1.

Introduction
The international business environment has changed the way we view upon
conducting business today. The globalization is erasing the national boundaries and
today companies are competing on a global market. This rapid change in the global
environment puts high demands on companies to quickly be able to adjust to new
situations in order to stay competitively strong. Furthermore, the economic and
financial integration have created strong links between companies and the global
macro- economic environment. No company in this integrated world will remain
unaffected of what happens in the world economy. (Brake, Walker & Walker, 1995;
Stanat, 2000)

The increased competition on the global marketplace has led to that companies today
focus more on relationships with their customers and are therefore leaving the
transactional-based point of view (Palmer, 2001; Robertson & Kellow, 2001). In
order to meet these international environmental changes, companies use customer
relationship management (CRM) in order to create competitive advantage and
thereby becoming more profitable companies (Galbreath & Rogers, 1999; Valentine,
1999).

In this chapter, the background and some definitions regarding the evolution of
Marketing and Customer Relationship Management are presented as an attempt to
clarify the concepts. Thereafter, a discussion of the problem area will be provided,
leading down to the specific research questions of this study.

The Evolution of Marketing

The word marketing is derived originally from the Latin “mercatus “, which means
marketplace. It comes from the work “mercari”, which means, “to trade”. The word
marketing can also be somewhat confusing. If you ask people what marketing is,
many will respond with a variety of words such as: selling, advertising, promotion,
targeting or marketing research. The fact is that marketing encompasses all of these
and yet many other activities and it are concerned with the identification of
marketing opportunities. (Zineldin, 2000) The traditional view on marketing with the
concept of 4Ps: price, product, place and promotion, was originally constructed by
Niel Hopper Borden in 1964. This approach that has then over the years been further
developed by a number of authors. These four elements are regarded as the
traditional marketing mix and the marketing mix approach constitutes a production-
oriented definition of marketing where transactions are put in the focus (Grönroos,
1997).

From the early 1980s an alternative approach to marketing theory and practice was
gaining power, namely relationship marketing. The term itself can be traced back to
the service marketing literature, though arguably it can be said to have originated in
industrial marketing (Fletcher, 1990). In the scope of industrial marketing this shift
from traditional marketing towards relationship marketing are occurring and several
scholars are claiming that this is a paradigm shift in marketing (Gummesson, 1997;
Grönroos, 1997; Parvatiyar and Sheth, 1994). Grönroos (1997, p.330) defines
relationship marketing in the following way:
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In its earliest forms, relationship marketing focused simply on the development and
cultivation of long-term, profitable, and mutually beneficial relationships between an
organization and a defined customer group (Parkington & Schneider, 1979). However,
the concept quickly broadened to encompass internal marketing in acknowledgment
that the successful management of external relationships was largely dependent on the
alignment of supporting internal relationships (Kelley, 1990). Several eminent
marketing academics have pointed out the changing role of marketing and the shift
from a transactional to a relational approach, i.e. Webster, (1992); Grönroos (1994);
Sheth and Parvatiyar (1995); Payne, Clark & Peck (1995); Gummesson (1998);
Turnbull; Ford and Cunningham (1996) and Ford, eds. (1997).

Customer Relationship Management

As already stated, the change of the business environment and the evolution of
marketing to adapt to these changes has led to that the way companies organize
themselves has switched from product-based to customer-based structures. A key
driver of the change is the advent of Customer Relationship Management – CRM,
which underpinned by information systems convergence and the development of
supporting software, promises to significantly improve the implementation of
relationship marketing principles. (Ryals & Knox, 2001, Storbacka & Lehtinen,
2000)

From another perspective, CRM is a strategic view of how to handle customer

relations from a company perspective. The strategy deals with how to establish,
develop and increase customer relations from a profitability perspective. Based upon
knowledge about the individual customer’s need and potential, the company
develops customized strategies describing how different customers should be treated
to become long-term profitable customers. The basic philosophy underlying CRM is
that the basis of all marketing and management activities should be the
establishment of mutually beneficial partnership relationship with customers and
other partners in order to become successful and profitable. (Spitler, 1997; Zineldin,
2000)

In order to more efficiently manage customer relationships, CRM focuses on

effectively turning information into intelligent business knowledge. This information
can come from anywhere inside or outside the firm and this requires successful
integration of multiple databases and technologies such as the Internet, call centers,
sales force automation, and data warehouses. (Galbreath & Rogers, 1999) There is
no universal explanation of what CRM is, since the area is fairly new and still is
developing. It is therefore important to remember that several attempts of defining
CRM exist and that many companies adapt the definition to their own business and
their unique needs. (Zineldin, 2000) The following quotations are three examples of
how CRM is defined:

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 “The activities a business performs to identify, qualify, acquire, develop and
retain increasingly loyal and profitable customers by delivering the right
product or service, to the right customer, through the right channel, at the right
time and the right cost. CRM integrates sales, marketing, service, enterprise-
resource planning and supply-chain management functions through business
process automation, technology solutions, and information resources to
maximize each customer contact. CRM facilitates relationships among
enterprises, their customers, business partners, suppliers, and employees.”
(Galbreath & Rogers 1999, p162)

As can be seen above, the three definitions have the following in common: a) they all
include activities in all parts of the company b) the reason for CRM is to create a
customer relationship focused company. In essence, CRM provides management with
the opportunity to implement relationship marketing on a company-wide basis (Ryals &
Knox, 2001). However, for CRM to be successful, all activities in a company need to be
managed in combination to reach success (Hamel & Prahalad, 1994).

Stone, Woodcock & Wilson (1996) note that in some companies there is the belief that
good market planning is equal to good CRM. It must be clear that CRM is not equal to
market planning, since they are founded on two different marketing approaches.
However, the authors add that although the information in market research is CRM, it is
only a small part of the CRM that is needed in order to create profitable customer
relationships. (Ibid.) Market planning is based upon the transactional-based point of
view with market segmentation as the emphasis. Moreover, market planning still
generalize and segment customers according to specific characteristics, but fail to
identify individual wants and need as CRM does, i.e. the knowledge about the
individual customers. (Ryals & Knox, 2001; Storbacka & Lehtinen, 2000) What
differentiates market planning from CRM is exhibited in figure 1.1.

New Style - Relationship Marketing Old Style - Transactional Marketing

Relationship
Customer Marketing
management strategies Market Planning
Marketing strategies
Objectives

Customer
Customer base analysis
management Market and competitive
Mix analysis
Needs Perceptions
policies Segmentation
Offer development

Implementation
Figure 1.1 Customer Relationship Marketing versus Market Planning
Source: Stone, Woodcock & Wilson, 1996 p.680 Results

Review

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 Problem Discussion

According to Peppers & Rogers (1999), it is important to define and distinguish

different concepts to be able to understand and discuss CRM. The four steps that
according to the authors constitute the core of CRM are to: identify, differentiate,
interact and customize. These steps are roughly in order of increasing difficulty and
complexity, even though you may find a good deal of overlap among them. The first
step refers to identify your customers. A company can’t have a relationship with a
customer they do not know about. Secondly, differentiate the customers since they are
different in two different ways. They represent different levels of value to the company,
and by categorizing them the company can prioritize their efforts and gain most
advantage with the most valuable customers but also tailor the firm’s behavior toward
each customer based on their individual needs. The third step is to interact with the
customers, to have a successful CRM focus in the company; there must be improvement
both in cost-efficiency and the effectiveness of the customer interactions. The fourth
and final step is to customize some aspect of the company’s behavior toward the
customer in terms what is offered. (Ibid.)

Moreover, CRM focuses on establishing a better understanding of customers with

valuable information about their buying patterns in order to create profitable
relationships with the customers. (Farrell, 2001) Many scholars have argued the issue
regarding CRM. The traditional but to some extent wrong view is that CRM is a
technological system for information analysis and handling. (Zineldin, 2000) Hall
(1997) found that even where organizations have technological integration, performance
integration does not always follow. Many departments and individuals see customer
handling as a sales or marketing function, and regard the release of their individual
customer data as signalling a loss of power and inability to solve the customers demand
on the company. Furthermore, Hall (1997) notes that the critical interface is between
marketing and CRM technology. An understanding of the perspective from both of
these disciplines is a prerequisite of cross-functional integration. (Ibid.)

This is further supported by Zineldin (2000), which states that CRM is much more than
a technical solution for data gathering and information handling. Zineldin propose that
CRM is a total management focus that should incorporate all levels and all units of a
company in order to create business possibilities for those who want to prosper in the
competitive international business arena of today. (Ibid.) Moreover, the marketing
perspective of CRM hinges on its potential to offer better customer service, and to
improve marketing effectiveness through better focus (McDonald & Wilson, 1999;
Bessen, 1993). Data systems can improve customer service in a number of areas,
including reliability, efficiency, and communication as well as quality control and
service monitoring, but the outcome of the CRM comes down to how the whole
company uses the information to become customer focused. There is one thing to
receive information; the hard part is using it correctly a process referred to as the CRM
process. (Berkley & Gupta, 1994; Storbacka & Lehtinen, 2000)

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the challenges of mass-customization. Although these factors are facilitating the shift
from product management to a customer focus, the shift will not be easily achieved. The
necessary changes will impact on the ways that companies view their customers and
how they treat them, how they are themselves organised and how they measure and
reward success. (Ryals & Knox, 2001; Jennings 1997)

As the companies attempt to re-orient themselves around customers, individual

employees will have to come to terms with changing cultural norms, organizational
structures and the way that their performance is measured and rewarded. (Ryals &
Knox, 2001) In studies by Martiny (1998) and Braganza and Myers (1996), it is
indicated that the commitment of senior management is critical to success. This was
reinforced in a META Group report (1998) that singled out the Chief Executive
Officer’s (CEO) involvement as a key success factor for CRM projects, concluding that,
investing in CRM technology without a customer-oriented cultural mindset – inherited
hierarchically throughout the enterprise from the CEO – is like throwing money into a
black hole. (Ibid.)

Data management systems are the tools that enable the whole firm to reorganise around
its customers, but they are not sufficient in themselves. Companies that regard customer
information management as a marketing department responsibility and leave it in the
hands of marketing planners and product managers in the expectation of short-term
payoffs are missing the point. The adoption of customer-oriented strategies require
according to Jennings (1997) an organizational culture that is adaptive and responsive to
change, and the quality of communication within and organization is an important
aspect of any change initiative. Failure to successfully communicate a change initiative
and its implications for employees can lead to failure. (Jennings, 1997; Ryals & Knox,
2001; Storbacka & Lehtinen, 2000)

According to the study by Christopher, Payne & Ballantyne (1991), the purpose of
relationship marketing is to improve long run profitability by shifting from transactional
based marketing, with its emphasis on winning new customers, to customer retention
through effective management of customer relationship. Furthermore, the authors argue
that the development of theory in relationship marketing continues undebated, the key
question facing practitioners is, how this shift in management focus can be integrated in
practice. (Ibid.)

In short, we have high lightened the importance and potential impact of CRM on
customer relationships. One should emphasize that areas regarding relationship have
been present in marketing discussion for the last thirty years, while CRM that has
evolved from the relationship marketing perspective have been present the last decade.
Despite this, companies still struggle and look on how to use CRM to become more
profitable by identifying the individual customers needs and wants. CRM is not just
technology it is so much more. The company that can tackle the issues regarding CRM
and use it most effectively will be the dominant actor in the business world of today.
(Christopher, Payne & Ballantyne, 1991; Ryals & Knox, 2001; Zineldin, 2000)

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 Research Purpose

As discussed above, the importance of CRM has increased due to the rapid speed of
globalization and increased competition both from domestic and international
companies. To prosper on the market today firms have to develop strategies based on
trends and possible scenarios. This makes it interesting to see how companies manage
the issue. Since CRM is a rather new approach to marketing, there is a need for
investigating how the objectives of CRM can be described and how CRM is integrated
into the firm, but also how the CRM activities and procedures are carried out. Now in
the era of globalization, the market conditions are changing and new ways to achieve
competitive advantage must be used. CRM may be a way for the companies to
strengthen their position in the market. Hence, the purpose of this research is to gain a
better understanding of how Customer Relationship Management is used in companies.

As the management of customer relationships may involve numerous activities, we limit

ourselves to the following three research questions:

 What different objectives do companies have with CRM?

 How can the CRM process in companies be described?

 How is the company’s organizational structure affected by the introduction of

CRM?

With the first research question we aim at describing what different objectives
companies have with CRM. The intention with the second research question is to study
the CRM process in companies can be carried out by describing the activities or
functions involved. Furthermore, the third research question aims at answering how a
CRM has affected the companies organizational structure, i.e. where in the company as
well as how CRM is integrated.

Demarcations

We have chosen to study only what the companies objectives with CRM is and not how
companies can benefit from the outcomes of CRM in their operations. These are two
different things; the first states objectives with CRM and the second shows the result
from CRM. Moreover, we are in this thesis only focusing on how companies uses CRM
today. This will eliminate certain scenarios, thus providing us with a phenomenon that
is possible to study during the time span allocated for our thesis. Finally, we are aiming
after a present state of the CRM usage in companies and not to any future scenario or
how the companies want to use CRM in their operations.

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 Disposition of the Study

In this section, the disposition of this research will be clarified. To start with, this
chapter has provided the background of the study and a problem discussion of the area,
leading to the specific research questions.

Chapter two contains a review of literature related to the three research questions of
this study, i.e. literature regarding objectives with CRM, and the CRM process from
different views. Furthermore, the literature review covers theories regarding how CRM
affects the organizational structure when being introduced.

Chapter three describes the frame of reference for the investigation, where we aim at
conceptualizing the useful aspects of the literature for our research. In the end of this
chapter, a visualization of the emerged frame of reference is provided.

Chapter four includes a description of the methodological procedures of the study.

These include the research purpose, research approach, research strategy, data collection
method, sample selection, analysis of the data and a discussion of the quality standards
reliability and validity of the study.

Chapter five provides a delineation of the empirical data gathered in the research.
Firstly, a short company presentation is provided and thereafter the data gathered is
presented.

Chapter six includes an analysis of the empirical data. The analysis contains both
within case analyses of each of the five companies as well as a cross case analysis,
where the data from the five companies are compared.

Chapter seven contains the overall conclusions that can be drawn from the research.
Conclusions will be given in relation to the three research questions. Furthermore, the
chapter includes recommendations for managers, theory and further research within the
area.

1 2 3 4
Introduction Literature Review Frame of Reference Methodology

5 6 7
Empirical Data Analysis Conclusions & Recommendations

Figure 1.2 A Schematic Presentation of the Disposition of the Study

Source: Authors’ own construction

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2. Literature Review
The previous chapter provided the background and the problem discussion of the area of
this study, leading down to the specific research questions. As discussed in chapter one,
CRM established between companies and customer has been identified as the research
area of this thesis. Hence, theoretical, this study is positioned within this area.
Particularly, the focus is given to the study of how company’s uses CRM, with the
emphasis is on the objectives. Furthermore, the CRM process is covered as well as how
the companies’ organizational structure is affected by CRM.

