that enabled an increase in customer value and supports including sophisticated information technology with which to contact, to care, and to provide quality service for customers.

From an operational business perspective, Batt (2006) studied high involvement human resource systems in the operation of customer call centers for the manufacturing industry.

Batt specifically studied how customer contact employees manage the boundary between a firm and its customers (2006). She noted that CRM is a set of management procedures that guide operational practices and shape the behavior of customer-contact employees. These operational practices could serve as either a competitive advantage to increase sales and customer retention, or as a contributing factor to business failure. The behavior of customer-contact employees directly affected customer loyalty and sales growth.

CRM had different viewpoints from management consultants, market research, software vendors, and training consultants. Management consultants focused on what CRM is, from the strategic (macro) viewpoint. Market research firms tended to develop strategic-tactical approaches, focusing on what and how. Meanwhile software vendors approached CRM from the perspective of linking tactics to operations. CRM training consultants, industrial psychologists, and some software vendors focused on how to implement CRM through people who actually interacted with customers. The historical overview section of CRM ranged from strategic, to tactical, to operational perspectives, and the current findings focused on the practical application of CRM in sales and customer service operations.

2.1.2 A Management Consulting Perspective

Management consultants viewed CRM as an investment in the organization that would change the culture to be customer centric. Marketing research firms identified CRM as the method to collect and analyze customer information in order to sell more cost effectively. Software vendors purported that information technology supported the CRM strategy, and they offered database analysis tools to enable market strategy.

Dull (2001) indicated that CRM is a capital investment and was the first to quantify the value ofCRM on financial performance. He defined CRM as the investment in the company’s overall interaction with customers, and he espouses that companies who have not invested in CRM capabilities are leaving millions of dollars of profit on the table. Dull (2001) surveyed 500 executives representing over 250 companies in six industries, and identified three key CRM capabilities that could have the highest return on sales.

  1. Customer service. The capability for a sales and services provider to deliver a truly satisfying experience, build customer trust, and hence loyalty. An investment in this capability could yield a return on sales of $13 million for a business that has annual sales of $1 billion.
  2. Converting information into insight. Converting information into insight is the capability to manage the events that constituted a complete sales lifecycle for both prospects and existing customers. Relevant information that provides insight included demographics, psychographies, and lifestyle data and contact history. The return on sales for this capability was assessed to be $12 million, for a business unit that had annual sales of $1 billion.
  3. Motivating and rewarding people. The capability to measure a customer service experience delivered by a sales and services provider, the overall asset growth of the value of customers, and to provide rewards that were softer in nature, such as opportunities to learn. This capability could yield a return on sales of $13 million for a business unit that had annual sales of $1 billion.

Yu (2001) indicated that in order to maximize the investment in CRM a paradigm shift from a focus on product to customer were required. The key to transforming how a company organizes to accomplish a paradigm shift from product to customer for CRM was in the office of the CEO, or the office of strategic planning (Yu, 2001). Booz (2001) indicated that the CRM return on investment could only be realized by integrating the customer-facing functions along the demand chain of marketing, sales, and service. Historically, customer-facing functions had been separated into organizational silos that prevented a customer-centric integrated organization.

2.1.3 A Marketing Perspective

The marketing concept of management was based on the premise that over the long run companies are born, and survive or die, because the people (the market) either want them or don’t want them (Bolman & Deal, 1997). While some companies believed they can design goods and services and then created a demand for them, the CRM marketing concept emphasizes the creative aspect of marketing that supported the “discovery, definition, and fulfillment of what people want or need or which solves their lifestyle problems” (1997, p. 208).

Market research firms fashioned CRM as a technological plan that to integrate customer information in order to respond to customer demand well before the demand was articulated (Murphy, 2001). Marketing firms have focused on approaching CRM as an investment in relationships that created psychological ties that motivated customers to maintain relationships, consequently setting an expectation of reciprocity between customers (De Wulf, Odekerken­Schroder, & Iocobucci, 2001).

The approaches that market research firms took to CRM were referred to by the following four names: (1) target marketing, (2) relationship marketing, (3) one-to-one marketing, and (4) database marketing. These approaches focused on selling more and spending less. They were congruent with the overall CRM strategic premise that a number of sales calls required to close a deal were combined to increase the true cost of selling and eroding the profit margin of companies (Coe, 2001). The following three tasks associated with CRM marketing included profiling, targeting, and segmenting customers and prospects.

  1. Profiling. This is a technique used to identify the best customers and extrapolate leads based on the profile. The extrapolation can result in quantifying the market (Weijo,2006).
  2. Targeting. This is a technique to correlate leads to opportunities associated with current market expansion, emerging opportunities, new product, or service introductions, and competitive opportunities. Targeting transforms leads into qualified prospects (Coe, 2001).
  3. Segmentation is a technique to relate specific attributes with prospects to gain insight about the fit and affinity between offers and prospects, including existing customers who have purchased a certain product or service within a defined time frame. Segmentation attributes often include demographic, psychographies, lifestyle, and other behavioral information indicative of values (Shahnam, 2001).

2.1.4 Software Vendor Perspective

Software vendors in the manufacturing industry, indicated CRM reflects the increasing sophistication of technology to contact, care for, and provide quality service to customers (Y ourdon, 2005). CRM business intelligence systems provided capabilities to marketing research firms to make strategic decisions regarding target markets. Business intelligence systems included data warehouses, data marts, and associated analysis tools (Loftis, 2001). Business management systems enabled organizations to act on the analysis generated from intelligence systems that associate customer psycho graphics or demographic data with product features, and extrapolate an affinity between the customer and a product.

2.1.5 A Training Consultant and Industrial Psychologists Perspective

CRM training consultants and industrial psychologists approached the implementation of CRM strategy by changing business processes to include specific CRM tasks. Software vendors were in both the strategic and operational business spheres of CRM, and they offered tools to facilitate changes in operational tasks.

Training consultants and industrial psychologists targeted call center and sales organizations that support the improvement of customer satisfaction through efficient call center operations and the enhancement of customer relationships through effective customer sales prospecting. Operational CRM software vendors often collaborated with trainers and industrial psychologists to develop tools to facilitate changes they made in call centers and sales organizations. In the call center, training consultants collaborated with software vendors claiming their software satisfied customers by routing calls to the appropriate customer representative (Aspect, 2001) thus minimizing call transfers. In sales organizations, vendors collaborated with industrial psychologists who built customer relationships by automating the sales activities that included creating leads, qualifying prospects, and closing a customer sale (Chambers, Medina & West, 2001).

For example, trainers in call centers focused on proactive quality programs for inbound service requests and used customer information and technology to anticipate the problem or need of the customer (Nickell, 2001). Industrial psychologists introduced CRM sales programs emphasizing the need to use customer information and technology to first ensure there is a fit between the sales lead and product being offered, then qualify the lead as a prospect using additional psycho graphics and demographic information (Creamer, 2001). Trainers, industrial psychologists, espoused these operational changes and vendors to be the key linkage between CRM strategy and operations because they accomplish the CRM strategy for a customer-centric focus by enhancing CRM capabilities.

Computer program vendors collaborated with trainers, industrial psychologists, and consultants to integrate many of the customer-facing processes that included strategic marketing and operational sales and customer service; however, these systems tend to be industry-specific (Cain, 2001). Surprisingly, the software vendors, not the management consultants, have taken the initiative to implement CRM strategy, by offering guidelines such as critical success factors (Loftis, 2001). When management consultants offered to implement CRM at the operational­level, their approaches were proprietary (Gill & Meier, 1989; Kandampully, 1998; Clever, 2001; Murphy, 2001; Dull, 2001).

2.1.6 Historical Perspective Summary

It appears from the historical overview that the execution of the CRM strategy occurred at the operational level with specific interpersonal relationship tasks performed by either the sales and services provider or sales person or Customer Service Representative (CSR) performing both roles.

The remainder of Chapter 2 focuses on the current findings of CRM at the operational level, and specifically the interpersonal relationship between a customer and CSR.

2.2 Current Findings on CRM Interpersonal Relationships

The current findings of the literature review were relevant to CRM operations and specifically the interpersonal relationship between customer and CSR. The literature review included the following: (a) CRM issues (b) CSR capabilities and (c) leadership skills. The findings presented are within the framework of the CRM literature review model (Figure 3).

Figure 3: The Organization of Findings from the CRM Literature Search: The search of Customer Relationship Management (CRM) literature ranged from general concepts to specific issues.

The model reflects a reductionist approach to the analysis of CRM literature. Specifically, where the CRM Intervention Model was a synthesis of skills and capabilities that influenced a customer relationship, the literature review model began with an analyzes of customer relationship issues, how those issues are related to CRM emotional, cognitive, and process capabilities, and finally the leadership skills associated with CRM capabilities.

2.2.1 Customer Relationship

The literature search revealed several operational issues about the management of customer relationships when blending strategic (macro) and tactical/operational (micro) business perspectives of CRM with theory-in-practice. The following issues generated from the CRM operational perspective, where the customer service representative (CSR) and customer interact have been explored: (a) employee relationship with management, (b) knowledge worker relationship with customers, (c) leader relationship with customers, and (d) customer relationship as a conceptual system.

2.2.2 Employee Relationship with Management

An operational issue with Customer Relationship Management (CRM), when defined as a managed process to establish interpersonal relationships between customer and CSR, was that “management discourse is a discourse about the employee” (Jacques, 2006, p. 69) and not about the customer. The work in the sphere of relational practice, where people were encouraged to construct their identities through connection rather than separation, was discarded from the workplace along with the demise of nineteenth century Federalists Institution (2006). Management theory and practice in the area of relationships with customers is limited because management has historically been concerned with the manager-employee relationship, not customer relationships. For example, Henri Fayol, the author of the first complete theory of management, said “the managerial function finds its only outlet through the members of the organization (corporate body)” (Shafritz & Ott, 2001, p. 46).

At the end of the federalist era, around 1930, society became specialized into an organizational sphere of production and a domestic sphere of consumption. Relational practices were de-emphasized in the organizational sphere as they did not constitute management objects of knowledge, the basis for reward and punishment (Jacques, 2006). Since 1930, women have been the traditional bearers of relational responsibility in the domestic sphere and today are they the suppliers of uncompensated work to the corporate organization, because they contribute to the physical and mental well being of the corporate worker (2006). Consequently, the knowledge, skills, and attitudes conducive to interpersonal relationships were relegated to the domestic sphere; therefore, they were lost to organization and management theory.

Jacques (2006) argued that those knowledgeable of relational practices were the knowledge workers of the federalist era and are the knowledge workers today. Nurses, for example, were knowledge workers whose role was caring in a structured, relational practice. The value of a sales and services provider is determined by the capability to combine discretion and skill to change what is known (2006). The expertise of the sales and services provider was exemplified in developing and handling customers during the “discretionary moment when commitment can not be coerced” (p. 181), for example when a customer was resolving the problem of whether or not to purchase a product or service.

2.2.3 Knowledge Worker Relationship with Customers

According to Macadam (in Sternberg, 2000), the capability to change the knowledge and perceptions about a customer was an aspect of wisdom that manifested at a mature stage of dialectical thinking corresponding to progressing through Piaget’s stages of concrete or formal thinking, and entailed simultaneously knowing while doubting. A knowledge/learning worker who had acquired customer relationship management (CRM) competencies, might be a knowledge/learning worker who has “gained the ability to subtly communicate through the interest structure already operating in another’s consciousness by working with the natural focus of attention, rather than against it” (Sternberg, 2000, p. 46).

Senge (2000) referred to the interest structure operating in a consciousness as “deeply held internal images of how the world works, images that limit us to familiar ways of thinking and acting” (p. 175) or, a mental model. According to Senge, the problem with mental model management in customer relationships, for example, was when mental models were tacit they exist below the level of awareness (2000). As CSR’s strove to become aware of the mental models of customers, they were exercising judgment between knowing and doubting. According to Kramer, (Sternberg, 2000) to change what one knows in the domain of human affairs involves an “awareness of the ill-structured, contextual, and often contradictory nature of experience” (p.291). Senge (2000) suggested skills associated with mental model management:

  1. The ability to recognize leaps of abstraction from observation to generalization.
  2. The skill of articulating what one thinks, but normally does not say.
  3. The ability to balance inquiry with advocacy, in the process of investigation.
  4. The increased awareness of the distinction between espoused theories, what is said, and theories in use.

When CSR’s performed transactional, service fulfillment, or problem resolution tasks, they were doing so as part of a process to influence a customer toward accomplishing certain goals, what Axle called leadership (2006).

According to Davenport (1998), a knowledge worker should have a good sense of his or her customer, the degree to which the customer was satisfied, and a working knowledge of the product or service offered. Further, detailed process knowledge used to influence a customer during service fulfillment and problem resolution tasks was not very useful (1998). Davenport and Harris (2001) offered that customer data- had to translate into something meaningful about customers, and advised against focusing on transactional data to supplement a CSR leadership skills.

Successful leaders of CRM strove for the optimal mix of knowledge; focus on the value of customers, and thought creatively about human knowledge. In an accelerated learning study of customer sales representatives, Gill and Meier (1989) found key leadership skills in CRM included professional confidence and use of reference material about the customer.

Finally, according to Senge’s first law of The Fifth Discipline, “today’s problems come from yesterdays solutions” (2000, p. 57). Specifically, yesterdays CRM models addressed those tasks where data was codifiable, tasks were standard, and the information technology facilitated know-how, and to some degree, processed knowledge (Mulligan, 2001). Today’s customer relationship management called for models of skills and knowledge that extended beyond process knowledge and into the knowledge continuum of problem resolution and systemic models to facilitate manipulation of mental models (Senge, 2000).

