INTRODUCTION
Rationale
CRM (customer relationship management) has been increasingly recognized as a business strategy to effectively understand, manage, and sustain customer relationship with advanced information and communication technologies
Relationship marketing, a term introduced by Berry in 1983, focuses on fostering ongoing relationships with customers rather than just individual transactions This concept, though framed as new, has roots in the practices of early merchants who understood the importance of earning customer loyalty by meeting their needs and desires.
Gronroos (1994) cites this Middle Eastern proverb from ancient trade: "As a merchant, you'd better have a friend in every town."
Before the mid-twentieth century, retail was dominated by small stores, fostering personal relationships between shopkeepers and customers, who enjoyed a straightforward purchasing process Shopkeepers had a deep understanding of their customers' habits and behaviors However, with the advent of mass production and marketing techniques in the mid-twentieth century, the retail landscape transformed significantly This shift led to the rise of large shopping malls and supermarkets, offering a wide range of products and convenience, ultimately replacing many small stores in the retail sector.
As the market became saturated with numerous products and services, customers have increasingly been reduced to mere "account numbers," leading shopkeepers to lose sight of their individual needs and preferences (Chen & Popovich, 2003).
In the 21st century, the rapid expansion of the Internet and information technology has transformed business communication, offering cost-effective solutions like websites, email, and cloud-based CRM applications Today, omni-channel retail fulfillment systems powered by artificial intelligence and cognitive technologies are revolutionizing customer interactions, making advanced communication methods a reality for businesses.
(IBM-Watson,2017) Attracting customer has become very difficult these days, when people are harder to please They are smarter, price conscious and sensitive,
Formatted more demanding, less forgiving, and they are approached by many more competitors with equally good or better offers (Kotler,2003)
In response to increasing competition and declining customer loyalty, businesses are focusing on nurturing customer relationships (Fazlzadeh, 2011) By combining traditional relationship marketing strategies with modern CRM technologies, companies can create sustainable connections with both new and existing customers Many organizations are actively working to strengthen these relationships to enhance long-term loyalty Those that effectively implement relationship marketing principles alongside strategic, technology-driven CRM applications are gaining a competitive edge in this endeavor (Chen & Popovich, 2003).
Small and medium-sized enterprises (SMEs) often face constraints in capital and resources; however, the recent decrease in CRM application costs has made these tools more accessible Additionally, Nielsen reported a remarkable 22% growth in Vietnam's e-commerce market last year, highlighting the potential for SMEs to thrive in this expanding digital landscape.
Vietnamese SMEs are increasingly adopting CRM solutions to enhance customer relationships, with a recent report from a local CRM provider revealing over 200% customer growth in the past year However, the implementation process has presented significant challenges, hindering SMEs from fully realizing the benefits of CRM systems Notably, there is a lack of research on the barriers to effective CRM management within the Vietnamese context, despite the fact that over 90% of businesses in the country are classified as SMEs.
SMEs (GSO, 2016 1 ) Thus, this study aimed to identify barriers in implementing customer relationship management in Vietnam SMEs by answering the following questions:
1 What are the benefits or objectives of business when implementing CRM?
2 What areis the key antecedents that affects the result of CRM implementation?
3 What areis the major barriers that VNSMEs faced when implementing
1 https://www.gso.gov.vn/
Research Objectives
To review existing knowledge on barriers of customer relationship management provided by previous studies;
To identify key antecedents of CRM application that affects the result of
To identify barriers in implementing customer relationship management of
To provide some suggestions in CRM implementation practices to improveVNSMEs performance and benefit in developing long-term relationship with their customers.
Subject and Scope of Research
The research subject of this thesis areis the key antecedents of CRM application andbarrier factors of CRM implementation of Vietnamese SMEs
This study examine Vietnamese SMEs which implementing CRM for their businesses activities in Vietnam The timespan for data collection is cros-sectional and implemented in 2017.
Structure of the thesis
Part 1 presents the introduction, Part 2 presents the literature and theoretical framework relate to practice in CRM implementation and benefit in developing relationship with customer, Part 3 presents about methodology where the research design and research methods are explained Part 4 explains results and discussions while Part 5 gives conclusions, limitations and implications
Detailed structure of this thesis is:
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Part 5: Conclusions, limitations and implications
THEORETICAL BACKGROUND
Benefits or objectives of business when implementing CRM
Positive impact of successfully implementation of Customer Relationship
Management is widely recognized in most of the literature These have been many studies focusing on the benefit of business when successfully implementation of
CRM as well as practice factors for success in CRM application CRM is one of the hottest topic in the fields of business strategy, marketing management, and
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Customer Relationship Management (CRM) is a cross-functional philosophy that requires significant business integration and a shift in mindset for successful implementation (Fazlzadeh et al., 2011; Piccoli et al., 2003).
Implementing a CRM application has significantly enhanced competitiveness for numerous companies, leading to increased revenues and reduced operational costs By effectively managing customer relationships, businesses can boost customer satisfaction and improve retention rates, ultimately contributing to their overall success.
1994; Levine, 1993) CRM applications help organizations gain customer loyalty and increase profitability by improving life-time value of each customers
CRM application offers the benefit of sharing customer data throughout the organization and implementing innovative technology that resulting in remarkable competitive advantages as below:
Table 2.1: Benefit of successfully CRM implementation
Customer data sharing throughout the organization resulting in:
Superior levels of customer service
Opportunities for cross-selling and up- selling
Vast information about customers‘ habits and references
Integrated and complete view of the customer
Improved targeting to segments and individual customers
Efficient call centers/service centers
Extends capability to the customer for self-service and Internet applications Attracts existing and new customers through personalized communications and improved targeting
Integrates customer and supplier relationships
Constructs metrics to analyze common and unique customer patterns Source: (Chen & Popovich, 2003)
Key factors for success and barriers of CRM application
Key factors for success and barriers of CRM application
Current academic literature primarily focuses on successful case studies and data sets (Bohling, 2006) Notably, Leverick et al (1998) offer an extensive review of success factors in the marketing sector Additionally, Ryals et al (2000) present a thorough analysis of customer relationship management (CRM) literature, while Wilson and McDonald (1996) explore success factors pertinent to marketing decision support.
