The majority of businesses operate in difficult and highly
competitive environment where consumer demand is constantly
changing, so the manager’s attention is increasingly focused on
attracting and retaining customers. It is precisely this situation
that converges with the marketing concept defined by Kotler as:
meeting consumer needs and desires with higher efficiency than
any other competitor. Marketing represents exactly the tools that
make it possible to meet customer satisfaction and has ex-
perienced the highest growth in recent decades. While the
market is fragmented into more heterogeneous segments, more
precise marketing techniques are required. These techniques
establish a dialogue with smaller groups of consumers, and
address nearly all individual needs. This situation, combined by
demo-graphic and lifestyle changes which increased the cost of
data processing and the cost of sale forces, has contributed in
the increase of direct marketing, and the use of Customer
Relationship Management (CRM). Inflation, technology, de-
velopment of financial markets and many new and tumultuous
events set aside the old rules of Marketing. The market itself felt
the instinctive need to adapt to the economic environment and
did so without waiting for prior legal adjustments. Indeed, the
main reason that explains and forces all these changes is simply
competition. But, not all businesses feel the same way about
competition. That momentum comes when the process is fueled
by several other factors: economic development, market
position, population welfare level, and especially management
foresight. Today, banks and other financial institutions face se-
veral challenges including global competition for deposits, loans,
and signature fees; increasing consumer demand; narrowing
profit margins; and the need to be in constant contact with the
novelties in Technology (Gade, 2005).
The focus on CRM increases the skills to more clearly
understand the current needs of customers and also understand
the behaviors of these customers. Such a practice has further
helped companies to design strategies based on each
customer’s preferences in order to meet their requirements
(Xu, 2002). Information about customers is important for banks,
and intelligent use of such information will establish long-term
bilateral relationship with customers (Crosby, 2002).
2. Literature review
2.1. Customer Relationship Management
The well-known concept "Customer Relationship Manage-
ment or CRM”, refers to a business strategy with the focus on
customer, a broad process that integrates sales, marketing and
customer services, which creates and adds value for both
business and customer (Gordon, 1988).
Speaking about CRM, and before formulating some
definitions given in the literature reviewed, it is helpful initially to
determine what it is not. It’s not just software or a program that
a company installs to improve its sales. The CRM requires a
change of philosophy within the company and the satisfaction of
customer needs, as the cornerstone of its existence. If a
company wants to be competitive it has to shift its marketing
strategy from the focus to product to customer profitability
management. Products are already easily copied by competitors
and therefore what is needed is focusing on customer
relationship (Gade, 2005).
CRM is a strategy that is based on developing customer
relationship. In recent years, CRM has flourished and now it can
be considered essential for any company that wants to succeed.
The CRM is focused on retaining costumers by collecting data
through phone, e-mail and the Internet. The company can use
this information for specific purposes such as marketing, sales
and after-sales services. The basic philosophy is that everyone
in the company should focus on client. CRM is a comprehensive
approach in the service of customer to identify, access and
create loyal customers over time, through interpersonal
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Vol. 22, No. 183/ August 2021
Customer Relationship Management
Prof. Ass. Dr., Management and Tourism, University of Applied Sciences in Ferizaj, Kosovo
The purpose of this paper is to understand more clearly how the management of customer relationship is carried out.
Considering that the markets are changing dynamically and products are easily copied by competitors, companies
are increasingly focusing on customer. Today, globally, all businesses, of all industries and sizes, from large
multinational companies to small and private companies, are striving to establish good relationships with their
customers, as well as create loyal customers. Customer-oriented management philosophy is increasingly being used
by companies. The impact of customer relationship management on company performance is an issue that has
received attention recently. Although the international literature on customer relationship management and relevant
strategies is rich, the Albanian literature is very limited. It is particularly limited in terms of using customer relationship
management as a tool to improve company performance. Therefore, this study investigates the impact of internal
environmental factors on the management of customer relations and more specifically in maintaining company-
Keywords: customer relationship management; marketing performance; financial performance.
relationship management system. CRM with its customer-
focused philosophy, focusing on the diverse needs of each
client, creates new structures and processes, by changing the
contemporary thinking of business and activities especially in
the service sector (Porter, 1998).
Prior to the arrival of the Internet, the CRM was a specialized
activity only for large enterprises, due to its cost and complexity.
Today, CRM opportunities are offered to all businesses and its
benefits are now affordable for any business operating online,
regardless of its size. The Internet has helped firms and their
clients to make the CRM a reality. There are numerous defini-
tions in the international literature to describe the CRM concept
In general, in relation to the definition of CRM, it would be
interesting to see how this term was conceived by various scho-
lars chronologically. One of the first references to CRM is that it
is about marketing approaches oriented toward individual cus-
tomers by creating strong stable relationships (Jackson, 1985).