2.2.4 Leader Relationship with Customers

An issue with Customer Relationship Management (CRM) as a modem business practice was simply that customer relationships, unlike employee relationships, were not managed, but were led. Rost (1991) said “leadership is an influence relationship among leaders and followers who intend real changes that reflect their mutual purposes” (p. 102) and clearly distinguished between the nature of relationships that may be led, versus those that were managed. First, leadership was an influence relationship; management was an authority relationship. Sales and services providers did not have referent power or authority over a customer relationship, and customers did not want their relationship to be viewed as an asset of the company. What customers want was value, respect, and convenience (Bloomberg, 2001). Second, leadership included leaders and followers, management included managers and subordinates (Rost, 1991). Customers were not subordinate to sales and services providers; they wanted to lead by selecting the communications they received from service and sales personnel and at the same time follow the influence of the sales and services provider (Bloomberg, 2001). Finally, leaders intended real change, substantive and transforming, and those changes reflected upon mutual purpose (Rost, 1991). Change occurs in the mental models (Senge, 2000) of both the customer and sales and services provider as they strove to achieve a mutually agreeable goal. The issue with CRM as it relates to leadership, then, is that CRM is not focused at once on the sales and services provider and customer working toward a mutual purpose.

2.2.5 Customer Relationship as a Conceptual System

An issue with the macro perspective of Customer Relationship Management (CRM) as a conceptual system model was CRM did not transcend systems thinking into the real world of human relationships. CRM conceptual models and application systems are designed to solve structured problems. They are “hard systems based on systems engineering methodologies where the objective or end-to-be-achieved can be taken as a given” (Checkland, 2001, p. 318). Customer relationships were unstructured problems associated with human activity systems which were based on “soft systems methodologies in which the known-to-be desirable ends cannot be taken as a given” (p. 319). Consequently, today’s CRM systems excluded the root definition (2001) of the relevant interpersonal relationship subsystem. As long as the conceptual systems model was not specifically constrained by any of its root definitions (the definitions of the relevant system components that encapsulate the structure or process of CRM), the model was a human activity system (Checkland, 2001).

Therefore, an argument can be made, from a systems perspective, that CRM as described herein, is a human activity system. The what/how relationship is the same as that between the CRM conceptual level system and CRM operational level subsystem (2001). According to Checkland, to identify CRM as human activity system is placed on sound theoretical basis to question whether new versions of existing models or a whole new model might be superior. The outcome of questioning the existing models may be to change the way things were done, better how’s, or to introduce a new version of the whole system, a new what (Checkland, 2001).

Rage & Powers (2006) described interrelationships among components of knowledge, and suggested that organizations, that adapted CRM, were in the business of processing people and relied more on knowledge embedded in models and skills than techniques and software. Consequently, if CRM is viewed from a system perspective, seeing it as a real world problem situation, system thinking dictated that a particular problem could be analyzed using models.

These CRM system models may then be manipulated using research techniques to create new ones (Checkland, 2001). CRM, as a systems theory in practice, appeared to lack a model to bridge the CRM operational perspectives on organization and culture. Specifically, the CRM conceptual level model inferred the culture would change from a product focus to a customer focus, if marketing, sales, and service functions become integrated and abandon their organizational silos (von Bertalanffy, 1999). The characteristics of a system are explained by communication between marketer and prospect, and sales and services provider and customer –and would assume greater customer focus because tasks were designed to influence a change in relationships.

In summary, a review of the literature about the relationship between customer and managed employee and CRM as a conceptual system raised several organizational leadership issues; (a) how applicable is the manager-employee relationship model in customer-CSR relationships; (b) is a customer-CSR relationship managed, or led; and (c) is CRM a conceptual system.

2.3 Emotional Capabilities

The subcomponents of emotional capabilities as they relate to customer relationship management are trust and reframing the climate. Cooper (1998) might argue that a CSR should have the emotional capability he called practical intuition to transform a customer contact into an emotional link for a relationship to be established. In order to further that relationship, the CSR should have the leadership skills to build trust by maintaining an authentic presence (1998) and the skill to reframe an emotional climate that might threaten that trust (Rogers, 2005; Kolberg, 2001).

Prior to knowing which task to perform, a CSR must first ascertain the customer’s motive for making the contact and determine his or her intention. Motive preceded intention and determined one’s choice, but an intention was what one aimed at or chose (Anscombe, 1997; Clever, 2001). One source of customer dissatisfaction was the inability of the CSR to understand a customer’s motive and intention upon initial contact (Nickell, 2001), what Cooper (1998) would call making an emotional connection. An emotional connection as a feeling that defines the relationship or link between the customer, the product or service, and the CSR and was the key to customer satisfaction (1998).

An emotional connection had been found to center on a common good and could be instantly established to form a common bond with humor, but an emotional connection also required practical intuition, a combination of attentiveness, questioning and curiosity (1998). Rost (1991) said emotional connection was greater than a common good, it was a mutual purpose and an essential element that must be present if leadership existed. The capability to make an emotional connection was based on emotional intelligence, an inner resource that gave us stability (Bagshaw, 2005) and is the capacity for recognizing our own feelings and those of others and for managing emotions in ourselves and in our relationships.

Anscombe (1997) said that emotions were objects of feelings in which motives and intent were identified depending on the nature of the response to why questions. When asked the reason for certain emotions, the response to why questions was considered a motive. If the response was described in a past state of affairs and implied causality, the response was an intention. If the response to the why question of an object of emotions was understood from practical reasoning, the intention was practical knowledge, one of Aristotle’s greatest discoveries (Anscombe, 1997).

However, according to Satir (1997), why questions designed to request information tended to put one on the defensive and evoke a feeling of being attacked, but the words how, which, what or when eliminated the defensive posture. Cognitive strategies in the emotional brain manipulate knowledge, a storehouse of representations and translated emotional representations into language that communicated emotions (Winograd & Flores, 1995; Gazzaniga, 1998).

Customer information is beneficial in making an emotional contact and establishing an interpersonal relationship (Hage & Powers, 2006). Knowledge management systems (Davenport & Harris, 2001) that presented customer tacit knowledge that was designed with causality to be actionable (Argyris, 2006) may assist the CSR in making an emotional connection. For example, a customer’s loyalty index or lifetime value (Tiwana, 2005) were tacit, actionable knowledge as they could provide insight to what may have motivated the customer to make contact.

2.3.1 Trust

Trust ranged from confidence to comfort and was found to be a catalytic process that has four primary elements – being aware of one’s self, revealing that self to others, realizing one’s path, and discovering interdependence with others (Gibb, 1978). Trust as confidence was a conscious trust, based on good reasons and evidence, while trust as comfort was instinctive and unquestioning (1978). Kolberg (2001) said trust had three components, commitment, consistency, and competency, that combined in degrees to equate to levels of trust. She said trust could be seen in a continuum, with the lowest level of trust being conditional trust and the highest, absolute trust.

The commitment-trust theory of relationship management was found to contain key mediating variables that focused on one party, either the CSR or customer, and that party’s relationship commitment (Hunt & Morgan, 2004). The commitment-trust theory was primarily concerned with the development of customer loyalty through trust and commitment. Customer loyalty was achieved by implementing a systematic approach for diagnosing the current trust relationship and taking actions to build a total trust relationship (2004). Hart (2001) studied a trust building framework to help CSR’s implement a total-trust strategy based on eliminating trust defects and diagnosing current trust relationships.

Relationships characterized by trust were so highly valued that parties desired to commit themselves to such a relationship. According to Morgan (1998), relationship commitment was a precursor to customer loyalty including relationship termination costs, relationship benefits, and shared values. A model to measure customer satisfaction, image, and customer loyalty found customer satisfaction is a surrogate to customer loyalty (Abdullah, 2005). Customer loyalty was ultimately achieved through relationship commitment and trust, and required a customer orientation (Fill, 2001).

Firms that set explicit targets for customer retention and made efforts to exceed loyalty goals were 60% more profitable than competitors that did not track customer loyalty well (Fredricks & Hurd, 2001). She said quality initiatives, like Six Sigma, aimed to enhance relationship quality and customer retention, and cited five key elements in any successful loyalty program. One element of a customer loyalty program was customer segmentation (2001) and it recognized that not all customers required or desired the same types or intensity of service, relationship, or interaction, and the correct level of commitment could be found in attitudinal information collected in a customer loyalty study. Hart (2001) said companies must go beyond customer satisfaction and customer delight which were transient, transaction based feelings, being a total-trust CSR, one who consistently acted in the best interest of the customer.

Weinberg (2005) more closely aligned trust with long-term customer relationships. He said important laws of trust included understanding the fleeting nature of trust — it could take years to win, moments to lose. Another law of trust was building trust by the implication that a service once given was a service promised for the future (2005).

2.3.2 Reframe Climate

A CSR skilled at reframing the prevailing emotional climate was capable of creating a climate that changed negative or distrustful feelings to a secure climate by perceiving, understanding and modifying the emotional energy during a contact with a customer (Rogers,

2005).

Rogers (2005) said a person-centered approach tapped vast resources for altering behavior if a definable climate of facilitative psychological attitudes could be provided, and if he or she identified three conditions that must be present in order to reframe a climate. The first condition was genuineness, realness, or congruence. Congruence meant being emotionally honest, not placating, blaming, or being irrelevant (Satir, 1997) with the customer. A second condition was acceptance of whatever emotion is occurring — confusion, resentment, fear or anger. The third condition was, empathic understanding or sensing accurately the feelings and personal meanings the customer was experiencing and communicating understanding to the customer.

Kolberg (2001) said such a negative emotional climate may prevail when there was breach in the continuum of trust that may have been intentional or unintentional and how one responded to a breach of trust depended on one’s capacity for trust factors. For example, one who was pragmatic or practical may reframe the climate of distrust by taking a calculated risk. If one was idealistic, blind trust led to an acceptable climate for re-establishing trust.

According to Sirdeshmukh (2001), a sequential two-step process modeled from the prisoners dilemma would reframe the climate. First, a CSR exposed himself to the customer at the risk of personal loss; for example, by practicing an operational benevolent behavior such as bending company policy to address a customer’s needs, or giving honest advice at the expense of making a sale. In the second step, the customer would forego the gain that would have been the CSR’s loss.

Goldenberg (1982) said consultation seeking may be a technique used to reframe climate.

Consultation seeking reframed the emotional climate when “one party is willing and able to make himself inferior or subordinate to another on a temporary basis, at considerable risk either to rebuff or losing equal status in the relationship” (p.387). The climate could be reframed between a customer and CSR offering ideas to improve a customer’s business process or the redesign of a customer service parameter (Hart, 2001).

A quantitative measure of CRM emotional capabilities and leadership skills was in terms of the components of a CSR -customer relationship as referenced above. Some approaches tended to be theoretical, treating self-reported responses as objective measures of relationship quality. Other approaches were psychological in nature, and they assessed subjectively held attitudes or evaluations of relationships (Fletcher, Simpson, & Thomas, 2005). A model that correlated some of the components of relationship quality-commitment, trust, satisfaction, and intimacy-were found to be the most plausible based on the assumption that people were motivated to keep their evaluative judgments consistent across domains (Abdullah, 2005).

2.4 Cognitive Capabilities

Dialogue and influence are two subcomponents of the cognitive capabilities associated with customer relationship management (CRM). The CRM cognitive capability of CSR’s to convert information into insight could contribute as much as $12 million toward the overall return on investment in CRM (Dull, 2001). CSR’s, however, need customer-specific information to negotiate customized offerings and persuade customers to buy a firm’s products (Batt, 2006). Information is data endowed with relevance and purpose (Drucker, 1995), but researchers described information as a message, a document or other visible communication, meant to change the perception of the receiver and have an impact on his behavior and judgment and make some difference in his outlook or insight (Davenport & Prusack, 1998). The transformation of information to insight was a cognitive process of acquiring information, and comprehending or constructing meaning from messages (Anderson & Krathwohl, 2001).

Dialogue, was an interactive leadership skill that allowed a free flow of meaning, reflective inquiry, and deep listening, and enabled yet another transformation of insight to innovative, coordinated actionable knowledge (2000). According to Senge (2000), discussion was a necessary counterpart of dialogue.

Influence or persuasion was a leadership skill practiced during discussion, in a dyadic relationship, between buyer and seller (Rost, 1991). Although “leadership is better thought of as larger and more intimate than a dyadic relationship” (1991 p. 110) influence or persuasion toward a mutual purpose was applicable in management of customer relationship (Rost, 1991).

Business intelligence systems (Loftis, 2001) could provide customer profiles-including, psychological and demographic attributes-that enabled CSR’s to engage a customer’s personality (Rage & Powers, 2006). According to Coe (2001), database systems qualified as business intelligence systems that gathered, refined, and organized information to gain insight about prospective customers. Insight manifested as customer information organized as a prospect profile (2001) purported to represent a direction of fit (Anscombe, 1997) between the need that motivated a prospective customer and the value proposition of the product or service to meet that need. Some business intelligence systems have extended beyond information about customer attributes to include knowledge (Tiwana, 2005) about a customer’s affinity for other products, a loyalty index, the lifetime value of a customer, or a level of trust (Kolberg, 2001), all of which could provide insight to the needs and wants that motivate a customer and determine behavior (Loftis, 2001).

2.4.1 Dialogue

Dialogue was a leadership skill that enabled the CSR to discover the fit between the needs of a perspective customer and the service offered. The aim of dialogue was to understand the truth value or inner reality of the need or desire for a service offering to a prospective customer during the didactic communication (Sternberg, 2000).