The Objectives with CRM

In this section objectives for CRM within a company will be discussed. Objectives of
CRM will be described in order to present different views on the topic. The presented
objectives of CRM have been verified in previous research and studies by each author
mentioned below.

Objectives by Burnett

Burnett (2001) argues that the objectives from CRM generally fall into three categories:
cost savings, revenue enhancement, and strategic impact. He states that the following
objectives seems reasonable for a company implementing CRM:

 Increased sales revenues results from spending more time with customers, which
results from spending less time collecting information about the customer.

 Win rates improve since the company withdraws from unlikely or bad deals earlier
in the sales process.

 Increased margins results from knowing your customers better, providing a value-
sell, and discounting price-less.

 Improved customer satisfaction rates. The increase occurs because customers will
find that the offer is more in line with their specific needs.

 Decreased general sales and marketing administrative costs. This decrease occurs
since the company has specified and has good knowledge about its target segment
customers. Thereby the company is using its resources better when no effort is a
waste of money or time. (Ibid.)

Objectives by Newell

Newell (2000) states that the key to CRM is identifying what creates value for the
customer and then deliver it. While individual customers have different views of value,
there are many ways to satisfy the each customer. Therefore the CRM objectives is to:

 Identifying those customer values that are pertinent to a particular segment.

 Understanding the relative importance of those values to each customer segment.

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 Determining if delivery of those values will affect in a positive manner.

 Communicating and delivering the appropriate values to each customer in ways the
customer wants to receive the information.

 Measuring results and proving return on investments. (Ibid.)

Objectives by Swift

Swift (2001) claims that as organizations move close to their customers and their
extended enterprise business unit, the leading organizations specifically communicate
their objectives and goals. The CRM objective is to increase business opportunities by:

 Improving the process to communication with the right customers.

 Providing the right offer for each customer.

 Providing the right offer through the right channel for each customer.

 Providing the right offer at the right time for each customer.

By doing this company’s can receive the following benefits:

 Customer retention. Ability to retain loyal and profitable customers and channels to
growth the business profitability.

 Customer acquisition. Acquiring the right customers based on known or learned

characteristics, which drives growth and increased margins.

 Customer profitability. Increasing individual customer margins while offering the

right product at the right time. (Ibid.)

Objectives by Galbreath & Rogers

Galbreath & Rogers (1999) state that many factors influence the purchasing decision of
a customer. A customer buys products or services when his or her expectations have
been met, or exceeded, in terms of the offering and personalized attention from the
firm’s employees. It is necessary for a company to meet customer expectations on a
consistent basis to secure its survival in the long run. This is especially valid now days
when competition is fierce and global. (Ibid) They have developed three main CRM
objectives for companies to handle this challenge: customization, personal relationships
and after sales/service support.

 Customization. Customer want services that meet or exceeds their individual needs.
Creating offerings that meet the diverse wants of a customer base will become a
necessary activity of retaining and growing business. The key to business success
lies in addressing each customer’s unique distinct characters. This is called mass
customization. Mass customization enables economies of scale, at the same time, as
it seeks to produce a tailored offering to the needs and wants of the individual

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Personal relationships. The greatest correlation to success is the amount of time spent
with the customer and the ensuing personal relationship of mutual respect and trust.
Therefore building customer relations demands that suppliers pay close attention to their
customers. It means not only listening to the customers, but also actively using their
feedback to improve the relationship and its outcomes. (Ibid.)

 After-sale service/support. Paying attention to customer after the sale with

responsive and proactive service and support can have a great effect on the business
profitability, when many customers leave their suppliers after bad after-sale
service/support experiences. Therefore one way to assure customer loyalty is to
never forget the customer even long after the sale has been consummated. (Ibid.)

Objectives by Kalakota & Robinson

According to Kalakota & Robinson (1999) is CRM an integration framework and a

business strategy. They have listed three objectives of the CRM business framework
that illustrate this: use existing customer relationship to grow revenue, use integrated
information for excellent service, introducing consistent replicable channel processes
and procedures.

 Use existing customer relationship to grow revenue. Enhance profitability by

identifying, attracting, and retaining the best customers. This is done by preparing a
comprehensive view of the customer to maximize his or her relationship with the
company through up selling (selling more exclusive products) and cross selling
(selling complementing products). (Ibid.)

 Use integrated information for excellent service. Use customer information to better
serve the customer needs. By doing this, companies save the customer time.
Customer specific information should be available to all customer contact points.
(Ibid.)

 Introducing consistent, replicable channel processes and procedures. With the

proliferation of customer contact channels, many more employees are involved in
sales. In order to enjoy continued success, companies must have consistent,
dependable, and convenient interaction with customer at every encounter. (Ibid.)

The CRM Process

This section deals with literature regarding the integration of business functions in the
marketing strategy. Furthermore, this section covers the tactical integration of the CRM
process and the CRM process cycle.

Integration of Business Functions in the Marketing Strategy

Peppers & Rogers (1998) describes four principal business functions that a company
must integrate into its marketing strategy. Furthermore, the authors state that they
should be used together in order to compete successfully in the international business
world. (Ibid.) Table 2.1, describes the four principals business functions that a company
must integrate in its marketing strategy according to Peppers & Rogers (1998).
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Table 2.1 Functions of the Customer Centric Enterprise
Function Contribution Implemented by
Custodianship of the Differentiating customers by their Chief Executive Officer
customer base enterprise and their value to it; allocating Chief Financial Officer
resources appropriately Chief Information Officer
Marketing Executives
Sales Executives
Vertical Market Managers
Account Relationship Managers
Production, logistics, and Mass customizing to build loyal Operation Executive
service delivery customers at higher margins: creating Customer Service Executives
Learning Relationships Product Managers
Area Vice Presidents
Customer communication Providing dialogue feedback to specify Marketing Executives
(a) Individual customer needs and Sales Executives
(b) Share-of-customer opportunities Advertising Executives
Information Systems Managers
Customer Service Executive
Distribution and logistics Defining the customer within the Marketing Executives
“distribution waterfall”; creating 1:1 Sales Executives
relationships with distributors; Channel Managers
distributing products/services more cost-
efficiently
Source: Peppers & Rogers, 1998, p.28

 Financial custodian of the customer base. Almost all companies have a customer
base, but the way to use it differs. The customer centric enterprise treats the
customer base as the primary asset of the firm, carefully managing the investment it
makes in this asset. The custodian of the customer base is essentially about
identifying the differences between individual customers. (Ibid.)

 Production, Logistics, and Service Delivery. The customer centric enterprise must
be capable of customize its actual offering to the needs and preferences of each
individual customer. The feedback loop with an individual customer is useful only if
the interaction can be incorporated into the way the enterprise actually behaves
toward the customer. To receive a truly customized product or service, the customer
first has to say what he or she wants and how it should be delivered. These convert
the customer from passive target to active participant in the selling process. This
means that the production and logistics functions has to be integrated with the
marketing function on the micro level of the individual customer rather than just on
the macro level of the target market. (Ibid.)

 Market Communication, Customer Service, and Interaction Dialogue. Marketing

communication and all forms of customer interaction must be combined in a single
function to ensure that the dialogue with a customer today picks up where it left off
yesterday. Without individual customer feedback, no collaboration or customization
is possible, nor it is possible to specify a customers needs in more detail. Creating
dialogue opportunities with customers is a prerequisite for soliciting feedback. The
dialogue itself has to be integrated into the enterprises existing knowledge of that
customer and its needs for additional information. (Ibid.)

 Sales Distribution and Channel Management. A complex issue when implementing

a customer centric enterprise approach is the use of a distribution system that was
designed for disseminating standardized products at uniform prices now shall work
for customized products at customer specific prices. Getting customer feedback is
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 not easy at all if the firm must use intermediaries like retailers and value-added
resellers. Managing inventory for a warehouse distributor or providing product
support for a value-added reseller, or customizing the product packaging to meet the
needs of an individual retail chain. (Ibid.)

Tactical integration of the CRM process

Swift (2001) provides a view of the CRM process, which enables for terrain and contact
point thinking. In order to facilitate growth and actualization of the goals of CRM, the
company must desire to refocus on the four key elements of the original CRM process.
These four elements of tactical strategies for the CRM process include: interact,
connect, know and relate.

 Interact. A series of transactions and interactions, that makes up a dialogue between

a customer and an enterprise. This is the data that is collected from all contact points
and communication outside points of contacts. (Ibid.) See figure 2.1

.
COMPANY
Sales Agent Retail Direct Kiosk Call E-mail/ Internet ATM
Branch Mail Center Fax Extranet

Figure 2.1 Customer Contact Points

Source: Adopted from Swift, 2001, p.42

 Connect. The mapping and management of interaction points between a

consumer/customer/channel and an organization or enterprise. (Ibid.)

 Know. The insight gained through capture and analysis of detailed information to
create continuous learning about customers, products, channels, markets and
competitors. (Ibid.)

 Relate. The application of insight to create relevant interactions or communications

with customers, channels, suppliers and partners that builds value relationships.
Ibid.)

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 The CRM Process Cycle

Swift (2001) views CRM as an ongoing learning process where the information
regarding an individual customer is transformed into a customer relation. The process
starts with collecting knowledge about the customer and ends with an interaction with
the customer. This interaction enables the establishment of long-term profitable
relationships. To get knowledge about the individual customer the company must have a
well develop info-structure, this means that they must have an infrastructure for
handling information. To become a CRM company is just not only about customer
knowledge it is also about the ability to gather, analyze and to respond on the individual
customers needs. The CRM process cycle consists of the following elements:
Knowledge discovery, Customer interaction, Market planning and Analysis and
refinement.

Knowledge Discovery Customer Interaction

1 2
Learning

Action

Analysis and Refinement Market Planning

4 3

Figure 2.2 The CRM Process

Source: Swift, 2001, p.40

 Knowledge discovery. The first stage of the cycle is the process of analyzing
customer specification and investment strategies. The analysis is done through a
process of customer identification, customer segmentation, and customer prediction.
The detailed customer information of historical information and customer
characteristics gives marketing personnel a better base for decision-making. In this
stage the company’s focus should be on pre-understanding the individual customers
buying behavior. A well-developed and functional data warehouse is a condition
that must be fulfilled in this stage. The data warehouse is defined as a logical
collection of information gathered from all over the organization that supports
business analysis activities and decision-making tasks. Moreover the data warehouse
offers the company the opportunity to combine the massive amounts of information
with campaign management to improve the company’s response rate towards the
market. Finally, it enables the company to facilitate customizing offers, reduce costs
by developing targeted campaigns when the company can present the right message,
at the right time for the right customer. (Ibid.)

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 Customer Interaction. This is the phase of executing and managing customer
communication with relevant information at the right time and offerings using a
variety of interaction channels. The interaction channels used is the ones already
decided in earlier phases. Since it is extremely important to know which channels
the customer prefers to interact via and also the types of technologies they prefer to
utilize. An inventory of all customer interactions and possible interaction channels is
necessary to do. This is important since it is through customer interaction channels
the company has the opportunity to deliver marketing messages and sales
opportunities and to handle service issues. (Ibid.)

 Market planning. This process defines among other things specific customer offers,
and distribution channels. The phase involves four different activities namely
market planning, offer planning, marketing planning and communication planning.
The process enables investments in customer interactions, localization alternatives,
treatment plans and products and services. Furthermore this stage enables the
development of strategic communication plans or programs. (Ibid.)

 Analysis and refinement. This phase consists of a process aiming to capture and
analyzing data from the customer dialogue that the company has received from the
interaction channels. This is a continuing learning process focusing on refining
communication, prices volumes, and approaches etc to excel the business
opportunities in the interaction with customers. A vital task is to understanding
customer specific responses to the company’s customer (marketing or sales)
stimulus. (Ibid.)

CRM’s affect on the organizational structure

This section deals with literature regarding the how CRM affects the organizational
structure of companies. This section covers the organizational design variables and also
organizational change. Finally, theory regarding the structure of the CRM marketing
organization is presented.

Organization Design Variables

Galbraith & Kazanjian (1986) propose that the choice of organizational form consists of
a comprehensive design of structure, systems and processes. Their proposed theory
handles the issue of how the marketing strategy in a company affects certain
organizational design variables. Furthermore, the authors state that this theory can be
used when altering the market strategy from transactional oriented to relationship
focused.

The major variables proposed by the authors and presented in figure 2.3 are: task,
structure, information and decision processes, reward systems and people. Each of the
variables depicted in Figure 2.3 represent a choice for the organization. However, to be
successful, the choices should be internally consistent and also consistent with the
firm’s strategy.

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 Task

Product/ Market StrategyPeople Structure

Performance

Information and Decision Processes

Reward System

Figure 2.3 Schematic Showing Fit Among Major Organizational Design Variables
Source: Galbraith & Kazanjian, 1986 p.2

Task

 Uncertainty. This is the core concept upon which the organization design
frameworks are based. Uncertainty is the difference between the amount of
information required to perform the task and the amount of information already
possessed by the organization. (Galbraith, 1977)

 Diversity. A process of becoming less dependent on one or a few business areas or

products. Diversification into different business areas can aid a company in
smoothing its sales and profits during different business cycles. (Galbraith &
Kazanjian, 1986)

 Interdependence. There are three types of interdependence. Firstly, pooled, which

means that two units share the same pool of resources. Secondly, sequential, where
there is a movement of work between units. Thirdly, reciprocal, which is a unit that
feeds an inspection operation that in turn feeds back to the assembly unit. (Galbraith
& Kazanjian, 1986)

Structure

The well-known organizational strategist Alfred D. Chandler defines structure as:

“The design of organization through which the enterprise is administered.”

(Chandler, in Galbraith & Kazanjian, 1986 p. 66)

Furthermore, another organization theorist, John Child define structures as the formal
allocation of work roles and the administrative mechanisms to control and integrate
work activity, including those that cross formal organizational borders. (Galbraith &
Kazanjian, 1986) Galbraith & Kazanjian (1986) has categorized structure in the
following variables.
- 15 -
 Division of labor. This is, the task of the organization that has to be divided into
subtasks and each subtask has to be assigned to an individual. They are referred to
as division of labor and can be divided into horizontal or vertical division of labor.
(Galbraith, 1977)

 Departmentalization. This refers to when a company divides the work and than
aggregate the work roles in order to form groups, units, department and division to
handle each divided work task. (Galbraith & Kazanjian, 1986)

 Shape. Shape is referred to what organizational structure the company has chosen. It
can differ from the centralized functional organization, the decentralized multi-
divisional forma, the holding company form and the matrix organizational shape.
(Galbraith & Kazanjian, 1986) The shape or configuration of the organization is
measured by the average spans of control and the ration of managers and staff to
total personnel (Garratt, 2000).