Dutta (2000) explores key success factors in e-commerce, highlighting a gap in comprehensive literature on the topic Meanwhile, Wilson et al (2002) investigate the unique factors that affect the successful implementation of CRM applications, drawing insights from five detailed case studies The following table summarizes prior research on the critical success factors for CRM implementation.
Table 2.2: Success factors for CRM implementation
Comment [HSB1]: What factors? Put them into a table
While research on the barriers to implementing Customer Relationship Management (CRM) is limited, Bohling (2006) emphasizes the importance of including data on failures alongside successes to better identify the factors that contribute to effective CRM implementation.
Barriers to implementing Customer Relationship Management (CRM) systems are frequently viewed as secondary concerns in discussions about CRM adoption According to Fazlzadeh et al (2011), small and medium-sized enterprises face significant challenges that hinder the successful implementation of CRM strategies.
Small and medium-sized enterprises (SMEs) within science and technology parks often face significant challenges, including poor communication, insufficient supporting budgets, and inefficiencies in business processes According to research by Bohling et al (2006), these issues are among the most frequently identified obstacles hindering their growth and success.
101 US-based firms were lack of necessary resources, insufficient focus on change management, and insufficient involvement of employees
Table 2.3: Barriers factors identified by previous studies
Barriers factors Bohlinng et al.(2006)
Insufficient focus on change management
Key antecedents of CRM application
Relationship marketing(RM) has been introduced in the service marketing by
Leonard Berry in 1983 The focus of relationship marketing is to facilitate and support the customers‘ consumption and usage processes throughout the
Comment [HSB3]: What factors? Put them into a table
Comment [HSB4]: What factors? Put them into a table
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Relationship marketing is a tactical implications in a firm (Gronnroos, 1997)
Armstrong and Kotler (2000) point out that relationship marketing is a relationship process for creating, retaining, and enhancing mutual value between enterprises and customers or other stakeholder groups
Table 2.4: Transactional marketing vs CRM approach (Piccoli et al., 2003)
Customer Relationship Management (CRM) distinguishes itself from traditional marketing by focusing on relationship marketing, which aims to enhance long-term profitability through customer retention rather than solely acquiring new customers According to Landry (1998), relationship marketing is a long-term strategy that utilizes a database system to understand customer profiles and foster relationships via various communication channels, ultimately delivering value and service This approach emphasizes building interactive, long-term relationships with customers, a key benefit for organizations adopting this concept (Webster, 1992) Gronroos (1991) highlights that the goal of relationship marketing is to establish, maintain, and enhance connections with customers and partners, making effective communication essential Strong relationship marketing cultivates trust and provides the necessary information for collaborative activities (Hajar et al., 2014).
In an organization knowledge management includes learning aboutcustomer needs and wants, dissemination of this knowledge within theorganization (Sin et al.,
Customer Relationship Management (CRM) leverages customer knowledge to enhance relationships and facilitate profitable communication with relevant customers Knowledge is considered a vital organizational asset, and effective knowledge management encompasses four key factors: acquisition, transformation, application, and protection Furthermore, knowledge management significantly impacts customer loyalty and satisfaction, highlighting its importance in fostering strong customer connections.
Figure 2.2 Knowledge Management System (Fteimi and Lehner, 2014)
Furthermore, knowledge management also followed the trend, with systems commonly being defined as technologies that support four knowledge management activities: knowledge creation, codifiation, transfer and application (Nevo & Chan,
Knowledge management extends beyond just information and data management; it involves establishing processes and behaviors that enable individuals within an organization to transform information into actionable knowledge and facilitate its sharing.
To achieve successful Customer Relationship Management (CRM), organizations must view it as more than just a collection of technological solutions Research by Chen & Popovich (2003), Xu & Walton (2005), and Zablah et al (2004) identifies three key aspects of CRM technology: enhancing external operations with customers to enable two-way communication, improving internal operations, and analyzing data to share knowledge across the organization This framework, based on META group segmentation, categorizes CRM technologies into collaborative, operational, and analytical types Additionally, technological resources extend across various customer touchpoints, including email, phone calls, faxes, and websites, serving as crucial channels for interaction between firms and their customers (Payne & Frow, 2006).
Operational CRM technologies utilize Intranet and Extranet systems to integrate various applications, ensuring that information and knowledge are accessible at all touchpoints within the organization and with its business partners (Xu & Walton, 2005) This integration is crucial for enhancing customer experience and leveraging multiple channels to strengthen business-customer relationships (Hamid & Kassim, 2004).
(2000) suggests that technological advances in global networks,convergence and improved interactivity, are key to explaining thegrowth of e-business and CRM
Technology has been acknowledged asan element towards the success of CRM
(Kubi & Doku, 2010) to achievethe customer profitability
Forces of change and critical role of top management team
Since 1999, McGrath et al have highlighted that companies face substantial pressures due to intensified competition, swiftly evolving market demands, accelerated technical obsolescence, reduced product life cycles, and the growing necessity to satisfy the needs of increasingly sophisticated consumers.
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In today's competitive landscape, businesses face challenges such as longer product development lead times, rising costs, and increasing complexity in technology The strategies companies adopt to navigate these issues are influenced by their specific industry, market dynamics, and the resources and skills available to achieve their objectives.
Innovative products and services are essential for organizational success and longevity, as they enable firms to effectively respond to evolving market demands By discovering new methods to serve customers, companies can strengthen their competitive position in a rapidly advancing technological landscape.
