Review of Integrative Business and Economics Research, Vol.

7, Supplementary Issue 2 116

Transformation from Relationship Marketing to

Electronic Customer Relationship Management:
A Literature Study
Chandra Hendriyani*
Faculty of Social and Political Sciences, Universitas
Padjadjaran

Lina Auliana
Faculty of Social and Political Sciences, Universitas Padjadjaran

ABSTRACT
In the era of digitalization, technology is driving companies to change their platform
process into the digital process for achieving sustainable corporate goals. A company
should make a strategy for the satisfaction and value of customers. To win customers’
heart, a company needs to know what customers need and want. It starts with building a
relationship with the relationship marketing strategies. They are (1) identifying each
customer more closely by creating two-way communication, (2) managing a mutually
beneficial relationship between customers and companies, (3) shifting to customer
relationship management (CRM) and (4) turning into electronic Customer Relationship
Management (e-CRM). This study intends to describe the process of relationship
transformation, from the beginning to the present in terms of the differences between
stages and how it would be essential for an organization to engage the customers. The
method used in this study was qualitative research with descriptive approach. The data
collection technique applied was literature study. The results show that the
transformation from relationship marketing to electronic relationship marketing
management is to aim at loyalty, profitability, sales increase, customer retention and
customer engagement. Digitalization has pushed companies to change their platforms to
become digital, so customers would have a 24-hour relationship with the companies via
online service.

Keywords: Relationship Marketing, CRM, e-CRM

1. INTRODUCTION
A high level of competition and the rapid development of technology recently
encourage a company to continue improving its proximity to customers. A company
continues to understand customer behavior by optimizing potential customer data. A
successful company is a company that can do its business transformation to network-
based digital and where the company will provide a different customer experience
integrated into their daily life. A company creates strategy relationship management to
obtain a competitive advantage. A strategy is a formulation of a comprehensive plan to
how a company will achieve its mission and objectives. Based on Hunger & Thomas
(2012), the strategy will maximize the competitive advantage and minimize the
limitations of competition.

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Review of Integrative Business and Economics Research, Vol. 7, Supplementary Issue 2 117

Customer relationship became a hot topic since the 1980s and it transforms every
era according to the fluctuant environment of business. Each era has its own
characteristics. Based on that, the study aims to describe the media of e-CRM to be used
in service companies, such as banking, hotel, and retail in the era of digital marketing.

2. LITERATURE REVIEW

2.1. Relationship Marketing(RM)

Relationship marketing was first introduced by Berry (1983) who defines it as
attracting, maintaining, and in multiservice organizations enhancing customer
relationship and it is recommended as a strategy to overcome service intangibility.
According to Christopher et al. (1991), relationship marketing was started in 1990. On
the other hand, Grönroos (1994) identifies and establishes, maintains and enhances and,
when necessary, terminates the relationship with customers and other stakeholders at a
profit so that the objectives of all parties involved meet; and this is done by mutual
exchange and the fulfillment of promises. According to Payne (1995), relationship
marketing focuses on how to develop, maintain and enhance customer relationship over
the customer lifecycle rather than on attracting new customers. O’Malley and Tynan
(2000) state that relationship marketing is believed to be working most effectively when
customers are highly involved in the good or service. There is an element of personal
interaction and customers are willing to engage in the relationship building activities.
According to Palmer (2001), relationship marketing focuses on the orientation to
customer retention, continuous customer contact, customer value, long-term scale, high
emphasis on customer service, high commitment to meet customer expectations and
quality that become the concern of all staffs. Cannon et al. (2008) state that customer
relationship with each company will be at different levels. There are five dimensions of
the relationship: cooperation, information sharing, operational circles, legal bonds, and
relationship-specific adaptations.

