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    International Journal of Marketing and Human Resource Management (IJMHRM), ISSN

    0976 6421 (Print), ISSN 0976 643X (Online), Volume 4, Issue 2, May - August (2013)

    FORMULATING AND PRIORITIZING CRM IMPLEMENTATION

    STRATEGIES IN MEHR EGHTESAD BANK OF IRAN USING

    COMBINATIONAL MODEL OF PIP AND ANP

    Allahyar Beigi Firoozi1, Mehran Aslaniyan

    2, Faranak Yusefvand

    3, Mojtaba Pahlavani

    4

    1Marketing consulter of Mehr Eghtesad Bank, Mehr Eghtesad Bank, Amiralmomenin Avenue,

    Zahedan, Sistan and Baluchestan, Iran2PhD Student of Human Resource Management, Department of Management, University of Sistan

    and Baluchestan, Daneshgah Avenue, Zahedan, Iran3MSc of Human Resource management, Islamic Azad University of Borujerd, Lorestan, Iran

    4MSc of IT management, Department of Management, Daneshgah Avenue, University of Sistan and

    Baluchestan, Zahedan, Iran

    ABSTRACT

    This study aimed to identify encouraging and restraining forces for implementation of

    Customer Relationship Management (CRM), as well as formulate and prioritize suitable strategies

    for it in Mehr Eghtesad Bank in Sistan and Baluchestan province. In this research, encouraging and

    restraining forces were identified through studying literatures and interviews with managers and

    heads of branches. In order to prioritize forces, a 9-scale questionnaire was designed based on ANPmethod and they were completed by 30 managers. In the second step, the most suitable strategies of

    CRM implementation in Mehr Eghtesad Bank of Sistan and Baluchestan were formulated by using

    PIP model. Finally, for prioritizing the strategies, paired comparison was established between

    formulated strategies based on research criteria. Results showed that Providing insight and deep

    understanding about customers' behaviour with the scale of 0.06903 among encouraging forces and

    L k f ff' b li f d CRM i h h l f 0 05319 i i f h

    INTERNATIONAL JOURNAL OF MARKETING AND HUMAN

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    ISSN 0976 6421 (Print)ISSN 0976 643X (Online)

    Volume 4, Issue 2, May - August (2013), pp. 40-53

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    1. INTRODUCTION

    Customer Relationship Management (CRM) is one of the newest issues in the late twentieth

    century (after production and mass marketing) which were raised by developments in information

    and communication technology (ICT) in business world (Mohammadi, 2003). This concept refers to

    the fact that different customers demand different products and services and we should do

    specifically marketing for each customer rather than mass marketing for individuals and

    organizations. In other words, customer relationship management will take all functions of

    organization (marketing, manufacturing, customer service, etc.) that require direct or indirect contact

    with customers (Elahi & Heidari, 2008).

    Customers tend to organizations which know them and their needs well and build better

    relationship with them. According to this view, it is being tried to attract customers' satisfaction by

    making relationships with them and qualify these relations (Liu, 2009); because nowadays,

    consumers have higher expectation than before. They used to low cost as well as high quality and

    variety; if their satisfaction is not obtained, they may simply tend into competitors; especially in

    today's business world that competition is much more complex (Doroudian & Khanbaba, 2007).

    Therefore, Customer Relationship Management is a strategic necessity and undeniable matter for

    all organizations that can directly affect customer attraction, make permanent and loyal customers,

    and subsequently can increase the profitability of organizations in the competitive environment(Pierce, 2009). According to researchers, attracting new customers is much more expensive than

    keeping existing ones; attracting a new customer costs about 7 to 10 times more than maintaining old

    and current customers (Gebert et al, 2003). Meanwhile, organizations, especially banks, have

    concluded that customers are their most important asset.

    Privatization of financial industry, expansion of trade for international financial institutions,

    and diversification of customers' needs in financial services have led to intense competition in

    banking industry. Due to this intense competition, resources and abilities in banks have been

    changed from product-oriented or service-oriented banking services into customer-oriented servicesand capabilities; customer as an essential component is the main goal of banks' activities (Gilmore

    and Mc Mullan, 2008).