The speed of new product introductions is significantly influenced by the exploration and discovery of new knowledge and information, as highlighted in innovation literature (Katila & Ahuja, 2002; Maggitti, Smith, & Katila, 2013; March, 1991) Additionally, the top management team plays a crucial role in facilitating this search process (Qiang Li et al., 2013).
Top management commitment for innovation
Implimentation of enterprise technology, such as CRM and ERP, requires changes to organizational culture (Al-Mashari and Zairi, 2000)
Top management commitment is crucial for successfully implementing innovation and realizing its promised benefits This commitment goes beyond mere endorsement from the CEO; it requires active involvement and support from leadership at all levels to drive effective change and foster a culture of innovation within the organization.
CRM project Customer-centric management requires top management support and commitment to CRM throughout the entire CRM implementation Without it, momentum quickly dies out.‖ (Chen & Popovich, 2003)
In their research titled "From Production to Solutions Innovation: A New Paradigm for Competitive Advantage," Shepherd et al developed a New Product Development (NPD) framework that highlights four essential elements This framework underscores the vital role of the top management team at every stage of the innovation process, emphasizing their importance in driving successful product development and competitive advantage.
(1) A senior, cross-functional managementteam responsible for reviewingprogrammes and making associated GO/NO-GO decisions
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(2) Empowered cross-functional executionteams who are responsible for an effectiveexecution and management of productdevelopment programmes
(3) Aligned cross-functional processesproviding an execution roadmap for allemployees and ensuring activities areeffectively co-ordinated and aligned
(4) Specific ―decision points'' or milestones,which demand the delivery of specificdeliverables These are employed to allowthe senior cross-functional managementteam to review programme progress andattractiveness
While both technology and business processes are both critical to successful
CRM initiatives rely on individual employees as the foundation of customer relationships (Chen & Popovich, 2003) In small and medium-sized enterprises (SMEs), effective training is crucial for fostering expansion and growth.
(Jenning et al., 1996) Bolton report (1971) highlighted the dichotomy between the
Small firms often face a significant gap in training and development, as many owners and managers fail to recognize its importance This lack of awareness, coupled with various obstacles, hinders their ability to transform the acknowledgment of training needs into actionable demand Consequently, there is an urgent need for enhanced support and resources to facilitate effective training initiatives in small businesses.
It must be recognized that some small business owner managers prefer independence and autonomy to growth and profit (Beaver, 1984; Bolton, 1971;
Stanworth and Curran, 1973; Stanworth and Gray, 1991) and work within limited geographical horizons with little desire to expand (Binks and Jennings, 1986;
While not logically required, the pursuit of growth and expansion is often assumed to be linked to training and development initiatives This assumption leads some owner-managers to believe that engaging in training will inevitably result in growth, causing them to opt out of such programs.
Change Management involves ongoing planning and implementation of significant changes, with a focus on human elements, as noted by Kostka and Monch (2002) Strategies and objectives should align with market dynamics, including customers and competitors, as well as client interests, such as shareholders This alignment is crucial for effectively managing the various factors of change that influence a diverse array of stakeholders during the execution of CRM initiatives and other major projects (Pries & Stone, 2004).
Figure 2.3: Factors of Change (Pries & Stone, 2004)
Change is introduced through a learning process According to Carnall
Hypotheses development and research model
Vietnam has experienced significant economic growth and development over the past three decades, particularly since the implementation of the "doi moi" reform in 1986 In contrast, most OECD countries have faced sluggish growth during this period With a population nearing 100 million, Vietnam's transformation highlights its dynamic economic progress and resilience.
With a population of 100 million, the country has significantly transitioned from a low-income status to a low-medium income level, aided by its membership in the World Trade Organization and increasing integration into the global economy.
Minniti 2007; Braunerhjelm 2008; Acs, Desai, and Hessels 2008; Acs and Virgill
2010; Wennekers and Thurik 1999) have identified the pivotal role of entrepreneurship in facilitating economic growth
Recent data indicates Vietnam‘s economy remain on a solid growth with
In 2015, Vietnam's economy experienced a growth rate of 6.68%, driven by a significant rise in retail sales and increased private sector credit that boosted consumer spending (BSI report, 2015; FE consumption report, 2016) By the first half of 2017, the GDP was estimated to grow by 5.73%, with wholesale and retail trade playing a major role in this overall economic expansion.
7.10% over the same period last year, which is the highest contribution to general increase (0.65 percentage point); accommodation and catering services increased
The growth of small and medium-sized enterprises (SMEs) in Vietnam faces significant challenges due to market constraints and internal limitations These include inadequate capital, outdated equipment, obsolete technology, and a lack of management skills and experience As a result, Vietnamese SMEs are unable to achieve their full potential.
During the research of motivation and entrepreneurship in Vietnam SMEs,
According to Swierczeks & Thai (2003), Vietnamese entrepreneurs are primarily driven by challenges and achievements rather than the need for career stability and economic security Their motivation is closely linked to Entrepreneurial Orientation, with a notable focus on short-term net profit rather than long-term business growth.
Vietnamese entrepreneurs are more willing to accept challenges and to emphasize working hard (Ronnas and Rammaurthy, 2000) They also depicted the
Vietnamese entrepreneurs typically embody individuals in their mid-age, possessing over a decade of education and prior experience in responsible roles, often within the state sector, who are eager to embrace challenges These entrepreneurs are navigating a landscape shaped by evolving economic conditions.
Vietnam is fostering a positive entrepreneurial culture driven by necessity, which contrasts with traditional Vietnamese cultural values This shift highlights how small and medium-sized enterprise (SME) owners are increasingly motivated to navigate a challenging business environment.
The insights gained regarding the traits of entrepreneurship in Vietnam prompt an examination of their impact on the perceptions of Vietnamese SMEs concerning the challenges associated with CRM implementation, which will be explored in the following section.