According to Labouvie-Vief(Sternberg, 2000), the tendency to externalize one’s inner process of thinking and reveal truth values was evident in the language of emotions, wishes, and desires, or needs; hence the importance of deep listening and suspending one’s own views during dialogue (Senge, 2000). Truth-values originated from a ‘mythos’ or ‘logos’ or a combination and rational, logical interpersonal exchanges during dialogue, but do not necessarily lead to incontrovertible truth-values. Perspicacity and expeditious use of information acquired during dialogue was found to be a level of intelligence associated with turning information into insight and the third dimension of a multidimensional scaling model of wisdom-related behaviors (Sternberg, 2000).

Arlin (Sternberg, 2000) said problem finding was s a skill that could be demonstrated during dialogue. The question is the central concern of problem finding, but the answer was the central concern with problem solving. According to Arlin, dialogic questions in problem finding revealed a strategy to discover, envisage, and go into deeper questions.

Several features of questions presented during dialogue were indicative of good problem finding. First, questions that searched for complementarity’s (Sternberg, 2000) emphasized conceptual conflict between the logos and mythos as a necessary preparation for its resolution. Second, dialogic questions detected asymmetry or lack of balance characterized by noticing relevant and often subtle features. Third, problem-finding questions were those that expressed a willingness to remain open to new information changes one’s worldview. In attempts to develop a problem finding model, Smilansky (Sternberg, 2000) studied problem finding in the social domain. He reported a positive correlation between problem finding and problem-solving and argued that one must be a very good problem solver before becoming a good problem finder. Arlin (Sternberg, 2000) developed a cognitive process model of problem finding and concluded the most important predictors of the quality of questions for problem finding was formal reasoning and divergent thinking, and conceptual complexity contributed little to the prediction equations.

            According to McCarthy (2001), the echo question was a type used in dialogue with a customer to determine the direction of fit as it is designed to overcome objections based on the proposition that the individual raising the question was the most likely to have a solution. The echo question exploited this proposition by answering a question with a question, and it shifted the focus from a problem to a solution and encouraged a sense of ownership by the customer. Goldenberg (1982) studied a form of consultation-seeking dialogue where CSR and customer acted autonomously, but were considerate of each other’s opinion and judgment. This form of dialogue was exhibited in a customer relationship that is growing closer. Specifically, after the CSR had established an emotional connection she or he could engage this type of dialogue designed to affect the intention of the customer. Consultation dialogue typically included the type of question that, in a sense, announced inferiority, for example, “What do you think?”

2.4.2 Influence

Rost (1991) said influence transcended several conceptual frameworks of leadership including steering another toward a goal, the ability to influence the actions of another, non­coercive influence afforded by one’s status, and the process of moving one in some direction through non-coercive means. According to Rost, influence as persuasion was an essential leadership skill involving what he called “power resources”(1991 p 105)- reputation, prestige, personality, purpose, status, message content, perception, give-and-take procedures and countless other things. The consequences of the concept of leadership as an influence relationship, according to Rost, were both multidirectional and non-coercive relationships.

Wansink (2005) identified laddering as a series of related questions to identify product attributes that were linked to consequences and then to customer values. Laddering, according to Wansink, was a way to recreate a customer’s mental map and insight to a customer’s view toward a service. The mental map was then employed in a non-coercive means to influence the customer toward a specific feature set and steer his or her decision to purchase.

Olshavsky (2001) took a human activity system (Checkland, 2001) approach to influence as persuasion and focused on a specific real world problem situation, a salesman interaction with a prospect in a retail appliance store. Olshavsky approached the development of a conceptual influence system by analyzing verbatim-transcribed instances when product attributes were mentioned during the transaction to determine the relationship between the products attributes and consummating a sale. Unlike Wansik (2005), the theoretical framework for the influence system did not include an attempt to determine a customer’s mental model, but focuses on the correlation between references to attributes during a three-phase model of a transaction — the orientation phase, the evaluation phase, and the consummation phase. Oshavsky (2001) observed the greatest influence of the salesman occurred in the evaluation of alternatives phase, specifically the salience of particular product attributes. Product attributes were of paramount importance to the decision to buy, with one notable exception. If the transaction involved a trade­in, very few product attributes were more important to the customer than the trade-in policy, which became the deciding factor in the consummation of a sale.

Where Oshavsky (2001) viewed influence systems beginning with a specific problem situation, Nixon (2001) challenged systems thinking by assessing transactional analysis models of influence systems which were steeped in psychoanalytical theory and behavior analysis influence models, which he said had little or no theoretical background.

According to Nixon (2001), the idea that a person who is conversing in social situation is performing a leadership skill had come to be widely accepted. Drawing upon Argyle’s (2001) theory of transactional analysis, Nixon said social leadership skills were goal-directed and demanded selective perception of cues relevant to a goal. He then described Argyle’s transaction theory in practice and training for face-to-face customer contact, focusing on the translation process, response processes, and feedback for corrective action. Social techniques employed in the transactional model were “the things we do, verbally or non-verbally, deliberately or unconsciously, in the course of social leadership encounters to influence others” (2001, p. 26).

            A behavior analysis model, said Nixon (2001), consisted of a set of categories to describe spoken contributions during a customer contact, such as proposing, building, disagreeing and seeking information, and was a sub-system of the transactional analysis model most applicable in telephone transactions. The application of behavior analysis was difficult to study without the observer being intrusive. The behavior analysis model, lacking formal systems concepts or other systems theory, was posited as a technique to gain insight by methodically gathering. According to Nixon (2001), despite its limitations, behavior analysis as an influence system was helpful and included the following steps to be followed during a telephone contact: greeting, information seeking, information giving, check understanding, offer alternatives or make proposals.

2.5 Process Capabilities

            Problem solving and task execution are two subcomponents of the process capabilities associated with customer relationship management (CRM). In a framework for CRM, Winer, (2001) found a focus on the CRM process to be the key capability to influence the outcome of a customer service experience. Solution construction, or problem solving, and task execution were among the leadership skills associated with process capabilities.

2.5.1 Problem-Solving

Problem-solving skills in CRM were referred to as solution construction skills. Problem solving included category combination, idea evaluation, and solution implementation and monitoring, and were found to be more important than customization (fitting customer needs perfectly) for businesses to influence the outcome of a customer service experiences (Yu, 2001). Hart (2005) identified service processes in a continuum from linear to non-linear flows, and found service problems could be remedied with process improvement efforts that focused on placing the current solution construction process in the continuum and then mapping to a new process within the continuum to achieve desired objectives.

Using constructed response measures, Zaccaro (2005) measured complex problem­solving skills that influenced service leadership, and concluded creative problem solving skills are most closely associated with expert knowledge and divergent thinking. Employing causal loop modeling, Repenning (2001) found problem-solving skills were necessary to solve systemic service problems, specifically ones created by the interaction of tools, equipment and workers. While positing service problems were inevitable and created a reactive service mode — where the customer has a problem, for example, a product failure, question about a bill, or product return­and contacted the CSR to solve it (Winer, 2001). Schrage (2001) advocated solving customer service problems by focusing on recovery strategies, and not by using a reactive problem solving strategy.

Service Level Agreements (SLA’s) were common tools to manage customer service expectations, but electronic systems and subsystems of Viasystems Group Inc.es were suffering because of poorly defined SLA’s including the identification of recovery strategies. SLA’s focused on potential problems around processes and system events and provided early identification of problems and recovery strategies (Pugh, 2001).

            Up to 50% of customers who experienced service problems were not satisfied with the recovery strategy, and customers responded by switching to a new company (Levesque & McDougall, 2005). Some customers attempted to remedy the problem by complaining or staying with the company, hoping things will get better. A customer’s intentions after a service failure related to the recovery strategy of a CSR and depended on the severity of service failure. For example, Levesque (2005) categorized services failures as core and process service failures and correlated them to service recovery strategies to remedy the problems.

A core service failure for an electronic systems and subsystems of Viasystems Group Inc., for example, occurred when the customer did not receive the basic service promised or the service was delayed. For example, the customer was denied Internet access or response time from the Internet was slow. A process service failure was a problem where service quality was affected, for example, being arbitrarily disconnected from the Internet. Levesque (2005) studied core and process service failures and correlated them to recovery strategies, such as an apology by the CSR, compensation for lost service, and assistance or action to rectify the problem. He concluded assistance in fixing the problem quickly was the most effective recovery strategy because it aligned the customer with the original purpose of the service.

2.5.2 Task Execution

Industrial psychologists and call center trainers approached CRM as the expertise and knowledge to perform service tasks that resolve customer problems or issues through established and maintained relationships. In a study to differentiate service tasks for information technology application in the financial services (Mulligan, 2001), three primary CRM tasks were identified and distinguished by the level of ambiguity associated with the expectations and needs of customers (see Table 2). Inspection of the table reveals that a continuum of knowledge to perform CRM tasks is required to execute the CSR tasks. The task dimensions define a continuum that encompasses three service task types. The continuous nature of the task dimensions means that the boundaries between task types are not discreet.

Table 2: Customer Relationship Management Tasks:

  Task Types
Task dimensions Transaction Processing Request Fulfillment Problem Resolution
Form of expertise Know-how Process knowledge Content knowledge
Data configuration Codifiable Mixed Tacit
Data interpretation Explicit Mixed Implicit
Task standardization High Moderate Low

Batt (2006) cast CSR task types similar to those above within a framework she called high-involvement systems and correlated CSR’s knowledge level and involvement in the system to quit rates. She concluding that quit rates decreased with the CSR’s increased involvement in the design of the work tasks, but effective design required increasing levels of tacit knowledge.

Transaction processing tasks required the lowest level of task expertise, involving know­how or familiarity with task sequence and utilize explicit knowledge (Mulligan 2001). These findings are consistent with those of Batt (2006) who found in order to persuade customers to buy a firm’s products, CSR’s needed knowledge of specific product features, service agreements, pricing, packaging, and legal regulations, all of which was explicit. Transaction processing tasks were highly standardized, for example order processing, billing, and remittance posting, and required minimal customer intervention (2001).

Request fulfillment tasks, for example, changing a customer’s account or service features, were a mid-point in the knowledge requirement continuum of customer relationship management (CRM) tasks. Fulfillment tasks utilized a mix of explicit and implicit data configurations in customer-defined needs. During request fulfillment, customers made the CSR aware of their need, maintained ownership of the tasks, and assessed the CSR’s performance based on the customer’s perception of request fulfillment process. They knew supporting systems and procedures (Mulligan, 2001), how to use that knowledge to negotiate customized offerings, and the work flowed from point of sale to delivery (Batt, 2006).

            CSR’s who resolved problems by finding the right fit between a customer needs and a service offering were at the high end of the knowledge continuum and required content knowledge and tacit knowledge to meet customer’s expectations (Mulligan, 2001). According to Batt (2006), CSR’s with deep tacit knowledge of products, processes, and high-involvement practices, developed personal relationships with customers and constituted a competitive advantage for the firm due to their valuable, rare, and hard to imitate knowledge. Although the customer was sometimes aware of needs, the CSR specified the details of the problem and developed a solution based on implicit data and tacit knowledge. The problem resolution task was shared between the CSR and the customer, and the assessment of the CSR’s performance was a function of the customer’s expectations (Mulligan, 2001).

Entry-level CSR’s required “high general skills (or formal education) plus a firm investment in initial training” (Batt, 2006, p.588) before assuming a role to process sales transactions, then must learn additional skills to fulfill service requests and creatively solve problems. Each level of task required the CSR to assume a different role, and be capable of performing multiple roles that transcended the continuum, a post-industrial worker trend called complexification (Hage & Powers, 2006).The service process skill that was most effective at influencing a customer depended on the type of service. For example, if the service objective was to do whatever it took to keep the customer happy, a non-linear flow that afforded CSR discretion was the better end of the continuum from which to work. On the other hand, if the objective was to drive out variability, conform to requirements, and achieve zero defects, a linear flow at the opposite end of the continuum would be considered (Hart, 2005).

Information about the competency of a customer was found to be useful to gain insight that increased the fit of a service process to customer service blueprints (Canziani, 2006). Canziani (2006) classified customers as to their expected competency based on their previous experience and argued using this framework to guide changes in the service delivery process to influence the customer experience. For example, segmenting existing customers into vagabond switchers who had experience with competing firms’ processes but their expectations of service were fuzzy, and value switchers, whose expectations for service were detailed-based on primary exposure to one firm (2006).

The role of referent and expert power employed by a CSR during the service process influenced the customers perception of the CSR and could facilitate changes in the customer attitude toward a complaint (Salem, Reischl, Gallacher, & Randall, 2005). Salem (2005) found that individuals were more likely to feel a satisfactory experience if the CSR possessed expert power. A customer perceived a CSR with expert power as representative who possessed technical knowledge, and shared experiences with the customer.

Chambers, Medina, and West (2001) found the use of certain customer service request computer applications enabled a CSR to influence the customer’s experience by customizing the service process flow to meet a specific customer complaint or need. Workflow versioning to match a customer’s specific service request left the customer with a sense of intimacy and satisfaction with the outcome of the customer experience (2001). A combination of workflow and unified customer view was found to be even more effective in influencing the outcome of a customer experience, as the customer information enhanced the CSR’s leadership ability to create a better fit between the customer and the service delivery process (Creamer, 2001). Automated workflow processes integrated with customer information were significant features of CRM applications systems.