(Gordon, 1988) has defined CRM as an ongoing process for
creating value for specific customers and taking advantage of
this ongoing and long-term process for parties, the company and
the customer. CRM involves understanding, focusing and
managing an ongoing collaboration between the company and
its special customers for creating mutual values.
Gordon (1988) also develops several dimensions of CRM,
which have significant effects on the businesses. Initially, it
refers creation of new value for customers and distribution of
this value to both parties involved. It then refers to recognizing
the critical role of particular customers.
The CRM enables companies that are customer-focused, to
plan and regulate business processes, communication, tech-
nology, and human resources, in order to provide value for
customer and create value through it. CRM is an effort of
continuous collaboration between the client and the company
which is transformed in real time.
In addition, Gordon acknowledges that creation of long-term
value for customers is more important than simple transactions,
and therefore strives to build a chain of relationship between
business and its customers, as well as between businesses and
their key partners. The most intense references for CRM began
in 1997, where it is emphasized that CRM is the link between
information technology and marketing strategies, aiming to built
long-term and profitable relationship between the company and
the customer (Gordon, 1988).
Q U A L I T Y
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Vol. 22, No. 183/ August 2021
Point of view Description Success requirements Concept
As a process
Improving the relationships between the
seller and the buyer; this relationships
must be strong and endurable.
The institution should have the ability
to discover the customer's desires and
to respond to them.
CRM is creating and enhancing the
engagement and relationships with the
external parties, specially the agents and
As a strategy
The value of the life period of the
customer with the institution determines
the amount and kind or resources that
the organization can invest in a
The institution should assess its
relationship with the customer
continuously. It should assign priorities
in dealing with him/her on basis of the
quantitative profitability during the life
period of the customer.
CRM is the investment of the companies
in the customers who are expected to be
valuable for the institution, and the
reduction of investment in the valueless
customers of the company.
As a philosophy
Customer retention can be better
achieved through focusing on
establishing relationships and
The customer should be the focus of
the attention of the institution, which
should be oriented towards
understanding the changeable needs
of the customer.
CRM is not a temporary project, but a
work philosophy, which aims at putting
the customer in the focus of the attention
of the organization.
As an ability
Profitable and long-term relationships
only arise when the companies are able
to customize its behavior continuously
towards every customer.
The company should possess a group
of tangible and intangible resources,
which the company uses to flexibly
remodel its behavior towards the
CRM means the desire and ability of the
institution to customers behavior towards
every customer, on the basis of the
information the customer tells and what
the institution knows about that customer.
As a technology
Knowledge management and reaction
represent the main resources that the
institution needs to establish profitable
and long-term relationships with the
The institution should be directed with
the functional method, and also the
user's acceptance of the technology
applied by the institution in order to
establish the customer's knowledge
and reaction management.
CRM is the technology used to integrate
sales systems, marketing systems and
information systems to establish
relationships with customers.
Table 1. The most important concepts of CRM
Source: Hisham, Sayed Soliman (2011). Customer Relationship Management and its Relationship to the Marketing Performance,
International Journal of Business and Social Sciences, Vol. 2, No.10, June, p.168.
2.2. Customer Relationship Management
From the definitions presented above it was clearly defined
what CRM means. Firstly, the relationship between CRM and
sales was revealed. The change in philosophy within any
company significantly affects the function of sales, as CRM is
about the company’s relationships with its important customers,
and sales in some way reflect the quality and importance of
those relationships. The definitions listed above contain some
common basic principles, such as customer relationship,
customer relationship management, customer retention, and
personalization according to each client's needs. Below are
briefly presented the main features of CRM through several
theoretical models of different authors (Porter, 1998).
CRM implementation model
by Sin et al. 2003
CRM implementation model
by Sin et al. 2003
2.3. Customer knowledge management model
Many authors consider that CRM and knowledge mana-
gement are the approaches to which resources and efforts are
dedicated. So, the business based on these two elements will
provide a competitive advantage, and when they manage to
unite them at the procedural level, the benefit will be for both the
company and the client.