 Distribution of power. This refers to how the distribution of power is done

throughout the organization. The vertical distribution is a question of centralization
and the lateral distribution is an issue for the line-staff authority. This thereby allows
for decision making at lower levels in the hierarchy. (Galbraith, 1977)

Information and Decision Processes

 Planning and control. In every organization, planning and control systems must be
installed to be able to identify weak areas of the organization in terms of
performance. (Galbraith & Kazanjian, 1986)

 Resource allocation systems. Organizations undertake a myriad of activities in

allocating their resources. These activities are usually labeled as budgeting and the
planning and control systems mentioned above. (Galbraith & Kazanjian, 1986)

 Integrating roles and departments. The roles and departments must be integrated
into the whole organization in order to provide the differentiated subtasks so as to
achieve successful completion of the whole task, i.e. all individuals’ tasks should be
a part of the whole task. (Galbraith & Kazanjian, 1986)

Reward System

 Compensation. This is referred to in what way and to what extent the employee and
manager are compensated for their work based on performance to round out the
reward system. It can be further categorized into system reward, group reward and
individual rewards. (Galbraith, 1977)

 Promotion. An alternative to tying salary directly to performance is to promote

individuals to higher paying jobs on the basis of performance. (Galbraith, 1977)

 Job design. Galbraith & Kazanjian (1986) states that job design is a powerful
motivation and a man for integrating individual and organizational interest. This can
be created through job enlargement, job enrichment or other types of adjustment to

- 16 -
 Special awards. Extraordinary work performance must be rewarded with special
awards appropriate to the result of the work. They should be realistic but not very
easy to reach. (Garratt, 2000)

 Performance measurements. Companies must establish some sort of system for

performance measurement in order to be able to compare the company’s activities
and operations with themselves and other. This can be done on both short-term and
long-term basis. (Galbraith & Kazanjian, 1986)

People

 Recruiting selection. Practitioners believe that the key to organizational

effectiveness is to find the good people and get them into positions of power.
Furthermore, selection is a key design variable. (Galbraith, 1977)

 Transfer, promotion. As people perform and gain more experiences they can be
transferred within the company as a mean of promotion to show appreciation for
their performance. (Galbraith & Kazanjian, 1986)

 Training and development. Theorists state that training and development

experiences should be used to change managers and employees in order to integrate
the individual and the organization. (Garratt, 2000)

 Leader style. Someone always have to be the leader. The occasional use of force
from a leadership position raises the question about who should be the leader of the
team or task force. There are different leadership styles, both formal and informal. It
is important to have the right leader appointed for the right task. (Galbraith, 1977)

Organizational Change

As an organization evolves from a traditional, product-focused enterprise to a customer-

focused, customer driven enterprise, it will need a new infrastructure to support the
processes (Peppers & Rogers, 1999). According to McDermott, one of the father figures
in the field of customer relationship management, in Peppers & Rogers (1999), the most
difficult part of making this transition is not acquiring and installing the technologies
required, but adapting the organization and its people to use it. Moreover, according to
McDermott, a company making these changes has to handle the five components:

 Automation. This refers according to the theory to the creation of a digital paperless
office. Moreover, this would enable the employees to provide greatly improved
customer services because all information would be at their fingertips. (Ibid.)

 Attrition. The second component, attrition allows the company to replace a large
portion of the embattled workforce with fresh faces recruited on the basis of their
willingness to work in a customer-focused environment. This is easily performed in
a company with high turnover and can then be accomplished without resorting to
massive layoffs usually associated with corporate re-engineering. (Ibid.)

 Reorganization. In terms or reorganization, the company should break up the

entrenched bureaucracies that are accumulating around departments such as
- 17 -
 accounting, claims and underwriting. Most companies have a weak horizontal
communication and few employees and managers have a clear picture of the
complete organization. (Ibid.)

 Training and education. Training and education refers to the possibilities to allow
managers to professionalize the company’s employees to the point where they could
make day-to-day decisions with minimum input from senior managers. (Ibid.)

 Empowerment. In the fifth and final component of organizational change,

McDermott refers to free the employees from the “production line” mentality that
made it impossible for the staff to focus on customer issues. (Ibid.) To further clear
this last stage, McDermott used a metaphor to describe this better:

“Do you think that Eisenhower personally told the machine gunner in the
second World War where to aim? Certainly not, the soldiers knew their mission
and were empowered to accomplish it.” (McDermott in Peppers & Rogers,
1999, p.98)

Moreover, the power and information structures in a company are often, according to
Storbacka & Lehtinen, (2000) the largest obstacles towards a successful implementation
of CRM. The product manager organization is the largest causes to the problem, due to
that an organization can have a large number of product managers using the same
customer base. By this reason they have a low willingness to share information
regarding customers. Therefore it is necessary to wind up the companies old power
structures in order to secure the flow of information in the organization and to provide
the customer coherent products. (Ibid.)

Structure of the CRM Marketing Organization

Swift (2001) has developed a model of how companies can structure their CRM
organization. The basic idea is to focus around the key communication and interaction
process. For ease of understanding and to map to the CRM process, the marketing
organization should follow along line of know, relate, interact, and connect. This is
presented in figure 2.4.

CRM Marketing V.P.

Marketing Analyst Campaign Manager Segment Manager Channel Manager

The Right Customer Data Mining,

TheAnalysis
Right Offer
of Knowledge
Designs offers,
Foundation,
The Strategy, Timing, printed matter,
Right Time Using Product Management,
the Right Channel(s) Advertising, PR
Coordinates messages
Hypothesis Development & Validation Owns all customers, has ultimate say. Campaigns,

Touches, Treatments, Privacy across channels,

Figure 2.4 The CRM Marketing Organization with Roles

Source: Swift, 2001, p.52
- 18 -
 The CRM Marketing VP. This function emphasizes, manages and coordinates all
facets of the marketing process and is measured on retention, profitability &
acquisitions. The titles today are often Marketing VP and should more accurately be
named Relationships and Communications VP, for this is what this individual must
focus on and to concentrate resources on and achieve ongoing results for the entire
management team. (Ibid.)

 The CRM Marketing Analyst. Focusing on identifying the right customer or

investment opportunities that are worth to exploit. The marketing analyst is intimate
with the knowledge foundation via databases and interacts closely with the IT
department and particularly the database administrator. Except from customer
identification the marketing analyst must segment the customers so that different
events that are worthy of analysis can be identified and the right customer decision
can be made. (Ibid.)

 The CRM Campaign Manager. Having identified the opportunities, the Campaign
Manager then creates the right offer towards the right customer. The campaign
manager is responsible for designing “offers” and to determine campaign strategy.
When doing this, it is important to align various campaign ownership groups such as
product managers, advertising managers, and public relation departments and
outside firms to ensure that the campaign process is fully integrated with the offers.
Test marketing of new offers and the management of the relationship with mail
houses and telemarketing firms are also key tasks for the campaign manager. (Ibid.)

 The CRM Segment Manager. This is perhaps the most important player in the CRM
process, since this person owns the business opportunities or the business problems
such as customer retention, customer acquisition, and customer profitability. He or
she has the final authority and responsibility to decide whether the relationship
marketing and communication process touches the customer, at the right time. The
segment manager is the glue of the team and form a linchpin in the CRM process,
when he or she:

 Manages the dialogue between the company and customer.

 Determines the communication plan, touches, treatments, and rules for

engagement.

 Owns privacy in the organization.

 Interacts with others to align execution of the four elements in the tactical
strategy, i.e. know, relate, interact, and connect. (Swift, 2001)

 The Channel Manager. Channel manager coordinates the customer, offer, and
timing into the channel decisions, and ensure that the same offer is communicated
and then reinforced across all customer contact channels. One important issue is to
present “a single-company image” to the customers across all customer contact
channels. This means that he must interact with the call centers, internet team, sales
force, customer service, and resellers to coordinate touches, treatments and total
customer communication. (Ibid.)

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3.
4. Theoretical Frame of Reference
In the previous chapter, we presented a brief review of the literature related to our
research questions. This chapter will provide the conceptualization, which constitutes
the frame of reference for this study. Based on the literature review, we will in this
chapter select relevant studies and concepts that we will use in our research. Hence, the
frame of reference will guide us when collecting the data and help us fulfill the purpose
of gaining a better understanding of how CRM is used in companies. After presenting
the conceptualization, we will provide a visualization of the emerged frame of
reference.

Conceptualisation

According to Miles & Huberman (1994, p.18), a conceptual framework:

“Explains, either graphically or in narrative form, the main things to be

studied”

We will here start by presenting the theories that will be used connected to our first
research question, of what different objectives do companies have with CRM? This will
be followed by theories connected to our second question, of how can the CRM process
in companies be described? Furthermore, previous research and theories that relates to
the third research question, how is companies the organizational structure affected by
the introduction of CRM? Since CRM is originated from the foundation of relationship
marketing, this will imply that we as authors will remain loyal to this marketing view.

Objectives with CRM

In this section, the conceptualization will be based on the first research question. Hence,
the theories that we believe are crucial in order to be able to answer how companies
perceive the objectives of CRM will be pointed out. The models are related to three
areas: cost savings, revenue enhancement, and strategic impact for the company when
using CRM, suggested by Burnett (2001). First of all, we will specify the theories
regarding objectives with CRM and explain and tie this to the above-described areas.

In order to answer this first research question we will divide the objectives for CRM in
to three categories as suggested by Burnett (2001): cost savings, revenue enhancement,
and strategic impact. The objectives we will use are the objectives presented by Burnett
(2001), Galbreath & Rogers (1999) and Kalakota & Robinson (1999). The theoretical
objectives presented by Swift (2001) is very similar to the objectives presented by
Burnett (2001) and can therefore be viewed as incorporated in his objectives. The
objectives presented by Newell (2000) are also used in our frame of reference. Our
motive for using the above mentioned theories and models are due to the fact that they
complement each other, discussing three important areas of CRM, and create a broad
and fundamental basis for the objectives connected to CRM. Finally, by introducing and
using the different models and theories by several author’s makes our frame of
reference very extensive and covers different angles from which the objectives can be
stated.

- 20 -
To be able to find out what objectives for CRM a company can have in terms of the first
category, cost savings, theories of different sources will be utilized. We will select the
ones that are recent and extensive to in the best possible way find out the sources that
can be used. These are:

 Decreased general sales and marketing administrative costs. (Burnett, 2001)

 Measuring results and proving return on investments. (Newell, 2000)
 Communicating and delivering the appropriate values to each customer in ways the
customer wants to receive the information. (Newell, 2000)
 After-sale service/support. (Galbreath & Rogers, 1999)
 Introducing consistent, replicable channel processes and procedures (Kalakota &
Robinson, 1999).

We will also adopt theories what objectives a company can have for CRM in terms of
revenue enhancement. Hence, the selected variables used are:

 Increased sales revenues. (Burnett, 2001)

 Improve win rates. (Burnett, 2001)
 Increased margins. (Burnett, 2001)
 Determine if delivery of customer values will affect in positively. (Newell, 2000)
 Reach economies of scale through mass customization. (Galbreath & Rogers, 1999)
 Use existing customer relationship to grow revenue. (Kalakota & Robinson, 1999)

Literature discussing the third category, strategic impact, will be used in order to see
what strategic objectives companies can have for CRM. This includes:

 Improved customer satisfaction rates. (Burnett, 2001)

 Identifying customer values that are pertinent to a particular segment. (Newell,
2000)
 Understanding the relative importance of values connected to each customer
segment. (Newell, 2000)
 Build personal relationships. (Galbreath & Rogers, 1999)
 Use integrated information for excellent service. (Kalakota & Robinson, 1999)

The CRM Process

This section deals with the second research question, of how the CRM process in a
company can be described. Theories that are important in order to be able to answer this
question will be specified. The structure will be the same as in the literature review,
following the four business functions by Peppers & Rogers (1998) and the CRM
process of Swift (2001) The reason to this is that these theories deals with all the aspects
of the CRM process from two different approaches, and is therefore together more
extensive than just using of the models by themselves. Swift (2001) adopts a more
action-oriented view of the CRM process and Peppers & Rogers (1998) has a function-
oriented approach to the topic. To provide a basis for answering the second research
question, we have used the above stated theories and models, which also focus directly
on the CRM process.

- 21 -
First, we will use literature discussing what functions are involved in the CRM process
will be used in order to see how companies can contribute from using CRM. The
function-oriented theory by Peppers & Rogers (1998) give a completely different but
together with Swift (2001) a very extensive coverage of the CRM process and will
therefore be used. Moreover, it is interesting to view how companies implement
different functions in order to see how well founded the CRM strategy and process are
in the company. Peppers & Rogers (1998) have the most detailed description of how it
can be applied, and will therefore be the model we base this section.

 Financial custodian of the customer base

 Production, logistics, and Service Delivery
 Market communication, Customer Service and Interaction Dialogue
 Sales Distribution and Channel Management

Secondly, we will discuss the theory related to the activity-oriented approach, i.e. Swift
(2001) and then the function-oriented view by Peppers & Rogers (1999) is covered. The
motive for choosing the CRM Process model by Swift (2001) is that it describes the
elements and processes of CRM. The reason for using the four-business function model
by Peppers & Rogers (1998) is that this theoretical proposition to a large extent focuses
on the function within a customer-focused organization. Since the selected theories
differs to a vide extent from each other, they will be used separately but linked, based
on the above-stated reasons. The theory by Swift (2001) states that the following steps
are involved in the CRM process and will therefore be used in our conceptualization.

 Knowledge Discovery
 Market Planning
 Customer Interaction
 Analysis & Refinement

To be able to find out how a company can act in the third step of the activity-oriented
CRM model approach by Swift 2001, customer interaction, the suggested Customer
contact points, by Swift (2001) will also be utilized as a foundation to get better
understanding of how companies can interact with their customers. We have selected
these one on the basis that is extensive enough to in the best possible way find out the
sources that can be used. These are:

 Sales
 Agent
 Retail Branch
 Direct Mail
 Kiosk
 Call Center
 E-mail/fax
 Internet/Extranet
 Automatic Teller Machines (ATM)

- 22 -
 The Structure of the CRM Organization

In this section, the conceptualization will be based on the third research question.
Hence, the models that we believe are necessary in order to answer how Swedish
companies structure their CRM organization. The models are related to three areas:
factors affecting the organizational structure, company change and the structure of the
CRM organization. Firstly, we will specify the model used regarding organizational
design variables that determined and shape the organization structure when introducing
new strategies. Secondly, what steps a company goes through when implementing CRM
in their organization and thereby shifting from product-oriented to customer focus.