    Hence, customer relationship management as a client-centered approach based on

    information and communication technologies has been increasingly used by banks and financial

    institutions which made significant investments in this area (Sinha and Sen, 2011). Because in its

    evolutionary way, marketing is in the stage that finding new customers is not the only aim; the main

    focus is on demand management through development and leading customers into loyalty. Today,

    customer satisfaction is not enough for maintaining them. Beside satisfaction, their loyalty should be

    ensured (Elahi and Heidari, 2008). The objective in CRM is to establish interactions and long-term

    relationships with banks stakeholders, especially customers, in such a way that more customers

    maintain and less customers leave the bank; more market share and increase in profitability would be

    the outcome for banks (King, 2008).

    2. THEORETICAL BACKGROUND AND LITERATURE REVIEW

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    Management. Customer is the ultimate consumer with supporting role in value creation

    relationships. By Relationship, it means creating loyal and profitable customers through learningcommunications. Management is creativity and the process of customer-oriented business as well

    as putting customer at the focus of organization's processes and practices (Singh et al., 2013). Today

    in organizations, strategic importance has been paid to customer relationship management. In the

    competitive conditions, organized and in-time relationship with customers is the best way to increase

    customer satisfaction, increase sales, and reduce costs at the same time. Due to these issues,

    customer relationship management in organizations is kind of business strategy (Abir Khan et al.,

    2012).

    In Cutlers view (2003), customer relationship management is a concept based on the

    philosophy of using marketing to create customer relationship. Gronerus (2000) defines CRM in

    services marketing as a communication process between the customers and organization services in

    order to attract and maintain customers which is eventually led to customers trust on using

    organization services (Siriprasoetsin et al., 2011). Brown views CRM as a business approach that

    combines infrastructure strategies, products, and channels to influence customer behavior through

    meaningful communications. He also believes that implementation of CRM aims in improving

    customer attraction and maintenance and increasing profitability (Sen and Sinha, 2011). Hawks

    (2000) states customer relationship management is a necessity for competitive industries, because

    companies can maximize their profitability from each customer by using CRM in such a condition.Osgender and Ayraz (2006) consider CRM as a key strategy for business in which a company can

    focus on customer needs and promote customer-oriented approach in organization (Liao, 2009).

    2.2. PIP Model

    Rapid development of technology, rapid growth of economic markets as well as social and

    political changes are continually putting pressure on organizations and making challenge for them as

    encouraging and restraining forces. It is important for organizations to be in improvement way,

    move into the future, and rely on past experiences. These experiences may even be irrelevant withnew problems that are ahead, but if an organization makes suitable strategy based on environmental

    forces, it will have the foresight rather than passive approach (Gholizadeh, 2010). As mentioned

    before and based on PIP (Performance Improvement Planning) method, at first problems are

    identified, analysed, and stemmed; then encouraging and restraining forces effecting on making

    potential problems or solving current problems are determined. Finally, strategies are formulated to

    apply encouraging forces and prevent restraining forces; then practical improvement programs are

    determined. The process of PIP model is summarized in Table (1) (Davari & Shanesarzadeh, 2001).

    Table (1) PIP Model Process

    ActivitiesStages

    Determining performance indicators and goals priorities

    Predicting future performanceFirst stage

    Identifying and analyzing performance problems

    Determining encouraging and restraining forces

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    2.3. Analytic Network Process (ANP)

    Analytic Network Process is a new theory which develops Analytic Hierarchy Process (AHP)to address dependency in feedback; to do so, the super-matrix approach is used. Saati established

    ANP method to solve problems on which there is dependency between options or criteria

    (Monavarian et al., 2011). ANP is composed of three major steps as follows:

    Step 1: Establishing model and problem structure: problem should be clearly stated and divided into

    a rational system, like a network. The network structure can be determined by decision-makers at

    brainstorming meetings or other methods (Alem Tabriz & Bagherzadeh Azar, 2010).

    Step 2: Paired comparisons matrices and priority vectors: in Network analysis method, like AHP,

    elements in each component are compared in pair according to their importance in standard control;

    components are also compared in pair with respect to their impact on the target. In this stage, paired

    comparisons of criteria and sub-criteria are carried out and their mutual effect on decision makers

    are asked in a series of paired comparisons. In addition, if there is interaction between elements of a

    component, effects on elements must be shown using paired comparisons and obtaining eigenvector.

