Investigating the impact of ECRM success factors on business performance

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Asia Pacific Journal of Marketing and Logistics

Investigating the impact of ECRM success factors on business performance:

Jordanian commercial banks

Hani H. Al-Dmour, Raed Salah Algharabat, Rawan Khawaja, Rand H. Al-Dmour,

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Hani H. Al-Dmour, Raed Salah Algharabat, Rawan Khawaja, Rand H. Al-Dmour, (2019) "Investigating the impact of ECRM success factors on business performance: Jordanian commercial banks", Asia Pacific Journal of Marketing and Logistics, https://doi.org/10.1108/APJML-10-2017-0270

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Investigating the impact of ECRM success factors on

business performance

Jordanian commercial banks

Hani H. Al-Dmour

Princess Sumaya University for Technology, Amman, Jordan

Raed Salah Algharabat

Qatar University, Doha, Qatar, and

Rawan Khawaja and Rand H. Al-Dmour

The University of Jordan, Amman, Jordan

Abstract

Purpose–The purpose of this paper is to develop an integrated framework to explore the influences of electronic customer relationship management (ECRM) success factors (process fit, customer information quality and system support) on customer satisfaction, customer trust and customer retention, which, in turn, impact upon the business financial performance of Jordanian commercial banks in Amman city.

Design/methodology/approach–Using a sample of 343 branch managers, assistant branch managers and heads of departments in Jordanian commercial banks, who answered a self-administrated questionnaire, data were collected and analysed using structural equation modelling (AMOS 17.0).

Findings–The results showed that the ECRM success factors (process fit, customer information quality and system support) positively affected customer satisfaction, customer trust and customer retention.

Furthermore, the authors discovered that customer satisfaction and customer trust positively influenced customer retention. It was determined that customer satisfaction, customer trust and customer retention positively impact on a business’s financial performance.

Originality/value – Previous research lacks the link between ECRM success factors and business performance (financial and non-financial).

KeywordsBusiness performance, Customer information quality, ECRM success factors, Process fit, System support

Paper typeResearch paper

Introduction

The service sector is witnessing a significant expansion in today’s market place, in terms of its size and its use of advanced technology in both developed and emerging countries (Lovelock and Wirtz, 2011). Rapid development in information technology (IT) allows service businesses to be significantly developed and improved within service processes and operations. The banking sector is one of the main services affecting the market place.

A strong banking sector is very important for stimulating economic growth and maintaining the financial stability of a country (Alalwanet al., 2015).

In Jordan, in the Middle East, the banking sector, as in many countries, is one of the main pillars of the Jordanian economy. The Jordanian banking sector contributed to around 18.8 per cent of the gross domestic product at market prices in the second quarter of 2015 (Awraq Investment, 2015; Alalwan et al., 2015). Hence, the banking sector is motivated by the development of the technology and information systems (IS) revolution, increasing profitability by attracting more customers and retaining existing ones by providing a quality service and meeting customers’expectations (Alalwan et al., 2015).

In addition to the IS revolution, which has increased the profitability of many banks

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in the Middle Eastern area, banks are trying to retain their customers by adopting customer-centric approaches that gain their trust and satisfaction (Sadeket al., 2011).

Attracting new customers is more expensive than retaining existing ones. Banks are orientated to acquire the loyalty of their existing customers as it is critical for business continuity with growing granted profit. Banks should satisfy their customers’expectations to increase their loyalty, by seeking effective and efficient management strategies (Rootmanet al., 2008). The most important aspect of any successful bank is“the customer”. Therefore, banks must meet their customers’ expectations by maintaining a strong and long relationship with them, and properly manage their data using efficient and effective methods. Electronic customer relationship management (ECRM) helps banks to serve their clients in an improved way, by managing and categorising their data (Alalwanet al., 2015).

Many researchers have explained the benefits of ECRM applications to banks and their customers. For example, Bezovski and Hussain (2016) discovered that ECRM has reduced workload and administrative costs, increased cross-selling, increased bank revenue and enabled bankers to understand customers’future needs, depending on past transactions.

In addition, Scullin et al. (2002) posit that well-implemented ECRM systems produce winning customers and companies because overall improvements in customer experience lead to greater customer satisfaction, which consequently has a positive impact on companies’profitability.

Alalwan et al.(2015) assert that to cope with customers’changing needs and to have competitive advantages, banks should make efforts to add value to their ECRM strategies to create satisfied and loyal customers. Furthermore, the authors suggest that banks can enhance their ECRM strategy from their customers’perspective when dealing carefully with the quality of their data, such as determining customers’needs, preferences and income.

Abu-Shanab and Anagreh (2015) indicate that ECRM is a useful tool that can improve banks’profitability by helping them to retain customers and reducing cost.

However, the nascent literature on ECRM within the banking sector, particularly in the Middle Eastern area, has not attempted to link the impact of ECRM success factors (process fit, customer information quality, and system support) with business performance (financial and non-financial) aspects. What has been accomplished in this area is the linking of ECRM (with different definitions and measurements) with business performance aspects. Due to the lack of a clear understanding of the relationship between ECRM success factors and business performance aspects, we were motivated to empirically investigate the nature of the link between these constructs. We therefore propose that ECRM success factors should be considered as the main antecedents of customer satisfaction, trust, and retention.

Using ECRM in the Jordanian commercial banking sector, the current research aims to:

investigate how ECRM success factors influence customer satisfaction, customer trust and customer retention; test the impact of customer satisfaction and customer trust on customer retention; and investigate the impact of customer satisfaction, customer trust and customer retention on business financial performance. Therefore, within the context of the Jordanian commercial bank sector, this research attempts to answer the following research questions:

RQ1. How do ECRM success factors influence customer satisfaction, customer trust, and customer retention?

RQ2. How do customer satisfaction and customer trust impact on customer retention?

RQ3. How do customer satisfaction, customer trust, and customer retention impact on a business’s financial performance?