Models regarding variables affecting the organizational structure will be used in order to
be able to see what determine the actual organization and how these factors can
influence the transition from product-oriented to customer-focuses. For this purpose,
the theory by Galbraith & Kazanjian (1986) will be used. This theory explains how
different aspect of the company will be affected when introducing a new strategy i.e.
CRM. The theory is well formalized and gives a good understanding of how different
areas within a company is affected by a change in strategy as well as a change of
another variable. Furthermore, theories by Galbraith (1977) and Garratt (2000) will be
incorporated to give an even more extensive base for analysis. The areas involved in the
theory and that will be utilized are:

 Task
 Structure
 Information and decision processes
 Reward systems
 People

In terms of the actual organizational change process that a company goes trough when
shifting their focus, organization, goal or vision, McDermott’s theory in Peppers &
Rogers (1998) will be used. This theory is well known within the field and brings to the
surface five important issues a company or management teams much deal with when for
instance introducing a customer-focused view within the company, i.e. CRM. These
variables have been used successfully in numerous companies and will therefore be
used in this thesis. Therefore, based on the above-mentioned reasons, the following
variables will be used in order to study this phenomenon:

 Automation
 Attrition
 Reorganization
 Training and education
 Empowerment

When introducing CRM to the organization and thereby shifting the focus of the
company, the marketing organization most certainly is affected. Therefore, we will
study the whole organization but also study if different positions within the marketing
organization are created when introducing CRM.

- 23 -
In this area the theory by Swift (2001) will be utilized in order to point out key positions
that the theories stipulate are essential in order to receive an effective and well-
functioning marketing department that incorporate CRM into every day activities. Swift
(2001) identifies five different but important position needed in order to find the right
customer, give the right offer at the right time and using the right channel. Furthermore,
Swift (2001) states that the marketing organization should follow along the line of the
CRM process in terms of know, relate, interact and connect. The important positions in
the marketing organization are:

 The CRM Marketing VP

 The CRM Marketing Analyst
 The CRM Campaign Manager
 The CRM Segment Manager
 The Channel Manager

The theory regarding the marketing organization and its structure will serve as a
foundation and provide us with the proper framework in order to answer how the
organization is affected by the introduction of CRM.

The presented theories and models in the literature review constitute a portion of the
existing proposed theoretical foundation in the area of research. We have not further
limited our literature base since we perceived the presented theories to be both relevant
but also essential for this thesis.

Emerged Frame of Reference

In this section we will present our emerged frame of reference. Figure 3.1 visualizes our
frame of reference, showing the company’s objectives with CRM. How the CRM
process within a Swedish company can be described and finally, how Swedish
companies are affected by the introduction of CRM in their CRM organization. The
three aspects are co-existing and thereby interdependent.

- 24 -
 A Company
RQ 1
The CRM Objectives
Revenue enhancement
Cost Savings Strategic Impact

  Increased
Decreased general sales and marketing administrative
salescosts.  improve.customer satisfaction rates. Identifying customer
Improved
revenues. Win rates
Measuring results and proving return
 onIncreased
investments. values

margins. Determine if delivery that are pertinent
of customer to will affect
values
Communicate and deliver the appropriate values to each customer in ways
positively. a particular
the customer
segment.
wants Understanding
to receive the information
the relative importance of values
 
After-sale service/support. Introducing Customization.
consistent, replicable channel connected to each
processes and procedures  Use existing customer relationshipcustomer
to grow segment.
revenue.
 Personal relationships.

Use integrated information for excellent service.






RQ 2

The CRM Process

Activity Function oriented
oriented
 Financial custodian of the customer base
 Knowledge Discovery  Production, logistics and service delivery
 CRM´s affect on the organizational
Customer Interaction  Customer communication
 Market Planning structure Distribution and logistics
 Analysis & Refinement
Company Change

RQ 3  Automation
 Attrition
Figure 3.1 Emerged Frame of Reference  Reorganization
 Training and education
 Empowerment

Marketing Organization
Organizational Design Variables
5. Methodology  The CRM Marketing VP
 The CRM Marketing Analyst
 The CRM Campaign Manager
The previous chapter showedTask how the literature has been conceptualized in this study
 The CRM Segment Manager
and provided a visual explanation of the emerged frame of reference.
The Channel This
Managerchapter will
cover the methodology used in this research. The selection of methodology is based on
People Structure
the research problem and stated research questions. Motivations and justifications for all
adopted methodological choices will be given in each section.

Info & decision Processes

Reward System
Research Purpose:
Exploratory Explanatory
Descriptive

Research Approach: Quantitative

Qualitative

- 25 -
Research Strategy:
Case Study Archival Analysis
Surveys Experiments Histories
Figure 4.1 Selected Research Path
Source: Author’s own construction

- 26 -
 Research Purpose

Yin (1994) and Eriksson & Wiedersheim-Paul (1997) means that research strategies can
be used for the three purposes: explore, describe, or explain. Exploratory studies aim for
basic knowledge within the problem area (Wallén, 1996). These studies are suitable
when a problem is difficult to demarcate and when relevant theory is unclear. They are
further appropriate when important characteristics and relations are hard to determine.
Descriptive research is appropriate when a problem is clearly structured but the
intention is not conduct research about connections between causes and symptoms. The
researcher knows what he or she wants to investigate but not the answers. Explanatory
research is useful for studying relations between causes and symptoms. The researcher
tries to identify the factors, which together cause a certain phenomena (Eriksson &
Wiedersheim-Paul, 1997).

Which category a study belongs to depends on ambitions and knowledge within the
research area (Wallén, 1996). The research purpose of this thesis is mainly descriptive.
This due to the fact that the research purpose is clearly structured and that this thesis
wanted to gain a better understanding of how Customer Relationship Management is
used in companies. Moreover, the fact that we are not focusing on the connection
between causes and symptoms also demonstrate that this thesis will follow a descriptive
approach. However, this thesis is also somewhat exploratory. This due to that CRM is a
rather new area of interest for companies and also by the fact that we have not been able
to find studies that focus on the exact same topic as we have chosen to do in this thesis.
Towards the end of this thesis the authors’ own conclusions are presented by answering
the research questions. In that sense, this thesis is beginning to explain the issues that
have been described. This makes our study mainly descriptive but with exploratory and
explanatory influences.

Research Approach

According to Holme and Solvang (1991), there are two general approaches of a
research, qualitative and quantitative. When conducting a quantitative research,
statistical methods are used to analyze the data and a large number of respondents are
selected, either randomly or judgmentally. A quantitative approach is formalized,
structured and characterized by a high degree of control from the researcher. The
distance between the source and the researcher is larger than in a qualitative research.
During a qualitative research, one or few objects are studied in depth and the main
purpose is to gain a deeper understanding of the problem studied and to acquire a
profound knowledge of the studied objects. The qualitative approach is characterized by
closeness between the source and researcher, and a low degree of formalization. (Ibid)

The choice of research approach naturally depends on the defined research problem and
the data needed for solving this problem. In this thesis, a qualitative approach is used.
This is due to the aim of gaining a better understanding of how CRM is used in
companies. Furthermore, in order to understand and characterize the use of CRM in
companies, a qualitative approach is the most appropriate. The stated research questions
will require answers that probably cannot be fully obtained by quantitative means.

- 27 -
 Research Strategy

Yin (1994) lists five research strategies that a researcher can choose between in social
science. These are experiments, surveys, archival analyses, histories and case studies.
Yin claims that the selection of one of these strategies depends on (1) the type of
research question, (2) the extent of control a researcher has over behavioral events, and
(3) the degree of focus on contemporary versus historical events. Table 4.1 below shows
the different research strategies in relation to these three conditions.

Table 4.1 Relevant Situations for Different Research Strategies

STRATEGY Form of research Requires control over Focuses on
question behavioral events contemporary events
Experiment How, why Yes Yes
Survey Who, what, where, how
many, how much No Yes
Archival analysis Who, what, where, how
many, how much No Yes / No
History How, why No No
Case study How, why No Yes
Source: Yin, 1994, p. 6

In this research, the type of research question posed is primarily of a “how” character,
there is no control over the behavioral events, and the focus is on a contemporary event.
This will influence the choice of research strategy. An experiment is done when an
investigator can manipulate behavior directly and precisely. This can occur in a
laboratory, focusing on isolated variables. (Ibid) Hence, in an experiment, control over
the behavioral environment is required, and is therefore not possible in our research.
Survey research is, according to Tull and Hawkins (1990), concerned with systematic
gathering of information from respondents, generally in the form of a questionnaire. The
use of questionnaires would not provide us with the better understanding of how CRM
is used in companies, and can therefore be ruled out as well. The historical method deals
with the past, and is used when no relevant persons are alive to report (Yin, 1994).

As the above discussion indicates, two strategies seem to be appropriate in our research,
an archival analysis and a case study. When conducting an analysis of archival
information, Yin (1994) holds that the goal is to describe the incidence or prevalence of
a phenomenon. The use of archival information is difficult when this topic is a coming
research area. Yin describes a case study as:

“An empirical inquiry that investigates a contemporary phenomenon within its

real life context, especially when the boundaries between phenomenon and
context are not clearly evident.” (Yin, 1994, p.13)

However, Yin notes that the preferred strategy when the question is “how”, there is no
control over behavioral events, and contemporary events are studied, is the case study.
Therefore, the case study is selected as research strategy in this study.

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According to Yin (1994), a case study can be either a single-case or a multiple-case
study. Eriksson and Wiedershiem-Paul (1997) note that the possibilities of comparisons
between the cases are added in a multiple-case study, and that this could increase the
understanding. Yin (1994) also notes that the evidence from multiple cases often is
considered more compelling, and that the study therefore is regarded as more robust.
Due to these advantages, this research is conducted by using a multiple-case study. As
we had decided to use a qualitative approach, case studies shown to be the most
appropriate choice for our thesis. Further support for the choice of case studies is that
the research was conducted in five companies, by looking on several issues, and this
made us unable to draw any general conclusions but rather generalize to theoretical
propositions.

Data Collection Method

When conducting case studies, Yin (1994) asserts that the data collection can rely on six
different sources. These sources include documents, archival records, interviews, direct
observation, participant observation and physical artifacts. Yin also notes the
importance of using multiple sources of evidence, so called “triangulation”, i.e.
evidence from two or more sources. Table 4.2 shows the strengths and the weaknesses
of each of the six sources of evidence.

Table 4.2 Six Sources of Evidence: Strengths and weaknesses

Source of Strengths Weaknesses
Evidence
 Stable - can be reviewed repeatedly.  Retrievability – can be low.
 Unobtrusive – not created as a result  Biased selectivity, if collection is
of the case study. incomplete.
Documentation  Exact – contains exact names,  Reporting bias – reflects
references, and details of an event. (unknown) bias of author.
 Broad coverage – long span of time,  Access – may be deliberately
many events, and many settings. blocked.
 Same as above for documentation.  Same as above for documentation.
Archival  Precise and quantitative.  Accessibility due to privacy
Records reasons.
 Targeted – focused directly on case  Bias due to poorly constructed
study topic. questions.
 Insightful – provides perceived causal  Response bias.
Interviews inferences.  Inaccuracies due to poor recall.
 Reflexivity – respondent gives
what interviewer wants to hear.
 Reality – covers events in real time.  Time-consuming.
 Contextual – covers context of event.  Selectivity – unless broad
coverage.
Direct  Reflexivity – event may proceed
Observations differently because it is being
observed.
 Cost – hours needed by human
observers.
 Same as above for direct  Same as above for direct
Participant observations. observations.
Observation  Insightful into interpersonal behavior  Bias due to investigator’s
and motives. manipulation of events.
Physical  Insightful into cultural features.  Selectivity.
Artifacts  Insightful into technical operations.  Availability.

- 29 -
Source: Yin, 1994, p. 80

- 30 -
Archival records have the same strengths as documentation, but are also more
quantitative and precise. Since this is a qualitative research, these latter characteristics
are not needed in this study. Direct observations will not be used either, mainly due to
that it is extremely time consuming and very costly. This is also the case with
participant observation. Physical artifacts are not relevant in this study either, since
there is no real need for data on cultural features or technical operations. In this
research, the sources of documentation and interviews will be used, allowing for
multiple sources of evidence. Documentation that will be used is mainly in the form of
company information material. Documentation material will provide us with more
information about the company, allowing us to obtain a clearer picture of the companies
studied and how they handle CRM. Interviews were used due to its ability of providing
a deep insight.

According to Yin (1994), interviews can be open-ended, focused or structured. In open-

ended interviews, the interview does not follow any structured questions. Yin holds that
one asks a respondent for both the facts of a matter as well as for the respondent’s
opinion about events, and the respondent might act more like an informant than a
respondent. In a focused interview, the respondent is interviewed for a short period of
time, like an hour. Here, the researcher is more likely to follow a certain set of
questions, although the interviews might still assume a conversational manner. Finally,
a structured interview is the most structured form of interview. The questions are clearly
structured along with the lines of a formal survey. (Ibid.)

In this study, a focused interview was conducted since a certain set of questions needed
to be answered during a limited period of time, in order to obtain data on the research
questions. The interviews also had to be relatively open-ended, since we wanted to
preserve the interview flexibility. We also wanted to be able to use probing techniques,
which is possible in focused interviews.

According to Eriksson and Wiedershiem-Paul (1997) there are two types of interviews:
personal and telephone interviews. In this research, the interview method used was a
telephone interview. A personal interview was not used mainly for reasons of high cost
and time consumption, but also due to the belief that the questions in this research could
be answered properly by way of telephone interviews. Before the interviews were
conducted, an e-mail was sent to the respondents, explaining the area of research and
overall purpose, forming a base for the following interviews. We also had telephone
conversations with several individuals including the respondent in each company. This
gave us a good pre-understanding of the topic in general and especially how it worked
in each company. We believe that this gave us the possibility of obtaining the most
exhaustive data related to our research questions.

During the interviews, a pre-constructed interview guide was used (see appendix A), as
suggested by Holme and Solvang (1991). The same interview guide was used during all
interviews. However, the returned questions from the respondents gave us hints on what
to ask in each interview more specifically. This included that some questions could be
ruled out and some questions deemed as necessary could be added in each interview.
The telephone interviews lasted around 60 to 80 minutes, and were all conducted in
Swedish, which is the mother tongue both of the researchers and the interviewees.

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 Sample Selection

In order to suit our research purpose, the sample collection followed some judgmental
criteria. As discussed in chapter one, there is a need of investigating how CRM is used
in companies. Our first sample criterion is that the companies have to originate from
Sweden. This criterion is suitable since Sweden has a large portion of both MNC’s and
SME’s that have customers all over the world. This will also facilitate the contacting
phase and ease the establishment of a good relation with the respondents in this
research. Secondly, we wanted the companies to have international operations, since we
believe that these are more likely to have extensively facetted customer relationship and
may use CRM as a tool, which also is indicated in chapter one. The third criterion is that
the companies should claim that they actively are managing customer relationship in
some way.