2.5.2 Barriers of CRM implementation in Vietnam SMEs
Lacks of skillful Human Resources
Top management, along with marketing and sales management, typically spearheads a company's CRM project, highlighting the importance of leadership in driving these initiatives (Cap Gemini, 1999) For successful CRM implementation, it is essential that all employees grasp the vision and the transformative impact CRM will have on the organization (Chen & Popovich, 2003).
A 2015 survey by VietnamWorks.com highlights that marketing and sales remain among the top six in-demand sectors for human resources in Vietnam Despite a supply increase of 20% to 40% compared to the previous year, the demand continues to outpace supply The competitive landscape of marketing, particularly in digital marketing, necessitates that marketing professionals engage in continuous learning to stay aligned with evolving industry standards.
The successful implementation of CRM strategies can face significant hurdles due to human resource capabilities, particularly resistance to change within organizations Marketing managers often struggle to shift from managing a single product to overseeing multiple brands and products that cater to diverse customer needs Additionally, sales personnel must engage with data-driven campaign outputs and adapt to recommendations that challenge traditional customer interaction methods This resistance can hinder the effectiveness of CRM programs and strategies.
Implementing Customer Relationship Management (CRM) often encounters objections and disagreements among different functional departments, which can be effectively addressed through direct intervention from top management Successful CRM implementation requires not only strong sponsorship from leadership but also a dedicated project champion who can advocate for ongoing change initiatives.
The quality of human resources is crucial for the successful implementation of Customer Relationship Management (CRM) systems, and a deficiency in this area can significantly impede progress Therefore, the author proposes the following hypothesis.
H1 Lacks of skillful human resource is a barrier to Vietnam SMEs in successfully CRM implementation
Lacks of Customer Knowledge Management Ability
The statement ―retaining customers is more profitable than building new relationships‖ is especially true in the changing Internet market The Boston
According to Consulting Group, marketing to existing customers online costs $6.80, while acquiring a new web customer can reach $34 (Hildebrand, 1999) This highlights the importance of CRM practices in helping businesses understand and engage with their most profitable customers, ultimately enhancing customer retention and loyalty through effective knowledge management.
Figure 2.5: CRM Knowledge Management process
As Fig 2.5 suggests, the knowledge management process can be further subdivided into three distinct micro-processes: (1) data collection, (2) intelligence generation, and (3) intelligence dissemination (Alavi & Leidner, 2001; Fahey et al.,
The data collection process involves a company's efforts to gather information about customers and markets, which can include documenting specific interactions, such as customer responses to marketing campaigns, sourcing data from secondary resources like U.S Census data, or directly querying customers regarding their satisfaction with the company.
Chapter Brief
This chapter explored academic literature on Customer Relationship Management (CRM) and identified key factors influencing its implementation, particularly within the context of Vietnamese SMEs and their unique entrepreneurial characteristics It offered relevant theories, research findings, and a conceptual framework, culminating in a proposed research model that outlines barrier factors negatively impacting CRM implementation in Vietnam's SMEs The subsequent chapter will detail the research methodology to ensure a rigorous scientific approach.
METHODOLOGY
Research design
This chapter outlines the methodological approaches utilized in the research, detailing the research design and the rationale behind the chosen strategies It begins with an overview of the research design, followed by a discussion of the research strategy The chapter then presents the research techniques employed, the paradigm adopted, the preparation of the questionnaire, and the data collection process Finally, it concludes with an examination of the analysis methods used and the ethical considerations taken into account.
A research design serves as a comprehensive plan for conducting a study and addressing research objectives, providing a structured approach to resolve identified problems and ensuring that the evidence aligns with the initial research questions (Yin, 2009) This study adopts a deductive approach, applying existing theories on Customer Relationship Management (CRM) and its key implementation antecedents to formulate hypotheses regarding barriers to CRM implementation The research follows a systematic process, including hypothesis development, data collection, testing, confirmation or rejection of hypotheses, discussion, and theory revision Research questions are derived from established theories and prior studies, as detailed in Chapter 2 of the theoretical background While previous research in the CRM field has predominantly focused on successful cases, it is essential for future studies to incorporate data on failures to identify distinguishing factors between successful and unsuccessful CRM implementations.
The goal of this study is not to create new theories but to utilize established key antecedent theories, transforming them into barrier factors that can be applied in the context of Vietnamese SMEs.
This research employs a mixed methods approach, combining both qualitative and quantitative techniques The primary research strategy involves conducting surveys to gather data, which is subsequently analyzed using statistical tools Prior to the survey, in-depth discussions with SME owners are conducted to gain insights into various dimensions of the study.
This article explores the significance of Customer Relationship Management (CRM) and identifies the key factors influencing its implementation It also discusses the perspectives of small and medium-sized enterprise (SME) owners in Vietnam, highlighting the barriers that hinder successful CRM adoption.
SMEs in successfully implementing CRM
The research begins with qualitative analysis through group discussions to identify the barriers hindering the successful implementation of Customer Relationship Management (CRM) among Vietnamese SMEs This initial step aims to establish a comprehensive set of measurements that capture the common challenges faced by these businesses in adopting CRM systems.
Then, following by quantitative research, includes collecting respondents of
SME owners through a survey with questionnaire, checking credibility of measurements, doing analysis for statistical data and reports All steps as below figure 3.1
Figure 3.1 Research process (Source: the author)
Data sources and data collection
Data sources are categorized into primary and secondary data collection Primary data provides specific and current information but can be expensive and difficult to obtain In contrast, secondary data consists of existing information gathered for purposes other than the current research problem.
Primary data collection is the most effective method for researching the barriers faced by Vietnamese SMEs in successfully implementing CRM This study will adapt measurements from previous research on CRM implementation and utilize qualitative research through focus group discussions These discussions aim to gain deeper insights from industry experts and customers regarding the factors that hinder CRM implementation and how to quantify them Leveraging a current business network and development seminars, the research has successfully engaged six top managers and CRM managers from SMEs.