The forms of relationship in business can be described as follows:

Finance
R&D Quality
Quality R&D
Relationship Purchasing
Sales person
Marketing Manager Accounting

Figure 1: Key Dimensions of Relationship in Business Markets

Source: Cannon, Joseph et al.(2008:189)

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Review of Integrative Business and Economics Research, Vol. 7, Supplementary Issue 2 118

Meanwhile, the level of relationship marketing according to Berry (1995) means

the level of relationship marketing divided into three levels: level one relies primarily
on incentives pricing to secure customers' loyalty; level two relies primarily on social
bonds, although aggressive pricing may be the vital element of the marketing mix and
level three relationship marketing relies primarily on structural solutions for important
customer problems.
According to Berry (1995) in Palmer (2001) relationship marketing can be clarified
based on three approaches:
a. As a tactic: relationship marketing is used as a sales promotion tool even though
the development of information technology has spawned many short-term
loyalty schemes.
b. As a strategy: relationship marketing is a process for binding customers through
legality, economics, technology, geography and proximity to customers.
c. As a philosophy: relationship marketing becomes the core of marketing
philosophy in which customers shift their focus from customer needs connecting
the life cycle of customer needs to customer relationships.

Morgan and Hunt (1994) identify that a relationship benefits customer trust so it will be
a commitment to consumers to be engaged. According to Bull (2003) and Zablah et al.
(2004), the concept of CRM is often criticized because it implies the meaning of
different things for different people.

2.2. Customer Relationship Management

The concept of relationship marketing depends on customer data. Customer data is
always important for companies. From the data, the companies can make a faster
decision. According to Samizadeh and Mehregan (2015), one of the various ways for
companies to use their day-by-day analysis is data mining. Based on Song et al. (2004)
data mining has been frequently used in CRM. Customer relationship management
(CRM) is a part of relationship management which is like a classification of customers
at risk, it creates profitable customers and customer retention. According to this
approach, companies can identify which customer that is loyal and generates substantial
value for the organization through a high-profit contribution.
Richards and Jones (2008) explain that CRM allows companies to gather customer
data swiftly, identify the most valuable customer from time to time and increase
customer loyalty by providing customized products and services. While, Knox et al.
(2003) say that CRM is a business strategy, process, and information technology (IT)
that enable a company to optimize revenue and increase value through comprehending
and satisfying individual customer needs. In addition, Hillebrand et al. (2011) state that
CRM is considered as an important way to enhance customer loyalty and the company
performance.

2.3. Electronic Customer Relationship Management

The rapid development of technology pursues companies to change their
platform to digital. Digitally, companies manage their relationship with customers in a
more efficient and effective way. According to Chuang et al. (2012), the evolution of
ICTs due to the rapid development of internet technology has led the development of
CRM to e-CRM.

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Review of Integrative Business and Economics Research, Vol. 7, Supplementary Issue 2 119

Perwej (2010) states that increasing competition, deregulation, and the internet
have contributed to increasing customer power. Usman et al. (2012) describe that e-
CRM is an approach consisting of a combination of hardware, software, applications,
processes, and management practice commitments to build a high-quality customer
service and customer care. According to Kumar (2015), e-CRM is a process of
maximizing sales to existing customers, driving a continuous relationship through the
use of the technology of digital communication, such as database operation, websites,
customer service, email and social media marketing. Aher and Bhakkad (2011) in Abu-
Shanab and Anagreh (2016) add that e-CRM is a long-term relationship that utilizes
technological and human resources to comprehend customer behavior and achieve a
maximum customer value.

3. METHOD
The method used in this study was qualitative research with descriptive approach.
The data collection technique applied was literature study using systematic mapping
process. According to Petersen et al. (2008), the essential steps of the process of
systematic mapping study are defining research questions, conducting the search for
relevant papers, screening of papers, keywording abstracts and data extraction and
mapping. Each step of the process has an outcome. The outcome of the process becomes
the systematic map.

4. RESEARCH AND FINDINGS

The results of the study in the transformation of relationship marketing into
electronic customer relationship management through literature study data obtained are
the following:
The competitive level of business is increasingly accompanied by the rapid
technological developments pushing companies to always improve their
competitiveness by expanding their market share and customer loyalty. The shift in
relationship marketing that grew rapidly in the 1980s begins as the more complex
customer finally emerges customer relationship management