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Literature review

Customer relationship management (CRM)

Customer Relationship Management (CRM) as a concept, which was introduced and developed in the 1990s, aimed to merge the market with its customers. As a result, CRM was rapidly adopted in companies of all sizes that dealt with customers (Xuet al., 2002). Many studies defined CRM as a system and a strategy used by companies to increase customers’ value, sales growth, satisfaction (Kennedy, 2006; Yim et al.,2004), trust (Miremadiet al., 2012), retention (Christopheret al., 1991), loyalty, profitability and revenue (Miremadiet al., 2012; Christopheret al., 1991). For instance, Shaw (1999) defined CRM as an interactive process that aims to achieve the optimum balance between corporate and customer satisfaction, to generate maximum profit. The author asserts that marketing activities such as sales and services should be integrated into CRM. Within the context of banking, CRM is more than a technology; it is a strategic process (Hung and Lin, 2008). Therefore, adopting CRM strategies helps banks to understand customers’current needs and enables them to predict their future and meet their goals (Xuet al., 2002). Miremadiet al.(2012) posited that the main goal of CRM is to create customer trust, loyalty and the maximum length of customer relationship. Bouldinget al.(2005) noted that CRM has the potential to enhance a firm’s performance and benefit customers. For instance, CRM enables firms to increase the value extraction from customers, and it helps customers to gain greater value from firms as they meet their needs and expectations.

Within the banking sector, previous studies have demonstrated the positive effects of implementing CRM. For instance, Krasnikov et al. (2009) reveal that CRM programme implementation reduces cost and increases the profitability of banks in the USA.

Furthermore, nascent literature on the implementation of CRM, e.g. by Feinberg and Kadam (2002), Mithaset al.(2005) and Newell (2001), shows the positive impact of adopting CRM on relational variables such as satisfaction and loyalty. Furthermore, other research by Chang and Tsay (2004) highlights the significant positive impact of CRM on profitability.

Woodcock and Stone (2012) discuss the strategies used by CRM and how they can win, keep and develop customers’relationships, leading to profitability, and assert that CRM can increase organisational efficiency.

ECRM success factors

Nowadays, the internet and web services are the main core of any business. The internet as an information centre helps to facilitate information transference and distribution (Alalwan et al., 2018; Navimipour, 2015). Furthermore, using the internet as a base for CRM functions and a channel for marketing, commerce, and information introduces new and great opportunities for businesses, described as ECRM (Feinberg and Kadam, 2002). Miremadi et al.(2012) define ECRM as“a combination of traditional CRM, with e-business market place applications”. Miremadiet al.(2012) posit that ECRM refers to a set of activities that enable firms to utilise new internet technology to implement CRM. Thus, banks all over the world have realised the benefit of CRM implementation using the internet and actively use ECRM strategies. Lederer et al. (2000) describe ECRM as a combination of hardware, software, applications and management commitment. Javadi and Azmoon (2011) define ECRM as a strategy of marketing, selling and integration of online services that play the role of identifying, obtaining and maintaining customers (the largest assets of the companies). Romano and Fjermestad (2003) assert that ECRM can attract and keep customers and thus allows organisations to eliminate any customers that are not valuable. Adopting ECRM within the banking sector is considered a competitive advantage that provides benefits for customers and banks. Effective organisational implementation of ECRM serves customers in an improved way, e.g. it increases customers’ satisfaction, loyalty and retention and increases organisational performance, e.g. sales, profits

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and revenue (Akhlagh et al., 2014). ECRM provides many benefits for banks, such as reducing the workload for branches, reducing administrative costs, increasing cross-selling, enhancing bank revenue and enabling bankers to analyse customers’needs based on their past transactions (Bezovski and Hussain, 2016). Miremadi et al.(2012) assert that ECRM implementation enhances banks’competitive advantages, such as keeping banks updated with the technology, creating a strategic focus for banks and helping banks in segmentation.

Soltani and Navimipour (2016) state that ECRM is a gathering of concepts, tools and processes that help an organisation to achieve maximum value from their businesses, thus increasing the effectiveness of their personal interaction with customers, especially through individualisation. Chen and Chen (2004) reveal that companies using ECRM often increase their customer loyalty to leverage their brand equity.

Sivaraks et al.(2011) examine the outcomes of ECRM implementation in the banking sector from a customer’s perspective. The results revealed that ECRM implementation improves relationship quality outcomes (overall satisfaction, trust, loyalty, retention and willingness to recommend) between the bank and its customers, which in turn impacts banks’overall profitability. Yazdanifard and Long (2010) discuss the impact of ECRM on customer satisfaction. The authors assert that most companies, with proper ECRM strategies, have a positive impact on customer expectation, loyalty and profitability.

Dhingra and Dhingra (2013) postulate that customer satisfaction, accurate transactions, customer convenience and trust are the main advantages of implementing ECRM strategies in the banking sector.

This research aims to investigate the impact of ECRM success factors (process fit, customer information quality and system support) on the facilitation of the ECRM process.

Previous research by Soltani and Navimipour (2016), Akhlaghet al.(2014), Rohet al.(2005), Wixom and Watson (2001) and Foket al.(2001), which investigates ECRM success factors, agrees that the main components of ECRM success factors are process fit, customer information quality and system support. ECRM success factors are discussed further within the following sections.

Process fit

Rohet al.(2005) assert that process fit centres on the contingency theory and is related to technological fit (Drazinand Andrew, 1985). Thus, process fit, as one factor of ECRM success factors, should be designed to reflect an understanding of the CRM process. Therefore, process fit is one of the technological topics that specify a set of processes and technologies used in the ECRM system (Akhlaghet al., 2014). Fan and Ku (2010) describe process fit as the association between information system success and ECRM profitability. The authors demonstrate how the configuration of technologies from the service provider respond to the complex needs of customers using IT. Fan and Ku (2010) assert that process fit implies that companies should analyse customers’problems and needs and respond to them accordingly.