Customer complaint handling systems focused on prioritization and tracking customer calls (Chambers, Medina,& West, 2001). In a comparative assessment of such systems, those that could route the customer contact to the appropriate CSR, relate a process flow diagram of the service process, and instantiate a script for the CSR, proved to be the most effective in influencing the outcome of a customer experience. According to Chambers (2001), the process technology fell short of delivering intimate knowledge of customer needs and expectations, a key business aspect of CRM, that included the ability to anticipate customer needs and provide services beyond what customers request. Further, Batt (2006) found the use of such computer applications also engaged in electronic monitoring for performance of CSR’ s leading to dissatisfaction and increased quit rates.

Underwriting the importance of task execution is research that discovered a correlation between customer service experiences and usage of product or service. Customer service expectations changed over time according to Bolton & Lemon (2001) who developed a dynamic model of expected level of service based on price and usage. In a perceived payment equity model, these researchers quantified customer payment equity — the customer’s evaluation of what was fair, right, and deserved considering the price of the service. They found a customer level of usage was influenced more on the basis of his or her experience with the CSR than by the price (2001). The key implication for CRM was that efficient and effective task execution frames a customer experience and customer usage of the service and customer expectations of such usage could be managed by guiding the experience (2001).

Finally, in a study of customer service process improvement with respect to task execution in the manufacturing industry, Repenning (2001) found an improvement paradox and a leadership problem with respect to task execution. On one hand, the number of tools and techniques to improve task execution was growing rapidly. On the other hand, organizations were not improving in their ability to incorporate innovations in their everyday activities. He said the root of the problem was systemic, created by the interaction of tools, workers, and managers and offered a work smarter balancing loop to accommodate the delay in closing the task execution gap after investment in process improvement was made.

2.6 Summary

The literature review has contributed to the study of how leadership skills can affect customer transactions by viewing CRM through a unique conceptual framework of leadership skills and CRM. The majority of the literature was focused on the operational process capabilities of CSR’ s to manage customer transactions, while marketing literature appeared to focus on tactics to enhance customer relationships, particularly customer loyalty. Strategic approaches to CRM identified in the literature emphasized the need to invest in customer relationship management, but only a few articles in trade magazines and consulting literature addressed the emotional and cognitive capabilities for CRM (Tiwana, 2005; Y ourdon, 2005; Johnson & Barksdale, 2001; McCarthy, 2001).

CRM emotional capability was primarily associated with establishing and maintaining an emotional connection and was associated with the leadership skill to establish trust and reframe an emotional climate that might threaten that trust. Although the capability to make an emotional connection may not have a measurable impact on sales and service, it appeared to be a pre­requisite and integral component of the other CRM capabilities.

CRM cognitive capability was focused on acquiring customer information during contact and turning information into insight. It required dialogue toward a mutual purpose to ascertain a customer’s motives, needs, and wants including the use of influence skills to determine the correct fit between a product and a customer.

The CRM process capability to influence the outcome of a customer service experience was the essence of customer satisfaction. Customers contacted CSRs, because they had a problem with the product or the service. The customers may have wanted to explore the use of the product or service capabilities. In either case, problem-solving skills and task execution skills ensured timely resolution to problems and reconciliation of issues that kept customers delighted with the service.

            The purpose of this quantitative exploratory research study was to determine the degree to which a leadership skills and CRM capabilities program delivered to customer service representatives (CSR) influenced the operational management of customer relationships in the manufacturing industry. The manufacturing industry was defined as the electronic systems sales and services provider to approximately 40% of its sales in the Americas. Chapter 2 reviewed the literature related to CRM capabilities, the specific leadership skills that may affect the management of customer relationships, and the subsequent impact on customer transactions. Chapter 3 presents the methodology to test the model to determine to what degree leadership skills affect customer transactions.

CHAPTER 3: METHOD

Chapter 3 described the basic plan that guided the data collection and analysis of the

study, (seen in Figure 4). In the CRM model, the dependent variable, customer relationship management, is affected by three independent variables, CRM emotional, cognitive, and process capabilities. Each of these three independent variables are further broken down into two CRM leadership skills each that constitute independent variables whose value will be determined by the survey responses: (a) trust, (b) climate, (c) dialogue, (d), influence, (e) problem solving and (f) task execution.

Figure 4: The Basic Plan for Data Collection and Analysis: The survey questions are the source of data for the study. The questions begin with overall satisfaction with the relationship and proceed with CRM capabilities and leadership skills questions.

The intent of this quantitative exploratory research study was to determine the degree to which a set of leadership skills and CRM capabilities acquired by customer service representatives (CSR) influenced the operational management of customer relationships. The setting was the manufacturing industry with an electronic systems sales and services provider to approximately 40% of its sales in the Americas. The research question is; what influence does improved leadership skills have on the management of customer relationships? The answers to the following nine research questions will determine the influence that leadership skills have on the management of customer relationships.

  1. To what degree does the leadership skill to establish trust, influence the emotional capability of a Customer Service Representative (CSR)?
  2. To what degree does the leadership skill to reframe an emotional climate, influence the emotional capability of a CSR?
  3. To what degree does the leadership skill to carry on a dialogue, influence a cognitive capability of a CSR?
  4. To what degree does influence as a leadership skill influence a cognitive capability of a CSR?
  5. To what degree does problem-solving leadership skills influence the process capability of a CSR?
  6. To what degree does task execution leadership skills influence the process capability of a CSR?
  7. To what degree does the emotional capability of a CSR, influence customer relationships?
  8. To what degree does the cognitive capability of a CSR, influence customer relationships?
  9. To what degree does the process capability of a CSR, influence customer relationships?

The directional hypothesis for this study was:

HI: There is a relationship between CSR leadership skills, CRM capabilities, and customer relationships.

The null hypothesis for this study was:

Ho: There is no relationship between CSR leadership skills and the CRM capabilities and customer relationships.

The Instrumentation, Validity, and Method Appropriateness sections explained the tools to execute the steps of the design, the manner in which the overall design objectively achieved the intended purpose, and the justification for data collection and analysis methods. Finally, the Feasibility and Appropriateness section explained the conduct of the study including costs, services, support, and other resources needed by the researcher.

3.1 Research Design

Exploratory research is a type of quantitative research that will explore possible causal relationships between CSR leadership skills and the operational management of customer relationships and often involves determining the degree to which the independent and dependent variables are associated (Kinnear & Taylor, 1979). This approach was appropriate for this research, because the objectives include portraying the characteristics and frequency of variables; specifically customer interactions with CSR’s and the influence leadership skills practiced during customer interactions have on customer relationships.

The research procedure included seven steps. The data collection steps included, (1) define the sample, (2) pilot the survey, and (3) administer the pre-test survey. Analysis, synthesis, and change execution included (4) conduct multi-variant data analysis and (5) conduct the workshop intervention. The measurement of the impact of the change included (6) the post­test-survey, and (7) conduct multi-variant data analysis of responses.

3.1.2 Sample

The County Chronicle newspaper, with about 25,000 subscribers, published an announcement about the pre-test survey. In addition, the Director emailed an announcement of the forthcoming survey to all customers. The email accompanying the Internet link to the survey, contained instructions on how to access and complete the survey, and who to contact in the event customers had difficulty completing it (see Appendix A). The customer population, approximately 1,900, was surveyed using the web. This sample represented the entire business and residential customer’s base of the electronic systems and subsystems of Viasystems Group Inc.

3.1.3 Pre- Test Survey

The pre-test was a two-phase process. First, ten individuals were contacted and asked to complete the survey. Each was personally interviewed to assess how well they understood the survey questions, to provide suggestions to clarify questions, and to offer recommendations regarding other issues they believed should have been included in the survey. Second, 50 customers were selected by random sample to pre-test the survey mechanics associated with the Web-based survey instrument. Specifically, Web-based surveys employ the most recent version of Internet software and often customers’ computers were not equipped with latest versions.

The second phase was the pre-test survey, distributed to the remaining customers. Responses were monitored daily, and after 10 days those customers who did not respond were sent another email asking them to complete the survey. If after 10 more days, the target response of 300 customers was not reached, the survey was mailed with a return postage-paid envelope to those customers who had not responded, with the option of mailing their completed paper survey or completing the Web version of the survey.

3.1.4 Pre- Test Survey Analysis

Returned surveys were computed, according to the unique case identification number assigned to each survey, and a survey response record was created in the database. Data verification and cleaning of survey records were conducted before and after the analysis of data subsets. Verification consisted of a series of cross-tabulations to look for inconsistent relationships, unexpected averages, and large numbers of missing values.

Different statistical procedures are used for different variables. For nominal variables associated with questions that provide a list of choices with no meaningful order to the list, frequencies with cross tabulations were appropriate, and results were displayed using charts. For ordinal values associated with questions of opinion on a particular issue, for example, where a code of 5= strongly agree means more agreement than a code of 4 =agree, but how much more is unknown, median and mode analysis were appropriate with results displayed in bar charts.

Analysis of variance (ANOVA), a versatile statistical tool, was used to study the relationship between the dependent variables and one or more independent variables. This research studied the relationship between the dependent variable, customer satisfaction and independent variables, emotional, cognitive, and process capabilities. ANOVA did not require making assumptions about the nature of the statistical relation, but it does require the variables to be quantifiable (Neter & Wasserman, 2004).

In the CRM model, the dependent variable, customer relationship, was affected by three independent variables, CRM emotional, cognitive, and process capabilities (Figure 5) and the five associated CRM leadership skills. Each skill and capability was an independent variable set whose value was determined by the survey responses. The relationship or correlation among variables was calculated using regression analysis. The degree to which variables related was calculated using the Analysis of Variance (ANOVA) equations.

3.1.5 Intervention Workshop

The workshop occurred between the pre and post-test survey and emphasized CRM capabilities and leadership skill weaknesses highlighted from the analysis of the pre-test survey. The Personal Assessment Social Aptitude Test, PASAT2000 (Poppleton, 2005) was administered to the CSR’s as the first activity of the intervention and the last activity on the last day of the workshop.

3.1.6 Pre-intervention Assessment

The PASAT2000 (2005) is a rigorously constructed questionnaire designed to assess the skills, capabilities, personality, and attributes that are vital to success in a Customer Service Representative (CSR). PASAT2000 is copy righted and solely owned by The Test Agency, founded by Professor Steven Poppleton, a product sold by Personality Assessment Network.

Figure 5: The Analytic Components for Testing the Empirical Customer Relationship Model: The statistical equations for the ANOVA and Regression Analysis model (Figure 5) follow:

Y1=Ax1+Bx2+constant, where Y1 equals emotional capability, where A equals the leadership skill to establish trust, and B equals the leadership skill to reframe an emotional climate.

Y2=CX3+D~+constant, where Y2 equals cognitive capability, where C equals the dialogue leadership skill, and D equals influence leadership skill.

Y3=Exs+Fxs+ constant; where Y3 equals process capability, where E equals problem solving leadership skill, and F equals task execution skills.

Y4=Gx7+Hx8+lx9; where Y4 equals Customer Relationship, where G equals CRM emotional capabilities, H equals CRM cognitive capability, and I equals CRM process capability.

            The PASAT2000 focuses on the behaviors most closely related to sales and services  performance and are based upon extensive research into those job tasks and behaviors critical to CSR performance. A broad job analysis was conducted in multiple sales and services environments, including customer contact centers, in order to identify those behaviors that differentiate successful from unsuccessful personnel.

            The PASAT2000 is comprised of 153 items. Test takers rated each item using a five­point scale indicating the degree to which they use the behavior in question. The P ASAT 2005 has eight main scales that correspond to the CRM capabilities and skills as follows:

  1. Social Adjustment is the tendency to establish and maintain effective relationships with others. This scale corresponds to CRM emotional capability and the skill of a CSR to build and maintain trust with the customer. The reliability of this scale achieved a Cronbach Alpha score of .86.
  2. Emotional Adjustment is concerned with coping effectively with emotionally difficult events and in showing resilience in the face of adversity. This scale corresponds to the emotional capability and CSR skill to reframe an emotional climate. The reliability of this scale achieved a Cronbach Alpha score of .82.
  3. Adaptive Distortion is to adapt a behavior to match or complement that of the customer’s behavior that corresponds to a cognitive capability and CSR dialogue skill. The reliability of the scale achieved a Cronbach Alpha score of. 71.
  4. Attentive Distortion is the attention paid to the social cues given by customers that serve as a behavioral guide. It also corresponds to the cognitive capability and CSR dialogue skill. This scale achieved a Cronbach Alpha score of .35.
  5. Social Control is concerned with influencing others by a variety of means, and corresponds to cognitive capability and CSR influence skill. The Cronbach Alpha score for this scale is .87.
  6. Social Distortion is the scale composed of items that tend to be endorsed when a person is giving inaccurate responses. This scale corresponds to cognitive capability and CSR influence skill and a Cronbach Alpha reliability score of. 72.
  7. Motivational Adjustment is concerned with goal-directed behavior and corresponds to process capability and CSR problem-solving and solution-seeking skills. This scale achieved a Cronbach Alpha of .75.
  8. Conscientiousness is concerned with doing things carefully, planning, paying attention to detail, and following rules. This scale corresponds to process capability and CSR task execution skill and is rated by Cronbach Alpha at .82.

The content of the PASAT2000 was validated following extensive review of personality and sales and service theory; sales and service role classification; and training manuals, sales diaries, and performance appraisals. After two pilot questionnaires were evaluated, 153 items were selected that had good psychometric properties and correlated with performance of the role.

PASAT2000 was concurrently validated in the financial, pharmaceutical, manufacturing retail sectors and one non-sales sector. The range of P values for each scale across the financial, pharmaceutical and manufacturing retail sectors were 0.180 to .346.