Even though there is no specific industry criterion in this study, we wanted to study five
companies operating in at least two dynamic industries. Another criteria were a high
stated customer focus in their business. Moreover, since it is of great importance for
large companies to have well developed relationships, especially customer relationships,
as mentioned in chapter one, the sample will contain large companies. Companies were
identified from a list of Sweden’s 50 largest companies in Veckans Affärer, nr 38,
(2001). After identifying proper companies, we called them up in order to find out if
these matched our criteria. Nine companies in five industries were identified and five of
them matched the above stated criteria. These companies can be seen in table 4.3 below.

Table 4.3 Companies, Industries and Respondents Included in this Research

Company Industry Respondent
SEB Financial CRM Project Manager
SKF Manufacturing VP Nordic sales
FöreningsSparbanken Financial CRM Project Manager
SCANIA Manufacturing Customer Information Manager
SKANSKA Construction Chief Marketing Officer
Source: Author’s own construction.

According to Holme and Solvang (1991), the selection of respondent is crucial. If the
wrong persons are being interviewed, the research may turn out to be invalid or
worthless (Ibid). During the first contact call with each company, the intention with the
research was explained and the right person to speak with was identified. In order to
fulfill the purpose of this thesis it is of great importance to get in contact with the
persons with most knowledge and experience of working with relationships at the
companies. Since the chosen respondents at each company are perceived to be the most
appropriate persons both by their companies and themselves, we believe that this has
been achieved.

Analysis of Data

There are basically three different ways to draw conclusions, the inductive or the
deductive or the abductive way. (Alvesson & Sköldberg, 1994) Induction means that
general conclusions are drawn from empirical findings. The inductive approach is
commonly used when there are very few established theories in the field of study, and
the aim of research is to form a new theory.

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Deduction implies the drawing of a conclusion perceived as valid if it is logically
connected. Usually in studies of a deductive nature, already established theories and
literature are used as foundation for the research. When using an abductive approach,
the researcher starts in empirical facts, as in the inductive approach but do no reject
theoretical pre-conceptions. The idea of abduction is that a separate case is interpreted
according to a theoretical overarching pattern that, if it was true, explains the case. The
observations should then be confirmed through new observations. (Alvesson &
Sköldberg, 1994) The observations from the study are then compared with the
theoretical frame of reference. (Yin, 1994) Further distinctions between the three
approaches are provided in figure 4.2.

Deduction Induction Abduction

Theory

Empirical
Regularities

Empirical
Observations
Figure 4.2 Deduction, Induction and Abduction
Source: Alvesson & Sköldberg, 1994 p.45

This research followed a deductive approach. We started by studying already

established theories within the area of different types of buyer-seller relationship and
continued with theories regarding management of customer relationships. We found it
appropriate to start with the theories to get a foundation for our research to be able to
construct the questions in the interview guide and then later on logically to try to draw
conclusions based on knowledge and empirical findings. An inductive or abductive
approach would not have been suitable to use in since it is to time-consuming.

General Analytical Strategy

Marshall and Rossman (1989) say that data analysis is the process of bringing order,
structure, and meaning to the mass of collected data. This is an important and time-
consuming part of the research. They continue to state that qualitative data analysis is a
search for general statements about relationships among categories of data; it builds
grounded theory. Furthermore it is important to realize that the samples are smaller in a
qualitative research than in a quantitative one, but it may be more subtle and complex.
That will affect the data analysis. Yin (1994) claims that every investigation should start
with a general analytic strategy, yielding priorities for what to analyse and why.
Marshall and Rossman (1989) give an analytic procedure for that data analysis will fall
into five categories:

 Organising the data: reading, reading and reading to become familiar with the data,
and during this process list on note card the data available, perform minor editing of
field notes, and “clean up” what seems overwhelming and unmanageable.

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 Generating categories, themes and patterns: noting regularities in the setting or
people chosen for the study, identifying themes, recurring ideas or language, and
patterns of belief that link people.

 Testing emergent hypotheses: evaluate the reasonableness of the developing

hypotheses and testing them against the data; evaluate the data for informational
adequacy, credibility, and centrality; and determine if the data are useful in
illuminating the questions being explored.

 Searching for alternative explanations: search for other explanations, identify, and
describe them, and demonstrate how the explanation offered is the most reasonable.

 Writing the report: central to the process and cannot be separated from the
analytical process, because the researcher is engaged in an interpretive act while
writing.

Marshall and Rossman (1989) continue to say that each phase of the data analysis
involves data reduction to bring the collected data into manageable pieces, and
interpretation of data. This is something Miles and Huberman (1994) also talk about.
They define data analysis as consisting to three different concurrent flows of activity:
data reduction, data display and conclusion drawing and verification. They refer data
reduction to the process of selecting, focusing, simplifying, and transforming the data
that appear in written-up field notes or transcriptions. Data reduction occurs
continuously throughout the whole qualitative study. They continue to state that data
reduction is a form of analysis that sharpens, sorts, focuses, discards, and organize data
in such a way that conclusions can be drawn and verified. (Ibid.)

According to Miles and Huberman (1994), most analysis is done with words. They
identify two types of analysis, within case displays and cross case displays. By display
the authors mean:

“A visual format that presents information systematically, so the user can draw
valid conclusions and take needed action.” (Miles and Huberman, 1994, p.91)

In a within case analysis, collected data will be compared with previous theory in order
to identify differences and similarities. The aim of doing a cross case analysis is to be
able to compare the single cases with each other and to increase generalizability. In a
cross case analysis, it is possible to see if the collected data in the separate cases are
diverse, typical, effective, ineffective etc. Miles and Huberman (1994) further present
matrices as good tools to visualize the collected data in order to make it easier to
compare and analyze them. Systematically structuring the collected data in logic
matrices has excellent consequences for understanding. (Ibid.)

In this research, both within case analyses and a cross case analysis will be conducted.
First, each case will be analyzed separately and compared with previous theory. This
analysis will follow the same structure as the frame of reference. Second, the two single
cases will be compared with each other in a cross case analysis, following the same
structure as the frame of reference. Matrices, in the form of tables and figures, will be
used in order to visualize the collected data for a better understanding for the reader.

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 Quality Standards: Reliability and Validity

According to Eriksson and Wiedershiem-Paul (1997), there are two important criteria
that can be used to determine the quality and trustworthiness of a research. These are
reliability and validity. In order to obtain validity the researcher should ask himself the
question Do I in my research with this choice of method measure what I intend to
measure? Reliability is defined, as a measuring tool ability to give stable and reliable
data. When measuring the reliability the researcher should ask himself: Would I get the
same or similar result if I were to use the same techniques repeatedly? (Ibid.)

The goal of reliability is to minimize the errors and biases in a study. The objective is
that if a later researcher follows the same procedures as described by a previous
researcher and conducts the same case study all over again; the later researcher should
arrive at the same findings and conclusions as the previous. One prerequisite for the
researcher to be able to repeat a previous case study is that the procedures followed in
the earlier case are documented. Hence, a good guideline is to conduct the research so
that an auditor could repeat the procedures and arrive at the same results. (Ibid.)

In this study, we have tried to map out the procedures involved in detail throughout the
study. Firstly, we have tried to develop clear research question that guides the research.
Secondly, the steps that have been taken in order to collect data on these research
questions have been thoroughly described in this chapter. Furthermore, the respondents
have been sent a base of information regarding the area of research and overall purpose
for this thesis before the telephone interview. An interview guide was developed,
showing how we have conceptualized the research questions (see appendix B).
However, despite these attempts of maintaining a high reliability in this study, personal
biases are always present to some extent when conducting interviews. Hence, we cannot
be sure of the influence of attitudes and values of the respondents and us in the study.

Eriksson and Wiedershiem-Paul (1997) claim that validity is the most important
requirement on a measurement instrument. According to Yin (1994) there are three
kinds of quality tests regarding the validity of a study. These are described below:

 Construct validity can be defined as “establishing correct operational measures for

the concepts being studied”.

 External validity concerns “establishing the domain to which a study’s finding’s can
be generalized”.

 Internal validity refers to “establishing a causal relationship, whereby certain

conditions are shown to lead to other conditions, as distinguished from spurious
relationships”. (Yin, 1994, p.33)

Yin (1994) notes that internal validity only applies to explanatory and causal studies and
not for descriptive studies. Since this research is mainly descriptive, the test of internal
validity will not be discussed in relation to this study. Table 4.4 shows the tactics that
can be used in the tests of the quality of construct and external validity.

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Table 4.4 Case Study Tactics for Construct and External Validity
Tests Case Study Tactic Phase in which Tactic Occurs

Use multiple sources of Data collection

Construct Validity evidence
Establish chain of evidence Data collection
Have key informants review Composition
draft case study report

Use replication logic in multiple

External Validity case studies

Source: Adapted from Yin 1994, p. 33

In relation to the construct validity of this study, the principle of “triangulation”, i.e. use
of multiple sources of evidence, is followed. Both documentation and interviews are
used to collect data. Furthermore, both notes and a tape recorder were used when
documenting the interview. Effort was also put into identifying the proper person to
interview. However, the interviews were conducted in Swedish and then translated into
English, which includes the risk of translation errors.

Regarding the second tactic, the establishment of a chain of evidence, this study builds
upon existing theories related to our research questions, and follows this base
throughout the research. Hence, the data collected on the research questions are derived
from this base. However, in spite of our precautions, relevant literature can have been
overlooked, which might have an impact on the validity. To fulfill the third tactic, our
supervisor has reviewed this study continuously throughout the whole process.
Feedback from these reviews has allowed for revising of the material. Furthermore,
feedback has also been received from the respondents as they have reviewed the data
collection. Regarding the external validity and to what extent the findings can be said to
be generalizable, Yin (1994) notes that case studies do not rely on statistical
generalization as with surveys, but analytical generalization. Analytical generalization is
concerned with generalizing a particular set of results to some broader theory. (Ibid) In
this study, a multiple-case study of five companies has been conducted, which might be
considered to give a better base of generalization than a single-case study.

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6. Empirical Data
In the previous chapter, the methodology of the research was discussed. In this chapter,
the empirical data collected from each of the companies investigated will be presented.
The five companies investigated are Skanska AB, Svenska Kullager Fabriken AB,
Scania AB, Skandinaviska Enskilda Banken AB and FöreningsSparbanken AB. In the
empirical data presentation, the interviewees will be referred to as the respondent or by
company name. The data is collected based on our conceptualization and frame of
reference in chapter three. Each section will start off with a short company background,
and thereafter, the data collected from the interview will be presented. The empirical
data is presented in a manner that addresses the three research questions of this study.

Skanska AB

Since it’s founding in 1887, Skanska has established a global network of operations in
more than 60 countries. Sweden, the US, UK, Denmark, Finland, Norway, Poland, the
Czech Republic, Argentina and Hong Kong are Skanska's main markets. The Skanska
group has approximately 85,000 employees. The head office of Skanska is located in
Stockholm. (Skanska, 2001) The company business mission of Skanska is:

“To develop, build and service the physical environment for living, working and
traveling. Through combining the company’s resources in these areas the
customer can be offered attractive, cost effective and thereby market competitive
solutions. (Skanska, 2001, p.6)

Skanska states that the vision for the company is:

“To be the world leader - the customer's first choice - in construction services
and project development.” (Skanska, 2001, p.6)

This is further supported with the implemented strategy; to focus on the customer's
needs and create long-term relationships and develop the best management, knowledge
and processes. Skanska’s operations are aimed at satisfying people’s need for housing,
work environments and communications opportunities. Skanska is active throughout the
value circle - everything from small building service contracts to assuming total
responsibility for identifying and solving the customers’ long-term needs of
construction-related services. (Skanska, 2001)

Skanska presented in 1991 a company wide program called 3T to increase its efficiency
and quality. The 3T stands for total time thinking and was a program to reduce the time
used in the company’s processes. The idea is basically about a focus on doing things
right from the beginning and also to reduce the time used by better planning. The 3T
had its origin from Total Quality Management (TQM) and was a response from
customer demands on higher quality and shorter construction times. (Skanska, 1992)

In terms of company structure and organizational chart, the company is divided into
three different business units: project development, construction services and new
businesses (Skanska, 2001) See figure 5.1.

- 37 -
 Corporate Staff Senior Executive Team Skanska Teknik

Skanska Financial Services

Project
SkanskaDevelopment
Skanska
Construction Services
Skanska Sweden New Businesses
Selmer Skanska

Skanska Denmark

Skanska OY

Exbud Skanska

IPS Skanska

Skanska UK

Skanska USA Building

Beers Skanska

Skanska USA Civil

Project Development Sweden
SADE Skanska

Skanska International Projects

Networks

Figure 5.1 Organizational Chart of Skanska

Source: Skanska, 2001, p.16

The Objectives with CRM in Skanska

Skanska has according to the respondent approximately 15 000 customers on a yearly

basis and many of them are large governmental and public institutions. Therefore, many
offers have to cope with the laws and regulations regarding governmental purchases.
Skanska’s goal with CRM is to create potential for their employees around the
organization with a system that actively support the marketing and sales work. The
respondent stresses that the system is not intended for the executive management level,
instead focusing on the employees. The reason for CRM in Skanska is that the company
is working on a mature market and because the company handles a lot of customers and
project, they need to have these issues organized.

Skanska’s major objectives with CRM are to improve win rates, since the company
withdraws from unlikely or bad deals earlier in the sales process. There are today about
20 000 potential offers that Skanska can place a bid on and therefore; every
improvement in win rates constitutes an increase in revenue. Moreover, another major
objective with CRM is to decrease general sales and marketing administrative costs due
to that the company has a good knowledge about its target segment customers. Thereby
- 38 -
the company is using its resources better when no effort is a waste of money or time.

- 39 -
Skanska has other objectives with CRM that also are important but that they do not list
them as major objectives. These are for instance, to assure customer loyalty by
providing after-sale service/support and to measure results and proving return on
investments. Furthermore, the respondent states that Skanska uses integrated
information in order to create excellent services for their customers

Minor objectives with CRM in Skanska is to increase margins, resulting from knowing
your customers better, providing a value-sell, and discounting price-less. This implies
mostly on the small customers and not the large governmental and public customers.
Moreover, the company can establish personal relationships with the customers that are
interested in this but CRM is also used to understand the relative importance of specific
values to each customer segment and to determine if delivery of those values will affect
in a positive manner.