    The relative importance is achieved using a relative scale; for example, a scale of 1 to 9 can be used.

    While score 1 indicates equal importance of two elements, score 9 represents the highest importance

    of an element (row of matrix) compared to another (column of matrix). In a paired comparison

    matrix, the value of other side is opposite. In ANP, like AHP, paired comparisons are made in the

    form of a matrix and local priority vector is achieved by assigning the relative importance associatedwith elements (or components). Paired comparison between dependencies in the network can also be

    considered at this stage (Liao et al., 2011).

    Step 3: Super matrix formation: ANP elements are interacting with each other. These elements

    may be decision-makers, criteria, sub-criteria, results, options and anything else. Relative scale of

    each matrix based on paired comparison is computed like AHP method. The result scales are put in

    the super-matrix and show interactions between system components. General form of super-matrix is

    shown in Fig(1) In this figure, shows Nth cluster; is n th element in Nth cluster, is blockmatrix consisting relative scales of w vectors and the effect of elements in i

    th

    cluster on jth

    cluster.If i

    thcluster have no effect on its i

    thcluster (inner dependency mode), will be zero.

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    In the end, final priority for each element of each subgroup is achieved based on Markov

    process as follows (Rahimi and Eshghi, 2009):

    Lim (1)

    2.4. Literature reviewIn relation to this study and successful implementation of customer relationship management,

    researches have been done worldwide that some of them are mentioned here:

    Kazemi et al. (2013) had a study entitled "Formulating development strategy for sustainabletourism in Lorestan based on PIP and ANP models". The research population included all tourism

    experts in the province. By judgmental sampling, 30 individuals were identified and questionnaires

    were distributed. After data analysis, it was found that strategy (1-A) with emphasis on increasing

    employment in the province has been suggested as the best strategy from the perspective of experts.

    Anvari et al. (2005) had a study entitled "Comparative evaluation of banking service quality

    from the perspective of customers and employees in Bank Refah". The purpose of this paper is to

    determine the factors affecting the quality of banking services, to evaluate the importance or factors

    affecting the quality of services on customers and banking service providers perspective, to analyze

    the correspondence between customers and service providers view toward banking service quality,

    and ultimately to develop performance improvement of banks. In order to determine factors affectingthe quality of banking services, the scientific articles, banking and academic experts and

    practitioners point of view was used. To evaluate the importance of the elements, reliable and

    adequate sample viewpoints of customers and bank employees were taken and analyzed. The results

    of statistical analysis proved significant difference between customers viewpoints and employees

    viewpoints about the importance of quality components. In addition, results indicated significant

    differences between prioritizing customers and bank employees corrective actions to improve

    service quality.

    Nazemi et al. (2005) studied on determining the role of new ways of banking servicesproviding to attract customers and improve the efficiency of the banking system (a study in branches

    of Bank Sepah in Mashhad). In this study, considering two populations of customers and managers

    and using multiple classified sampling method, statistical samples of 416 and 39, respectively, were

    selected and questionnaires were distributed. Reliability of questionnaires was confirmed

    Cronbachs alpha coefficients of 0.84 and 0.92. For data analysis and to test research hypothesis,

    ratio test and contingency tables and chi-square test were used. ANOVA and Duncan's test were

    used to investigate the relationship between general characteristics of the respondents (moderator

    variables) with the number of new ways of banking services providing. The results showed that thenew techniques for providing banking services increased customers in branches of Bank Sepah in

    Mashhad, But these services has not resulted in increasing efficiency (reducing costs and time).

    Motameni & Jafari (2009) investigated CRM implementation in hotel industry in Iran. CRM

    implementation conditions in Irans hotel industry were evaluated based on Gartner model and

    important factors to implement CRM technology were determined. After analyzing data, it was

    found that Irans hotel industry has major weakness in such fields as considering changes in the

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    success factors (CSFs) which are important for implementing customer relationship management in

    textile industry were determined considering three key aspects of technology, processes, and humanfactors. Using critical success factors, a questionnaire was designed based on pair-wise comparison

    tables and fuzzy numbers, which were responded by seven marketing directors in textile companies.