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Vol. 22, No. 183/ August 2021
Figure 3. Customer Knowledge Management model by Gebert et al. (2003)
The figure above shows the basic elements included in this
theory. The basic features of the model are:
1) Emphasize the importance of marketing, sales and ser-
vice as primary business functions;
2) Campaign management is the basic marketing process
during which the relationship marketing ideas are
3) Management of "VIP" customer’s constitutes the foun-
dation, identification and prioritization of contacts with
4) Supply management is the main sales process. Its
purpose is to create sustainable and personalized offers
that will meet all requirements;
5) Contract management is the process of creating and
maintaining contracts for the provision of products or
6) Complaints management, and customer dissatisfaction
is considered, processed and transferred to business;
7) Service management is planning, implementation and
control of service delivery;
8) CRM requires activities for the design of interfaces with
customers, on the matters of interaction with them.
These activities are: interactive management, channel
management and opportunity management;
9) CRM and knowledge management have the potential for
significant collaboration and cooperation, as knowledge
management can act as a service feeder for CRM,
resulting in mutual benefit for both approaches.
2.4. A Framework for Customer Relationship
The main question arising from this model is what com-
panies need to know about their customers and how this
information can be used for the development of integrated CRM
activities. Given the above question, a model for CRM is
proposed which consists of seven key elements presented in the
following figure: Development of a database containing custo-
Based on this analysis, decisions has to be made on the
Tools for target customers;
Ways to build customer relationship;
Terms of privacy;
Measures to assess the success of the CRM program.
2.5. Development Strategies
for Competitive Advantage
During development of many theoretical models (Gebert et
al. 2003), it is mentioned that companies began to pay more
attention to CRM when they realized that this organization
manner could give them the opportunity to create a competitive
advantage and positively affect their performance and profi-
tability. It would be of interest, to present strategies for creating
competitive advantage, and in particular the factors that refer to
the knowledge which constitutes the basic element of research
The concept of competitive advantage is one of the most
common in the business strategy literature and many re-
searchers got involved (Porter, 1998). Competitive advantage is
the result of strategies adopted by a company that aims to add
value to its customers. More specifically, a company has a
competitive advantage when the profit rate is higher than the
average percentage of businesses in the sector where the
Figure 4. Model proposed by Winer (2001)
company operates, and has a constant competitive advantage
when manages to maintain this profit rate for a longer period
(Porter, 1998). When the customers value company products
and services, which exceeds their production cost, than the
company has fulfilled the basic conditions to secure a com-
petitive advantage over its competitors (Porter, 1998).
Today, in a competitive environment, businesses are facing
many challenges, characterized by constant changes in tech-
nology, market forces as well as globalization process. So, the
companies in order to be able to manage with the contemporary
environment and achieve a competitive advantage, has to
constantly redefine their products and services and reorganize
processes and strategies. The strategies through which they
can create competitive advantages are as follows:
a) Knowledge Management;
b) Organizational learning;
c) Performance measurement indicator systems;
In this thesis, only the first elements that are more in line with
the concept of CRM will be analyzed, but also with the research
model in the following chapter.
2.6. Knowledge Management
Defining the concept of Knowledge Management is difficult
as different perspectives can bring different dimensions. The
term “Knowledge Management” seems to have originated in the
mid-1970s. Nicholas Henry (1974) uses ‘knowledge manage-
ment’ in a manner that resembles our current understanding of
the expression. More broadly defined “Knowledge management
is the process through which organizations extract value from
their intellectual assets”. Adopting this trust to the KN, another
more appropriate definition is given “Knowledge Management
refers to the critical issues such as organizational adaptation,
survival and competence in relation to increased environmental
change. Essentially, it embodies organizational processes that
seek synergic combination of data and information processing
capacity, information technologies, and the creative and
innovative capacity of human beings” (Meyer, 2005).
Initially, it would be good to define the concept of knowledge
management in relation with the business. It is the expertise,
experience, awareness, and skills that enable business exe-
cutives to more easily accomplish their tasks, make faster
decisions, and produce new skills (Gorelick et al., 2005).
KM is planning, organizing, motivating, and controlling people,
processes, and systems from one organization, to ensure that
its knowledge-related assets are effectively improved (King,
2012). KM requires a mix of business awareness, creative
attitudes and practices, systems, tools, policies, and procedures
In this regard, we can say that KN can effectively help an
organization to succeed in building better relationships with
customers, and have a positive impact on the performance of
Yim et al., (2005) thinks that we should take into conside-
ration that the success of relationship management is heavily
dependent on collecting and analyzing customer’s information,
as such information is used to develop highly personalized
offerings (Sigala, 2005). KM is a process that helps organi-
zations to identify, select, organize, disseminate, and transfer
important information and expertise, as part of the organiza-
tional memory, usually found in an unstructured way.
This knowledge structure enables effective and efficient
problem solving, dynamic, strategic learning, planning, and
decision making. Knowledge management initiatives focus on
identifying knowledge, dispersing them formally, and increasing
their value by reusing.