Hanoi and Hai Phong to participate in the focus group discussion
Furthermore, data collection for quantitative results has been conducted by a
21- question- survey which is sent to businesses with CRM function or busineses planning to apply CRM The answers to questions are structured in 5 scale with the highest level of agreement is 5 – strongly agree and highest level of disagreement is
Qualitative research
Qualitative research plays a crucial role in exploratory studies, particularly in the initial stages of the research process, as highlighted by Joseph Maxwell in 1992 This approach seeks to understand the underlying reasons, opinions, and motivations behind a phenomenon, offering valuable insights that can inform the development of ideas or hypotheses for subsequent quantitative research Additionally, qualitative research uncovers trends in thought and opinion, allowing for a deeper exploration of the issues at hand.
Qualitative measurement begins with focus group discussions, where participants receive a list of open-ended questions and documentation regarding six key antecedents of CRM application This approach allows them to brainstorm and identify the primary barriers to CRM implementation within their businesses and the broader national context Following the collection of responses, an online conference facilitates an in-depth discussion among the group, with the researcher documenting the results.
The survey results provide a quantitative measurement for this research, consisting of 21 structured questions Each proposed barrier to CRM application in Vietnam is accompanied by 3 to 5 sub-groups, requiring respondents to rate their agreement on a scale from 1 (strongly disagree) to 5 (strongly agree) The collected data is analyzed using basic statistical concepts, including mean and standard deviation, to identify the key factors within the sample.
A comprehensive discussion on the challenges of implementing CRM in Vietnamese SMEs identified five key barriers: a lack of skilled human resources, insufficient customer management knowledge, cultural shifts and cross-functional interaction issues, the absence of new processes and standardization, and security threats Initially, the author proposed six primary obstacles, including mid-management challenges, which is now recognized as an additional factor influencing CRM adoption in these businesses.
Conflicts of Interest But most of opinions agreed to combine this factor with
The evolution of business culture and cross-functional collaboration significantly influences the implementation of Customer Relationship Management (CRM) systems According to a consensus reflected in Table 3.1, various definitions and determinants highlight the key barriers perceived in CRM adoption Understanding these barriers is crucial for organizations aiming to enhance their CRM strategies and improve overall efficiency.
Table 3.1 Key barrier factors and sub-dimensions to CRM implementation in
Barriers Sub-dimensions Details description
Digital marketing personnel that have ability to assisting in the formulation of strategies to build a lasting digital connection with consumers; planning
Resource and monitoring the ongoing company presence on social media; launching optimized online advertisements to increase company and brand awareness
A skilled Content Builder Copywriter excels in researching industry-related topics by integrating online sources, conducting interviews, and analyzing studies They are adept at crafting clear marketing copy that effectively promotes a company's products and services Additionally, they prepare well-structured drafts utilizing Content Management Systems to enhance content organization and delivery.
Sales personnel possess the skills to effectively close deals by employing diverse customer sales techniques They forecast sales trends, create innovative sales strategies, and assess their success Additionally, they evaluate customer needs and capabilities, fostering productive and enduring relationships.
Customer service personnel play a crucial role in attracting potential customers by effectively answering inquiries about products and services They maintain accurate customer records by updating account information and address issues by clarifying complaints By identifying the root cause of problems, they provide tailored solutions, expedite necessary corrections or adjustments, and follow up to ensure complete resolution.
The CRM Team Leader possesses a comprehensive understanding of CRM systems and fosters an inspiring team environment that promotes open communication among representatives from sales, marketing, customer service, finance, and operations This role involves setting clear, cross-functional team goals, delegating tasks, and establishing deadlines for team members Additionally, the leader is responsible for overseeing the documentation process and reporting to the Board of Directors.
Lacks of customer manage ment knowledg e
Ability to understanding and perform wide-range CRM system‘s features effectively and securely
The ability to gather and analyze data on consumers, competitors, and the marketplace is crucial for creating actionable insights By understanding business objectives, one can design effective surveys and questions to uncover prospective customers' preferences This process involves compiling and interpreting statistical data to inform strategic decisions and enhance business outcomes.
Effectively handling customer complaints involves addressing issues positively and constructively, identifying the root cause of the problem, and selecting the most appropriate solution It is essential to communicate the chosen solution clearly, implement necessary corrections swiftly, and follow up to ensure complete customer satisfaction.
Interpersonal communication and job assignment skills
Ability to communicate and job assignment clearly, effectively or even inspirationally with other team members through verbal and non-verbal messages, especially in the uncertainty business environment
Knowledge updating and setting up internal training programs skills
Ability to keeping up-to-date knowledge and information related to firm‘s operational and changing in market demand; setting up internal training goals, perform training programs and evaluating effectiveness
Changes CRM‘s staff involvement Staff involvement in the CRM implementation in business culture and cross- functiona l interactio n project
The ability to change (or be changed) to fit changed circumstance
Organizational inertia is the tendency of a mature organization to continue on its current trajectory
Resource rigidity relates to the motivation to respond, routine rigidity to the structure of that response
Lack of interest, concern or actively interaction with other team members or department throughout the CRM implementation process
Employee motivation is the level of energy, commitment, and creativity that a company's workers bring to their jobs
CRM supplier‘s instructions and training
Instructions and training activities that CRM supplier provided for both Management team and staffs who directly interaction with CRM system
An experiment is a systematic procedure conducted to support, refute, or validate a hypothesis, offering valuable insights into cause-and-effect relationships by revealing outcomes from manipulating specific factors Additionally, innovative processes are developed through experimentation to identify optimal strategies that assist staff, departments, or organizations in achieving their targeted goals, resulting in well-defined process descriptions.