            The construct validity of PASAT2000 included a comparison between PASAT2000 and the Eysenk Personality Inventory and the Manchester Personality Questionnaire. The constructs of these instruments include neuroticism, psychoticism, creativity, agreeableness, achievement, and reliance.

PASAT2000 is a newly designed questionnaire to reflect current human resource management issues and follows the Poppleton Allen Sales Aptitude Test (PASAT) designed in the early 1980’s. Appendix B presents an alignment of the PASAT2000 scale of behaviors and the CRM scale of skills.

3.1.7 Intervention Workshop Agenda

The Intervention Workshop was a three-day workshop with four-hour sessions. Day one included; (1) an overview and purpose of the training; (2) a review of the pre-test survey questions; (3) three steps from the Ten Steps to the Learning Organization (Kline, 1998), and (4) a review of the pre-test survey results with a focus on those capabilities that needed improvement.

The agenda for the second day of the intervention workshop included the following (1) CRM process capability, including problem solving and task execution, and (2) CRM cognitive capability, including dialogue and influence. The content of these topics was derived by the literature search, in Chapter 2. Specifically, each section of the literature research was related to a CRM capability and skill set.

The third and final day of the intervention included the following: (1) emotional capability and the skills to build and maintain trust and reframe an emotional climate; (2) the plan to conduct the post-test survey; and (3) the administration of the PASAT2000. CSR’s who had not scored the desirable level on the PSAT2000 were exposed to additional training, and re- assessed until 90% of the CSR’s tested in the desirable aptitude range.

3.1.8 Post- Test Survey

The purpose of the post-test survey was to gather the data to test the hypothesis, and to determine to what degree the CRM leadership intervention model affected the CSR’s capability to manage customer relationships. The post-test survey was administered three months after the intervention, allowing post-test survey recipients an opportunity to have contacted the electronic systems and subsystems of Viasystems Group Inc.

3.1.9 Post- Test Survey Analysis

The analysis techniques for the post-test survey focused on a comparison between the pre-test and post-test survey analytical results. The analysis of the post-test survey included a cross-tabulation with respondents from the pre-test survey, and a further analysis of a control and treatment group within the responses of the post-test survey. Post-test respondents, who did not contact the electronic systems and subsystems of Viasystems Group Inc. after the intervention, were the control group, and those who did were the treatment group.

3.2 Instruments

The customer survey instrument was constructed based on established reliability and validity of items and scales (See Appendix A). The survey, complete with cover letter, was deployed on the World Wide Web and linked to the customers’ email addresses. The propriety software known as Survey- Wave (Brown 2005) was used to facilitate the web design, deployment, and data collection of both pre-test and post-test surveys. Survey-Wave provided real-time tallies of response rates, creation of respondent database records with unique case numbers, and reports of valid responses.

Output from Survey- Wave was input to a comprehensive system for analyzing data,

Statistical Processing for the Social Sciences (SPSS, 2006), which facilitated the statistical analysis. The analysis of variance model (ANOVA), Figure 5, was built in SPSS to calculate the affect of CRM leadership capabilities on customer relationships. Linear regression was used to test the strength and direction of the relationship between leadership skills and CRM capabilities.

3.3 Validity

The truth-value or internal validity of this quantitative research design was achieved through the content and constructs of the model. From a qualitative perspective, the truth-value was enhanced by the credibility of the business context and customer relationships, in which the design is cast.

The research design achieved applicability or external validity through face-validity. Specifically, the design appeared to be a reasonable business approach to measure customer relationships and applicable to businesses that have customers who were considered end-users of services or products.

The generic term given to the problem of consistency of measurement is reliability. By virtue of both pre-test and post-test aspects of the design, the measurement of the relationship between customers and customer sales representative demonstrated the application of the design in a practical situation.

The statistical nature of the design, the randomness of the sample, the scientific validity of the instruments, and the automation of data processing all ensured the objectivity of research.

3.3.1 Truth Value-Internal Validity

The primary hypothesis, that leadership skills affect customer relationships, was tested using quantitative, descriptive methods to provide information for the evaluation of alternative courses of action. Specifically, the degree to which an organization learned leadership skills and capabilities to affect customer relationships was an alternative to other approaches to CRM. While descriptive studies determined the degree to which variables were associated, for example, the consistency of the relationship between CRM emotional capabilities of the CSR and customer relationships, statements regarding cause and effect relationships were not possible with exploratory research (Kinnear & Taylor, 1979).

3.3.2 Content

            Descriptive information can be used to make predictions regarding the degree to which CRM variables are associated and provide evidence regarding specific questions relating to the current state in an implicit causal model. For example, positive correlations between the dialogue capabilities of CSR’ s and customer’s experience with a contact about new and existing products could be the evidence to support the prediction that increased dialogue capabilities lead to increase sales. Similarly, a positive correlation between emotional capability and a customer’s perception of his or her customer relationship with the CSR may predict customer retention, and its corollary, customer attrition. Finally, a positive correlation between CRM process capability and customer relationship could predict an increase in up-sell and cross-sell products.

3.3.3 Construct

From a statistical perspective, internal validity was enhanced as all variables loaded on the same scale. For example, the interval scales measuring behavior were consistent regardless of the construct, thus achieving a greater correspondence between the measure and “reality” and the greater the correspondence, the better the measurement (Kinnear & Taylor, 1979). Further, the emotive elements, for example, trust and emotional climate, clearly contributed to emotional capability. The longitudinal design aspects of this descriptive study, specifically, where the respondents and measured variables stay the same between the pre-test and post-test, enhanced the validity of the study, as changes in attitudes, knowledge, and behavior could be analyzed.

In summary, the statistical correlation among variables and the longitudinal aspects of this quantitative descriptive study did not cast this research into a category of causal research. However, the study could provide a valid causal model that could be useful in the business environment when combined with a decision maker’s implicit model of how a CRM system works.

3.4 Applicability-Face Validity

It appears obvious that every business that has a desire to enhance customer relationships would be interested in a research design that not only measures, but also could influence customer satisfaction. This quantitative descriptive design demonstrated an approach to sense, affect, and measure change in the external customer environment. Specifically, the pre-test survey was a sensing tool that established a baseline of customer satisfaction at a point in time and identified areas of dissatisfaction. The design, through the intervention, established an expectation that a change in the internal environment could affect a change in the external environment. After an intervention, a change could be measured in customer satisfaction. An argument could be made that the face-validity of the research design was a change management tool that enabled decision makers to respond to the external environment of the customer.

3.4.1 Consistency       

This quantitative descriptive design appeared to be consistent in form or homogeneity, as it addresses the internal consistency and reliability with Cronbach’s coefficient alpha for the relationship between the variables–leadership skills, CRM capabilities, and customer relationship.

Coefficient alpha analyzed the internal consistency to determine the degree to which variables were related. In operational terms, if the scores of the variables–leadership skills and CRM capabilities, and CRM capabilities and customer relationship–across the survey results correlated, positively, variables were homogeneous. Thus homogeneity was consistency of performance over all items on the survey (Kinnear & Taylor, 1979).

A Cronbach’s Alpha of at least .70 for total scale and contribution was the target reliability measurement. The measurement was taken as part of the analysis of the pilot survey.

3.4.2 Neutrality

            The opportunity for bias in the study was minimized from several aspects. First, the identity of customers was not known. Second, all surveys were administered electronically; minimizing the opportunity for tampering with the data, and all data were analyzed using standard, scientifically validated tools and techniques. Finally, the participants in the intervention workshop included a mix of employees and internees with various levels of education, training, and experience in customer service.

3.5 Methodology Appropriateness

Exploratory research on an applied social research method at the core of many survey research projects in which estimates of population attitudes are study objectives (Bickman & Rog, 1998). As an applied social research method, exploratory research was appropriate, therefore, to estimate the attitude of the customers toward their relationship with an electronic systems sales and services provider.

Applied exploratory research is concerned not only with determining whether or not an influence existed, but was interested in the practical and statistical significance of the influence, specifically, knowing if changes were of sufficient size to be meaningful. Thus, applied exploratory research was appropriate to determine if leadership skills influenced customer relationships, and to what degree.

3.6 Feasibility and Appropriateness

            The setting, sample, and support services were aspects of this quantitative exploratory research that made it feasible and appropriate. First, the setting for the research was an electronic systems and subsystems of Viasystems Group Inc. customer contact center. The benefits of the study to the electronic systems and subsystems of Viasystems Group Inc. and the sponsoring organization offset the cost associated with employee time expended by the center. Specifically, the CSR’s benefited from the CRM intervention training and in exchange for these benefits, the employees devoted time to participate in the intervention workshop.

Second, the sample was appropriate as it was included all of the active customers, thereby ensuring the opportunity for input from all sectors of the community. The administration of the survey was feasible with the automation provided by electronic systems and subsystems of Viasystems Group Inc. technology, email, and Web access. Specifically, the survey was linked to an email originating from the electronic systems and subsystems of Viasystems Group Inc. The electronic systems and subsystems of Viasystems Group Inc. director coordinated the timing and distribution of the email and monitored acknowledgment of receipt of the email by the customer sample.

Finally, the executive management of the organization provided written consent to conduct the research and made a timely announcement of its support for the study to the customer community at a public event. A collaborative effort between executive management and the researcher facilitated the communication of the purpose and nature of the study to the community through newspaper articles and Web site links. Finally, a professional marketing firm allowed the researcher to employ its proprietary software to administer the survey furthered the feasibility of the study.

In summary, the setting, sample, and support services provided the means by which the researcher furthered the feasibility of the study. The electronic systems and subsystems of Viasystems Group Inc. was and appropriate business environment as customer service representatives interact with customers on a daily basis.

3.7 Summary

The purpose of this quantitative exploratory research was to determine the degree to which leadership skills influenced the operational management of customer relationships in the manufacturing industry, specifically with an electronic systems sales and services provider to approximately 40% of its sales in the Americas. Chapter 2 reviewed the literature related to CRM capabilities, the specific leadership skills that may affect the management of customer relationships, and the subsequent impact on customer transactions.

Chapter 3 described the basic plan that guided the data collection and analysis of the study. This quantitative exploratory research approach included steps to define the sample, design and validate the data collection instruments, and collect and analyze survey responses to answer the research questions. The longitudinal nature of the approach-a pre-test to establish a current state of customer relationships, a leadership skills intervention, and a post-test to determine the affect of leadership skills on customer relationships–constituted testing the hypothesis that a leadership skills intervention model enhances the CSR’s capability to manage customer relationships.

CHAPTER 4: PRESENTATION AND ANALYSIS OF DATA

Chapter 4 presents the influence of leadership skills and CRM capabilities on the operational management of customer relationships between an electronic system and subsystems of Viasystems Group Inc. and approximately 1930 customers. The six leadership skills included (a) trust, (b) reframe climate, (3) dialogue, (4) influence, (5) problem solving, and (6) task execution. The three CRM capabilities included (1) emotional, (2) cognitive, and (3) process.

The null hypothesis for this study is the following: there is no relationship between CSR leadership skills, CRM capabilities, and customer relationships. The overarching question of this study is what influence do improved leadership skills have on the management of customer relationships. Nine research questions were addressed:

  1. To what degree does the leadership skill to establish trust, influence the emotional capability of a Customer Service Representative (CSR)?
  2. To what degree does the leadership skill to reframe an emotional climate, influence the emotional capability of a CSR?
  3. To what degree does the leadership skill to carry on a dialogue, influence a cognitive capability of a CSR?
  4. To what degree does influence as a leadership skill influence a cognitive capability of a CSR?
  5. To what degree does problem-solving leadership skills influence the process capability of a CSR?
  6. To what degree does task execution leadership skills influence the process capability of a CSR?
  7. To what degree does the emotional capability of a CSR, influence customer relationships?
  8. To what degree does the cognitive capability of a CSR, influence customer relationships?
  9. To what degree does the process capability of a CSR, influence customer relationships?

The research procedure included seven steps. The data collection steps included, (1) define the sample, (2) pilot the survey, and (3) administer the pre-test survey. Analysis, synthesis, and change execution included (4) conduct multi-variant data analysis and (5) conduct the workshop intervention. The measurement of the impact of the change included (6) the post-test-survey, and (7) conduct multi-variant data analysis of responses.

These procedures provided three objective measures of behavioral changes that are attributed to the CRM workshop that focused on leadership skills and CRM capabilities. First, the change in the CSR’s test scores after the intervention workshop was measured. Second, the change in customer relations between the pre-and post-test surveys was measured. Finally, changes in leadership skills and the capabilities of customer service representatives (CSR) of the electronic systems and subsystems of Viasystems Group Inc. to improve customer relations were hypothesized to be attributable to a set of enhanced CSR leadership skills and capabilities presented in the CSR workshop.

4.1 Pre- Test Survey Analysis

Sixteen percent, or 321 customers, of the 1930 and 100% sample of customers surveyed, responded to the pre-test survey. The 321 responses established the initial measurement of how customers perceived their relationship with the electronic systems and subsystems of Viasystems Group Inc. Approximately 42.0 % of respondents were very satisfied with their relationship, and 40.8% were satisfied with their relationship with the electronic systems and subsystems of Viasystems Group Inc. (see Table 3). When responses were stratified by customer tenure, longer tenure customers tended to be less satisfied with their relationship (see Appendix B).

