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A framework for web-based ecommerce customer relationship management:
Research in progress
Howard Rosenbaum
Bin-Yun Huang
August 9, 2002 http://www.slis.indiana.edu/hrosenba/Pres/ais_02/index.html
Rosenbaum/Huang SLIS@IU
I. What is web-based customer relationship management?
• Focusing on CRM
• Approaches to CRM
II. Studying web-based CRM
• Method
• Findings
• A framework for web-based CRM
III. Conclusions
• Next steps
Rosenbaum/Huang SLIS@IU
I. What is web-based customer relationship management?
“The Web seems like the perfect place to do customer service. It’s where people go to find answers fast. It provides the basic technology needed to help customers navigate their way through lots of content to the particular piece of information they need. And it’s open seven days a weeks, 24 hours a day.
In fact…, Web-based customer service … is one of the biggest business opportunities on the Web.”
Gianforte, G. (2001). The Insider’s Guide to Customer Service on the Web: Ten Secrets for Successful e-Service http://www.rightnowtech.com/resource/whitepaper.html
Rosenbaum/Huang SLIS@IU
However:
“Poor customer service … could cost online retailers millions in lost customers…
Customer service is a relationship that begins at the entry to a site and should follow all the way through and after the customer leaves…
It costs six times more to get a new customer than to keep an old one, and if … customer support falls down, then companies are greatly reducing their chances of repeat business. In the absence of live sales assistants, who follow you … through a land-based store, customer service is probably 10 times more important.”Mattis, M. (1999). The Devil's in the Details. Business 2.0 May. 113.
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
From the consumer’s perspective, the perceived risk in e-commerce is greater vis-à-vis purchases that can be made at brick and mortar retail stores.
Gaining the consumer’s trust is very important for the e-tailer to reduce the level of perceived risk … Since consumers cannot see the outcomes of their shopping process ahead of time, they will judge an e-tailer based on cues that they encounter as they shop.Krishnamurthy, S. (2000). An empirical study of the causal antecedents of consumer confidence in e-tailers. First Monday. 6(1). http://firstmonday.org/issues/issue6_1/krishnamurthy/index.html
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
Forrester estimates that by the end of 2002, 50% of customer service will be provided on the Web. According to IDC, Web-delivered customer service … is the fastest growing segment of the [CRM] market: [it] will grow to $14 billion in 2005.Lester, J. (2002). Building an intelligent web-based customer service strategy. http://ecommerce.ncsu.edu/seminar/lester.html
Spending on [CRM] management technology will reach USD16.5 billion by 2006, up from USD9.7 billion last year
Online customer service contacts will grow from 870 million in 2001 to 4.7 billion in 2006 Jupiter Media Metrix http://www.jmm.com/xp/jmm/press/2002/pr_022602.xml
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
What is web-based CRM?
Ecommerce firms are finding it increasingly difficult to compete on the basis of price and product differentiation
They are turning to web-based CRM to grow their customer bases and increase customer loyalty
This is important because market researchers claim that many online shoppers are dissatisfied with their ecommerce experiences
Our basic question
What are these firms doing to improve their relationships with customers?
Rosenbaum/Huang SLIS@IU
We offer an empirically grounded framework for web-based CRM that can be used to make sense of the options currently used by ecommerce firms
This framework provides a baseline for understanding web-based CRM
It suggests several research directions that will deepen our understanding of firm-customer relationships in ecommerce
It can also lead to improvements in the online retail experience for consumers
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
• Approaches to CRM
CRM is a long-term enterprise wide strategy intended to increase profitability through a focus on the customer
The goals of CRM are to:
Effectively and consistently manage prospects and customers, regardless of where the interaction takes place
Develop and maintain sustained interactions with customers over time
Identify profitable customers, understand their complex needs and align business capabilities to meet those needs
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
Successful CRM means that all “points of contact” with customers are handled with consistent quality
This requires integrating business processes in sales, marketing and customer service
The call center or web portal is connected to the organization’s IT infrastructure and new and legacy external delivery channels
It also requires a customer database used for data mining, user profiling, and personalization
“Customer facing” technology is combined with back office processes, so that appropriate information can be retrieved and updated
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
Generating demand
Communicating about product
Conducting transaction
Fulfilling orders
Post-sale customer service
Customer “touch points”
Levy, M. (2000). E-volve or die.com. New Riders, p 71
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
Two views of customer service: the firm
It is at the end of the value chain (Porter 1985)
The activities needed to keep a product/service working for the buyer after it is sold and delivered
A linear process with three phases separated by time
Pre-transaction: organizational buy-in and preparation
Transaction: minimize time between ordering and receiving the product
Post-transaction: customer care
A set of activities to win and keep customers over and above assembly and sale activities
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
Two views of customer service: the customer
This is a life cycle model with four stages
Assessment: do I need the product/service?
Acquisition: how and where can I buy it?
Ownership: where the product/service is used
Retirement: should I get another one?
If the customer engages in another transaction, the cycle begins anew
She can be at different stages of the life cycle at any given moment if she has purchased different products from the firm at different times
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
Customer’s view
Firm’s view
Replacement
Acquisition
OwnershipAssessment
Pre-transaction Transaction Post-transaction
Time
Firm and customer views of customer service
What is web-based CRM?