Therefore, process fit aims to improve the performance of ECRM via an appropriate“fitness level”of the customer interaction process (one-to-one communication; Wells et al., 1999), sales channel process (single channel, multiple channels or online channels) (Bilgiceret al., 2015), the personalisation process (to provide a personal service for each customer;

Surprenant and Solomon, 1987) and the after-sales service process (a set of services provided for customers after they purchase a product; Egonssonet al., 2013; Rohet al., 2005).

Roh et al. (2005) assert that process fit can improve ECRM performance through the customer interaction process, processing sales channels, the personalisation process and the after-sales service process. We have adopted the definition of process fit based on the description by Rohet al.(2005), as the fitness level of the customer interaction process, sales channel process, personalisation process and after-sales service process.

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Customer information quality

The ECRM system was designed to relate to customers (Akhlaghet al., 2014). Therefore, the evaluation of customer perception for the service provider is necessary (Pittet al., 1995). The quality of customer information is considered to be another important factor for the success of the ECRM system (Akokaet al., 2007). This is justified because knowing the customers who use the ECRM system is important for its success. However, only collecting data from customers is not enough, as data are helpful when analysed and segmented to build insights into customers and market behaviour (Rohet al., 2005). The area of customer information quality focusses on four aspects: data accuracy, timeliness, completeness and consistency (Ballou and Tayi, 1999; Wang and Strong, 1996). Hable and Aglassinger (2013) also classify customer information quality as accuracy, completeness and consistency. Furthermore, the authors assert that the quality of customer information is a key factor for successful application of ECRM systems. Mueller and Nyfeler (2011) posit that customer information quality is key to effective ECRM performance. The author stated that when employees enter customer data that is not accurate, useful or reliable, neither the companies nor the customers will benefit from the ECRM system (Chuang and Lin, 2013). According to Roh et al. (2005), the quality of customer information can be measured by the integrity and usefulness of customer information, support of information segmentation and the forecasting of customers’purchasing power. Integrity of customer information relates to protecting the information of ECRM users from any manipulation by companies or employees (Graves and Wong, 2015). Usefulness of customer information relates to rich knowledge of ECRM users that can be useful and valuable for the system. This information must be clear, correct and effective for simple analysis and comprehension (Algharabat, 2014; Algharabat and Shatnawi, 2014). ECRM systems support customer information segmentation by classifying customers’data, which helps to identify valuable and loyal customers (Rohet al., 2005). Forecasting the purchasing power of customers acquired from the quality of the customer information in ECRM systems, helps to predict purchasing intentions, builds trust and loyalty with customers, and predicts the products that customers will be more interested in (Linet al., 2015). Therefore, we adopted classifications for customer information quality by Roh et al. (2005) and expect that the quality of customers’information will help banks to understand users’needs, feedback and level of satisfaction, as the data need to be useful and accurate for CRM implementation to be successful (Abbottet al., 2001).

System support

System support is related to the measurement of the system processing itself (Negashet al., 2003). To reap the benefits of ECRM systems, it should be successfully implemented with an effective processing system. This all takes place through a well-organised IT infrastructure, and the system is expected to facilitate segmentation, processing and the response-time process (Rostamiet al., 2016). System support in ECRM should support and manage the organisational and business process to gain a competitive advantage in the market (Turban et al., 2008). Previous studies determined the main characteristics of system support, such as reliability, response time, ease of use, system flexibility, quality of documentation and consistency of the user interface (Butler, 2000; Hamilton and Chervany, 1981; Seddon, 1997;

Swanson, 1974). Davis (1989) states that a good system should be easy to use (the degree to which users believe, when using this technology system, that they would be free from effort when adapting this technology) and useful (the degree to which users believe this technology system can enhance their job performance). Jutla et al. (2001) assert that technology has a positive impact on the applicability of ECRM systems. Technology makes ECRM systems useful and effective. We adopted the measures of system support described by Roh et al. (2005), based on favourable system investment, implementation level,

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integration of CRM system with legacy MIS systems and open networking systems for the sales force. All the above factors are expected to strengthen the relationship between system users and customers.

Research model and hypotheses

Figure 1 exhibits the relationships between these research constructs, namely, ECRM success factor dimensions (second-order), customer satisfaction, customer retention, customer trust and financial performance.

Impact of ECRM success factors on customer satisfaction, customer retention and customer trust

Many researchers argue that calculating the level of performance should go beyond financial performance measurement using market measurements, such as customer satisfaction and loyalty (Ambler and Kokkinaki, 1997; Doyle, 1995). Therefore, for this study, two types of measurements for business performance were used: financial and non-financial performance.

Uadiale and Fagbemi (2012) measure banking performance by using both financial and non-financial measures. To measure non-financial performance, Sadek et al. (2011) used customer loyalty, satisfaction, and customers’ willingness to purchase the product.

Therefore, many studies examine the impact of ECRM relating to bank performance. For instance, Abu-Shanab and Anagreh (2015) study the impact of ECRM in the Jordanian banking sector. The author posited the importance of ECRM as technology that increases customer satisfaction and bank profitability. Yimet al.(2004) assert the positive relationship

Customer Data Quality

ECRM Technology

System Appropriate

Process

ECRM

H2 H3 H1

Customer Satisfaction

Customer Trust Customer

Retention

H6 H7 H8

Financial Performance H4 H5

Sources: Adapted from Roh et al. (2005), Lai et al. (2009) and Reinartz et al. (2004)

Figure 1.

Research theoretical framework

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between CRM, customer satisfaction, and customer retention. Xuet al.(2002) posit that CRM helps banks to understand the needs of their customers and increase their satisfaction.

Miremadiet al.(2012) state that there is a relationship between CRM, trust, customer loyalty and long-lasting customer relationships. Bouldinget al.(2005) argue that ECRM enhances customer benefits. Furthermore, extant literature by Feinberg and Kadam (2002), Mithas et al. (2005) and Newell (2001) assert the positive impact that implementing ECRM programmes has on relational variables such as satisfaction and loyalty. Sadeket al.

