The study of the relationship between
KM capability, customer life cycle activities,
and CRM performance
Southern Taiwan University
Department of Business Administration
Kuo-Wei Lee
Date: Oct. 22, 2009
Maneesap Rojdamrongratana
Background & Motivation
 Various researchers have discussed about customer relationship
management (CRM) in order to improve firm’s performance. CRM helps
firm to reduce cost through improved efficiencies in managing
customer interaction (Hansotia, 2004).
 In this study, we try to discuss the relationships between customer life
cycle activities management (CACAM) and CRM performance.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(2)
Background & Motivation
 The concept of Customer Life Cycle (CLC) is increasingly discussed in
the recent years (Hansitia, 2002).
 Similar to Product Life Cycle (PLC), Customer Life Cycle (CLC) has been
segmented to four stages (Thomas,1998) :
1. Acquisition : Attracting new customer
2. Assimilation : Turning the first time buyers into repeat customers
3. Cultivation : Cementing life-long customer bonds
4. Reactivation: Bringing lost customer back.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(3)
Background & Motivation
 The company should know about the natural of four stages in the CLC
to achieve better CRM performance. By creating and delivering the
suitable marketing activities to each stage, firms can improve CRM
performance (Hansotia, 2002).
 One of the purpose of this study is to discuss the impact of CLCAM on
CRM performance.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(4)
Background & Motivation
 In addition, CLCAM are supported by the firm’s ability in leverage
customer data creatively, effectively and efficiently to design and
implement its strategies.
 Hence, the customer knowledge is one crucial resource for CLCAM.
Companies need to gather a lot of information and create various kind
of knowledge to make CLCAM successful. Knowledge should be
managed well in order to utilize the information more effectively
(Menon & Varadarajan, 1992).
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(5)
Background & Motivation

In prior research, it indicated that four dimensions of knowledge architecture,
including Knowledge Acquisition, Conversion, Application, and Protection are
essential organizational capabilities for effective knowledge management (Gold,
Malhotra, & Sehars, 2001).

There are some studies mention the importance of CLCAM and highlight CLCAM
will help the business get succeed (Thomas, 1998). However, there are no
scholars discuss the linkage of using KM to manage CLCAM to achieve the CRM
performance.

This study will also prove the relationship between KM capability and CLCAM.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(6)
Background & Motivation
 Furthermore, in recent years, the information technology (IT) has
help firms to leverage and utilize the data to support the firm’s
decision, especially in marketing field (Shaw, Subramaniam, Tan &
Welge, 2001) .
 So, IT is one of most important factors that affect the relationship
between KM capability and CLCAM. In our study, the moderating effect
of IT on KM capability and CLCAM will be also examined.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(7)
Background & Motivation
 Finally, the customer relationship is also built on the foundation of
trust (Berry, 1995) .
 Trust is an important feature in the building and development of
quality relationships through a process of making and keeping
promises (Dwyer, Schurr & Oh, 1987; Gronroos, 1990; Hewett, &
Bearden, 2001).
 The empirical evidence in prior research also show that trust relates to
the CLCAM and CRM performance.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(8)
Research objectives
1.
To identify interrelationship between KM capability,
CLCAM, and CRM performance
2.
To investigate how the interaction of KM capability and
Information Technology will affect CRM performance
3.
To investigate how the interaction of CLCAM and Trust will
affect CRM performance
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(9)
Framework
Moderator
Moderator
IT
Trust
KM Capability
H4
•Acquisition
Customer life cycle
Activities management
•Protection
H1
• New customer Acquisition
CRM performance
•Customer Satisfaction
(CLCAM)
•Conversion
•Application
H5
•Customer Loyalty
H2
• Cross sales for customer
• Customer retention
• New Product development
H3
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(10)
H4: Interaction between KM capability and IT has significant effect on
CLCAM
•H4.1: Interaction between KM capability and IT has significant effect on
new customer acquisition activity management.
H5: Interaction of CLCAM and Trust has significant
•H4.2: Interaction between KM capability and IT has significant effect on
effect
on CRM
performance
H1: KM
capability
has
significant effect on CLCAM
cross sales activity management.
Interaction
CLCAM and
Trust
has
significant
•H1.1:H5.1:
KM capability
hasofsignificant
effect
on•H4.3:
new
customer
Interaction acquisition
between KM activity
capabilitymanagement.
and IT has significant effect on
on customer
satisfaction
Moderator
Moderator
H2: sales
CLCAM
has
significant
effect
on
CRM performance
•H1.2:effect
KM capability
has significant
effect onretention
cross
activity
management.
activity management.
H5.2:
Interaction
of
CLCAM
and
Trust
has
significant
•H2.1:
CLCAM
has
significant
effect
onhas
customer
satisfaction
•H1.3: KM capability has significant effect on•H4.4:
retention
activity
management.
Interaction
between
KM capability and IT
significant
effect on
effect
on
customer
loyalty
IT
Trust
•H2.2:
CLCAM
has
significant
effect
on
customer
loyalty
•H1.4: KM capability has significant effect onnew
newproduct
productdevelopment
developmentactivity
activitymanagement.
management
Hypotheses
KM Capability
H4
•Acquisition
•Protection
H1
• Cross sales for customer
CRM performance
•Customer Satisfaction
• New customer Acquisition
•Conversion
•Application
CLCAM
H5
•Customer Loyalty
H2
• Customer retention
• New Product development
H3: KM capability has significant effect on CRM performance
H3.1: KM capability has significant effect on customer satisfaction.
H3.2: KM capability has significant effect on customer loyalty.
H3
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(11)
Hypotheses