To improve customer satisfaction rates due to that customers will find that the offer is
more in line with their specific needs is today not a goal since the now established CRM
system does not facilitate that. Since Skanska has over 15 000 customer on a yearly
basis it is a problem to identify the customer values that are pertinent to a particular
segment. However, towards public and governmental customers, this is possible since
they are rather few in numbers. Skanska presents no own stated objectives with CRM.
The goals with CRM in Skanska are presented in table 5.1

Table 5.1 Objectives with CRM in Skanska

Objectives None Minor Medium Major
Decrease general sales and marketing administrative 
costs
Measuring results and proving return on investments 
Communicating and delivering the appropriate values to 
each customer in ways the customer wants to receive the
information.
Assure customer loyalty by providing after-sale 
service/support.
Introducing consistent, replicable processes and 
procedures
Increase sales revenues 
Improve win rates 
Increase margins 
Determining if delivery of customer values will affect in 
a positive manner.
Reach economies of scale by mass customization 
Use existing customer relationship to grow revenue 
Improve customer satisfaction 
Identifying those customer values that are pertinent to a 
particular segment.
Understanding the relative importance of customer 
values to each customer segment.
Build personal relationships 
Use integrated information for excellent service 
Source: Author’s own construction

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 The CRM Process in Skanska

Skanska is according to the respondent a company that uses a mix of both relationship-
oriented focus as well as transactional focused. This implies that the company towards
its largest customers uses a transactional view. These customers are referred to as
governmental and public customers, where price matters. The reason for this is
according to Skanska that these customers must follow the laws and regulations of
governmental purchases and here price is the major variable that matters. However,
established personal relationships have a great importance since this increases the hit
rates i.e. received customer orders. In comparison, Skanska holds a relationship focus
concerning the smaller customers. This sort of relationships can have been ongoing for
several years or decades.

In terms of what are the most important activities in the custodian of the customer base,
the respondent states that this is to identify the needs of the customers; both conveyed
and not disclosed needs. Without those needs identified, Skanska cannot deliver
customer value or customer satisfaction. When addressing the issue of the customer is
an active or passive part in the sales process, Skanska insists that the customer is always
right, and has therefore the right to be passive. It is therefore up to the company to take
the initiative in the buying or selling process, which in this case starts with the creation
of a formal offer as a answer to a customer’s request. However, Skanska always tries to
make the customer more active and by doing so receiving their preferences, wants and
specific requirements.

Skanska has no marketing organization that goes across the organization. Instead a
manager in the production has a marketing and sales responsibility in their area of
expertise and geographical location. That manager is also handling all customer
relationships connected to his responsibility. By including marketing in production can
Skanska provide the customer offers that are not only based on price, when the ability to
set up the right project group with the right competences and social skills also are
important features that attract the customer. Earlier construction projects also work as a
good reference in the sales process. Logistics is another part that is integrated into
production and have a low impact on customer satisfaction except in the field of ballast
were it has an great impact on both customer satisfaction and profitability.

The company takes use of the information received from the customer systematically,
this referrers to the registration of each customer interaction or meeting that occur and
that those events are logged in the data system, expressing what has been said, decided
or planned. After this everyone that needs that information can log on and receive
necessary data. Most of the customers’ interaction is with the members of the team that
Skanska has assigned for the project. This interaction can be via letter, e-mail, stationary
and cellular telephones, and fax machines and also by meeting the customer face to
face. In terms of if the company has access to customer information generated in
different distribution channels, the answer is yes. However, how Skanska uses this
information is a question that the respondent would not answer based on the company
believe that this should be kept confidential. This is also the situation in regards to how
the customer analysis process is structured. The respondent disclosed that the company
uses key figures in terms of loyalty, frequency and volume of purchase etc but would
not go deeper into the subject based on the believe that this is critical information for the

- 41 -
According to Skanska, the market planning of the company is conducted on each
regional market, since the company believes that there is a large difference between
each market segment/region and therefore the market planning needs to focus on
different aspect based on what region it is referred to. Relationship planning is also an
important activity where the company has to decide what sort of relationship that is
important to have or disclose. The interaction with the customers of Skanska is mainly
personal meeting and since Skanska approaches the customer, that have initially
expressed their wants and needs when formulating the offer request, its up to Skanska to
sell in their solution that fulfills these objectives.

CRM´s Affect on the Organizational Structure in Skanska

The existing organization and its structure was a basis for the construction of a CRM
system in Skanska. The respondent stressed that this was an important prerequisite for a
successful implementation of CRM in Skanska’s operations when working tasks and
procedures remained the same as before the implementation. CRM has according to the
respondent not affected Skanska’s organizational structure regarding shape,
departmentalization, distribution of power, or division of labor. The information process
has been affected by CRM in that sense that marketing plans is more precise than
before. This is due to that the company now has more customer information that
provides a clearer picture of the market. Skanska has also now a better base for making
the right prioritizations regarding projects and customers.

There has been no affect from CRM in the area of human resource management. The
respondent also stated that there had been no changes in the reward system concerning
compensation and promotion issues due to the implementation of CRM. The
interdependency and uncertainty between organizational units, and the diversity among
them remains the same has before the implementation of CRM. Skanska has put more
effort into recruiting customer-oriented employees than before, but still the most
important criteria when hiring a new employee is his or her capability to do the work
The company has made some alterations to ease the flow of information between
employees and departments. Previous, the information stayed at the person who
received it but the computerization of information has led to increased availability.
Skanska has today not replaced a lot of employees to enforce a more customer-focused
organization. Instead, Skanska has conducted training on CRM during the last years.
The respondent has as chief marketing officer been responsible for this activity and has
also been the one lecturing in the topic. All sort of positions from secretaries to district
managers have been attending this training program.

Skanska has a decentralized management style that enables each employee to take
initiative in his or her work towards the customers. This is seen as a prerequisite for
success when all-important decisions must be taken close to the customer in the project
management team. Up till today CRM has had no impact on the roles in Skanska’s
marketing organization. In Skanska it is the chief marketing officer that coordinates the
business process at a central level and by the district managers at a local level. The
district managers also have the responsibility to identify business opportunities and to
keep up with coming construction projects that customer in his area is planning for.
Based on these activities he sets up a team that creates a solution based on the
customers’ specifications for the project.
- 42 -
 Svenska Kullager Fabriken AB

Svenska Kullager Fabriken AB - SKF was founded in 1907 and was from the very
beginning focused intensively on quality, technical development and marketing. Today
it has its own sales companies in 70 countries, supported by some 7 000 distributors and
dealers, e-business market places and global distribution system. SKF is always close to
its customers for the supply of both products and services and have a clear stated
customer focused strategy. The manufacturing facilities are located in 22 countries and
the total number of employees is approximately 38 500. According to the company’s
investor relations department, SKF has not stated any business mission or vision.
Instead, the company has defined financial targets and these are to reach an operating
profit of 4 billion SEK and a operating margin of 10%. According to SKF, the key
factors to be successful in this line of industry are to have high level of ingenuity, quick
market response and close cooperation with customers and other companies to create
new and innovative solutions for the market. (SKF, 2001)

The four cornerstones of the strategy to reach these targets are:

 Service. To develop and increase the service business by selling predictive and
preventive maintenance, trouble-free operation, condition monitoring, reliability
engineering and productivity improvements in process industries. (SKF, 2001:1)

 Trading. To further develop e-business and buy complementary products to be able

to offer customers complete solutions. To sell more of SKF’s expertise and skills
with regards to logistics and technology, etc. (SKF, 2001:1)

 Electronics. To further integrate electronics and software competencies in bearing

and sealing technology in order to develop customized solutions for demanding
applications. SKF’s sensor technology has already been introduced in a number of
applications, and more is being developed. (SKF, 2001:1)

 Partnership. To enter into partnerships with customers and other companies in order
to gain competitive advantages by combining technological expertise and know-how
and/or by creating joint manufacturing activities. (SKF, 2001:1)

The SKF business is organized in six Divisions, Industrial, Automotive, Electrical,

Service, Seals and Steel. These six divisions focus on a specific customer segment in
order to deliver a high level of customer services (SKF, 2001:1) See figure 5.2.

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 CEO

Finance Technology Development Communication

Business Development Quality & HR
Legal

Automotive Electrical Industrial Service Seals SteelAerospace & Other Businesses

Germany USA

Figure 5.2 Organizational Chart of SKF

Source: SKF, 2001, p.12

The Objectives with CRM in SKF

The main objective for SKF in their work with CRM is to create and store customer
information at one central spotting. This information is the foundation for their base of
customer knowledge. The gained customer knowledge is a vital tool for various
individual SKF employees to increase the efficiency when meeting one of SKF’s
customers. The customer knowledge consists of information regarding buying behavior,
user demands and service demands.

SKF has several CRM objectives in the area of sales. One is to increase sales revenues,
when more time is spend with customers and less time is spend on collecting
information about the customer. This also gives higher win rates, since the company is
able to withdraw from unlikely or bad deals earlier in the sales process. In the area of
sales is reducing administrative costs also an objective when the gained customer
knowledge can be used more effectively. SKF also view CRM as an important tool in
their work focusing on increasing margins, resulting from better customer knowledge
enabling a value-sell, and lower need for price discounting. Which is also in line with
the improvement of customer satisfaction rates due to that customers will find that SKF
product and service offers is more in line with their specific needs. By doing this can
customer loyalty by providing after-sale service/support be assured. Furthermore, the
information received from the customers can be integrated and used to create a high
service level.

CRM also support SKF in creating personal relationships with its customers. One
important objective with a relationship is the feedback that will be looped back from the
customer to the company. Furthermore SKF highlights the importance of the ability to
communicate and deliver the appropriate values to each customer in ways the customer
wants to receive the information. Moreover, the company believes that by selling to
existing customers, the company can grow revenue. The theoretical proposed objective,
determining if delivery of customer values will affect in a positive manner is not an
objective according to SKF since their CRM system does not support this objective.
The company has not identified any other objectives with CRM. The objectives with
CRM for SKF AB are presented in table 5.2
- 44 -
Table 5.2 Objectives with CRM in SKF
Objectives None Minor Medium Major
Decrease general sales and marketing administrative costs 
Measuring results and proving return on investments 
Communicating and delivering the appropriate values to 
each customer in ways the customer wants to receive the
information.
Assure customer loyalty by providing after-sale 
service/support.
Introducing consistent, replicable processes and procedures 
Increase sales revenues 
Improve win rates 
Increase margins 
Determining if delivery of customer values will affect in a 
positive manner.
Reach economies of scale by mass customization 
Use existing customer relationship to grow revenue 
Improve customer satisfaction 
Identifying those customer values that are pertinent to a 
particular segment.
Understanding the relative importance of customer values 
to each customer segment.
Build personal relationships 
Use integrated information for excellent service 
Source: Author’s own construction

The CRM Process in SKF

SKF has according to the respondent a long tradition of producing and supplying
customers in different industries with rolling bearing and seals. Therefore the company
has established relationships with its customer that in many occasions has been going on
for decades. SKF also stresses the importance in their TQM manual of putting the
customers need first in every decision by stating “It is the customer's perception of our
performance that determines our success” (SKF, 2001:1). Both the respondent and the
TQM manual state that SKF to meet this ambition has organized itself around customers
and not around products.

People from logistic and production functions are not directly involved in the marketing
process. Indirectly the have a great impact when quality of products and delivery is
important factors influencing customer satisfaction and thereby the customers image of
the company. SKF views the customer as both an active and passive part in the sales
process. The customer can be described as active when he set new demands on SKF
products to meet up to his requirements. The company retrieves customer information
through several channels, such as: own sales force, distributors, service personnel, call-
centers handling services and complaints. All customer contacts through these channels
are registered electronically or, when a report is being made after a personal interaction
with the customer. SKF has not directly access to the customer information generated in
the distribution channel. Here SKF has to rely on information that their own sales
people snap up during visits at distributors and on customer surveys. These surveys
gives information about customer requirements on development of new products and
services as well as a picture of customer satisfaction and SKF's image position.
However, SKF has today the ability to store.

- 45 -
There is today an ongoing process within SKF to primarily interlink the European
activities, but secondly to link SKF globally.

The respondent states that SKF customer analysis is an ongoing process based on earlier
interactions with the customer. The aim is to meet the customers’ expectation better in
the future. Because the process is ongoing it is difficult to state particular phases in the
process. SKF uses a key account management approach when handling important
customers. Special sales teams are handling the interaction with important customers
and the atmosphere is of a personal character. These customers often have an EDI
solution where they can put orders to SKF. When dealing with small customers SKF
uses interaction via telephone, fax machines, and call centers as a major tool in sales
and service. SKF has provided Internet as a point of contact for their customers. Via the
web site: www.skf.com can customers receive product information and also make
technical calculations on bearings and seals. The company also has an e-business site
named endorsia.com focusing on small and mid-sizes customers. The aim is that
received information from earlier interactions shall work as a base for future
customization. The market planning is primarily focusing on increasing the market
share. The company’s way to reach this objective is by selling more to already existing
customers and also by attracting new customers. CRM is an important tool in the sale
process supporting the salesman in his or her work by providing information about the
customers’ earlier product purchases, including services and maintenance done by SKF.

CRM´s Affect on the Organizational Structure in SKF

The implementation of a CRM strategy in SKF has not affected their organizational
structure regarding division of labor, departmentalization, shape, or distribution of
power. The information and decision process has not either been affected by this
implementation and so are also the case in the field of human resource management and
reward systems. Since no organizational change has taken place in SKF the relationship
between organizational units has remained unchanged.

Like many large company’s, SKF has made efforts in easing the transfer of information
by making a large portion of it electronically. In terms of employees, SKF put effort in
recruiting customer-oriented employees and also to train sales and service personnel in
sales support systems and on how to meet the customer. The respondent stressed the
importance of that the people with customer contact must be interested and positive in
providing service towards the customers. The company put a lot of effort into improving
quality, and according to SKF TQM manual this activities starts at the individual level
in a work team. First of all, when recruiting SKF valuates the applicants competence
that is necessary in the specific job tasks. Thereafter the applicant’s degree of customer
focus is taken into consideration.

There has been no reorganization due to CRM and SKF has not made any alterations to
ease individual employees handling of customers. In SKF the channel manager has the
responsibility to coordinate the business process and the interaction with the customer.
Key issues here are to identify the right customer and business opportunity and
thereafter to create the right offer and to decide when the offer shall be presented for the
customer. The channel manager also handles the customer interaction. The personnel in
SKF that have received training or education on CRM are mostly sales personnel that

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 Scania AB

Scania is the world's fourth largest manufacturer of heavy trucks. In Europe, Scania is
the second largest and in Latin America the leading one. Scania is also the world's
fourth largest manufacturer in the heavy bus segment. Scania is an international
corporation with operations in more than 100 countries. Ninety-seven percent of its
production is sold outside Sweden. The number of employees is 26 900 and the head
office is located in Stockholm. Scania’s industrial operations specialize in developing
and manufacturing vehicles, which shall lead the market in terms of performance, life-
cycle cost, quality and environmental characteristics. (Scania, 2001) Scania’s business
mission is:

“To supply its customers with vehicles and services related to the transport of
goods and passengers by road. By focusing on customer needs, Scania shall
grow with sustained profitability, thereby generating shareholder value.”
(Scania, 2001:1)

Scania’s vision is:

“To be the leading company in its industry by creating lasting value for its
customers, employees, shareholders and other stakeholders.” (Scania, 2001:1)

To further state their customer focus, Scania’s commercial operations, which include
importers, dealers and service points, shall supply customers with optimal equipment
and after sales support, thereby providing maximum operating time at minimum cost
over the service life of their vehicles. By focusing on customer needs, Scania shall
create value-added for the customer and grow with sustained profitability. Scania
stresses that by doing so the company generates shareholder value. In April 1996 Scania
was listed on the stock exchange in Stockholm and New York. (Scania, 2001:1) In
terms of organization, Scania is divided into three different business areas and they are
further presented in their organizational chart, see figure 5.3.