Table 3: Pre- Test Level of Satisfaction with Customer Relationship

Customers were also asked to assess the leadership skills and CRM capabilities of customer service representatives (CSR). Table 4 shows the description of each of the three CRM capabilities with the corresponding leadership skills. The pre-test survey included 28 questions regarding three CRM capabilities and six leadership skills. A five-point Likert scale was used to collect the degree to which customers agreed or disagreed with positive statements about CSR leadership skills and capabilities. In each instance, these values were associated with each scale:

1. Strongly agree = 5;

2. Agree = 4;

4. Neither agree nor disagree = 3;

4. Disagree = 2;

5. Strongly disagree = 1

Table 4: Sets of CRM Capabilities and Leadership Skills

The mean and standard deviation of customer responses to CRM capabilities and leadership skills from the pre-test survey ranged from 040 to 1.01. (see Table 5). The pre-test results indicated a strong weakness in CSR cognitive capability at a mean of 1.94. The strength in their emotional and process capability appeared to be the greatest at a mean of 3 .96. It appeared that customers do not perceive that CSR’s had the information to respond to customer needs, nor the ability to provide appropriate recommendations. The emotional capability of the CSR’s appeared to be strong, because customers apparently felt that they are valued, that the CSR tried to understand their needs, and that the CSR listened to them without judging them.

Table 5: Results of CSR Capabilities and Skills

4.1.1 Survey Scale Reliability Analysis

The pre-test survey scales were validated utilizing Cronbach’s alpha (c), a descriptive measure of internal consistency between the scale and the survey item, based on the average inter-item correlation (see Table 6).

Cronbach’s alpha (u) measured the consistency between survey scales. For example, referring to the leadership skill trust, communicating a feeling of comfort and confidence was a reliable indicator of trust at alpha .856.

A Cronbach alpha score of 1.0 indicated a 100% reliability, and most alpha scores for the CRM model ranged from u =.756 to u =.943, with the exception of a single survey item relating to influence skill (c =.471). The elimination of this single survey item raised the alpha for influence skill to u = .584. Table 6 summarized the degree to which the survey items could be relied upon to measure leadership skills. A detailed analysis is available in Appendix B.

Table 6: Cronbach Reliability Scores Scale

4.1.2 Pre-Test Relationship Analysis of CRM Model Variables

Two statistical methods were used to evaluate the pre-test relationship of CRM model variables: (a) regression analysis, and (b) Analysis of Variance (ANOV A). Regression analysis is a versatile statistical tool for studying the relationships between a dependent variable. For example, the relationship between emotional capability, and one or more independent variables, such as trust and reframe an emotional climate was evaluated. Analysis of Variance (ANOVA) is a statistical method to quantify the statistical significance of a relationship.

The ANOV A results described the overall relationship between the sets of leadership skills and CRM capabilities. The significance level, often called the p value, is the basis for deciding whether or not to reject the null hypothesis. It is the probability that a statistical result as extensive as the one observed, would occur if the null hypothesis were true. If the observed significance level was small enough, usually less than 0.05 or 0.01, the null hypothesis was rejected. A relationship was considered statistically significant if the probability of a Type 1 error (u) was less than or equal to .05. Other factors in the ANOVA for significance included the degree of freedom (df), a value associated with a test statistic that was used in determining the observed significance, and Fisher’s exact test (F), a test for independence.

The relationship between sets of leadership skills, for example the set of trust and reframe emotional climate leadership skills, and CRM emotional capability, were statistically significant at .000 (see Table 7). The p-value of .000 is evidence that supported the hypothesis that leadership skills influence CRM capabilities.

Table 7: Analysis of Variance for CRM Capabilities

Note: CRM capabilities are the independent variables and leadership skills are the predictors.

Regression analysis is a statistical technique that tests the strength and direction of variable relationships. It estimates the change in the dependent variable, for example, a CRM capability that can be attributed to a change of one unit in the independent variable, for example, a single leadership skill. The estimate for the degree of change is a beta coefficient (J3) sometimes called standardized regression coefficients, including a standard error (SE). A degree of change is considered statistically significant if the probability of a Type 2 error (B) is less than or equal to .05. The relationship between individual leadership skills, for example trust and emotional capability, were statistically significant at .01 (see Table 8). The closer the value of beta coefficient (J3) is to + 1, the stronger the correlation between individual leadership skills and

4.1.3 CRM capabilities

The statistical significance of the correlation, the p-value is evidence that supports the hypothesis that individual leadership skills influence CRM capabilities.

Table 8: Coefficients Between CRM Capabalities and Leadership Skills

Multiple regressions were also used to assess whether the capability CRM capability constructs were an adequate reflection of the higher order construct, satisfaction with the customer relationships. The relationship between emotional capability and customer relationship was statistically significant at .680; however the relationship between cognitive and process capability to customer relationship was not at .090 (see Table 9).

Table 9: Coefficients Between CRM Capabilities and Customer Relationship

4.1.4 CRM Model Test Results

The Analytic Components for Testing the Empirical CRM Model depicted the components for the regression analysis (see Figure 5). The results of the regression analysis using the pretest data are presented in Figure 6. The values represent the beta coefficient (fJ). The closer the value is to + 1, the stronger the correlation between leadership skills and CRM capabilities, and customer relationship.

Figure 6: Leadership Skills and CRM Capabilities Regression Analysis Results: The results of the regression analysis on leadership skills and CRM capabilities indicate (*) relationship is significant at the 0.01 level (1-tailed), (**) relationship is statistically significant at the .05 level (1-tailed), and [ns] not significant at the .05 level.

In the CRM model, the dependent variable, customer relationship, was influenced by three independent variables ( a) CRM emotional, (b) cognitive and (c) process capabilities. CRM capabilities were associated with CRM leadership skills. Each leadership skill and capability was an independent variable whose value was determined by the pre-test survey responses. The degree to which leadership skills and CRM capabilities related to customer relationship was calculated using the regression analysis equations (see Figure 5).

4.2 Research Questions: Findings and Conclusions.

Six research questions addressed the influence of leadership skills on CRM emotional, cognitive, and process capabilities as follows:

  1. To what degree does the leadership skill to establish trust, influence the emotional capability of a Customer Service Representative (CSR)?
  2. To what degree does the leadership skill to reframe an emotional climate, influence the emotional capability of a CSR?
  3. To what degree does the leadership skill to carry on a dialogue, influence a cognitive capability of a CSR?
  4. To what degree does influence as a leadership skill influence a cognitive capability of a CSR?
  5. To what degree does problem-solving leadership skills influence the process capability of a CSR?
  6. To what degree does task execution leadership skills influence the process capability of a CSR?

4.2.1 Influence of Trust and Reframe Climate Skills on Emotional Capability of CSR          

Emotional capability enables an emotional connection between the customer and sales and services provider during contact (Rogers, 2005; Cooper & Sawaf, 1998), and what many call an ability to relate or empathize. In order to establish and sustain an emotional connection, customer sales representatives (CSR’s) need both the leadership skill to establish trust (Gibb, 1978; Kolberg, 2001) and the leadership ability to reframe an emotional climate to a secure atmosphere (Rogers, 2005).

The first two research questions of the study addressed emotional capability:

  1. To what degree does the leadership skill to establish trust, influence the emotional capability of a Customer Service Representative (CSR)?
  2. To what degree does the leadership skill to reframe an emotional climate, influence the
  3. emotional capability of a CSR?
  4. The overall relationships between trust and reframe climate skills with emotional capability are described in Table 8. The relationship is statistically significant at .00, and it provides supporting evidence that trust and reframes climate skills influence the emotional capability of CSR.

4.2.2 Influence of Dialogue and Influence Skills on Cognitive Capability of CSR

Cognitive capability enabled the customer sales representative (CSR) to convert customer information. Drucker (1995) called information, data endowed with relevance and purpose, to generate insight about customer beliefs, attitudes, motives, and intentions (Anscombe, 1997; Sternberg, 2000). Insight was articulated as an emotional expression of a mutual purpose toward a favorable transactional outcome between customer and provider, for example, a sale. Higher order cognitive skills, including dialogue to create shared meaning in a dyadic relationship (Senge, 2000), and the use of leadership influence were both leadership skills a sales and services provider needs to transform knowledge into insight (Rost, 1991).

Two research questions addressed cognitive capability:

  1. To what degree does the leadership skill to carry on a dialogue, influence a cognitive capability of a CSR?
  2. To what degree does influence as a leadership skill influence a cognitive capability of a CSR?

Dialogue and influence leadership skills had a statistically significant relationship to CRM cognitive capability. The overall relationship between dialogue and influence leadership skills and cognitive capability is statistically significant at .00 as described in Tables 8. The results provide evidence to support the hypothesis that dialogue and influence affect the cognitive capability of a CSR. For example, the beta coefficient (JJ) of .457 measures the correlation between dialogue and cognitive capability with the statistically significant p-value of 000 and is evidence that supports the hypothesis that dialogue influences the cognitive capability ofa CSR.

4.2.3 Influence of Problem-Solving and Task Execution Skills on Process Capability of CSR

Process capability enables the Customer Service Representative (CSR) to ensure an outcome of a customer service experience. Specifically, process knowledge enables the sales and services provider to maximize the benefits a customer perceives that he or she has received from a contact with a sales and services provider. Process or working knowledge (Davenport & Prusack, 1998) was both explicit and tacit knowledge. Explicit process knowledge is codified, descriptive knowledge that includes the essential techniques and methods to accomplish tasks. Tacit process knowledge is the knowledge of experience, it cannot be written down or organized; it has to be shown and acquired during interactive problem-solving (Narum & Takeuchi, 2005). Problem-solving leadership skills and the skill to stay on task, whether using structured, explicit processes, or unstructured, tacit processes, both contributed to process capability.

Research questions five and six addressed process capabilities as follows:

  1. To what degree does problem-solving leadership skills influence the process capability of a CSR?
  2. To what degree does task execution leadership skills influence the process capability of a CSR?

Problem-solving and task execution leadership had a statistically significant relationship to process capability. The overall relationship between problem solving and task execution with process capability are described in Table 8. The overall relationship is statistically significant at .00, providing evidence to support the hypothesis that problem solving and task execution skills influence process capabilities.

In summary, all six-research questions regarding the influence ofleadership skills on CRM capabilities are answered in the affirmative. There was a relationship in both strength and direction between leadership skills and capabilities.

4.2.4 Influence of CRM Capabilities on Customer Relationships

Three research questions addressed the relationship between customer relationship and CRM capabilities as follows:

  1. To what degree does the emotional capability of a CSR, influence customer relationships?
  2. To what degree does the cognitive capability of a CSR, influence customer relationships?

  • To what degree does the process capability of a CSR, influence to customer relationships?

According to Cooper (1998), the CSR should have the emotional capability he calls practical intuition to transform a customer contact into an emotional link for a relationship to be established. In order to further that relationship, the CSR should have the leadership skills to build trust by maintaining an authentic presence (1998), and the skill to reframe an emotional climate that might threaten that trust (Rogers, 2005; Kolberg, 2001). The relationship between emotional capability and customer relationship is described in Table 9. The independent variable, emotional capability is positively associated with the dependent variable, customer relationship, at a .00 level of significance. This statistically significant finding indicates emotional capability has a strong, positive influence on customer relationship. The transformation of information to insight is a cognitive process of acquiring information, and comprehending or constructing meaning from messages (Anderson & Krathwohl, 2001) during dialogue. According to Drucker (1995), information is data endowed with relevance and purpose, but researchers described information as a message, meant to change the perception of the receiver and influence his behavior and judgment and make some difference in his outlook or insight (Davenport & Prusack, 1998). CRM cognitive capability has no statistically significant relationship to overall customer relationship as seen in Table 9, meaning that customers did not perceive cognitive capability important to their level of satisfaction with CSR’s ability to deliver service. The insignificance of the relationship between cognitive capability and customer satisfaction negates the hypothesis that cognitive capabilities influence customer relationship.

In a framework for CRM, Winer (2001) identified a CRM model with seven phases and found a focus on the process to be the key capability to influence the outcome of a customer service experience. Solution construction, or problem-solving, and task execution were among the leadership skills associated with process capabilities. Process capability had no statistically significant relationship to overall customer relationship as seen in Table 9. Customers did not perceive process capability important to their level of satisfaction with CSR’s ability to deliver service. The insignificance of the relationship between process capability and customer satisfaction negates the hypothesis that process capabilities influence customer relationship.

In summary, the statistical analysis of the pre-test survey validated the hypothesis that emotional capability influences customer relationship but negated the hypothesis that cognitive and process capabilities affect customer relationship.

4.3 Intervention

            The first intervention workshop included thirteen CSR’s and was conducted after the pre­test survey in order to inform CSR’s of the survey results and provide training in leadership skills and CRM capabilities. The research aligned the results of the statistical analysis of the customer pre-test survey with the Personal Assessment Social Aptitude Test (PASAT2000) to identify behaviors that customers perceived as needing improvement. Customers expressed their level of agreement or disagreement with positive statements on the survey scales that were indicative of leadership skills and CRM capabilities. This level of agreement was congruent with personality attribute scales in the PASAT2000. During the intervention, CSR scores were reviewed, areas of improvement were identified, and an organizational benchmark for CRM capabilities of the CSR’s was decided. Over a three-week period following the initial intervention, two additional workshops were conducted that focused on the areas of improvement. Two weeks after the third and final workshop, and a total of five weeks after the initial intervention, the PASAT2000 was re-administered to CSR’s to measure the effectiveness of the interventions. The subsequent PASAT scores for all CSR’s scores met or exceeded the organizational norm.

The objective of the interventions was to influence the CSR’s behavior associated with a set of leadership skills and CRM capabilities identified as needing improvement by customers in the pre-test survey. Three techniques were employed during the intervention to influence the future behavior of CSR’ s during a customer interaction.