H1: KM capability has significant effect on CLCAM

H1.1: KM capability has significant effect on new customer acquisition activity management.

H1.2: KM capability has significant effect on cross sales activity management.

H1.3: KM capability has significant effect on customer retention activity management.

H1.4: KM capability has significant effect on new product development activity management.
H2: CLCAM has significant effect on CRM performance

H2.1: CLCAM has significant effect on customer satisfaction

H2.2: CLCAM has significant effect on customer loyalty
H3: KM capability has significant effect on CRM performance

H3.1: KM capability has significant effect on customer satisfaction.

H3.2: KM capability has significant effect on customer loyalty.
H4: Interaction between KM capability and IT has significant effect on CLCAM

H4.1: Interaction between KM capability and IT has significant effect on new customer acquisition activity
management.

H4.2: Interaction between KM capability and IT has significant effect on cross sales activity management.

H4.3: Interaction between KM capability and IT has significant effect on customer retention activity management.

H4.4: Interaction between KM capability and IT has significant effect on new product development activity
management.
H5: Interaction of CLCAM and trust has significant effect on CRM performance

H5.1: Interaction of CLCAM and trust has significant effect on customer satisfaction

H5.2: Interaction of CLCAM and trust has significant effect on customer loyalty
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(12)
Questionnaire Design
Responses were assessed using 7-point Likert scales

12 items of KM capability

16 items of CLCAM

8 items of CRM performance

3 items of IT

3 items of customer trust
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(13)
Data Collection

Method :
Convenient Sampling

Samples:
500 Thai companies in related departments

Questionnaire: Email questionnaire survey

Data Collection Period: Early February,2008 to middle April,2008
( approximately 2.5 months)

Respondents: 107 survey questionnaires were responded.
(Responded rate is 21.4 %)