Tabel 1: Transformation Relationship Marketing to Customer Relationship

Management then electronic Customer Relationship Management

• Started since 1983 by Berry

Relationship • Marketing appeared as a new marketing strategy (Mattson, 1997; Tareq,
Marketing 2012; Payne, et al., 2000; Crosby and Stephen,1987)
(RE) • The aim is to increase customer retention and customer loyalty (Berry,
1983; Mattson, 1997; Payne and Frow, 1999; Reichheld and Sasser, 1990;
Priluck, 2003)
• The aim is to increase profitability and improve services (Berry, 1983;
Walsh et al., 2004; Reichheld and Sasser, 1990; Garland, 2002; Dawes,
2004).
• The benefit increases purchases, reduces costs, has free advertisement,
emerges the lifetime value of customers, gives a positive word-of-mouth
(Zeithmal and Bitner, 2000; Christopher et al., 1991; Reichheld and Sasser,
1990; Grönroos, 1996; Beaton and Beaton, 1995; Bonnin et al., 2005)

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Review of Integrative Business and Economics Research, Vol. 7, Supplementary Issue 2 120

• RM activities are related to the driver of customer equity (Chang and Tseng,
2005)
• RM are trust, commitment, social bonding and communication (Morgan and
Hunt, 1994)
Customer • CRM is a strategy (Nejad, 2011; Knox, 2013)
Relationship • CRM value drivers: improving the ability to target profitable customers,
Management integrating offerings across channels, improving the efficiency and
(CRM) effectiveness of sales force, improving pricing, customizing products and
services, improving the efficiency and effectiveness of customer service,
individualizing marketing messages, value, brand and relationship equity
drive overall to customer equity (Richards and Jones, 2006)
• CRM is a key element that allows a bank to develop its customer base and
sales capacity (Perwej and Asif, 2010)
• The goal of CRM is to maximize profitability from every customer (Perwej
and Asif, 2010)
• Customer relationship is a key competitive advantage (Perwej and Asif,
2010)
• CRM is considered as an important way to enhance customer loyalty and
firm performance (Hillebrand, et al., 2011, Parvatiyar A. and Sheth JN.,
2001; Sin et al., 2005; Das, 2004; Payne et al., 2001)
• CRM is a much more efficient and cost-effective mechanism for customer
retention (Murugan and Kumar, 2011)
• Dimensions for CRM Effective namely are organizational commitment,
customer experience, process-driven approach, reliability and technology-
orientation affecting customer satisfaction, customer loyalty and loyalty-
influenced cross-buying (Padmavathy et al., 2011)
Electronic • ICT has led to e-CRM due to the rapid development of internet technology
Customer (Chuang et al., 2012)
Relationship • e-CRM is considered as the latest paradigm of relationship marketing in the
Management cyberspace (Chen and Chen, 2004)
(e-CRM) • A comprehensive business and marketing strategy integrates people,
processes, technology and all business activities to attract and retain
customers through the internet and mobile phones (Noor, 2012; Usman et
al., 2012)
• e-CRM acts as marketing activities, tools and techniques delivered over the
internet and maximum sales (Aydin and Ozer, 2005; Kumar, 2015)
e-CRM facilitates online service to customers (Kumar, 2015)

Source: Results from the writers (2017)

The following diagram shows the transformation of relationship marketing:

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1980s 1990s 2000s

Relationship Customer Relationship Electronic Customer
Marketing Marketing Relationship Marketing

Focus on Marketing Focus on Focus on

Mix(4P) and Data Mining Platform digital
Customer Service

Increase customer value, customer retention, to increase profitability, reduced

costs, long-term relationship

Figure 2: Model Transformation RM to e-CRM

Source: Results from the writers (2017)

5. CONCLUSION AND SUGGESTION

5.1 Conclusion
The transformation from relationship marketing to electronic customer
relationship management occurs due to changes in a business environment that is
increasingly boundless and interconnected due to the rapid technological advances. All
the stages of a relationship since the 1980s until now are to aim loyalty, profitability, an
increase in sales, customer retention and customer engagement. Digitization has pushed
companies to change their platform to digital, so customers could have a 24-hour
relationship with the companies by online service.

5.2 Suggesstion
In addition, for future research, researchers can conduct research on e-CRM
implementation that focuses on segmentation which will become the biggest market
share in 2020, namely Y and Z generation segmentation

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