CEO
Group Management

Sales & Marketing Trucks & Buses Service Finance

HRM

Franchise Development Communication

Market Support IT

Marketing Strategy

New Markets

Figure 5.3 Organizational Chart of Scania

Source: The Respondent

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 The Objectives with CRM in Scania

According to Scania, the objective with CRM is to strengthen the relationship with their
customers. The respondent further states that it is the profitable relationships that the
company focuses on. This implies that the company needs to switch their time span of
the relationship from previous when the length was equal to the product life cycle. Now,
the company sees relationships in a longer time span and focuses more on the customer
life cycle.

Furthermore, the respondent states that the unprofitable customers are something that
the company tries to alter and transform them into profitable ones, but if this is
something that is not possible, the company feels no urge to keep these customers. In
short, the respondent states that long-term profitability is the most important reason for
why Scania uses CRM in the company. Moreover, by creating a long-term mutual
beneficial relationship with the customer, Scania ties the customer closer to the
company giving them a better communication and possibility to keep the customer.

The reason for CRM in Scania are numerous and of different importance. According to
the respondent, the major objectives with CRM are to assure customer loyalty by
providing after-sale service/support, this implies that the relationship has only begun
when Scania sells the truck to the customer and therefore there is an essential need that
the after-sales activities in terms of services and support is in line with the customers
preferences.

Major objectives with CRM for Scania are also to increase margins and increase win
rates. The first one is a result from knowing your customers better, providing a value-
sell. Since the customer is aware of Scania as a company, the urge for mere price
focusing is not primarily important. Secondly, increased win rates are created since the
company can withdraw from unlikely or bad deals earlier in the sales process since they
know their customers to a greater extent. CRM are also used to increase Scania’s
service offering towards the customer. By taking over a part of the customers risk by
providing finance and insurance solutions, can Scania increase its margins and total sale
revenue, at the same time as its service offerings towards the customer is increased.

Other major reasons for CRM in Scania is according to the respondent to improve
customer satisfaction rates due to that customers will find that the offer is more in line
with their specific needs. This is also a result of better knowledge about customer
preferences and needs. Moreover, the company focuses on building personal
relationships with the customer, which will provide the company with growth in
revenue and feedback. This information can then be used to create a high level on the
service and support functions.

The company has other reasons for CRM that are of importance but not to the same
extent as the above stated. These are according to the company to decrease general sales
and marketing administrative costs due to that the company has a good knowledge
about its target segment customers but also to use CRM to measure return on
investments. Moreover, the company sees that one important goal with CRM is to
handle the area of customer values i.e. identify customer values that are pertinent to a
particular segment, understand the relative importance of those values to each customer
- 48 -
Furthermore, the respondent says that it is important to create unified processes and
procedures in Scania. Therefore, the company has a system called Dealer Operating
System –DOS in order to raise and create consistent customer interactions despite which
dealer the customer interacts with. Finally, Scania states that their goal with CRM is not
to increase sales revenues instead they are focusing to satisfy the customers’ needs and
by doing this well they customer has incentives to be a loyal customer in the future. The
respondent stated that Scania has no other goals with CRM than the theoretical
presented.

Table 5.3 Objectives with CRM in Scania

Objectives None Minor Medium Major
Decrease general sales and marketing administrative 
costs
Measuring results and proving return on investments 
Communicating and delivering the appropriate values to 
each customer in ways the customer wants to receive the
information.
Assure customer loyalty by providing after-sale 
service/support.
Introducing consistent, replicable processes and 
procedures
Increase sales revenues 
Improve win rates 
Increase margins 
Determining if delivery of customer values will affect in 
a positive manner.
Reach economies of scale by mass customization 
Use existing customer relationship to grow revenue 
Improve customer satisfaction 
Identifying those customer values that are pertinent to a 
particular segment.
Understanding the relative importance of customer 
values to each customer segment.
Build personal relationships 
Use integrated information for excellent service 
Source: Author’s own construction

The CRM Process in Scania

Scania is putting a lot of effort in being a relationship-oriented company. The primarily

objective is to get long-term profitability in their operations. The custodian of the
customer base is managed by local dealerships and by the distributor for that specific
market. Scania has a philosophy that not interfere to much into a distributor or a dealers
activities, this is due to that it is them and not Scania that holds the best knowledge of
the customer and local market conditions.

These activities can be very different in kind since they are tailored to meet the
customer and the conditions at each market. The activities have one thing in common
they are all focusing on the vehicle and on the service hubs stressing that they enables a
good reliability and short stand for service. However, these activities must be in line
with Scania’s overall marketing strategy. Scania role in the custodian of the customer
base is mainly to coordinate the independence in the chain of distribution.

- 49 -
Scania as very simplified two sorts of customers: few-vehicle customers and fleet
customers. The few-vehicle customers drive and own their vehicles. This type of
customer can be either active or passive in the sales process depending on his
preferences and financial status. It is not unusual that a salesman from the local
dealership takes the initiative in the sales process by starting up a dialogue with the
customer. This segment is by tradition Scania’s strongest and the customers are valued
high in Scania. The fleet customers can have several hundreds of vehicles in its fleets
and have special departments for handling purchases of new cars and services. They are
a very active part in the sales process and they hold a great knowledge as users. This
lead to that they can specify their demands on the new vehicles.

Scania also use a key management approach with special sales team on especially the
distributor level to treat this type of customers. Marketing, production, and logistics
functions are working closely in the product development process. Especially the ability
to deliver on time is stressed by the customers. It is important according to the
respondent to increase the amount of customer information and to make it available for
the people at Scania and its dealerships that need the information. The awareness of the
importance of this is increasing in Scania and among its dealerships. The dealership has
a very good knowledge of their customers’ needs and wants.

It is difficult to transfer the customer information due to cultural issues, and legal issues.
Therefore is the customer information at the distributors not at all as comprehensive and
accurate as on the dealership level and its even less at Scania headquarter. The
respondent sees this as a problem that is diminishing in size when the awareness of
customer information increases. This is a minor problem, which is natural since the one
closest to the customer has the clearest picture of the customer. It had been worse if it
had been the opposite. Scania has access to information generated from its distribution
channels including independent satellite workshops. Scania has also put a lot of effort
into forward integration in their chain distribution. Scania’s strategy has been to acquire
the distributor in each market and to acquire dealerships that are of strategic importance
in the local markets. By doing this they have come closer to the end users and thereby
they have increased their ability to become customer focused.

The salespeople at the dealership are doing the customer analysis automatically when
they have the best knowledge of their own customers and theirs needs for products and
services. The process can be divided into some basic steps first Scania have to decide
what customers they are aiming after. In the next step Scania uses there stored
information regarding this customer. If the customer is new Scania has to collect
information about his needs and wants. In the next step Scania try to use the collected
information to fulfill and meet the customers expectation. Scania’s marketing planning
is focusing on a variety of different activities. This is due to Scania is operating on a
number of different markets that all has its unique conditions. How Scania’s marketing
plan looks like is also affected on how Scania’s organization is structured on that market
as well as. Scania’s interaction with its customer is mostly conducted through its
dealerships and service hubs and other workshops. The interaction can also be a
response on direct marketing campaigns and by visits or phone calls from salespeople
from the dealerships. Invitations to road shows and product development clinics or
visits to production plants are also tools that enable interaction. All this interactions is
registered in the CRM database as a base for future interactions. Moreover the Internet

- 50 -
 CRM´s Affect on the Organizational Structure in Scania

CRM has affected Scania’s organizational structure in several ways. The product
development is now being conducted in a “clinic” with closer cooperation with the
marketing function than before. In this clinic are several of Scania’s core competences
working together to develop new products in cooperation with customers that are
invited into the clinic, so that they can express their needs and wants in an early stage in
the development of a new product.

Scania has also since 1995 put a lot of effort into forward integration in their
distribution chain. Scania’s strategy has been to acquire the distributor in each market
and to acquire dealerships that are of strategic importance in the local markets. Today
Scania control its distributors in the European markets expect Portugal, Ireland, and
Iceland. However, the impact from CRM on production units has according to the
respondent been relative small.

In Scania the ambition to become more customer focused has lead to customer
cogitation in the information and decisions processes regarding planning and control,
budgeting and performance measuring. Customer satisfaction has become one of the
most widely used criteria on how to measure Scania’s performance.

The customer has stressed that delivery on time is an important criteria so therefore is
the ability to deliver on time an important issue when deciding bonuses for Scania’s
personnel. When addressing the issue of automation, Scania stresses that the company
has engage in activities to make information available to their employees. The company
is putting more effort into making the customer information more accessible. The
respondent states that Scania educates and train their employees in an internal education
system, called the Marketing academy. The focus is on training and education of the
distributors in the company’s marketing philosophy and strategies. It is then up to each
distributor to transfer this knowledge to individual dealerships.

A Customer centric mind is not a stressed objective when selecting and recruiting new
employees at Scania. The respondent views this criterion as so obvious and naturally
that it is unconsciously a part in the candidate profile in the recruitment and selection
process. Recruiting customer focused employees in all business, and production
functions have been a natural thing during the last 10-15 years and especially since
Scania become independent from SAAB in 1995. The respondent states that the
company has not made any alterations in their leadership style to ease the possibilities
for each customer interacting employee to adjust in order to meet customer demands.

The company states that in terms of coordinating marketing actitivities it is the regional
manager, in this case the distributor that are in charge. The distributor or retailer is also
responsible for the identification of right customer, creation of the right offer and
deciding the right time to present the offer. They are also responsible for the customer
interaction, except when large international customers are handled, which is done on a
central level.

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 Skandinaviska Enskilda Banken AB

André Oscar Wallenberg founded Stockholm’s Enskilda Bank in 1856, the first
appearance of the bank. In January 1972, Skandinaviska Banken merged with
Stockholms Enskilda Bank into the new bank, Skandinaviska Enskilda Banken - SEB.
Today, SEB is a European financial corporation primary for companies and financially
active private persons. The Group is represented in some 20 countries around the world
by 670 offices and has approximately 21,000 employees. The company has a total of
four million customers, and 800 000 are Internet customers. By December 2000 the
company had administered capital to a total value of 910 billion SEK. The company
headquarter is located in Stockholm. The business mission of SEB is:

“SEB's business concept is to create value for customers and shareholders

through leading competence and long-term relationships. “ (SEB, 2001,p.7)

The vision of SEB is:

“To be the leading "e-centric" customer-driven supplier of financial services in

Europe.” (SEB, 2001, p.6)

In a short period of time SEB has changed, from doing “everything for everybody”
particularly in Sweden, to being a supplier of financial services for well-defined target
groups in Europe. The company focuses on creating value for the customers in order to
retrieve profitable customers and thereby higher profit. In order to come up to these
expectations and demands, SEB must have a good knowledge about its customers,
develop its relations with them and manage its business according to their demands. All
alternative ways of contact must be used in order to offer maximum accessibility.
During 1999, the overwhelming part of SEB's staff and customers were in Sweden,
where also most of the income was generated. Today, more than half of both employees
and customers are outside Sweden and 57 per cent of gross income originated from non-
Swedish markets compared with 27 per cent in 1999. The company is organized into the
following divisions Nordic Retail & Private Banking, SEB Germany, Corporate &
Institutions, SEB Invest, SEB Trygg Liv, The Baltic & Poland, which is presented in
figure 5.4. (SEB, 2001)

Group Chief Executive and President

Staff functions

Nordic Retail & Private Banking SEB SEB Corporate & Institutions SEB The Baltic & Poland
Germany Invest Trygg Liv

Figure 5.4 Organizational chart of SEB

Source: SEB, 2001, p.11

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SEB main objectives with CRM are to improve the process to communicate with the
right customer and to provide each customer the right offer through the right channel at
the right time. By doing this SEB uses the right resources towards the right customers
hereby can the customer receive satisfaction on, for the SEB, a cost efficient way.

SEB is today striving from a product-oriented structure and strategy towards a customer
focused one. SEB started this journey several years ago and according to the respondent
CRM thoughts has gain a stable ground in SEB, but still there are a lot of work before
the final destination will be reached. Today each business area has its own business
mission and vision and these are not always concordant and in line with the other
business areas objectives. The organizational structure, with several business areas and
production units can also work as an obstacle when turning the focus on the customer.

The respondent claims that SEB and its business is moving closer to their customers in a
manner that some times can be described as small step forward and sometimes two step
backwards; but the long term direction is toward a customer focused structure. The
benefits of a CRM approach that SEB is striving towards are higher levels of customer
retention and higher profitability per customer. SEB has very high stated objectives with
its use of CRM. The reason for this is that SEB see this strategy as the foundation for
future competitiveness of the company. Therefore, they regard the following activities
as very important:

 To increase sales revenues, resulting from spending more time with customers,
which results from spending less time collecting information about the customer.
 To increase win rates, since the company withdraws from unlikely or bad deals
earlier in the sales process.
 To improve margins, resulting from knowing your customers better, providing a
value-sell, and discounting price-less.
 To improve customer satisfaction rates due to that customers will find that the offer
is more in line with their specific needs.
 To decrease general sales and marketing administrative costs due to that the
company has a good knowledge about its target segment customers. Thereby the
company is using its resources better when no effort is a waste of money or time.
 To build personal relationships with the customer, which will provide the company
with feed back.
 To reach economies of scale by mass customization.
 To assure customer loyalty by providing after-sale service/support.
 To identify those customer values that are pertinent to a particular segment.
 To understand the relative importance of those values to each customer segments.
 To determine if delivery of those values will affect in a positive manner.
 To communicate and deliver the appropriate values to each customer in ways the
customer wants to receive the information.
 To measure results and proving return on investments.
 Introducing consistent, replicable processes and procedures
 Use existing customer relationship to grow revenue
 Use integrated information for excellent service

- 53 -
These above stated objectives with CRM are further presented in table 5.4 and SEB has
according to the respondent no other objective with their CRM activities.

Table 5.4 Objectives with CRM in SEB

Objectives None Minor Medium Major
Decrease general sales and marketing administrative 
costs
Measuring results and proving return on investments 
Communicating and delivering the appropriate values to 
each customer in ways the customer wants to receive the
information.
Assure customer loyalty by providing after-sale 
service/support.
Introducing consistent, replicable processes and 
procedures
Increase sales revenues 
Improve win rates 
Increase margins 
Determining if delivery of customer values will affect in 
a positive manner.
Reach economies of scale by mass customization 
Use existing customer relationship to grow revenue 
Improve customer satisfaction 
Identifying those customer values that are pertinent to a 
particular segment.
Understanding the relative importance of customer 
values to each customer segment.
Build personal relationships 
Use integrated information for excellent service 
Source: Author’s own construction

The CRM Process in SEB

According to the respondent, SEB is today more transactional oriented but are moving
more and more towards a relationship oriented view. SEB could, according to the
respondent been even more relationship oriented if the company had executed the
intended CRM effort that was planned to integrate CRM in the whole organization.
However, the executive board felt that the company was not ready to fully transform the
company to a CRM structured organization and therefore postpone the project.