    Then, tables were analyzed within AHP Fuzzy method and prioritizing CSFs were identified. The

    main objective of the study was to describe and determine validity of a model based on critical

    success factors to be the guideline for implementation and evaluation strategy of customer

    relationship management in textile industry.

    Siriprasoetsin et al. (2011) in a study entitled "Factors affecting the performance of customer

    relationship management" used quantitative and qualitative approaches. Collected data were

    analyzed by Pearson correlation test, factor analysis and multiple regression. Factors affecting theperformance of CRM were identified as CRM knowledge and understanding by staff, leadership,

    communication and organizational culture, and customer management process. Results showed that

    all of these factors have significant meaningful relationship with CRM.

    Bohling (2006) in his study entitled "Applying CRM: insights and issue of effectiveness"

    shows CRM success factors as follows: top management support, clear goals and strategy, and

    change management.

    Lindgreen et al. (2006) provided a tool in their research to assess the relationship

    management. They cited the most important factors for relating customer as: information technology(IT), people, and organizational culture.

    As mentioned in research background, different researchers suggested several CSFs for

    successful implementation of CRM. Table (2) lists the most important factors influencing the

    success of customer relationship management.

    Table (2) Key success factors in CRM implementation

    Success FactorsResearcher(s)

    Leadership and Organizational CultureButtle (2004)

    PeopleLindgreen (2006), Buttle (2004), Yang and Tu

    (2013)

    ITCroteau (2003), Buttle (2004), Lindgreen (2006),

    (Kim (2010)

    Clear strategy for CRMKim (2010)

    Change ManagementBohling (2006)

    3. RESEARCH METHODOLOGY

    In terms of data collecting, this study is a descriptive-survey and in terms of target, this is an

    practical study. Literature reviews, interviews, and a questionnaire were used to collect and analyze

    data The population in this study consisted of managers experts and heads of branches in Mehr

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    prioritized and strategies have been formulated for the most important encouraging and restraining

    forces for CRM implementation in Mehr Eghtesad Bank in Sistan and Baluchestan. In the fourthstage, the strategies presented in the third stage were prioritized and finally suitable strategy for

    CRM implementation was selected. Figure 1 illustrates an overview of research processes and the

    combinational model.

    4. RESEARCH FINDINGS

    4.1. First stage: Determine research objectives and criteria for achieving them

    The main objective of this research is to formulate and select CRM implementation strategy

    in Mehr Eghtesad Bank in Sistan and Baluchestan. In order to achieve this goal and after reviewing

    Figure(2) research overview and

    combinational model of PIP & ANP

    Selecting CRM implementation strategy

    1-A 2-A 3-A N-A

    )1-C()2-C()3-C()N-C(

    Factors with positive

    effect- encouraging forces

    )1-P(

    )2-P(

    .

    .

    .

    Factors with negative

    effect- restraining forces

    )1-N(

    )2-N(

    .

    .

    .

    First stage

    Second stage

    Third and fourth stage

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    CRM implementation at Mehr Eghtesad Bank were identified as follows: considering peoples

    customer-orientation potential, IT platform, clear strategy for CRM, and need for change

    management.

    Table (3) identifying encouraging and restraining forces in CRM implementation

    Encouraging ForcesRestraining Forces

    peoplescustomer-orientation

    potential(1-C)

    1- Creating a deep vision and

    understanding of customers behavior as

    well as their needs and demands (1-P)

    2- Creating high value for customer as

    well as a nice experience (2-P)

    3- Increasing organizations share from

    customers budget (3-P)

    1- Poor priorities planning for

    investment in CRM; ex. developing

    technology before strategy or definingexpectations of customers and

    employees (1-N)

    2- Little or no attention to employees

    skills and abilities and their lack of

    belief to CRM implementation (2-N)

    3- lack of measurable business goals for

    customer attraction in branch level (3-N)

    IT(2-C)

    4- Saving costs (4-P)

    4- lack of software infrastructure toimplement CRM (4-N)

    5- Little attempt to develop skills and

    infrastructures associated with CRM

    system (5-N)

    clearstrategyforCRM

    (3-C)5- Increasing profitability of each

    customer (5-P)