Through an organizational support climate and modern in-
formation technology, an organization can bring all its
organizational memory and knowledge to touch upon problems
at anytime and anywhere. For an organizational success, know-
ledge, as a form of capital, must be interchangeable between
persons and increase continuously. Knowledge of how problems
are solved can be grasped, so knowledge management can
foster organizational learning, leading to creation of further
knowledge (Lehaney, 2004).
With regard to the KM term, it is used to describe the
administrative practices related to creation, edition and disse-
mination of knowledge and expertise. A short and concise term
definition represents ‘any process or practice of creating,
acquiring, capturing, hiring and utilizing knowledge, in order to
enhance learning and performance in the organization.
Furthermore, knowledge management can be defined as the
management of organization information resources, and
providing this knowledge to as many employees as possible, in
order to encourage better and more sustainable decision (Probst
et al., 2000).
The term knowledge cannot exist without information and
experience. With the right information, executives can engage in
delicate actions and support business processes and admi-
nistrative decisions, and thus attract profitable customers.
Below are listed four main types of knowledge management
procedures, which show that knowledge management consti-
tutes a complex process:
a) Procedures followed by the company aiming to create,
acquire and use important competitive knowledge to
ensure the leading position in the market;
b) Daily knowledge management processes, in order for the
business to function faster and more efficiently, ie to
produce and distribute quality products and services for
customer higher satisfaction with fewer efforts (Lehaney,
c) Processes for creation of knowledge in order to enable
the company to use innovation and experiences and
seek new opportunities;
d) Procedures that provide a clear picture of the knowledge
priorities for the business (Winer, 2001).
In conclusion, knowledge management is a business pro-
cess that can determine important knowledge and create a
system for collecting and managing best practices and the right
information, by enabling managers to share their operational
experiences and create new knowledge.
2.7. Organizational learning
Businesses often, through reorganization of strategy and
offering of new opportunities, manage to reinforce their per-
formance and develop further (Guth and Ginsberg, 1990).
Organizational learning can increase a company’s ability to
identify opportunities and use them to effectively pursue into
new business activities (Davis and Botkin, 1994). Organizational
learning as a factor for achieving competitive advantages is
emphasized as a source for creation of knowledge and learning,
as a unique, inimitable and endless resource-based theory.
Organizational learning is seen as a key factor in gaining
competitive stable advantage and good performance (Martinez
Costa and Jimenez-Jimenez, 2009).
Organizations that embrace strategies consistent with
learning organization have the opportunity to achieve higher
performance (Ellinger et al., 2002; Calantone et al., 2002). The
figure 5 shows Huber's organizational learning model (1991).
Organizational learning is defined as the process where
organization’s members actively use data to guide behavior in a
way to promote the ongoing adapting organization process
Q U A L I T Y
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Vol. 22, No. 183/ August 2021
Figure 5. Organizational Learning Stages, Huber 1991
(Edmondson and Moingeon, 1998). It is a process that requires
individual knowledge, and supports the suitability of the
company, as a key feature in applying CRM philosophy.
Furthermore, organizational learning is known as a critical
component for development and innovation of new products and
services, and it is recommended that before the company
manages to improve innovative behavior and relationship with
the customers, it should analyze its current organizational
learning (Saban et al., 2000). Organizational learning is asso-
ciated with an interesting concept that is related to the idea
of strategy, since the process of creation of knowledge can
produce unique organizational skills, but also potential sources
of competitive advantage and retaining important customers. All
these are presented in another equivalent theoretical model
through which it is clearly reflected the central role of knowledge
dissemination concept in the organizational learning. The pur-
pose of knowledge management is to accurately and promptly
take decisions, as a very important element in customer
relationship management. Below are briefly presented the four
knowledge stages in order to function efficiently during the CRM
a) Identification and development of knowledge:
At this stage the client and his importance are identified
as well as the knowledge needed to have a successful
completion of CRM functions. Knowledge development is
the result of observing important customer patterns and
the actions of competitors;
b) Codification and knowledge retention:
At this stage the knowledge developed in the first step
are transformed into a format that can be read, stored
and incorporated into technology;
c) Knowledge dissemination phase:
This step consists of dissemination of knowledge through-
out the company and using them in cases where a
hypothetical scenario appears with specific requirements
in terms of knowledge elements;
d) Knowledge use and feedback process:
During this phase, knowledge is identified and used, nee-
ded to solve a real problem. Using this knowledge in
solving problems can generate additional knowledge,
which can be stored and used in the future. The company
can provide feedback on the quality of stored knowledge,
and note the degree of difficulty for recovering this know-
ledge’s. At the same time it can present new types of
knowledge required, depending on the needs of the
company (Bose and Sugumaran, 2003).