(2011) examine the effect of ECRM on the performance of commercial banks. The authors concluded that banks with a high level of ECRM adoption often gain customer satisfaction, which, in turn, impacts their loyalty and profitability. Successful implementation of ECRM systems enhances banks’competitive advantages and hence increases their performance (Coltman, 2007). Regarding the Jordanian bank sector, Akroushet al.(2011) assert that CRM implementation in Jordanian banks has a positive impact on banks’performance. Previous studies assert the positive relationship between CRM factors, customer satisfaction and customer retention (Kimet al., 2004; Kohli and Jaworski, 1990; Lawet al., 2013). Romano and Fjermestad (2003) assert that ECRM helps organisations to attract and keep customers.

Sivarakset al.(2011) found that ECRM implementation in the banking sector boosts the quality of relationships between the bank and customers, and increases customers’ satisfaction, trust, loyalty, retention and willingness to recommend the bank. Yazdanifard and Long (2010) find that ECRM impacts customer satisfaction, expectation and loyalty.

Dhingra and Dhingra (2013) describe the positive relationships between ECRM implementation within the banking sector and customer interaction, satisfaction, high speed, accurate transactions, customer comfort, customer convenience, availability of the transaction history and trust. Dowling (2002) posits the positive relationship between ECRM processes and customer satisfaction, which in turn impacts on their loyalty. Ryals and Knox (2001) and Ryals and Payne (2001) discuss the positive relationship between CRM and customer satisfaction. Empirical evidence of the existence of this link is provided in a study by Sinet al.(2005), which found that using marketing performance to measure CRM success is more effective than using financial performance. Previous studies by Kohli and Jaworski (1990) and Lawet al.(2013) assert that companies’adoption of CRM often increases customers’ satisfaction, retention, and enhances companies’ return on investment.

Within the service sector, Law et al. (2013) identify positive relationships between the adoption of CRM factors, customer satisfaction and customer retention. Edward and Sahadev (2011) find a positive relationship between customer satisfaction and customer retention. Previous studies (Wu and Liu, 2010; Chen and Wu, 2016; Fatima and Razzaque, 2014) assert that non-financial performance factors (such as satisfaction, trust and retention) have a positive impact on organisational financial performance. Thus:

H1. ECRM success factors positively impact customers’satisfaction.

H2. ECRM success factors positively impact customers’retention.

H3. ECRM success factors positively impact customers’trust.

H4. Customers’satisfaction positively impacts customers’retention.

H5. Customers’trust positively impacts customers’retention.

Customer satisfaction, customer retention, customer trust and business performance

Previous literature defines business performance in many ways. For example, Ajanthanet al.

(2013) define performance as profitability and productivity in the banking sector.

Furthermore, the authors add that business performance refers to the growth in share

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price, or the present valuation of the company. Wheelen and Hunger (2002) posit that performance is the outcome of all the firm’s operations and strategies. Morgan (2012) asserts that business performance mainly derives from the degree to which the firm competes in the market place, by choosing to operate and turn into function according to market place characteristics. With reference to key performance indicators, banking performance is influenced by company profitability, as well as its customer retention ability (Asiedu, 2016).

Thus, financial performance can be defined as the results of a company’s operation in monetary terms. Therefore, non-financial performance should be combined with financial performance to achieve the best measures of performance (Petersen and Schoeman, 2008). To measure the financial performance of a firm, Ismail and King (2005, 2006) used profitability, availability of financial resources and sales growth. Other research by Bontis (1998) and Bontiset al.(2000) measures business performance as financial performance and non-financial performance. Woodcock and Stone (2012) discuss the advantages that CRM can achieve, such as winning, keeping and developing customers, and ensuring their profitability by reducing costs and increasing yield. Bergendahl and Lindblom (2008) evaluate the performance of Swedish banks by using financial and non-financial measures. Previous research by Bartet al.

(2001), Dess and Robinson (1984), Lyles and Salk (2007) and Yap and Khong (2006) emphasises the correlation between financial performance and non-financial performance as a practical and appropriate measure of the firm’s business performance. Krasnikovet al.(2009) reveal that CRM programme implementation reduces cost and increases the profitability of US banks. Other research studies highlight the significant positive impact of ECRM on profitability (Chang and Tsay, 2004). Yazdanifard and Long (2010) find that ECRM impacts banks’profitability and decreases costs. Thus, we hypothesise the following:

H6. Customers’satisfaction positively impacts financial performance.

H7. Customers’retention positively impacts financial performance.

H8. Customers’trust positively impacts financial performance.

Methodology

Data collection and sample

To test the relationships between ECRM success factors (process fit, customer information quality and system support) and business performance ( financial and non-financial) of the Jordanian commercial banks in Amman city, the researchers collected data from 13 listed Jordanian commercial banks (Association of Banks, 2017; Central Bank of Jordan, 2017) as follows: Housing Bank (58 branches), Arab Bank (49 branches), Jordan Bank (44 branches), Jordan Kuwait Bank (39 branches), Cairo Amman Bank (34 branches), Ahli Bank (32 branches), Etihad Bank (28 branches), ABC Bank (19 branches), Jordan Commercial Bank (18 branches), Arab Jordan Invest Bank (16 branches), Societe General Bank (11 branches), Capital Bank (8 branches) and Invest Bank (7 branches). Accordingly, we employed the following procedures to collect data:(i) before distributing the questionnaire, contact was made with the human resources (HR) department in each of the 13 listed Jordanian commercial banks to determine whether each bank uses any form of ECRM. All the listed banks assured the researchers that they are using ECRM; the researchers asked the HR department to provide details of the employees overseeing this task; results revealed that branch managers, assistant branch managers and heads of departments in the branches are the employees who are in charge of monitoring customers’data and use ECRM and all its features with authorisation; and copies of the survey were distributed to the 13 Jordanian commercial banks. Due to the statistical analyses used, structural equation modelling, we decided to distribute 500 questionnaires (based on a recommendation by Hair et al.in 2010 to allow 10–15 observations per indicator and not to exceed 500).