SEB has identified two important activities in the handling of the customer base. Firstly,
on a central level conduct analysis in order to find the right and profitable customers.
Moreover, to develop new customer handling processes to ensure good and high service
level in the customer contacts with the already established customers. Secondly, on a
local level, the most important activity is to have good knowledge in regards to the
customer base, and this is something that SEB has, according to the respondent. There
are situations where centrally planned activities are being used on a local level.

In regards to the customer’s activeness or passiveness in the sales process, the customer
is regarded as an active participant. This is due to that the customer is closely involved
in the actual production of the service or product. This implies that the company must
have an open dialogue where the customer is given space to express his or her wants

- 54 -
company and therefore, the analysis of the customers needs is much more extensive
when the customer uses the bank offices as point of interaction, mainly because
personal communications are more easily facilitated in that specific channel.

The production of services and products are being conducted in specific product units,
i.e. SEB Invest, SEB Trygg Liv. When introducing a new product, this can be done
based on two different approaches. Firstly, the bank creates a new product and then tries
to sell it by using a push strategy. Secondly, customers reveal their preferences and
wants in regards to a new product solution and then the bank creates the product after a
dialogue with the customer. This are two different approaches that are used in SEB, but
the company is striving towards the second alternative, producing a product that they
know customers wants and needs.

According to the respondent, SEB can take use of the information received from the
customer and transfer it throughout the channel, but also between different channels.
The information received in the distribution channels can be monetary transaction,
loans, retirement plans, life insurance, and more specifically, what different products
and services the customer is interested of. However, there have been and still are a
resistance to some extent within the company to work in this new manner based on a
customer-centric approach. The information received from the customer is mainly used
to refine product offering and offer the customer the right product, at the right time,
using the right channel.

Customer analysis is conducted in SEB on a central level by a market analysis

department. On a local level a bank counselor executes this at the bank offices. The
customer analysis process used by SEB is based on information. This information can
be old one received through a interaction channel and thereafter stored in a database or
new one transferred at the same time as the analysis takes place. Thereafter a
customization can start aiming after this special customers needs and wants. Finally,
some activity is planned and executed towards this special customer or customer
segment. In all steps some response or feedback will be looped back. Database
marketing is a frequently used activity in this field

In terms of interaction, the bank wants to create different channels for interaction that
will appeal all customers. The bank interacts via the following channels; personal
meetings at the bank office, phone calls, Direct mail, tele-banks (call centers), e-mail,
fax, Internet, WAP, and ATM’s. Not everyone wants to use the Internet as their channel
for interaction and therefore there must be a vide array of different customer contact
points between the company and the customer. Furthermore, the respondent states that
using bank offices is the most expensive channel, followed by telephone and the
Internet, which is the cheapest. Therefore, the customer who wants to use a specific
channel must accept the cost of using it. Based on this, the bank tries to guide each
customer into the most appropriate channel for both parties so this creates a win-win
situation for the involved parties.

CRM´s Affect on the Organizational Structure in SEB

There has been no change of SEB organizational structure regarding division of labor,
departmentalization, and distribution of power etc, due to the use of CRM, so in that

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sense has CRM not affected SEB organizational structure. CRM has had a minor impact

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on the information and decision process regarding planning and control, budgeting and
performance measuring when analysis generated from stored customer data are included
as an foundation in the decision making process. The respondent states that despite this
advancement the organization lacks capacity and to some extent ability to view the
operations with a customer focus.

The reward system has been affected by CRM since relationships with customers are
valued higher and the actual sales figures has decreased in impact when setting the
criteria’s for salary, bonuses and other form of compensations. When measuring the
relationship, activities like the number of customer contacts, visit, and activities etc, are
used. Up till today promotion have been based upon other criteria’s but there are signs
that customer focus or the ability to enhance relationship activities will maybe in the
future have an impact on the selection of candidates in a promotion process.

As most banks SEB has laid off a large amount of their personnel during the nineties, at
the same time as they have recruited new employees with new skills into all business
areas. The main criterion when selecting a new employee is competence, i.e. his or her
ability to deliver results in the daily work. Customer focus are stressed in the way that a
SEB employee must like to meet and work with people of different kinds

To some extent has CRM affected the relationship between organisational units
regarding their interdependency, diversity and the degree of uncertainty. Very
simplified the bank consists of two parts: production units and the retail bank. The
production units are by nature very eager to sell their products to so many customers as
possible. The retail bank acts as an emissary for the customer aiming to fulfil their needs
and wants towards the rest of the organisation.

To some functions has SEB recruited specialist with the right background to handle
CRM technology. Most of the training has been conducted at the bank offices and the
areas that have been focused on are to make the personnel more customer-focused by
creating an ambition to raise the level of satisfaction in each customer contact. The term
CRM is not widely used within SEB instead customer focus, customer satisfaction,
customer retention and customer loyalty is commonly used terms. The company has a
decentralized management style that enables employees to act and to take responsibility
in their daily work. This management style favors empowerment but however there are
also some guidelines on how to act and some decisions are centralized to higher levels.
As a step toward implementing a customer focus SEB has set up a market advisory
board consisting of representatives from business areas, divisions, and product units.
This board is aiming to create a consensus view on the customer base and is trying to
match the SEB product offering towards the different customer segments needs and
wants.

The roles in the marketing organization are as follows. The central market function
coordinates the marketing process in the company. The head of this function is the sales
& marketing director and the organizational seat for this position and function is in the
staff organization. Central market in cooperation with analysis identifies the right
customer and business opportunities for SEB. Thereafter central market is tailoring the
right offer towards the customer. The presentation of the offer towards the customer is
also made by the central market function. The retail bank manages the customer

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 FöreningsSparbanken AB

FöreningsSparbanken traces its origin back to the savings bank movement and the
cooperative bank movement. During the years has the savings banks and cooperative
banks merged into larger banks. FöreningsSparbanken is the result of the merger
between Föreningsbanken and Sparbanken Sverige in 1997. (FöreningsSparbanken,
2001) FöreningsSparbanken’s business mission is:

“To be the clear choice among banking alternatives for private, individuals, companies,
the agricultural sector, municipalities, country councils and organizations by offering a
range of customized, easy-to-use financial services.” (FöreningsSparbanken, 2001,
p.16)

The vision for FöreningsSparbanken is:

“To create the bank of opportunities” (FöreningsSparbanken, 2001, p.16)

In Sweden, FöreningsSparbanken has 4.1 million private customers and 231 000
business customers and the total assets in the bank is 833 billion SEK. To meet their
needs, the Banks has during the last years developed modern system components,
electronic channels and data warehouse to enable new services and an increasing
dialogue with the customers whether how they chooses to use the bank. Furthermore,
the company states that each business unit shall focus on creating increased value for
their customers in the relationship. FöreningsSparbanken organization has four business
units: retail business area, business areas, alliances business area and support function.
This is further demonstrated in their organizational chart. (FöreningsSparbanken, 2001)
See figure 5.5.

Board of Directors

Internal Audit

President
Accounting, Business controlling, Treasury, Financial Risks/CFO Human resource and skills development

Credit/CCO Group Development

IT/CIO Information and Investor Relations

Operational Risks Marketing Communication

Executive Secretary

Retail Business Area Business Areas Alliances Business Area Support functions

Local banks Savings Independent banks Support

Telephone Lending Jointly owned banks IT

Internet Payments FIH Other

E-business Hansabank

Swedbank Markets Aktia Sparbank

Figure 5.5 Organizational Chart of FöreningsSparbanken

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Source: FöreningsSparbanken, p.16

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‘

The second research question reads as follows: “How can the CRM process in
Swedish companies be described?” In this section we will try to provide an answer to
this question.

A major finding in this thesis is that Swedish companies to a large extent uses the CRM
processes that are suggested by the theory by both Peppers & Rogers (1998) and Swift
(2001). We can also from their answers see that the direction is towards a more
customer centric management of customer relations in these companies. We can
therefore describe the CRM processes in a Swedish company according to Swift (2001)
activity oriented CRM process in four steps:

 Knowledge discovery.
 Customer interaction.
 Market planning.
 Analysis & refinement.

Or/and as the steps that Peppers & Rogers (1998) suggests in his function oriented CRM
process:

 Financial custodian of the customer base.

 Production, logistics, & service delivery.
 Customer communication.
 Distribution & logistics.

Furthermore, this study also highlights that all studied companies has adapted the view
of the financial custodians of the customer base by Peppers & Rogers (1998) on treating
their customer base as a primary asset and to carefully managing their investment in this
asset. This thesis also concludes that production and logistic functions must be more
involved in the marketing process in order to be more capable to customize its actual
offering towards the needs and preferences of each individual customer as suggested by
Peppers & Rogers, (1998).

It is interesting to notice that one company, SKF hasn’t applied to the ideas of Peppers
and Rogers (1998) on how to gain first hand customer information from the distribution
channels. This indicates that SKF can receive false or fragmented customer information
and that customisation can be difficult to execute. This will also lead to the
disadvantage that the customers are seen as a segment not as an individual customer.

We can also conclude that the inability to transfer customer information across national
borders or between distribution channels also is an obstacle that can obstruct or
complicate their ability to receive feedback, continue a dialogue from the spot is ended
earlier and to customize their offers. Another interesting finding in the area of CRM
processes is that one company, Scania has used forward integration in order to gain
control over daily operations and obtain customer information, which facilitates
customization.

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Independently of how we describe the CRM processes in a Swedish company as
function oriented or action oriented, we can clearly state that Swedish companies has
accepted and implemented the processes that is a condition for handling customer as
individuals and not as a part of segment, i.e. the companies has gained a base for
implementing a customer centric view in its operations.

The Third Research Question. Finally, we will answer our last research question that
is: “How is the organization affected by the introduction of CRM in Swedish
companies?”

When comparing the five case study objects, that all stipulates to be involved in CRM
activities, it may come as a surprise since many of the theoretical proposed variables by
Galbraith & Kazanjian (1986), McDermott in Peppers & Rogers (1999) and Swift
(2001) were not fully affected when using CRM in the companies. We can therefore
conclude that the organizational structure in Swedish companies has not been affected
by the use of CRM to any larger extent.

We can conclude that the organizational design variable by Galbraith & Kazanjian
(1986), that have been most affected is people and especially in the area of training and
education trying to implement a customer focus. However, this effort has been mostly
targeting market and sales personnel and not the entire company work force. This
weakness will result in that CRM will work as a sales support system, not as the total
business concept it is intended to be.

In the area of organizational change variables by McDermott in Peppers & Rogers

(1999), we can conclude that two organizational change variables, automation and
training and education are affected within Swedish companies when using CRM. We
can also conclude in this area that the majority of companies have not taken any actions
towards changing the organizational structure or employee structure that the
organizational change variables, attrition and reorganization suggests. Steps in these
directions would ease the transformation towards the customer centric company.

The CRM marketing organization roles in Swedish companies differs from the
theoretical propositions by Swift (2001). We can conclude that Swedish companies have
not adapted to the theoretical suggestions in this area. Further conclusions can be drawn
form this fact, which shows that the roles in Swedish companies marketing organization
still are highly transactional-oriented.

Overall conclusions. We have in this thesis made three main findings. Firstly, Swedish
companies have well developed objectives with CRM that exist within the three
classification areas, cost saving, revenue enhancement and strategic impact. Secondly,
Swedish companies have accepted and implemented CRM processes that is a condition
for the transition to a customer centric company. Thirdly, the organizational structure in
Swedish companies has not been affected by the use of CRM due to that Swedish
companies have not adapted to the CRM business framework. Today, Swedish
companies mostly use CRM as a sales and marketing support system.

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 Recommendations for Management

After concluding this thesis, we have come up with a number of issues we feel can be
beneficial to the company manager interested in receiving knowledge in this area. These
recommendations are listed below:

 Success factor. Managers must understand the importance of customer relationship

in their operations and view CRM as a vital tool to become successful. The first step
is to understand that the CRM framework is something that involves the whole
company’s organization and business, and not just the marketing and sales function.

 Continues learning processes. Many companies rely on old business frameworks

and claim that they are customer focused and use clichés like “with the customers
best in our mind” as a way to state their position. In becoming truly customer
focused they need to create a process that enables the organization, as a whole to
continuously learn from its customer.

 Customer information. To be able retain a true picture of the customers need and
wants; it is necessary to have an information system that register all interaction.
More over, this system must enable the transfer of customer information across
distribution channels and country borders.

 Customization. The integration of production and logistic functions into the

marketing process is almost a prerequisite for a customer centric handling of
customer interactions and customization in a company.

 Organizational change. Independently of how far a company has got in there strive
towards a customer centric handling of customer relations; it is necessary to create
awareness for organizational change. This is due to that the company sooner or later
will face the need for an reorganization as a response to the gained customer
knowledge and to the new business opportunities that it enables.

Recommendations for Theory

In the analysis chapter we were able to see how well the literature used agrees with the
findings in our research. The literature corresponds rather well with what we have been
able to find out, but we do have findings that constitute our implications for theory. We
have deductively formulated our purpose and research questions, based on previous
studies by numerous authors. We have in this thesis described, explored and begun to
explain how Swedish companies use CRM. We have studied the objectives, the
processes and how the organization is affected by CRM in five different case studies.

This thesis contributes to theory in that it provides an empirical investigation as to how

established theory regarding customer relationship management relates with how CRM
is used in Swedish companies. Since there are very limited amount of studies focusing
on how CRM is used in not only Swedish companies, this thesis provides a foundation
from which further studies may be done.

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 Conclusion

While conducting this research, some interesting subjects for further research have
turned up. Firstly, it would be possible to concentrate on one variable within the CRM
processes, for example the customer interaction and investigating it in depth during the
customer communication in a variety of interaction channels. By investigating a single
variable in depth one might be able to obtain a more detailed picture of CRM affect the
interaction processes.

Another topic for further research is to make an investigation based on quantitative data.
To do a quantitative research would make it easy to get a clear picture of what direction
the CRM framework is striving towards in a larger setting. Another data collection
method that could be used is participant observation. To participate in a company’s
interaction process for a certain time period could provide the investigator with an in-
depth understanding of how customer relationships are processes are managed in
practice.

Finally, it would be interesting to study the outcome of CRM in a customer relationship

in terms of satisfaction, trust, value, and loyalty. In writing this thesis, a number of
different issues have come up, which we feel would be interesting to see future research
done upon. Hence, we will now present a list of suggestions for future research that we
think are suitable topic for a future thesis.

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