First, CSR’s were made aware of the areas where customers perceived their behavior could be improved. Table 10 shows the alignment of leadership skills and CRM capabilities with PASAT2000 attributes and the corresponding behavior judged by customers needing improvement.

Table 10: Alignment of PASA T2000 Scales and Leadership Skills

Second, concepts and techniques associated with enhanced leadership skills were explained. For example, operational benevolence and the prisoner’s dilemma, identified in pages 54-55 of Chapter 2, were explained as approaches to gain trust. In addition, peers with favorable scores on the PASAT2000 were encouraged to discuss their techniques and approaches to customer service.

Finally, a minimum PASAT2000 score was determined to be a CRM benchmark. In order to define the benchmark, each CSR’s identified their own score on the PASAT2000 scale aligned with leadership skills. The collaborative effort of the group resulted in a shared purpose to improve upon the mean PASAT2000 score. PASAT2000 scales ranged from 1 to 10. Table 11 describes the CSR scores. The benchmark score, or norm, was discussed among the customer service representatives and the electronic systems and subsystems of Viasystems Group Inc. director who decided the norm between the first and second intervention workshops.

The intervention concluded with three significant action items. First, the group of customer service representatives decided to develop their own best practices for customer services based on the Customer Relationship model. Best practices were stratified based on customer type, for example, senior citizens, and customer competency.

Second, the group concluded they could improve on the mean PASAT2000 score. After the experience of the initial workshop training, they decided the mean from the pre-test of the PASAT2000 would be the benchmark, or norm, for leadership skills and CREM capabilities for their organization.

Finally, the group decided to practice PASAT2000 behaviors, leadership skills, and demonstrate CRM capabilities on all customer contacts. They decided to capture the identification of customers who contacted them after the workshops and before the post-test survey in order to assess the change in their perceptions attributable to their newly acquired leadership skills and CRM capabilities.

Table 11: Descriptive Statistics of CSR PASAT2000 Scores

4.4.1 Post-Intervention PASAT2000 Test

Five weeks after the initial intervention, CSR’s were post tested with the PASAT2000 and with a score of7 of 10 in each PASAT2000 category being the norm. Twelve of 13 CSR’s achieved or exceeded the norm. The one CSR who did not meet the norm was given additional training. Approximately one week following the additional training, that CSR was retested with the PASAT2000, and achieved the norm.

4.4.2 Post- Test Survey Analysis

A post-test survey that employed the same questions as the pre-test survey was conducted two months after the intervention to collect data to measure the influence of CRM capabilities on customer relationships. The two-month period between November 2006 and January 2003 was selected, because it had historically been the period of the greatest amount of customer contact. During the interim period, between the intervention and the post-test survey, the identification of customers who contacted the center was recorded. The record added an additional dimension to the rigor of the analysis. The respondents to the post-test survey who did not have contact with the electronic systems and subsystems of Viasystems Group Inc. in the interim period were considered a control group and respondents who did have contact were the test group.

Three hundred twenty-one of 1,933 customers responded to the pre-test survey. During the two-month period after the pre-test survey and intervention, but prior the post-test survey, the electronic systems and subsystems of Viasystems Group Inc. recorded 139 contacts. The 321 customers that responded to the pre-test survey, were administered the post-test survey. There were 122 valid responses to the 321 customers who were administered the post-test survey, and 21 of the 122 customers were among the 139 who had actual contact with the electronic systems and subsystems of Viasystems Group Inc. during the interim period between the intervention and the post­test survey. The group of21 was considered the treatment group and the remaining 101 were considered the control group. Five of the 21 customers in the treatment group had multiple contacts with the electronic systems and subsystems of Viasystems Group Inc., but were consider a single contact for statistical analysis purposes.

4.4.3 A Comparative Analysis: Pre- and Post Test Survey Results

The null hypothesis for this study is the following: there is no relationship between CSR leadership skills, CRM capabilities, and customer relationships. The research study findings and empirical evidence that negates the null hypothesis is summarized in Figure 7. First, Figure 7 shows a statistically significant order-of-magnitude change in the treatment group from satisfied to very satisfied with customer relationships. Customers changed their perception of their satisfaction from 4.16 to 5.0 where 5.0=very satisfied and 4.0=satisfied.

Figure 7: Change in Control and Treatment Groups

Figure 7: Change in Control and Treatment Groups: The mean scores for customer satisfaction, where 5.0=very satisfied and 4.0=satisfied, and agreement with statements about CSR emotional, cognitive, and process capability, where 4.0=strongly agree, and 4.0=neither agree nor disagree show an order-of-magnitude change for the treatment group.

The treatment group had contact with the CSR’s who had received leadership skill and

CRM training in the intervention and the control group was the participants who had no contact since the intervention (see Table 12).

Table 12: Comparison of Control and Test Group on Overall Customer Satisfaction

The change in overall satisfaction by respondents in the treatment group was a statistically significant, increase to 5.00, very satisfied, from 4.16, satisfied Second, Figure 7 shows a statistically significant order-of-magnitude change in each CRM capability. For example, emotional capability changed to 4.92 from 4.96, cognitive capability to 4.07 from 4.47, and process capability to 4.48 from 4.77. Customers changed their perception of CSR capabilities from neither agree nor disagree, to agree, where neither agree nor disagree=4.0 and agree=4.0. The treatment group had contact with the CSR’s who had received leadership skill and CRM training in the intervention, and the control group was the participants who had no contact since the intervention (see Table 13).

The data indicated shifts in the control group perceptions of cognitive and process capability from the pre-test mean of 4.86 to 4.87 and 4.33 to 4.77, respectively (see Figure 7). A multi-variant ANOVA test, a between-subject statistical analysis technique, was conducted to factor out the impact of the change in the control groups that could affect the treatment results.

Table 13: Comparison of Control and Treatment Group Results on CRM Capabi/ties

The multi-variant, between-subject test in Table 14 shows the change in customer satisfaction was statistically insignificant and Table 15 shows the changes in CRM capabilities also to be statistically insignificant. Details of the analysis are shown in Appendix B.

Table 14: Comparison of Pre- Test Control and Post- Test Control Results on Customer Satisfaction

Table 15: Comparison of Pre-Test Control and Post-Test Control Results on CRM Capabilties

4.4 Summary

Chapter 4 reported the results of applying the quantitative exploratory research method. Step one, pre-test, collected and analyzed data to determine the gap between the actual Customer Service Representative (CSR) leadership skills and CRM capabilities and the customer perception of CSR leadership skills and CRM capabilities.

Step two included an intervention workshops to review the survey and PASAT2000 test results, to educate CSR’s on appropriate behaviors that enhance leadership skills and CRM capabilities, and to conduct additional training for the CSR’s until they had reached on an organizational norm for leadership skills and CRM.

Step three included a two-month interim period between the intervention and the post-test survey where CSR’s demonstrated their leadership skills as they responded to approximately 139 customer contacts The post-test survey was administered after the interim period, and the survey results were divided into two groups. The first group was a control group that included respondents to both the pre-test and post-test survey, but who did not contact a CSR during the interim period. The second group, a treatment group that included respondents to both the pre­test and the post-test survey and did contact the electronic systems and subsystems of Viasystems Group Inc. for a product during the interim period.

The analysis of the pre- and post-test data was presented and addressed the overarching question of this study, what effects do improved leadership skills have on the management of customer relationships? Specifically, nine research questions were addressed:

  1. To what degree does the leadership skill to establish trust, influence the emotional capability of a Customer Service Representative (CSR)?
  2. To what degree does the leadership skill to reframe an emotional climate, influence the emotional capability of a CSR?
  3. To what degree does the leadership skill to carry on a dialogue, influence a cognitive capability of a CSR?
  4. To what degree does influence as a leadership skill influence a cognitive capability of a CSR?
  5. To what degree does problem-solving leadership skills influence the process capability of a CSR?
  6. To what degree does task execution leadership skills influence the process capability of a CSR?
  7. To what degree does the emotional capability of a CSR, influence customer relationships?
  8. To what degree does the cognitive capability of a CSR, influence customer relationships?
  9. To what degree does the process capability of a CSR, influence customer relationships?

The null hypothesis for this study, there is no relationship between CSR leadership skills and CRM capabilities and customer relationships was shown to be false. There is a strong and positive relationship between CSR leadership skills and CRM capabilities on customer relationship.

Items that may have affected the understanding of the tested hypothesis and research questions are discussed in Chapter 5. Qualifications and significance of the findings and conclusions drawn from the literature review, methodological approach, and data presentation are also addressed in this Chapter 5. Finally, Chapter 5 includes recommendations and suggestions for further research.

CHAPTER 5: CONCLUSIONS, IMPLICATIONS, AND RECOMMENDATIONS

Responding to promises of exceptional financial returns, businesses have invested heavily in Customer Relationship Management (CRM) programs designed to achieve congruency between their internal organization of customer service representatives (CSR) and customers. An investment of $75 million in CRM by a $1 billion business unit over a three-year period promises congruency with customers. This investment translates into financial returns due to the following: ( a) a stable and growing revenue stream from reduced customer attrition, (b) an increased up-sell and cross-sell opportunities, and (c) increased life-time-value of the customer base. Some proponents of CRM estimate a return of $50 million to income. However, the problem with CRM is that industry-wide, an astounding 70% of CRM programs fail.

The significance of this study suggests that the value of the CRM program described in this research study translates into immediate productivity gains, reduced customer attrition, and the opportunity to increase revenue. A three-month CRM training program for 50 CSR’s at a cost of $50,000 or less increases the capability of CSR’s to work more effectively with customers. Thus, an investment in the CRM training program described in this research study will save an organization millions of dollars over a three-year period.

5.1 Purpose

The intent of this quantitative exploratory research study was to determine the degree to which a set of leadership skills and CRM capabilities influenced the operational management of customer relationships by customer service representative (CSR) in the manufacturing industry. The chosen company was Viasystems Group Inc. The company makes electronic systems and subsystems, such as printed circuit boards (PCBs) and backpanel assemblies; that line of business represents about two-thirds of sales. It also offers design, manufacturing, procurement, integration, and testing services. Viasystems’ products are used in a wide range of applications, including automotive dashboards, major appliances, data networking equipment, telecom switching equipment, and instrumentation. Its roster of 125 customers includes General Electric, Delphi, Fujitsu, Hitachi, and Siemens. Viasystems gets around 40% of its sales in the Americas. The set of leadership skills and CRM capabilities formed a Customer Relationship model comprised of six leadership skills (a) trust, (b) reframe climate, (c) dialogue, (d) influence, (e) problem solving, and (f) task execution, that are aligned with three CRM capabilities (a) emotional capability, (b) cognitive capability, and (c) process capability.

5.2 Procedure

The research procedure included seven steps. The data collection steps included, (1) define the sample, (2) pilot the survey, and (3) administer the pre-test survey. Analysis, synthesis, and change execution included (4) conduct multi-variant data analysis and (5) conduct the workshop intervention. The measurement of the impact of the change included (6) the post­test-survey, and (7) conduct multi-variant data analysis of responses.

The pre- and post-test customer surveys included twenty-nine questions that proved reliable based on Cronbach’s Alpha. The questions encompassed the essence of how customers perceived CSR leadership skills and CRM capabilities in the delivery of satisfactory customer service. Three workshops were delivered over a period of five weeks and CSR’s were trained in leadership skills and CRM capabilities. Prior to the first workshop and following the last, CSR’s were administered a standard Personal Assessment Social Aptitude Test, PASAT2000 (Poppleton, 2005) to measure their progress toward achieving a norm established by the management of the electronic systems and subsystems of Viasystems Group Inc. CSR’s demonstrated their newly acquired customer service skills for three months following the intervention, then the post-test customer survey was administered. The post-test survey customer sample consisted of the pre-test survey customer respondents. Customers that responded to the post-test survey, but did not have CSR contact in the interim three-month period following the intervention were the control, and those that did were the treatment group. In the final analysis, the change in customer perception of CSR skills and capabilities and customer satisfaction was measured, and an order-of-magnitude change was attributable to the delivery of the CRM skills and capabilities in the research Customer Relationship model.

5.3 Conclusions

The decision to reject the null hypothesis is based on the conclusions drawn from the answers to the nine research questions. The first six research questions related to the degree to which leadership skills – (a) trust and emotional capability, (b) reframe emotional climate and emotional capability, (c) dialogue and cognitive capability, (d) influence and cognitive capability, (e) problem solving and cognitive capability, and (f) task execution and process capability – in the Customer Relationship model influence CRM capabilities. Research questions seven, eight, and nine related to the degree to which (a) emotional capability, (b) cognitive capability, and ( c) process capability influences customer relationship.

The results of the regression analysis on the first six leadership skills and CRM capabilities indicate the relationship between six leadership skills and CRM capabilities is significant at the 0.01 level or .05 level. This significant finding validates the CRM model and appears consistent with the previous research related to trust (Kolberg, 2001), reframe climate (Rogers, 2005, Satir, 1997), dialogue (Sternberg, 2000), influence (Rost, 1991), problem solving (Yu, 2001; Repenning, 2001), and task execution (Mulligan, 2001).

The results of the regression analysis on CRM capabilities indicate a statistical significant relationship between CRM emotional capability and customer satisfaction, which is consistent with the research on emotional intelligence (Cooper, 1998). However, the relationship between CRM cognitive and CRM process capabilities and customer relationship was not statistically significant. The result is inconsistent with the recent research by CRM authors and consultants, Dull (2001) and Dych’e (2001). The result could be attributed to the business environment of the electronic systems and subsystems of Viasystems Group Inc. that was studied. The electronic systems and subsystems of Viasystems Group Inc. serve General Electric, Delphi, Fujitsu, Hitachi, and Siemens and gets around 40% of its sales in the Americas with many CSR internees, and a loyal customer following. This result merits further investigation in the form of applying the Customer Service model in different business environments.