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Furthermore, we obtained a total of 343 valid questionnaires (with a 69 per cent response rate). The number of questionnaires distributed was relative to the size of the banks and their number of branches. The researchers sent emails to the selected participants to remind them to complete the questionnaires. The questionnaire included the main research constructs as well as the key characteristics of respondents, such as their age, gender, education level, position and type of the ECRM system used in the bank.

The sampling method pursued in this study was non-probability sampling, in which each element in the population does not have the same probability of being part of the sample (Hairet al., 2010). The non-probability sampling technique used was judgmental sampling (i.e. branch managers, assistant branch managers and heads of departments in the branches) due to the sample role to use the ECRM in all its features with authorisation (Hairet al., 2010). Therefore, to achieve the objectives of the current study, only employees who use ECRM software were included in the sample. We decided to use Jordanian commercial banks to collect our data due to the following reasons: first, according to the Central Bank of Jordan (2017), the level of financial inclusion in Jordan has increased from 24.6 per cent in 2014 (Global Findex) to 33.1 per cent in 2017, and this is distributed among services such as money transfers, online payments, debit cards, and overdrafts. Moreover, Jordanian commercial banks had $42bn as deposits from different customers at the end of 2016. Therefore, it seems that this industry needs more investigation using ECRM to study customers’behaviour. Second, with reference to the 13 listed Jordanian commercial banks, the need is obvious for this sector to deal with advanced technological software that handles customers’ data mining to meet their needs and expectations, and thus helping policy makers and decision makers at Jordanian commercial banks to set their strategies (Agariya and Singh, 2012). And third, due to the high competition between the Jordanian commercial banks, the efficient use of ECRM makes this sector of value for further investigation (Nikbakht, 2011). We followed recommendations by Pittaet al.(1999) to focus on a narrow measurable group, i.e. a specific geographical area and a selective group of people (our study took place in Amman with a selective group in the branches).

Construct operationalisation

To measure the ECRM success factors and their impact on the business performance ( financial and non-financial) of Jordanian commercial banks, the researchers adopted well- established methods and used multiple-item measures to calculate the research variables using a five-point Likert scale. To measure ECRM success factors, the scale suggested by Rohet al.(2005) was adopted, consisting of 12 items distributed among three dimensions (process fit, customer information quality and system support). The scale was also used to measure financial performance consisting of four items, and again for customer satisfaction, consisting of four items. The scale of Laiet al.(2009) was used to measure trust, and this consisted of four items. For customer retention, the scale by Reinartzet al.(2004) was used, consisting of three items. Table I illustrates the items used and their sources.

Results

Measurement models

To test the validity of our proposed model, an exploratory factor analysis was run using principal components (extraction method) and varimax (rotation method) in SPSS 17.0. The results show that SPSS rotated to seven factors, which all loaded above 0.40 (Table II). Then we proceeded with analyses using two steps. First, the measurement model was evaluated for ECRM success factors (second-order) using AMOS 17.0. Our results show that the ECRM success factors construct is multi-dimensional and consists of three factors (PF, CIQ and SS).

Furthermore, fit indices for the ECRM success factors construct were acceptable and within the recommended levels (Hair et al., 2010). For instance, χ²¼144.341, df¼51,

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χ²/df¼2.830, p¼0.002, goodness-of-fit index (GFI)¼0.938, comparative fit index (CFI)¼0.973, Tucker–Lewis index (TLI)¼0.964, incremental fit index (IFI)¼0.973 and root mean square error of approximation (RMSEA)¼0.073. Moreover, it was proven in this study that a relationship exists between composite reliability (CR) and discriminant validity (average variance extracted, AVE) (Tables III and IV ). This research finds that the loading value for each item was higher than 0.70 (Fornell and Larcker, 1981) and the AVE for all constructs was higher than the squared correlation coefficients between them (Anderson and Gerbing, 1988).

Construct Author(s)

Electronic customer relationship success factors (ECRM) Roh et al. (2005) (i) Process fit (PF1-PF4)

PF1: the customer interaction processes built into the ECRM system are well equipped PF2: the linkages between sales channels are well controlled

PF3: the personalised marketing support processes are well constructed PF4: the after-sales service processes are well defined

(ii) Customer information quality (CIQ1–CIQ4)

CIQ1: various customer information sources are well integrated CIQ2: the customer information provided by ECRM system is useful CIQ3: the customer scoring and segmentation information is supported by the

ECRM system

CIQ4: the potential purchasing power of customers can be estimated (iii) System support (SS1–SS4)

SS1: our company is supportive of investing in the system infrastructure for ECRM SS2: our ECRM system is well implemented

SS3: the ECRM system and legacy MIS system are well integrated SS4: open networking system for sales force is well supported (iv) Customer satisfaction (CSAT1–CSAT4)

CSAT1: friendly interactions with customers are increasing after implementation of the ECRM system

CSAT2: implementation of the ECRM system helps to enhance brand value CSAT3: customer complaints are decreasing after implementation of the CRM system CSAT4: overall, customer satisfaction level is increasing after implementation of the

CRM system

(v) Financial performance (FP1–FP4) FP1: increase of new customers FP2: increase of reselling/upselling FP3: decrease of customers’churn FP4: increase of overall profitability

Customer trust (CT1–CT4) Lai et al. (2009)

CT1: after implementation of the ECRM system, our customers have the willingness to share ideas and information with us

CT2: after implementation of the ECRM system, our customers have integrity and stick to their obligations in dealing with us afterwards

CT3: after implementation of the ECRM system, our customers are competent and have the technical knowledge and interpersonal skills to perform the job, and good consistency in handling situations

CT4: after implementation of the ECRM system, our customers are concerned about our welfare and have willingness to protect, support, and encourage us

Customer retention (CR1–CR4) Reinartz et al.