Rosenbaum/Huang SLIS@IU
I. What is web-based customer relationship management?
• Focusing on CRM
• Approaches to CRM
II. Studying web-based CRM
• Method
• Findings
• A framework for web-based CRM
III. Conclusions
• Next steps
Rosenbaum/Huang SLIS@IU
II. Studying web-based CRM
• Method
Ebusiness web sites are the primary settings through which interactions between customers and the firm take place
A site is an artifact representing the firm to its customers
CRM options are embodies in the site’s structure, architecture, and functionality
We wanted to get a sense of the range of currently available web-based CRM options
Our primary method is content analysis
Rosenbaum/Huang SLIS@IU
Studying web-based CRM
Search terms:“computer sales”
“software”
“cell phone”
“designer clothing”
“stock trading”
“wine”
“books”
“music cds”
“loans”
“online groceries”
Search engines:Google www.google.com
AltaVista www.altavista.com
HotBot www.hotbot.com
Lycos www.lycos.com
Go www.goto.com
FAST www.alltheweb.com
Sample sites:Computer sales: 32
Software: 24
Cell phone: 30
Designer clothing: 32
Stock trading: 23
Wine: 15
Books: 17
Music CDs: 21
Loans: 28
Online groceries: 19
n = 241
Keywords, search engines, and sample sites
Rosenbaum/Huang SLIS@IU
Studying web-based CRM
The first step generated 241 sites
10 URLs for each search term (excluding non-commercial sites and dead links)
100 URLs for each search engine
Redundant links were removed
Sites were visited at least twice between 10/2-11/5, 2001
Initial coding scheme was based on a random sample of 20 sites
CRM options were coded and the page on which they appeared were downloaded
896 CRM options were found and coded
Rosenbaum/Huang SLIS@IU
• Findings
Two main characteristics of web-based CRM emerged from the data
Social: options varied according to degrees of interactivity and social presence
Solitary: low interactivity and low social presence
Interactive: high interactivity and high social presence
Technical: options varied in modes of communication
Asynchronous: gap between sending and receiving messages
Synchronous: real time communication
Studying web-based CRM
Rosenbaum/Huang SLIS@IU
Solitary Interactive Totals
Asynchronous 71 (8%) 338 (38%) 409 (46%)
Synchronous 477 (53%) 10 (1%) 487 (54%)
Totals 548 (61%) 348 (39%) 896 (100%)
Studying web-based CRM
Across all categories, the most frequently used option was synchronous and solitary
The second most frequently used option was asynchronous and interactive
The same pattern was found within each retail sector
Summary of findings
Rosenbaum/Huang SLIS@IU
Sites Number CRM Instances Instances/site
Computer sales 32 106 3.3
Software 24 126 3.7
Cell phone 30 118 3.9
Designer clothing 32 105 3.3
Stock trading 23 75 3.3
Wine 15 58 3.9
Books 17 76 4.5
Music CDs 21 88 4.2
Loans 28 85 3.0
Online groceries 19 59 3.1
The average site used 3.5 CRM options
Studying web-based CRM
Rosenbaum/Huang SLIS@IU
Studying web-based CRM
Examples of web-based CRM
Type of service Examples
Solitary/Asynchronous
Solitary/Synchronous
Interactive/Asynchronous
Interactive/Synchronous
Mailing lists, newsgroups, listservs, newsletters autoresponders
Viewing order status and tracking, viewing shopping carts, help pages/ FAQs, knowledge bases, currency converters, store locators, online tutorials, web broadcasts, online calculators
Email, electronic forms, feedback/ survey forms, bulletin /message boards, forums
Live talk, chat
Rosenbaum/Huang SLIS@IU
Studying web-based CRM
Solitary Interactive
Asy
nch
ron
ou
sS
ynch
ron
ou
s
A framework for web-based CRM
Visiting alone
Responses arrive later
Low social presence
Others are present
Responses arrive later
High social presence
Visiting alone
Responses arrive immediately
Low social presence
Others are present
Responses arrive immediately
High social presence
Social
Tec
hn
ical
Rosenbaum/Huang SLIS@IU
I. What is web-based customer relationship management?
• Focusing on CRM
• Approaches to CRM
II. Studying web-based CRM
• Method
• Findings
• A framework for web-based CRM
III. Conclusions
• Next steps
Rosenbaum/Huang SLIS@IU
III. Conclusions
• Next steps
Sort categories according to types of firms
Are certain types of options more likely to be used in certain market sectors?
Are there patterns of co-occurrence in instances of multiple options?
Provide richer details about instances in each category
Explore genre analysis to anchor the framework more firmly in the literature
Test stability and generalizability of the framework with a larger and more varied sample
Rosenbaum/Huang SLIS@IU
Next, research will proceed in two directions
-In front of the interface
Studying customers as they use web-based CRM to interact with firms
Understanding the role of web-based CRM in trust building and maintenance
-Behind the interface
Studying firms as they use these options to manage customer relationships
Assessing the costs of these options and their impacts on profitability
Understanding how they effect work flows in the firms
Conclusions
A framework for web-based ecommerce customer relationship management:
Research in progress
Howard Rosenbaum
Bin-Yun Huang
http://www.slis.indiana.edu/hrosenba/Pres/ais_02/index.html