Business process standardization (BPS) is a systematic approach that focuses on establishing, reporting, and ensuring adherence to standardized procedures while promoting continuous improvement The primary goal of BPS is to unify organizational practices, enabling different teams to follow consistent processes for similar tasks.
Threats of leaking confidential information and trade secrets to those outside of your organization, including competitors
Threats of losing top talent employees and his/her intelligence to other firms or competitors
Key-Person Dependency Risk arises when a department or company’s current or future performance relies heavily on the availability of one or a few individuals This reliance can expose the organization to significant vulnerabilities, as the absence of these key persons may jeopardize operations and strategic goals.
Research measurements
*The observed variables will be measured by 5-point Likert scale, formed by: 1 -totally disagree, 2-disagree, 3-no opinion, 4-agree, 5-totally agree
*The classified variables such as: name and size or of company, position of the respondent, field of business, experiences…will be measured by nominal measurements, ordinal measurements…
The below table 3.2 shows the operationalized variables for the quantitative research:
1 Lacks of skillful Human Resource
1.1 Technical Digital Marketing Staff A1 ―1‖ =Totally Disagree
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2 Lacks of customer management knowledge
―5‖ Totally Agree 2.4 Interpersonal communication and job assignment skills
―5‖ Totally Agree 2.5 Knowledge updating and setting up internal training programs skills
3 Changes in business culture and cross- functional interaction
4 Lacks of new processes & standardization
CRM supplier‘s instructions and training
Quantitative research
The population of this study is Vietnam SMEs that applied CRM system The current situation of lacking reliable data of implementing CRM in
Vietnam presented several challenges for this research, primarily due to the unavailability of population size data, which rendered the quantitative survey results non-representative Consequently, the findings leaned more towards qualitative analysis The quantitative measures were restricted to basic statistical analysis of the sample and served as a supplementary tool to validate the factors identified through in-depth group discussions.
In fact our survey by questionnaire to Vietnam SME‘s was done as following:
Time of the survey: 2 weeks, from 15 Dec, 2017 to 31 Dec, 2017
Over a four-week survey period, 180 online questionnaires were distributed to SMEs in Vietnam through various channels, including online forums, groups, emails, and personal networking By the end of the survey, a significant number of responses were collected.
32 answeredquestionnaires After qualifying check, a total of 25 answered- questionnaires are acceptable for the research
The qualified answered-questionnaires are coded, then being input
Excel Data will be processed by Excel for the basic descriptive statistics.
Validity and reliability
This research relies on qualitative measures instead of quantitative ones, prompting the implementation of specific strategies to improve the reliability and validity of the findings.
The first strategy employed in this research is triangulation, aimed at minimizing the personal biases of investigators and addressing the limitations associated with single-investigator or single-theory studies, thereby enhancing the study's validity (Denzil, 1989) To achieve this, the author utilized multiple data sources, including focus group discussions and surveys distributed across various channels The respondents, representing diverse business sectors, CRM backgrounds, and management levels, provided distinct perspectives without overlap, further strengthening the research's validity.
The second strategy involves expert consensual validation, where independent analysis of data is conducted by others To enhance the validity and reliability of the research findings, the author has shared the results with experienced business owners in Customer Relationship Management (CRM) to confirm the insights and conclusions drawn from the study.
Member check is another tactic used The author recycled the analysis back to the focus group members The conclusion is only given after getting the member‘s confirmation.
Ethical consideration
All information gathered from respondents was kept strictly confidential and not shared with any third parties The data collected was presented in its original form without any modifications Additionally, the literature reviewed for this study is properly acknowledged in the reference list.
Chapter brief
This chapter outlines the research design and methodology employed in the study, which was conducted in two stages: initial research and official research The initial phase utilized qualitative research methods, involving group discussions between the researcher and owners of Vietnamese SMEs.
Results of the qualitative research help to adjust the research model having
The research model identifies 21 observed variables to assess five key definitions: deficiencies in skilled human resources, inadequate customer management knowledge, shifts in business culture and cross-functional interaction, lack of new processes and standardization, and security threats Utilizing a quantitative approach, the study employed a questionnaire for data collection This chapter details aspects of the research, including the information gathered, measurement definitions, methodologies, and challenges encountered during data analysis The quantitative findings reveal that out of 180 distributed questionnaires, 32 responses were received, representing a response rate of 17.7%, with 25 respondents deemed qualified for analysis.
RESULTS AND DISCUSSIONS
Sample description
A focus group comprising six top managers and CRM managers from SMEs in Hanoi and Hai Phong was convened to explore the critical factors influencing the application of Customer Relationship Management (CRM) and the primary obstacles businesses face in implementing it These participants represent companies with substantial operational scales, providing valuable insights into the challenges and drivers of CRM adoption in the region.
5 years in various industries including Hotel service, retailing, manufacturing… and especially one participants from CRM solution provider
When conducting survey, 25 surveys were collected The respondents‘ background is summarized in the following table:
Business Owner, Member of BOD, Middle Management, CRM
From VND1 billion to VND 100 billion
Number of employees From 3 to more than 300 employees
Results of focus group discussion
A recent survey revealed that 5 out of 6 participants face challenges in implementing CRM systems within their businesses Only one participant reported no difficulties, attributing this success to having established their CRM from the outset of their operations, which have spanned over five years.
However, she agreed that every business may face a number of difficulties when applying CRM, especially at the early stage
In a survey regarding the influence of human resources on Customer Relationship Management (CRM), 50% of participants acknowledged that human resources have a significant impact, while the other half believed that human resources are merely one of several factors with minimal influence on CRM outcomes.
The study emphasizes the significance of establishing standards for business processes when implementing Customer Relationship Management (CRM) systems, as highlighted by four out of six participants Additionally, concerns regarding information security emerged as a primary issue among the participants when utilizing CRM in their businesses.