(2004) CR1: we maintain regular interactive communications with our customers

CR2: we have customer loyalty or retention programmes

CR3: we have integrated customer information that can be accessed by different departments

Table I.

Research construct operationalisation

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Construct PF CIQ SS CSAT FP CT CR

PF1 0.88

PF2 0.89

PF3 0.87

PF4 0.78

CIQ1 0.87

CIQ2 0.88

CIQ3 0.87

CIQ4 0.72

SS1 0.86

SS2 0.88

SS3 0.87

SS4 0.76

CSAT1 0.73

CSAT2 0.80

CSAT3 0.87

CSAT4 0.82

FP1 0.84

FP2 0.88

FP3 0.89

FP4 0.87

CT1 0.89

CT2 0.90

CT3 0.87

CT4 0.86

CR1 0.87

CR1 0.80

CR1 0.87

Table II.

Exploratory factor analysis

Indicator Direction Construct Standardised loading SE t-value p CR AVE

PF1 ← PF 0.897 0.93 0.7624

PF2 ← PF 0.910 0.054 19.276 ***

PF3 ← PF 0.876 0.050 20.284 ***

PF4 ← PF 0.806 0.051 19.586 ***

CIQ1 ← CIQ 0.751 0.91 0.7161

CIQ 2 ← CIQ 0.873 0.070 16.772 ***

CIQ 3 ← CIQ 0.935 0.072 17.981 ***

CIQ4 ← CIQ 0.815 0.070 15.674 ***

SS1 ← SS 0.894 0.92 0.7399

SS2 ← SS 0.897 0.043 24.366 ***

SS3 ← SS 0.883 0.042 23.167 ***

SS4 ← SS 0.759 0.049 17.543 ***

Note:***po0.001

Table III.

Confirmatory factor analysis: ECRM success factors

Variable PF CIQ SS

PF 0.873

CIQ 0.30 0.846

SS 0.25 0.26 0.86

Notes:The numbers on the diagonal are average variances extracted by each construct. The numbers below the diagonal are the squared correlation coefficients between the constructs

Table IV.

Discriminant validity:

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Second, after testing for the measurement model using the five latent factors of ECRM success factors, CSAT, CT, CR and FP, our results revealed the following fit indices:

χ²¼617.793, df¼311; χ²/df¼1.986, CFI¼0.961, GFI¼0.901, TLI¼0.956, IFI¼0.961 and RMSEA¼0.054. Table V shows standardised estimates, t-values, CR and AVE.

Table VI shows discriminant validity through the Pearson correlation between constructs against the square roots of AVE across diagonal, all of which proved to be acceptable.

Structural analysis

The results from the structural model revealed acceptable fit indices:χ²¼684.844, df¼313, χ²/df¼2.188, CFI¼0.953, GFI¼0.902, TLI¼0.947, IFI¼0.953 and RMSEA¼0.059.

We found that all our hypotheses are supported (Table VII). For instance, we found a positive relationship between ECRM success factors and customer satisfaction (H1,β¼0.81,po0.001,R²¼0.65), customer retention (H2,β¼0.63,po0.001,R²¼0.34) and customer trust (H1,β¼0.72,po0.001,R²¼0.52). The relationship between customer satisfaction and customer retention (H4, β¼0.60, po0.001) and customer trust and customer retention (H4,β¼0.52,po0.001). Further, we found that customer satisfaction (H, β¼0.54, po0.001), customer retention (H, β¼0.26, po0.001) and customer trust (H,β¼0.21,po0.001) have a positive impact on financial performance withR²¼0.72.

Indicator Direction Construct Standardised loading SE t-value p CR AVE

SS ← ECRMSF 0.801 0.84 0.6294

CIQ ← ECRMSF 0.789 0.089 9.387 ***

PF ← ECRMSF 0.790 0.095 9.760 ***

CSAT1 ← CSAT 0.701 0.89 0.6606

CSAT2 ← CSAT 0.812 0.051 20.387 ***

CSAT3 ← CSAT 0.894 0.060 17.513 ***

CSAT4 ← CSAT 0.832 0.069 14.117 ***

CT1 ← CT 0.894 0.92 0.7331

CT2 ← CT 0.813 0.072 9.692 ***

CT3 ← CT 0.887 0.076 11.769 ***

CT4 ← CT 0.828 0.102 14.107 ***

CR1 ← CR 0.911 0.94 0.8378

CR2 ← CR 0.959 0.033 31.169 ***

CR3 ← CR 0.874 0.036 24.807 ***

FP1 ← FP 0.860 0.94 0.8058

FP2 ← FP 0.905 0.038 27.716 ***

FP3 ← FP 0.936 0.043 25.276 ***

FP4 ← FP 0.888 0.044 22.658 ***

Note:***po0.001 Table V.

Results of the CFA within the five latent factors

Construct ECRM CSAT CR CT FP

ECRM 0.793

CSAT 0.22 0.812

CR 0.23 0.34 0.856

CT 0.24 0.41 0.29 0.915

FP 0.19 0.27 0.20 0.31 0.897

Table VI.

Discriminant validity:

ECRM success factors and other constructs

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Mediating test

To examine the mediation impact, we tested four mediations: ECRM→CSAT→CR;

ECRM→CT→CR; TRU→CR→FP; and SAT→CR→FP. We followed Holmbeck’s (1997) procedures and used Sobel’s (1982) test to examine the significance of the mediation effect of trust, satisfaction and retention. Sobel’s test tells whether the indirect effect through the mediator is significant. Using Amos 17, we generated a 1,000-sample bootstrapping with phantom variables and bias-corrected 95% confidence intervals (Mallinckrodtet al., 2006).

