Electronic Customer Relationship Management

Published Date: 23 Mar 2015 Last Modified: 19 May 2017

Introduction: Technology continues to evolve according to the needs of the people and the ongoing construction and reconstruction of the competition in the global market. Technologies were apparently being applied in different sectors of industry for its promise to deliver the efficiency towards the work (Dwyer et al. 2005). Many marketing and management strategies have been adopted recently in business sector to increase and maintain the competitive market position. Now, traditional market focusing on product, price, place and promotion has been replaced by new customer relationship management (CRM) for long term relationships with customers. A long term relation with customers is now a key to stability in an increasing dynamic market. In recent years, web technologies and wide spread of internet access has facilitated and reshaped CRM implementation bringing it to a new and more popular form known as Electronic Customer Relationship (eCRM) .

Wahab et al. (2010) stated that eCRM is now becoming a main strategy for companies regardless of their size. This is because the cost of making a new customer is five times more to get an existing customer to make a new purchase. On the other hand, a dissatisfy customer can cause an exponential damage to the company. Dissatisfied customers are more likely to convince others to switch service provider hence defect the company's market competition Wahab et al. (2010).

Term Customer Relationship Management (CRM) widely used in business sector is referred as a business strategy to attract and retain the economically valuable customers while repel and eliminate economically invaluable ones (Fjermestad 2007).

CRM has always been a popular subject of marketing which can potentially deliver significant benefits such as; cost reduction, increase in value that a company offer to its customers and a greater increase in revenue through better understanding of its customers and market competitors (Pan et al. 2003).

According to Simons et al. (2009) "eCRM refers to a kind of CRM that is channel-independent in the sense that it uses one, company-wide set of data and one set of business rules to manage customer interaction via any channel at any time".

In most cases, web technologies are used for management processes and to provide information and functionality to the representatives. Traditional CRM rely on local approaches to data management and business rules, for example call centers, eMarketing or sales force automation. Many of these local CRM initiatives move towards the more unified way in long run that is eCRM (Simons et al. 2009)

The key to retaining the customers through electronic resources, and thus increasing profit margins, is improved service quality. Although service quality is important across all business sector and industries, it is even more important in retail services because of the ease and flexibility with which customers can switch from one retailer to another (Poel et al. 2004).

There are numerous competitive retail markets including online stores as well, so profit margins are less while choices are more as compare to other business sectors. Retailers are struggling to attract and retain the valued customers using different business strategies and marketing channels. In recent years, many retail supermarkets have adopted eCRM strategies to attract and retain loyal customers hence increase their business revenue. For example TESCO one of the bigger market retailers using eCRM systems in retail market. Tesco online stores, TESCO loyalty cards, Club card and customers gift schemes are some essential factors to attract and retain the customers.

As stated by Fjermestad (2007) eCRM systems are getting popularity in retail sector. Organisations want to achieve enormous benefits of high return on investments, increase in customer loyalty from successful implementation of eCRM systems. A successful implementation of eCRM can reward increased customers loyalty, more effective marketing, improved customer services, improved organisation's efficiency and cost reduction (Fjermestad 2007). However, studies in business sector have also explored the issues and limitations of eCRM approaches in customer services, loyalty and retention.

Marianna et al. (2004) argued that modern technology based business models and increased online price and product transparency has enhanced purchasing power of the customers and made them more price sensitive, less brand loyal and more sophisticated. Although eCRM is one of the fastest growing management approaches being adopted across many Organizations but it has not always delivered the expected results. Kennedy (2007) named eCRM as a double-edged sword that is developing both opportunities and challenges for business organisations considering its adoption and implementation.

Marianna et al. (2004) stated that up to 20% of business executives claim that eCRM initiatives had actually damaged customer relationships. A research/advisory firm named as Gartner Group claims that close to 50 percent of all CRM projects fail to meet expectations (The Australian, 8th July, 2003, cited by Coltman & Dolnicar 2007). Another survey organisation , an InfoWorld survey of chief technology officers (InfoWorld 2001, cited by Coltman & Dolnicar 2007) found that close to 30 percent of chief technology officers said that CRM was one of the most "over hyped" technologies they had seen. A follow up survey of IT executives found that 43 percent of large companies that have

Deployed CRM still believe that it deserves the bad press (InfoWorld 2003, cited by Coltman & Dolnicar 2007).

The failure of eCRM applications to deliver expected benefits has opened many doors to research on this topic. According to Marianna et al. (2004) previous studies in this regard have been primarily focused on investigating eCRM implementation from a company's perspective ignoring its customer perspective which often leads to an unsuccessful eCRM system and its implementation. aving

Keeping in view the above mentioned issues, this study will focus on customer's perspective of eCRM efforts implemented by retailers.

Research Aim and Objectives

The main aim of this study is to investigate and analyse the impact of eCRM on service quality of retail stores as perceived by the customers.

To achieve this aim following will be the objectives to be met:

1- Review the literature to investigate the concept of eCRM systems and their

potential impacts on retail supermarkets.

2- Review the literature on retail supermarkets and explore the issues of their

customer service quality.

3- Conduct an investigation in to a case study retail store to explore their

eCRM efforts and service issues.

4- To study the state of customer services and Electronic Customer

Relationship Management (e-CRM) implemented in retail sector

5- To determine Customers perception on eCRM efforts and service quality of

e-Retailers

6- Identify and suggest areas of possible future research on the subject of

eCRM in retail sector.

Literature Review:

A range of literature including journals and research papers on the topic eCRM has been analysed to investigate the problem area. Most of these inform about the importance and implementation of eCRM in different business sectors. Different factors of a successful eCRM systems and their impact on service quality have been discussed. Some of the studies have identified the limitations and failures of eCRM systems.