On the top management level, a majority of participants considered the
Knowledge of Management on CRM and Business Culture the factors impacting on
CRM On the other context, when the business is not equipped with these factors, it will become huge obstacles for businesses.
Results of survey
Table 4.2 Results on thekey factors of barrier
Lacks of skillful Human Resources
Changing Business Culture and Cross- functional interaction
Lacks of new processes and standards
(Source: Excel Data Analysis Tools)
The observed variables will be measured by 5-point Likert scale, formed by:
1 -totally disagree, 2-disagree, 3-no opinion, 4-agree, 5-totally agree.Distance value
= (Maximum - Minimum)/n = (5 - 1)/5 = 0.8 The level of mean are as follow: 1.00
– 1.80: totally disagree; 1.81 – 2.60: disagree; 2.61 – 3.40: no opinion; 3.41 – 4.20: agree; 4.21 – 5.00: totally agree Thus the lowest acceptable mean is 3.41, and higher than 4.21 is consider as totally agree
All hypotheses are accepted, as the average scores for the key barriers exceed 3.41 Notably, respondents show a strong agreement, with mean values above 4 for 2 out of the 5 proposed barriers to CRM identified by the researcher.
Changing Business Culture and Cross-functional interaction(4.11) and Lacks of
Customer Knowledge Management Ability(4.08) Other 3 barrier factors with lower mean are: Lacks of new processes and standards (3.93), Lacks of skillful Human
Resources (3.83) and Information Security Threats (3.47)
Scale 3 in survey represents ―No opinion‖ while Scale 4 represents ―Agree‖
Among the factors, ―Lack of Customer Knowledge Management Ability‖ and
―Changing Business Culture and Cross-functional interaction‖ have higher mean value, indicating that businesses tend to find it more difficult to apply CRM successfully due to these 2 factors
Results on the sub-dimensions of each factor
Table 4.3 Results on the sub-dimension of each factor
Dimensions Operationalize d variables Mean SD
1 Lacks of skillful Human Resource
2 Lacks of customer management knowledge
2.4 Interpersonal communication and job B4 3.72 1.10 assignment skills
2.5 Knowledge updating and setting up internal training programs skills
3 Changes in business culture and cross- functional interaction
4 Lacks of new processes & standardization
4.1 CRM supplier‘s instructions and training D1 3.64 1.32
(Source: Excel Data Analysis Tools)
A small standard deviation indicates that the values in a data set are closely clustered around the mean, while a large standard deviation signifies that the values are more dispersed and farther from the mean.
The analysis of the standard deviation for the collected samples reveals a low value, approximately 1, indicating that the responses are closely aligned with the mean This suggests that the perceived weight of the barriers, as reflected in the mean, accurately represents the views of the majority of respondents.
The analysis of the characteristics of each barrier reveals consistent results, with no significant differences observed in the mean and standard deviation across individual sub-groups and the overall group The table below outlines the six sub-dimensions identified by SME owners as the most prevalent barriers.
Table 4.4 6 sub-dimensions as most commonly barriers
3 Knowledge updating and setting up internal training programs skills
Discussion on the results
From the discussion of the focus group, the following factors were identified as the barriers to CRM in Vietnam:
1 Lacks of skillful Human Resources
2 Lacks of Customer Knowledge Management Ability
3 Changing Business Culture and Cross-functional interaction
4 Lacks of new processes and standards
Another factor that is controversial and not agree among the focus group is
The survey results serve to supplement the identified factors discussed in the focus group, confirming that all hypotheses are accepted This includes a comprehensive list of barrier factors affecting CRM implementation in Vietnam.
SMEs were defined as follow:
1 Changing Business Culture and Cross-functional interaction (Mean:
2 Lacks of Customer Knowledge Management Ability (Mean: 4.08)
3 Lacks of new processes and standards (Mean: 3.97)
4 Lacks of skillful Human Resources (Mean: 3.83)
This section will offer insights into each factor, comparing the study's results with previous research to highlight similarities and differences Additionally, it aims to discuss potential explanations for these disparities.
Barrier 1: Changing Business Culture and Cross-functional interaction
Table 4.5: Detail sub-dimensions of Barrier 1-Changing Business Culture and
Cross-functional interaction Item Mea n rank
3 1 Changes in business culture and cross-functional interaction
The highest rank barrier factor for Vietnam SMEs in CRM implementation is
The implementation of enterprise technologies like CRM and ERP necessitates significant changes in organizational culture, highlighting the importance of cross-functional interaction and adaptation within business environments, as supported by previous research (Al-Mashari and Zairi, 2000).
―Enterprises must rethink and continue to try to create new business models‖ (Voelpel et al., 2004).With the characteristic of Vietnam SMEs which is cited in 2.5.1
Vietnamese SME owners often prioritize a short-term focus on net profit over long-term business growth, as highlighted by Swierczeks & Thai (2003) This shift from a profit-driven approach to one that emphasizes building organizational culture and creating new business models poses significant challenges for many Vietnamese SMEs.
There are 5 sub-dimensions for this factor sequenced by mean rank as follow: Adaptation ability (4.28), Organization inertia (4.28), Apathetic attitude
Vietnamese SMEs encounter significant challenges in managing cultural change and enhancing cross-functional interactions, particularly regarding staff motivation (3.96) and CRM staff involvement (3.88) These issues stem from the adaptability of both employees and managers to new circumstances, compounded by organizational inertia, which leads mature organizations to maintain their existing paths Resource rigidity reflects the reluctance to respond effectively, while routine rigidity pertains to the established response structures Unfortunately, the lack of focus on raising employee motivation—defined as the energy, commitment, and creativity workers bring to their roles—has resulted in diminished staff involvement, a direct consequence of inadequate attention from SME owners and managers.