Our results show that, first, the effect of ECRM success factors on customer retention did drop from 0.63 (without the mediator) to 0.30 (with the mediator) at (po0.001), indicating support for the partial mediating influence of trust on the relationship between ECRM success factors and customer retention. Second, the effect of ECRM success factors on customer satisfaction did drop from 0.63 (without the mediator) to 0.32 (with the mediator) at (po0.001), indicating support for the partial mediating influence of customer retention on the relationship between ECRM success factors and customer satisfaction. Third, we found that the effect of customer trust on financial performance did drop from 0.21 (without the mediator) to 0.17 (with the mediator) at (po0.001), indicating support for the partial mediating influence of customer retention on the relationship between customer trust and financial performance. Fourth, the findings suggest that customer satisfaction of financial performance did drop from 0.54 (without the mediator) to 0.28 (with the mediator) at (po0.001), indicating support for the partial mediating influence of customer retention on the relationship between customer satisfaction and financial performance (Table VIII).

Discussion and implications

This research aimed to investigate the relationship between ECRM success factors (second-order) and business performance measures (non-financial and financial). The focus of this study was to gain an insight into the status of ECRM implementation by commercial banks in Jordan. To achieve the study objectives, and to conduct the research in a systematic approach, a conceptual framework was developed based on the ECRM success factors (process fit, customer information quality and system support) that were introduced

Hypothesised relationships β SE t-value Result

H1: ECRM→customer satisfaction 0.81 0.098 9.957*** Supported

H2: ECRM→customer retention 0.63 0.023 6.548*** Supported

H3: ECRM→customer trust 0.72 0.114 9.6123*** Supported

H4: Customer satisfaction→customer retention 0.60 0.045 7.354*** Supported H5: Customer trust→customer retention 0.52 0.051 6.256*** Supported H6: Satisfaction→financial performance 0.54 0.063 9.543*** Supported H7: Customer retention→financial performance 0.26 0.043 5.853*** Supported H8: Customer trust→financial performance 0.21 0.043 4.365*** Supported Notes:ns, not significant;β, standardised path coefficients. ***po0.001 (two-tailed test)

Table VII.

Structural model results

Relationship Direct without mediator Direct with mediator Indirect

ECRM→CSAT→CR 0.63 (0.001) 0.30 (0.001) 0.001

ECRM→CT→CR 0.63 (0.001) 0.32 (0.001) 0.001

TRU→CR→FP 0.21 (0.001) 0.17 (0.001) 0.001

SAT→CR→FP 0.54 (0.001) 0.28 (0.001) 0.001

Table VIII.

Mediating test

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by previous research (Akhlaghet al., 2014; Rohet al., 2005). The result shows that the three dimensions of ECRM success factors (second-order) reflect a better understanding of the ECRM process. Therefore, the ECRM success factors scale should include process fit, customer information quality and system support. We found that system support has the strongest impact on creating ECRM success. System support, which is related to the measurement of the system processing itself (Negashet al.,2003), has the strongest impact on creating ECRM success in Jordanian commercial banks. Therefore, banks’ability to gain more benefits is restricted to their system’s ability to be adopted and implemented successfully. For instance, implementing system support helps banks to effectively manage their business process, which leads to banks enhancing system performance, increasing response time, maintaining reliability by integrating ECRM system with MIS systems (Kriebel and Raviv, 1980; Rohet al., 2005) and increasing sales. We have found that process fit is the second most important construct to affect ECRM success. Therefore, process fit level relates to banks’ability to analyse their customers’problems and needs and respond to them accordingly (Fan and Ku, 2010). Therefore, to implement this factor successfully, banks should interact with their customers via one-to-one communication, determine which channel their customers prefer to use, analyse customers’data, personalise services for each one and follow customers up to give them better after-sales service (Roh et al., 2005).

We have found that customer information quality is the third most important construct to affect ECRM success factors. Customer information quality is related to the value produced by the ECRM system. Thus, Jordanian commercial banks should pay more attention to the quality of their customers’information (i.e. integrity, currency, output timeliness, reliability and usefulness) to segment the current customers and to forecast their purchasing power.

Thus, Jordanian commercial banks should manage their customer information effectively via customer information analytics to build insight into markets and customers’behaviours and to take the correct action. Thus, high-quality customer information results in ECRM success (DeLone and McLean, 1992). Therefore, organisations should pay more attention to this aspect while analysing customers’data. These findings are also consistent with the literature. As a result, Jordanian commercial banks should take into consideration the appropriate process of ECRM success factors in order to enhance banks’ business performance (financial or non-financial performance). In addition, banks should educate their employees about the importance of ECRM success factors and how such factors impact ECRM implementation and thus the performance of the banks.

The researchers found that ECRM success factors positively influence customer satisfaction, customer trust and customer retention (H1–H3). The path coefficient analysis indicates that ECRM success factors have the most significant impact on customer satisfaction, with a coefficient value of 0.81 (R²value of 0.65). This is followed by the impact of ECRM success factors on customer trust, with a coefficient value of 0.72 (R²value of 0.52).

Furthermore, we found that ECRM success factors have the least significant impact on customer retention with a coefficient value of 0.63 (R² value of 0.34). The relationship between customer satisfaction and customer retention (H4; β¼0.56, po0.001), and the relationship between customer trust and customer retention (H4;β¼0.56,po0.001) was also proven. Finally, the relationships between customer satisfaction (H4; β¼0.54, po0.001), customer trust (H4; β¼0.21, po0.001), customer retention (H4; β¼0.26, po0.001) and business performance are as expected with anR²value of 0.35. The above results come in accordance with previous literature. For instance, within the commercial banking context, Sivarakset al.(2011) posited that there is a positive indirect impact of ECRM implementation on relationship quality (trust, satisfaction, commitment, retention, loyalty and willingness to recommend). Dyche (2001) argued that ECRM systems improve customer services, help organisations to retain their customers, increase customer value and enhance customer loyalty. Abu-Shanab and Anagreh (2015) found that implementing ECRM

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in the Jordanian banking sector increases customer satisfaction and bank profitability.

Yimet al.(2004) asserted the positive relationship between CRM and customer satisfaction and customer retention. Sadek et al. (2011) discuss the positive relationship between implementing ECRM and performance of commercial banks (customer satisfaction, customer loyalty and banks’ profitability). Yazdanifard and Long (2010) found that ECRM impacts customer satisfaction, expectation, and loyalty. Asiedu (2016) asserts the positive relationship between profitability, customer retention, and banking performance.