    6- Increasing attraction of profitablecustomers (6-P)

    7- Increasing Mehr Eghtesad Banks

    profit (7-P)

    8- Deepening customer lifetime value

    (8-P)

    6- lack of macro-strategy in the bank to

    implement CRM system (6-N)

    7- Lack of alignment between CRM

    program, organizational brand and

    positioning, and customers expectations

    (7-N)

    angemanagement

    (4-C)

    8- Poor change management (8-N)

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    4.3. Third stage: prioritizing criteria and sub-criteria of research and formulating CRM

    implementation strategy

    At this point, data collected from the questionnaires were analyzed by Super Decision

    software. Using achieved super-matrix (Appendix 1) priority of criteria and sub-criteria was

    determined based on research objective; results are presented in tables 4 and 5.

    Table (4) Prioritizing criteria based on research objective

    RankPrioritized values based on research objectiveCriteria

    10.195351-C

    20.080583-C

    30.03834-C

    40.01912-C

    As Table (4) shows, among search criteria, 1-C criterion (peoples customer-orientation

    potential) by scale of 0.19535 is the first rate and then 3-C (clear strategy for CRM), 4-C (change

    management) and 2-C (IT) by scales of 0.08058, 0.03830, and 0.0191 received 2 to 4 ratings,

    respectively.

    Table (5) Prioritizing sub-criteria based on research objective

    Encouraging ForceRestraining Forces

    RankPrioritized valuessub-

    criteria

    RankPrioritized valuessub-

    criteria

    11-P0.06903

    12-N0.05319

    25-P0.02932

    26-N0.03606

    36-P0.02716

    33-N0.02363

    48-P0.01383

    47-N0.02103

    55

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    Table (5) shows the priority of sub-criteria based on research objective. Among encouraging

    factors, sub-criterion 1-P (creating a deep vision and understanding of customers behavior as well

    as their needs and demands) with the scale of 0.03257 had the highest priority and sub-criteria 5-P

    (increasing profitability of each customer), 6-P (increasing attraction of profitable customers), and 8-

    P (deepening the lifetime value of each customer) received 2 to 4 rankings with scales of 0.02932,

    0.02716, and 0.01383, respectively. Among restraining forces, sub-criterion 2-N(little or no attention

    to employees skills and abilities and their lack of belief to CRM implementation) with the scale of

    0.05319 had the highest priority and sub-criteria 7-N (lack of alignment between CRM program,

    organizational brand and positioning, and customers expectations), 6-N (lack of macro-strategy in

    the bank for implementation of CRM system), and 5-N (little attempt to develop skills and

    infrastructures associated with CRM system) received 2 to 4 rankings with scales of 0.05319,0.03606, and 0.02263, respectively.

    4.4. Step Four: Formulating and prioritizing CRM implementation strategies in Mehr Eghtesad

    Bank

    In this stage and using data from the first three steps, strategies for CRM implementation in

    banks Mehr Eghtesad Bank in Sistan and Balushestan were formulated and prioritized. Based on PIP

    model, suitable strategies are formulated for each encouraging and restraining forces. So, in order to

    apply encouraging and avoid restraining force, suitable CRM implementation strategies arepresented as follow:

    I. 1-A: Formulating strategic marketing plans and providing clear statements on vision, mission-Statements clarify organizations commitment route to quality and focusing on customers so

    that employees understanding about the necessity of customer-orientation can be developed.

    (1-P), (2-N), (6-N)

    II. 2-A: Setting and formulating monthly and annual plans to create value for customers - such ascustomer intimacy, operational excellence or product leadership - to develop a clear andbalanced vision. (1-P),(2-P),(6-P),(1-N),(2-N),(3-N),(6-N)

    III. 3-A: Establishing customers club and completely organizing account information andsegmenting customers site (for example in macro, micro, and individual levels). (3-P), (4-P),

    (5-P), (6-P), (8-P), (5-N), (7-N)

    IV. 4-A: Senior managements attention to the value that customers gain as much as banksearnings and income. (5-P), (7-P), (8-P), (7-N)

