Strategic Investments In The Right CRM Technologies, In The Right Amount, and In The Right Order

Although many companies have spent a great deal of money to adopt CRM (Customer Relationship Management) technologies, many have not seen satisfactory returns on their CRM installations. One of the reasons for such dissatisfaction and low ROI may be the lack of a comprehensive approach to evaluating the impact of CRM technologies, which are very different from traditional cost-cutting and quality-improving IT. To bridge the gap between the existing research stream on IT investment and firms’ dissatisfaction with returns on CRM technologies, we aim to analyze the optimal CRM implementation strategy and the impact of CRM investments on a firm’s profitability. For our analysis, we classify CRM technology into two broad categories, targeting-related CRM technology and support-related CRM technology. We find that the two types of CRM technologies are substitutive in generating firms’ revenue rather than complementary. We also find that firms’ investments in both targeting-related CRM and supportrelated CRM can decrease consumer welfare under certain conditions. We develop a model that not only considers different factors across industries and environments, but is also helpful in determining the right CRM technology, in the right amount, and in the right order.