Missing data: 3 sets

Usable respondents: 104 respondents
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(15)
Characteristics of respondents
Characteristics
Company industry
Company size
Years of company
Working time of respondent
Position level
Categories
Frequency
Percentage (%)
Service industry
65
63.1
Manufacturing industry
38
36.9
< 100 employees
26
25.2
100-400 employees
27
26.2
400-1,000 employees
32
31.1
>1,000 employees
18
17.5
< 5 years
13
12.6
5-10 years
22
21.4
10-20 years
30
29.1
> 20 years
38
36.9
< 5 years
66
64.1
5-10 years
29
28.2
10-20 years
7
6.8
> 20 years
1
1.0
Staff
38
36.9
Junior management
34
33.0
Medium management
26
25.2
Top management
5
4.9
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(16)
Results & Findings
Customer Life Cycle Activity Management ( CLCAM )
(H1)
KM Capability
New
Customer
Acquisition
Knowledge
Acquisition
Cross
Sales
Customer
Retention
New Product
Development
CRM Performance
(H3)
Customer
Satisfaction
Customer
Loyalty
*
Knowledge
Conversion
**
**
**
Knowledge
Application
***
***
***
**
**
Knowledge
Protection
AR2
0.368
0.463
0.276
F-Value
15.831***
23.000***
10.742***
***
***
***
0.223
0.537
8.299***
9.946***
0.488
7.678***
Note：P*<0.1、P**<0.05，P***<0.01
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(17)
Results & Findings
CRM Performance
(H2)
Customer Life Cycle Activity Management
(CLCAM)
Customer Satisfaction
Customer Loyalty
**
New Customer Acquisition Activity
Cross Sales Activity
Customer Retention Activity
***
***
AR2
0.287
0.164
F-Value
11.267***
6.010***
New Product Development Activity
Note：P*<0.1、P**<0.05，P***<0.01
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(18)
Results & Findings
IT * KM Capability
IT*Knowledge Acquisition
IT*Knowledge Conversion
IT*Knowledge Application
Customer Life Cycle Activity Management ( CLCAM )
(H4)
New Customer
Acquisition
Cross
Sales
Customer
Retention
New Product
Development
**
***
*
***
***
**
***
***
***
*
IT*Knowledge Protection
AR2
.329
.357
.290
.321
F-Value
51.031***
57.627***
42.628***
49.293***
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
(19)
Note：P*<0.1、P**<0.05，P***<0.01
by Maneesap Rojdamrongratana
Results & Findings
CRM Performance
(H5)
Trust * CLCAM
Trust*New Customer Acquisition Activity
Customer Satisfaction
Customer Loyalty
**
**
**
Trust*Cross Sales Activity
Trust*Customer Retention Activity
**
***
**
AR2
.394
.284
F-Value
67.319***
41.390***
Trust*New Product Activity
Note：P*<0.1、P**<0.05，P***<0.01
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(20)
Results & Findings
Acquisition
Trust
5.8
Conversion
Small
5.6
Medium
5.4
Large
5.2
IT
5
Application
4.8
4.6
4.4
4.2
Loyalty
Protection
4
Satisfaction
New Customer Acquisition
New Product
Cross Sales
Retention
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(21)
Results & Findings
Acquisition
Trust
5.8
Conversion
Small
5.6
Medium
5.4
Large
5.2
IT
5
Application
4.8
4.6
4.4
4.2
Loyalty
Protection
4
Satisfaction
New Customer Acquisition
New Product
Cross Sales
Retention
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(22)
Results & Findings
KM Capability
Customer Life Cycle Activity Management ( CLCAM )
(H1)
New Customer
Acquisition
Cross
Sales
Customer
Retention
**
***
*
**
***
**
***
**
**
Knowledge
Acquisition
Knowledge
Conversion
Knowledge
Application
Knowledge
Protection
Customer Life Cycle Activity Management
New Product
Development
CRM Performance
(H3)
Satisfaction
Loyalty
***
***
***
CRM Performance (H2)
Satisfaction
Loyalty
**
New Customer Acquisition Activity
Cross Sales Activity
Customer Retention Activity
New Product Activity
***
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
***
(23)
Results & Findings
IT * KM Capability
IT*Knowledge Acquisition
IT*Knowledge Conversion
IT*Knowledge Application
IT*Knowledge Protection
Customer Life Cycle Activity Management ( CLCAM )
(H4)
New Customer
Acquisition
Cross
Sales
Customer
Retention
New Product
Development
**
***
*
***
***
**
***
***
***
*
Note：P*<0.1、P**<0.05，P***<0.01
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(24)
Results & Findings
CRM Performance
(H5)
Trust * CLCAM
Trust*New Customer Acquisition Activity
Customer Satisfaction
Customer Loyalty
**
**
**
Trust*Cross Sales Activity
Trust*Customer Retention Activity
Trust*New Product Activity
**
***
**
Note：P*<0.1、P**<0.05，P***<0.01
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(25)
Contribution

This study contributes to the theoretical development of a relationship model
of KM and CRM as customer life cycle activity management (CLCAM)
and CRM performance.

It provides the view of which KM capability is valued to concern in each CRM
activity which related to CLCAM and CRM performance. Also, the CLCAM
affects CRM performance significantly.

The results of this research can make more understanding about how KM
effect CLCAM and how to use KM capability with CLCAM more
effectively to enhance CRM performance.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(26)
Limitation

This study uses the convenient sampling because it is quite difficult to balance
the characteristics of samples.

Only a few prior research to discuss the concept of the customer life cycle
activity management (CLCAM). It has some theoretical limitation. Due to this
few prior research, it would be argued that the validity and reliability of the
construct and questionnaire design is quite weak. However, since factor analysis
is examined in this study, we believe that the reliability and validity of this
construct is still acceptable.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(27)
Managerial Application

At first, new customer acquisition activity management should be concerned
in knowledge acquisition and knowledge conversion more than others. Since
the two variables have a significant effect on this activity.

Second, from the empirical evidence, it indicates that cross sales activity
management need to synergize more knowledge capability. That is to say,
managers who handle this kind of activity should enhance the knowledge
management to make it more productivity.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(28)
Managerial Application

Third, for managers, customer retention activity management mostly depend
on if the knowledge can be used very well or not. For them, how to convert ,
apply and protect the existing knowledge in the right way is very important.

Finally, the most important capability for new product development is
knowledge application because this activity needs to translate the new
knowledge into tangible things. It means that the team of new product
development should consist of different background persons in order to have
different and broader views to develop new concept.
The study of the relationship between KM capability, customer life cycle activities, and CRM performance
Master’s Thesis Presentation @ Southern Taiwan University
by Maneesap Rojdamrongratana
(29)
Thank You For Your Attention