    V. 5-A: Assessing customer satisfaction annually in branch level using criteria such asaccountability, accuracy, and being on-time as quantitative indicators; also identifying the

    causes of dissatisfaction at any branch. (1-P), (2-P), (3-N)

    VI. 6-A: Determining comprehensive measures to calculate the attraction, return, profitability, andcustomer lifetime value for each customers department in different branches of province and

    providing performance feedback to senior management at least every three months. (2-P), (3-P),

    (4-P), (8-P), (3-N), (7-N)

    VII. 7-A: Creating a central data storage containing accurate and complete information from

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    In Table (6) and based on Appendix (1), the priority of strategies has been shown:

    Table (6) CRM implementation priority in Mehr Eghtesad Bank

    Diagram StrategyPrioritized values based on

    research objectRank

    1-A 0.11552 1

    4-A 0.07627 2

    5-A 0.04889 3

    6-A 0.03227 47-A 0.0229 5

    3-A 0.01728 6

    2-A 0.01173 7

    8-A 0.00847 8

    As shown in Table (6), strategy 1-A with the value of 0.11552 has the highest priority.

    Strategies 4-A, 5-A, 6-A, and 7-A with values of 0.07627, 0.04889, 0.03227, and 0.0229 received 2

    to 5 ratings, respectively.

    5. DISCUSSION AND CONCLUSIONS

    The emphasis on Article 44 of the Constitution and proposing privatization of financial

    industry in recent years, expansion of international trade for financial institutions, and diversification

    of needs for financial service customer have led to intense competition in banking industry.

    Therefore, attracting and maintaining profitable customers as well as meeting their demands areextremely important in this competitive industry. In this regard, customer relationship management

    is considered as a strategic necessity for all banks which can directly affect customer attraction and

    make them loyal and permanent; consequently can increase the profitability of banks and financial

    institutions in the competitive environment. Accordingly, in order to take advantage of benefits in

    this system and develop customer-oriented culture, this study aimed to identify encouraging and

    restraining forces as well as formulate and select a suitable strategy for Mehr Eghtesad Bank in

    Sistan and Baluchestan. Using analytic network process (ANP), paired comparisons between criteria

    and sub-criteria was done; then they were prioritized. Prioritization showed that among criteria, 1-C(Peoples customer-orientation ability) and among sup-criteria, 1-P (Creating a deep vision and

    understanding of customers behavior as well as their needs and demands) for encouraging forces

    and 2-N (Little or no attention to employees skills and abilities and their lack of belief to CRM

    implementation) for restraining forces were in the highest priority. At the next step and according to

    prioritization, the most important strategies for CRM implementation in Mehr Eghtesad Bank in

    Si B l hi f l d B d b i i i d i d

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    develop its competitive position in banking industry by identifying target markets and introducing

    new services continually.

    Aligning results of this study, Anvari et al. (2005) study can be pointed out. He found that in

    Refah Bank, there is a difference between staffs and customers views in terms of service quality.

    Beside this factor, the factor employees lack of belief to customer-orientation was presented in

    the current study which shows the two studies are consistent with each other.

    Nazemi et al. (2005) studied on determining the role of new techniques to provide banking

    services in order to attract customers and improve the efficiency of the banking system (case study

    of Bank Sepah in Mashhad). They showed that new techniques to provide banking service have led

    to increase customers, but not to improve efficiency (reduce costs and time). This study emphasized

    the need to implement customer relationship management; it was also proposed to use informationtechnology for improvement in the effectiveness of this system. So, the two studies are consistent in

    this aspect. On the other hand, this study noted that implementing CRM and new technologies will

    reduce costs; in this aspect, it is not consistent with Nazemi et al. The reason can be attributed to

    different emphasis and population of the two studies.

    Keramati and Nikzad (2008) evaluated critical success factors for customer relationship

    management strategy in textile industry by using fuzzy approach. They stated these CSFs in terms of

    technology, processes, and human factors. Also in the present study, people and technology have

    been considered as CRM implementation success factors; in this aspect, it is consistent withKeramatis research.

    This study is also consistent with Prastoesen et al. (2011), Bohling (2006), and Lyndgreen et

    al. (2006) who considered staff, senior management support, strategy and clear goals, change

    management, and IT necessary and essential to implement CRM successfully.

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