Barrier 2: Lacks of customer management knowledge
Table 4.6: Detail sub-dimensions of Barrier 2-Lacks of customer management knowledge Item Mea n rank
2 2 Lacks of customer management knowledge
2.5 2 Knowledge updating and setting up internal training
Formatted: Font: (Default) Times New
Roman, 13 pt, Bold, No underline, Font color: Green programs skills
2.4 5 Interpersonal communication and job assignment skills
A significant barrier to CRM implementation for SMEs in Vietnam is the lack of customer management knowledge This aligns with previous research, which highlights that effective data collection involves activities aimed at gathering essential information about customers and markets This process may include documenting specific interactions, such as customer responses to marketing campaigns, and sourcing data from secondary resources.
Census data), or querying customers about their satisfaction with the firm‖ (Park &
The five sub-dimensions identified for this factor, ranked by mean score, are as follows: CRM system operation skills (4.4), knowledge updating and internal training program skills (4.28), complaints handling skills (4.04), customer information analysis skills (3.96), and interpersonal communication and job assignment skills (3.97) These sub-dimensions represent common obstacles faced in effective customer relationship management.
Vietnamese SMEs face significant challenges in customer management due to a lack of knowledge and expertise in utilizing CRM systems effectively Many struggle to understand and leverage the full range of CRM features securely, while also keeping up-to-date with market demands and operational changes Setting internal training goals, implementing effective training programs, and evaluating their success are particularly difficult for these businesses Additionally, addressing customer complaints constructively requires extensive training in problem identification, solution selection, and follow-up to ensure customer satisfaction, which many SMEs find hard to maintain systematically.
Barrier 3: Lacks of new processes and standards
Table 4.7: Detail sub-dimensions of Barrier 3-Lacks of new processes and standards Item Mea n rank
4 3 Lacks of new processes and standards
4.1 3 CRM supplier‘s instructions and training D1 3.64 1.32
The third significant barrier for SMEs in Vietnam regarding CRM implementation is the lack of new processes and standards This aligns with Zablah's (2004) findings, which highlight the critical need for clearly defined processes and standards in successful CRM strategies.
The CRM process encompasses various relevant processes, including knowledge and interaction management, which require detailed mapping and description It is essential to allocate responsibilities for these process activities among individuals and groups, defining clear process roles (Buckley & Carter, 1996) However, many SMEs in Vietnam face challenges in creating comprehensive process documentation due to limited resources and knowledge.
There are 3 sub-dimensions for this factor sequenced by mean rank as follow: Standardizations for new processes (4.28), New processes experiment (4),
Vietnamese SMEs often encounter challenges related to CRM supplier instructions and training, with a rating of 3.64 highlighting this issue These obstacles stem from a lack of new processes and standards, as CRM systems fundamentally alter the execution of existing tasks To address this, businesses must focus on Business Process Standardization (BPS), which encompasses setting standards, reporting on them, ensuring compliance, and fostering continuous improvement.
BPS seeks to standardize procedures across organizations that employ varying practices for identical processes, a challenging goal even for large SMEs In Vietnam, SMEs are recognized for their flexibility, yet they often lack a comprehensive understanding of the key factors influencing the success or failure of new process experiments.
Barrier 4: Lacks of skillful Human Resources
Table 4.8: Detail sub-dimensions of Barrier 4-Lacks of skillful Human
One of the significant challenges faced by Vietnamese SMEs in implementing Customer Relationship Management (CRM) systems is the lack of skilled human resources This aligns with previous research by Chen & Popovich, which emphasizes that successful CRM initiatives necessitate a clear vision and require all employees to comprehend the objectives and transformations that CRM can introduce.
2003) Setting up a brand new team from old member that fit with the new business models is challenged to most of Vietnam SMEs
There are 5 sub-dimensions for this factor sequenced by mean rank as follow: CRM Team leader/champion (4.36), Content Builder Copywriter (4),
Technical Digital Marketing Staff (3.76), Customer Service Staff (3.64), Sale Staff
The absence of a CRM Team Leader or CRM Champion hinders the effective management of the CRM system, as this role is crucial for fostering an inspiring team environment and promoting open communication among representatives from sales, marketing, customer service, finance, and operations Establishing clear, cross-functional team goals, delegating tasks, and setting deadlines are essential for team productivity Additionally, leading documentation processes and reporting to the Board of Directors are vital responsibilities that need attention Furthermore, there is a notable deficiency in Human Resources, specifically in the area of Content Builders.
Copywriter, personnel that have ability to researching industry-related topics
(combining online sources, interviews and studies); writing clear marketing copy to promote firm‘s products/services; preparing well-structured drafts using Content
Table 4.9: Detail sub-dimensions of Barrier 5-Information Security Threats
The last barrier factor for Vietnam SMEs in CRM implementation are
Information Security Threats This finding is highly agreed with previous study that
Seify (2006) emphasized that ―One of the most important strategies in CRM
(Customer Relationship Management) is to capture enough information from customers and using this information carefully And security of this information is very important in CRM data management‖
There are 3 sub-dimensions for this factor sequenced by mean rank as follow: Business opportunities leaking (3.64), Firm ―Brain drain‖ effect (3.4) and
Key-person dependency poses significant threats to Vietnamese SMEs during CRM implementation, primarily through the risk of leaking confidential information and trade secrets to external competitors Additionally, the potential loss of top talent and their expertise to rival firms exacerbates this issue When a department or company relies heavily on one or a few key individuals, it becomes vulnerable to key-person dependency risk, jeopardizing both current and future performance.
Chapter brief
This chapter summarizes the empirical data gathered through surveys and discusses the outcomes of both qualitative and quantitative research The qualitative research identifies the barriers and related sub-dimensions affecting CRM implementation in Vietnamese SMEs The following chapter will delve into the implications of these findings and offer recommendations for enhancing the CRM implementation process in Vietnam's small and medium-sized enterprises.