The current application of CRM philosophy is possible only
through the use of knowledge management processes, which
are based on processes that focus on the client, and enables
businesses to improve their performance on key issues such as
customer satisfaction, loyalty and their profitability (Winer,
2001). These procedures will enable companies to meet the
needs of the target customers, based on the knowledge
collected, and not on collective conclusions about the customer
The methodology of this paper also relies on direct market
research, in addition to the theoretical approach based on the
study of literature, scientific papers and other relevant sources.
Efforts have been made to reach a representative sample of the
target population by contacting individuals and respondents
(Bryman 2004), which may be a “primary data collection
method, based on communication, with representative sample
of individuals” (Zikmund 1997 p. 202). The sample was selected
within the service sector (banking sector and specifically in the
bank branches selected in Prishtina). Selection of this industry
is due to the role, importance and weight it has in the service
sector and in the national market. In this research study, the
main sample framework consists of a total of 27 bank branches
operating in the city of Prishtina, whose names were taken from
the Bank of Kosovo.
The purpose of this paper is to reveal the factors that can
affect to maintain relationship
between the company and client and the impact of the latter
on the performance of bank. In order to achieve this goal, the
connection between environmental factors, maintaining company-
customer relations and bank performance were tested.
The focus of the information collected with the surveyed
individuals was on the number of employees working in the bank
branches selected for the study, employees working years, and
operations of these bank branches since their establishment.
The processed results showed that: 2.04% of bank branches
selected have up to 5 employees, 30.6% of them have 5-9
employees, 42.8% between 10- 20 employees and 24.5% have
more than 20 employees. With regard to the employees working
years, the results showed that 30.6% of them have less than 5
years of work in these banks, 57.14% between 5-10 years,
8.16% between 11-15 years, and 4.08% of them have more than
15 years. Referring to the operation of these bank branches
since their establishment, 32.65% were established between the
years 1990-2000, and 67.35% of them were established after
the year 2000.
Based on the research results, it would be appropriate to
conduct a further analysis of the general remarks and comments
regarding the progress of this research. Initially, it would be
reasonable to emphasize once again the main purpose of this
thesis. The reason for the development of the relevant model
was to illustrate and prove whether and to what extent some
internal environment factors of the company can affect the CRM
processes, respectively in maintaining the company-customer
relationship, and how CRM affects the company's performance
on both blocs’ economy and marketing. At the same time are
presented the basic elements of CRM practices and the intensity
they are used from the bank branches included in the study. In
the context of the internal environment, there are four research
hypotheses that need to be examined to identify the important
factors that influence the preservation of company-customer
relations in the bank branches included in the study.
The research findings showed that banks included in the
survey apply at a satisfactory level strategic methods related to
CRM, ranking their customers at the center of their business
processes. The findings also showed that companies make
huge investments in relation to their customer by creating long-
term relationship, and at the same time integrating the client-
centric approach into the culture and structure of the company.
In the majority of the banks surveyed, there was a great
interest from managers for creative application of customer-
oriented activities, a fact that was evidenced, through the
investment made to promote innovations in CRM and to
systematically organize the process of organizational learning in
terms of market data and developments.
On the other hand, in some cases, incomplete CRM
processes were observed in several phases, respectively in
relation to the organization and integration of CRM within
The banks surveyed were still at an early stage in terms of
CRM and the success in this direction, so as a result, increase
of investment for a significant growth should be projected.
In order for a company to achieve the desired results in
relation to CRM, organizational and economical environment
factors must be strengthened. For this reason, the company
should seek to create an organizational culture and structure,
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Vol. 22, No. 183/ August 2021
which places the customer at the center of business processes,
and consider the value of customers and their satisfaction at the
top of their activities, and not just use individual tactics in relation
Therefore, it is very important for managers to emphasize
the various CRM processes and activities in banks. The bank
managers needs to understand who are the potential valuable
customers, what kind of services and products they need, why
the customer is connected with competitors, how they can keep
customers, and how they can attract valuable customers to
increase their performance. They should also seek to build a
long-term relationship with their current customers, convince
them to use banking services, take customer complaints and
solve their problems as soon as possible, and make customers
think constantly about products or services they offer.
Through improvement of these systems, the relationship
between the CRM and performance can be improved as well.
Without understanding this, it is difficult for a bank to determine
its specific activities around CRM, which can likely lead to a
different broader measured performances.
Q U A L I T Y
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Vol. 22, No. 183/ August 2021
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