Strengthening CRM performance through customer knowledge: the role of technological capability in SMEs

Purpose Customer relationship management (CRM) is increasingly critical for small and medium-sized enterprises (SMEs), yet the mechanisms through which CRM activates translate into performance remain under-theorized. This study aims to examine how technological capability enables operational CRM processes and customer knowledge utilization to drive CRM performance in SME manufacturers. Design/methodology/approach Survey data were collected from 127 UK-based SMEs. Structural equation model (SEM) was used to test a process-oriented model linking technological capability, operational CRM practices, customer knowledge and CRM performance. Findings The results highlight the pivotal role of customer knowledge and technological capability in enhancing CRM performance. While technological capability positively influences customer knowledge and operational CRM, it does not mediate the relationship between operational CRM and CRM performance. Instead, technological capability strengthens the relationship between customer knowledge and performance outcomes. Research limitations/implications The absence of a significant mediating effect of technological capability between operational CRM and CRM performance suggests that SMEs should focus on how technology enhances customer knowledge and operational processes through their integration within operational CRM, rather than treating technological capability or customer knowledge in isolation. Practical implications Managers should leverage technological capability to better use customer knowledge within operational CRM. Technology investments yield greater returns when integrated with customer knowledge-driven practices to improve customer retention and acquisition. Social implications By integrating customer knowledge with operational processes through technological capability, SMEs can achieve more effective CRM performance, thereby supporting business growth, customer satisfaction and broader socioeconomic contributions within local communities. Originality/value This study offers a process-based explanation of CRM performance in SMEs, demonstrating how technological capability functions as an operational enabler. In doing so, it provides a theoretically grounded contribution aligned with the customer-facing and operational nature of CRM activities.