Given the results of the influence of leadership skills on CRM capabilities, the following conclusions can be drawn:

  1. There is a relative importance of emotional, cognitive, and process CRM capabilities, each comprised of two leadership skills, to customer satisfaction.
  2. There is a significant, positive relationship of CRM emotional capability on customer satisfaction.
  3. CRM cognitive and process capabilities, respectively, are important to customer relationship satisfaction, but to a lesser, statistically insignificant degree.

Given the order of magnitude changes in customer satisfaction, and the customer perceptions of CSR capabilities, the following conclusions are:

  1. The construct of the Customer Relationship model, including the strength and direction of the correlation between leadership skills and CRM capabilities and customer satisfaction is valid (based on the correlation coefficient from multiple regression analysis).
  2. The intervention workshops structured to focus on the CSR shortcomings in leadership skills and CRM capabilities as perceived by customers can positively impact the interpersonal relationship behavior between CSR’s and customers.
  3. The conceptual linkage between the customer survey questions and the Customer Relationship model components – from customer satisfaction to CRM capabilities, to leadership skills, to PASAT2000 behaviors – represents a theoretical construct to achieve congruency between external customers and the internal organization.

5.4 Qualification of Conclusions

The study offered statistical evidence that leadership skills have a significant relationship to CRM emotional, cognitive, and process capabilities, CRM emotional capability was the only statistically significant predictor of customer satisfaction. The researcher speculates that this may be due to the communal nature of the electronic systems and subsystems of Viasystems Group Inc. and its relationship to its customers. The electronic systems and subsystems of Viasystems Group Inc. makes electronic systems and subsystems, such as printed circuit boards (PCBs) and backpanel assemblies; that line of business represents about two-thirds of sales. It also offers design, manufacturing, procurement, integration, and testing services.

CRM cognitive capabilities were associated with higher-order thinking skills and relates to customer information to negotiate customized offerings and persuade customers to buy a firm’s products (Batt, 2006). Given the relatively stable market of the electronic systems and subsystems of Viasystems Group Inc., new customer acquisition and upgrades in existing customer service were not areas that offered great potential. For example, the electronic systems and subsystems of Viasystems Group Inc. did not offer its customers upgrades to higher speed access and acquired few new customers for its services during the test period. It was reasonable to believe that the response by customers to survey questions regarding cognitive capability was likely 3=neither agrees nor disagrees, because there was no issue around which they could provide a meaningful measurement.

CRM process capabilities relates to solving existing customer service problems, which falls into two categories in the electronic systems and subsystems of Viasystems Group Inc. The first type category of problems occurred with the settings in a customer’s equipment. These problems occur during the initial purchase of equipment. This type of problem was routine for CSR’s who respond as experienced problem solvers.

The second category of problems was equipment failure. These problems occurred infrequently as the electronic systems and subsystems of Viasystems Group Inc. were reliable, and incidents were measured in terms of mean- time-between-failure per year. The electronic systems and subsystems of Viasystems Group Inc. incurred no equipment failures during the test period.

5.5 Implications and Recommendations

The results of this study, Customer Leadership Skills and Customer Relationship Management, suggest two alternative approaches to CRM programs. First, the CRM investment focus shifts from a macro-organizational perspective that includes culture, strategy, function, and technology (Morgan, 1998), to a micro-organizational aspect of the customer service function in the call center. Second, the CRM investment is in the education and training of the specific workers whose role as a CSR is to establish and maintain relationships with customers. Finally, a financial investment in a CRM program, that employs the Customer Relationship Model (Figure 2), is an order-of-magnitude less than traditional approaches, and can be implemented in months, not years.

Customer service delivered by capable CSR’s, endowed with leadership skills as proven in this study, can yield benefits beyond the positive impact on revenue. For example, businesses that utilize CRM capable CSR’s can achieve performance excellence and benefit from reduced employee turnover. CRM capable CSR’s see themselves as valuable knowledge workers who enjoy dealing with customers and do not endure the frustration and feelings of ineptitude of dealing with dissatisfied customers, that contributes to quit rates (Batt, 2006). Furthermore, businesses that adopt the CRM leadership model can qualify entry-level workers based on their aptitude for customer service, by using the PASAT2000 (Poppleton, 2005) and focusing a training program on the leadership skills that are important to performance excellence in their business.

Prior to investing in the CRM model in this study, it is recommended that businesses define the scope of the CRM capabilities that are important to customers who consume the products and services they deliver. Knowledge of the relative importance of leadership skills and CRM capabilities could be critical to the business environment, as they enable it to focus on those skills and capabilities that could maximize the return on investment in CRM training and performance. CRM emotional capability and the leadership skill to build and maintain customer trust are necessary in any business environment. Customers may initially purchase a product or service based on blind trust, but businesses must earn the trust of customers with each subsequent contact to gain customer commitment and loyalty.

The research data indicated that after CRM emotional capability was established, the impact CRM cognitive and process capabilities depends on the business environment. One approach to defining the scope ofleadership skills and CRM capabilities important for CSR’s to learn, is to profile customers based on the industry type of call center that serves the customers. For example, there are approximately 16,457 call centers in the US grouped into twelve industry­types for reporting response time. When these twelve types are cast into four industry groups of call centers using criteria indicative of a knowledge continuum of leadership skills and CRM capabilities, this new grouping of call centers provide a unique perspective on the relative importance of CRM capabilities to CSR’s working in that group of call centers.

First, a commodity group of call centers includes five industry types — utilities, telephone/manufacturing, government, catalog sales, and travel and lodging reservations -­and is characterized by infrequent, impersonal contact by customers who require CRM emotional competency and leadership skill to achieve conditional, or level one, trust to maintain satisfactory customer relationships. Customers in the commodity group purchase goods and service, either sporadically or on a routine basis and require that Customer Service Representatives (CSR) have CRM process capability and task execution skill, primarily to execute transactions.

A second group of call centers is the financial services group of three industry types -­banks/credit unions, credit cards, and mutual funds — that have regular contact to purchase goods and services that are customized and personal. CSR’s are required to possess a higher level of CRM emotional capability and leadership skill to achieve commitment, or level two trust, to maintain satisfactory customer relationships. CSR’s operating in the financial services group has CRM process capabilities and problem-solving skills in addition to task execution skills.

The insurance services group of call centers includes two industry types –life, property, auto insurance, and health – whose customers expect service both on a consistent and sporadic basis. CSR’s in this group have the CRM emotional capability and leadership skill to consistently achieve a third level, unconditional trust with customers, and the skill to reframe emotional climates in order to mitigate the effects of unexpected events. CRM process capability, including problem-solving skills that lead to accurately assessed situations, in addition to task execution, are expected.

A fourth group is specialized call centers and includes two industries, software and manufacturing, that provided products and services that represent a significant investment by the customers and is frequently a business. Generally, customers contact specialized call centers for two reasons, ( a) they need a new service or product that is unique to a their business, or (b) a product or service they purchased failed. Customers served by specialized call centers require CSR emotional capability and trust leadership skill that extended to an absolute level of trust. Absolute trust requires CRM cognitive capability, including dialogue and influence leadership skills for feedback and disclosure. CSR’s in call centers of this specialized group make recommendations and implement solutions that are market competitive and customers expected them to demonstrate CRM process and emotional capabilities.

If the CRM intervention model was applied to a training program, the recommendation is that one target specific skills and capabilities to a specific environment within an industry group. A targeted approach is facilitated by the pre-assessment of the existing CSR skills and aptitudes, for example, the PASAT2000 standardized test. Test results are used to narrow the scope of the training, thereby, minimizing the time and cost of the program by training only those skills critical to the specific environment.

It is important, however, to recognize that customer perspectives on the leadership skills and capabilities analyzed through a pre-test survey are a critical parameters in defining the scope of a CRM program. Customer perceptions followed by a comparison of CSR’ s aptitudes, provide a critical parameter to ensuring the most effective and efficient delivery of training.

 

5.6 Future Research

The utility of CRM as a business approach could be increased with additional research to transform the CRM intervention model into a knowledge-based customer service technology. Today, Case-Based Reasoning (CBR) applications are commonly found in customer service and are based on breaking down customer contacts into structured components that build a database of solutions. Then, CSR’s search the database for solutions with similarities to the components of a customer problem.

A knowledge-based customer service application would employ the CRM model cast into an artificial intelligence design and guide CSR’s through a customer contact experience. For example, one approach is to use the Socratic method of discussion and dialogue and embed questions that exemplify leadership skills and CRM capabilities to discern motives from intentions, edit input for fallacious arguments, and create valid argument frameworks in which customer conversations would be cast. The application could be designed as an external computer module to existing CRM manufacturing. The results of customer contacts could then be stored in an argument format that reflects the truth logic exemplified in critical thinking skills including ( a) motives and intentions, (b) problem or issue, (c) alternative analysis and their premises, (d) conclusions (f) and actions taken. This approach would captures the inductive thinking process of a CSR and the customer contact experience as knowledge for future reference, but in a structure different than today’s Case-Based Reasoning (CBR) structure.

5.7 Summary

CRM, as a business practice, is the management of the leadership communication process between customer service representatives (CSR) and customers. CSR’s assume a leadership role similar to a coach. The essence of leadership is coaching, communication, and teamwork (Kolberg, 2001). Coaching requires dialogue, a cognitive capability to engage through effective communication the mental models of a customer that contain his or her values and beliefs that give rise to motives and intentions. Coaching requires influence, a cognitive capability to understand a customer’s motives and guide intentions in a dyadic engagement. Coaches deal with emotions, are empathetic, have a rapport with customers, and focus on the end-results of a customer contact.

The capabilities of CSR’ s who coach relationships surpass the performance of the learned behaviors of traditional CSR. Traditional sales and customer service training is script based, teaching a learned behavior that includes (a) what to say, (b) when to say it, and (c) how to say it in a manner that sounds authentic to the customer. Customer Service Representatives in the role of coaches learned leadership skills by ( a) becoming aware of their behavior (b) understanding how to modify their behavior to enhance their interpersonal relationship capabilities, and (c) taking responsibility for enacting their leadership behavior with customers.

CRM programs that employ a conceptual design that encompasses a customer relationship model of leadership skills similar to the one in this study are a viable alternative to traditional approaches. They can minimize the investment in CRM while yielding significant organizational and financial benefits.

CRM Emotional Capability

            The first section of questions addressed the emotional capability of the CSR, or how the

CSR related to the customer. Leadership skills associated with emotional capability included

skill at establishing trust and reframing emotional climates that threatened a relationship.

Emotional Capability Survey Questions

CRM Cognitive Capability

This section of questions used level-of-agreement Likert scales and positive and negative statements associated with overall cognitive capabilities affecting the perception of the customer’s service experience. This section addressed the capability of CSR’s to comprehend customer information and needs and extrapolated them into an emotional expression of mutual purpose (Rost 1991), or to articulate the essence of the information into a proposition in the direction of fit to customer needs (Anscombe 1997). These questions were informed by a 24­item, nine-point Likert-like summated ratings scale to measure the degree to which a salesperson engaged in behaviors aimed at increasing customer long-term satisfaction and carried an Alpha value of .91 (Bruner and Hensel 2006).

The CRM leadership skill to carry on a dialogue or converse is the ability to focus on the customer to ensure a comprehensive needs review (Ivey 2002); or to create shared meaning in a dyadic relationship (Rost 1991). The questions related to dialogue reflect an adaptation of the questions used in the basic listening sequence (2002), including determination of the customer’s priority, eliciting customer input to an approach, clarifying mutual understanding of the need, and thoughtful response to customer questions. These questions reflected an adaptation from a two-item, five-point Likert type scale measuring the degree to which considerate leadership style was employed in a working relationship. An alpha value of .774 were reported using this scale (Bruner and Hensel 2006).

The CRM leadership skill to influence the outcome of service experience was recast as skillful guidance toward a decision. Skillful guidance was the ability to induce a customer to believe that what the CSR wants of them is what their appraisal of their own responsibilities requires them to do in their own interest (Rost 1991), not the CSR’s. The questions related to influence are recast toward a concept of guiding a customer toward a decision and adopted from a questions related to a concept referred to as operational benevolence(Lemon, White et al. 2001).

Cognitive Capability Survey Questions

CRM Process Capability

The perception of the process capability of a CSR was judged by questions that also used level-of-agreement Likert scales. These were positive statements to measure the extent to which the CSR had mastered the entire customer service process (Davenport and Harris 2001) as evidenced by the perception that the customer was completely satisfied with the service experience. A CSR’s process capability included a combination of experience and sound judgment (Sternberg 2000) in fulfilling the expectations of the customer (Shahnam 2001).

            The CRM leadership skills to solve problems were expertise and divergent thinking skills to construct acceptable solutions to core and process service failure (Levesque and McDougall 2005; Zaccaro, Mumford, et al. 2005). Some of the problem-solving skills questions were adapted from a scale to measure responsiveness to complaints using a seven-item Likert-type summated ratings scale that reported a .72 alpha score (Bruner and Hensel 2006).

The CRM leadership skill to focus on task execution, include transaction processing and request fulfillment tasks (Mulligan 2001) to deliver satisfactory service in a single contact.

Some task execution questions were modified from a four-item, five point Likert-type summated ratings scale to measure the customer perception of the interest and diligence of the sales person to complete a particular sales transaction. A Cronbach’s alpha score of .76 was reported for these questions about the task-orientation of the salesperson (Bruner and Hensel 2006).

 

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