Woodcock and Stone (2012) discovered a positive relationship between CRM elements and organisations’ profitability. Krasnikov et al. (2009) asserted that there is a positive relationship between CRM programmes and banks’financial performance. Chang and Tsay (2004) found that ECRM has a significant positive impact on profitability. Yazdanifard and Long (2010) found that ECRM impacts upon banks’profitability.

This analysis provides empirical evidence of the impact of ECRM success factors and their ability to explain the prediction of business performance measures (financial or non-financial). This result supports the proposition that the availability of the ECRM system is positively linked to business performance. Therefore, a better understanding of the influence of ECRM success factors on business performance should be viewed as a whole, rather than in isolation. These results are in line with Akhlaghet al.(2014), who support the positive relationship between success factors and ECRM system technology with business performance. Furthermore, the results are in line with Rohet al.(2005) and their findings that suggested that ECRM success factors impact customer satisfaction, which, in turn, impacts business performance. Based on the findings, we concluded that customer trust, customer satisfaction and customer retention are partial mediators. Thus Jordanian bank managers should take care of such mediators.

Theoretical implications

The researchers contributed to the field of ECRM literature within the banking sector by providing the following. First, this study explained an unexplored path between ECRM success factors and customers’satisfaction, trust and retention. Previous research examined and linked ECRM success factors with customer satisfaction (Rohet al., 2005), but not trust and retention. Therefore, we provided researchers with an integrative framework, which links ECRM success factors with customers’satisfaction, trust and retention. Second, this study is considered, to the best of the authors’knowledge, to be the first one to conceptualise and measure ECRM success factors as a multi-dimensional (second-order) construct consisting of: process fit, customer information quality and system support. Previous research (Roh et al., 2005) investigated this as a first-order issue, and thus we have no knowledge of the impact of the ECRM success factors as one unit, or its consequences.

Third, testing the impact of customer satisfaction and customer trust on customer retention, within the context of commercial banks, which utilised ECRM success factors, was considered as another contribution for the current study. Previous research in this area found that customer satisfaction has a direct impact on business profitability (Rohet al., 2005), or that ECRM has an indirect impact on the customer–bank relationship quality (Sivaraks et al., 2011). Therefore, our finding regarding the impact of customer–bank relationships (customer satisfaction and customer trust) on customer retention is considered as another theoretical contribution. Fourth, more evidence has been provided for scholars on ECRM success factors, with further indications regarding the relationship between ECRM success factors and non-financial performance indicators (customers’ satisfaction, trust, retention), and financial performance. Fifth, our results regarding the mediating impact of customers’trust, satisfaction and retention are considered as another contribution to the literature. Previous research on the ECRM success factors did not investigate the impact of such mediations within the banking sector (Rohet al., 2005; Sivarakset al., 2011).

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Managerial implications

Within the increasing competition in the Jordanian commercial banks sector, the current study provides the following managerial implications. First, according to the results, it is expected that Jordanian commercial banks’investment in ECRM success factors will help branch managers to effectively interact with and retain their existing customers, thus providing them with the value they seek. Therefore, it is expected that ECRM success factors will enhance banks’non-financial performance measured by customer satisfaction, trust and retention. Jordanian commercial banks that wish to increase their non-financial performance should adopt ECRM success factors. Thus, in order to remain competitive, Jordanian commercial banks must understand that adopting ECRM success factors will enhance their sustainable competitive advantage for achieving customers’trust, satisfaction and retention. Therefore, ECRM success factors are key to competitive advantage. Second, the positive correlation between customer satisfaction, customer trust and customer retention revealed another managerial implication: banks that employ ECRM success factors properly will have the ability to provide a better understanding of their customers’ needs and wants and will work accordingly to match customers’needs. This, in turn, will motivate customers to trust the bank and be satisfied with the services it provides.

As a result, customers will be more loyal and will come back to purchase services whenever needed. However, this result might not be valid for all customers, particularly customers who cannot be satisfied due to the bank’s prices, the level of services and the fact that the customers are not profiting. Therefore, we advise Jordanian commercial banks to evaluate the efficacy of ECRM success factors based on the long-term perspective and to focus on targeting and serving customers who can be served better in a profitable way. Thus, a periodic evaluation for ECRM success factors is recommended, to enable branch managers to track and monitor changes within customers’needs over time. Third, based on the results, the researchers believe that implementing the notion of ECRM within Jordanian commercial banks can help top management to build, develop and maintain effective marketing strategies to increase their business performance (financial and non-financial). Fourth, in a highly competitive environment, the researchers find that Jordanian commercial banks, which invest in ECRM success factors, also improve their financial performance. Thus, the researchers recommend that banks invest in the ECRM process and subsequently increase their profitability. Finally, the impact of customers’satisfaction and trust on retention could provide opportunities for bank managers, such as increasing cross-selling for other products/services. Thus, a satisfied customer is likely to expand his/her purchase of other product categories in different banks. As a result, bank managers should pay more attention to their customers’satisfaction level.

Limitations and future research directions

This study has several limitations that should be considered when evaluating and generalising its conclusions. However, the limitations discussed below can provide a starting point for future research. First, the study was conducted in one country, Jordan.

Although Jordan is a valid indicator of prevalent factors in the wider MENA region and developing countries, the lack of external validity of this research means that any generalisations of the research should be considered with caution. Future research could be orientated in other national and cultural settings and compared with the results of this study. Second, the data analysis was cross-sectional. As with all cross-sectional studies, the parameters tended to be static rather than dynamic. This drawback limits the generalisation of the study’s findings to further situations and beyond the specific population from which the data were gathered. Therefore, future studies should consider longitudinal studies to better understand the implementation of the ECRM system over time. The study proposes a framework for future research in measuring ECRM success factors and business