Kennedy (2006) defined eCRM in a more practicable way stating that eCRM is a combination of marketing activities, tools and techniques delivered via the Internet which includes email, world wide web, chat rooms, e-forums, etc., with a specific aim to locate, build and improve long term customer relationships to enhance their individual potential.

In today's rapid growing web-enabled markets effective execution of customer acquisition and retention strategies are essential to achieve the business targets. Customer behaviour needs to be closely measured and analysed under a broader range of circumstances to understand the preferences of loyal customers Shenton (2001).

Regarding the implementation of eCRM systems in retail sector Ondrus (2005) argued that retail websites empowered with the customer relationship management system provides strong opportunity of using a one-to-one marketing strategy which increases sales and loyalty of the customers. Customers find personalized coupons based on their previous purchases which brings them a feeling that the company knows the customer personally. This would improve the perceived quality of customer service. In addition, retailers would have higher profit and lower cost of keeping profitable customers (Ondrus 2005).

Another ultimate objective of eCRM is to keep the customers out of the competitor facilities by using easy electronic on-to-one marketing which can not be achieved by traditional marketing channels (Ondrus 2005).

Customer service quality plays a significant role in customer's satisfaction and loyalty. Building and maintaining relationship is the key of a successful business. Shenton (2001) pointed out the privacy issues stating that relationships are built on trust and eCRM customer loyalty building efforts often undermine privacy issues of the customers.

A close analysis of customers shopping behaviour is another important element of customer loyalty towards a single retailer. Customers Loyalty is one of the key factors of eCRM practices. Loyal customers are asset of a company. According to Simon et al. (2009) it is important to examine which actions companies can take to increase customer loyalty, all existing actions are not equally effective. For example, companies reward the customers with points of presents through many loyalty programs but there is doubt about which programs are very effective.

Shenton, (2001) pointed out that many business organisations rely on online customer feed back, monthly reports on web site hits, a comparative chart on marketing campaign response rates and call canters report of customer response for their eCRM success. These factors can not provide a 360 degree view of the customers. Effective eCRM analysis requires an impartial customer prospective about their shopping preferences (Shenton, 2001).

Today, modern technology has accelerated the routine of life. People want 24 hours access of retail services. They want to know the time their order is shipped and how much is remaining balance in their account. They need quicker answers to their questions about the sale they made (Belachew and Hoang 2007). In this regard it is important for a company to manage these services at a single interface. Lee (2003) informs that eCRM makes all this possible by retrieving customer data from any where in call centres and providing personalised service to each customer. Hence E-CRM can enhance customer experience, identification and retention of the most profitable customers, increased market share and reduced costs of customer servicing (Lee 2003).

Bocheng and Bing (2006) have discussed the importance of eCRM and explain that eCRM ties customer relationship management with e-business. It has been identified that eCRM is a work flow management system interfaced with other information systems to form a seamless integration and interchange of information both inside and outside an organization. In today's global competitive market environment, integration of business partners, supplier and customers is useful to achieve business goals.

Internet and e-mail are playing most significant role in CRM implementation as they produce effective information between the organisation and client. eCRM includes other e-technologies and new e-channels including mobile technologies, call centers, and voice response systems. The uses of these technologies have either eliminated or reduced human interaction on the supplier side (Coltman 2009)

Kennedy (2007) explains eCRM as a three phase process; acquiring new customers; enhancing the profitability of existing customers and retaining profitable customers for life. All these steps are designed to manage the customer life cycle and maximise customer lifetime value. These eCRM phases depend on the quality of customer information and insight available to the organisation. Online information channels provide data that is already in a format to be pulled into its analytical processes without the steps of data entry necessary when collecting information through traditional channels. Streamlining of the data collection process enhances information quality and timeliness. Quality of data is important as data is further used in eCRM decision analysis activities to predict customer behavior, resulting in more targeted and customised relationship strategies. eCRM is valued for both parties : customers in receiving products and services more closely related to their needs and lifestyles while the organisation earns a base of high-value, low-risk customers (Kennedy 2007).

eCRM can link every operation in a business that affects the customer experience which allows companies to capture customer feedback at more of the 'touch points' between a company and its customers across channels and functions. For example meetings with sales people, customer service enquiries, Internet purchases and customer surveys are used to improve relationships and value for individual customers. However, providing such consistent and timely customer service turned in to a complex process of handling increased customer inquiries through multiple channels (Kelly and Gilbert 2003).

A single enterprise-wide view of the customer in eCRM has made significant improvements in customer service quality which lead the company to improve the bottom line as well (Ondrus & Pigneur 2009).

Regarding customers acquisition and retention, eCRM technology strengthen business capabilities in key areas that determine a customer's purchase decision including pricing, product quality, marketing, sales and customer service to create a virtuous digital loyalty cycle (Kelly and Gilbert 2003).

A functional framework of eCRM to understand customer value can evaluate the win-win strategy for both the companies and their customers. CRM is a defined as a combination of business processes and technology that can provide a better understanding of company's customers from multiple perspectives (Kelly and Gilbert 2003). CRM systems have been classified in three main types to highlight their functionality: operational CRM, analytical CRM, and collaborate CRM. The operational CRM is a customer-oriented application which not only strengthens the relatively weak part of the sales function but also integrates the marketing and customer service function as a whole. The analytical CRM is utilised to captures, stores, extracts, processes, and analyzes the customer data using data discover customer patterns and behaviours. The collaborative CRM is said to create and maintain collaborative working environment across all the customer interfaces (Bocheng et al. 2006).

Regarding the importance of the customer value in CRM strategy, Bocheng et al. (2006) argue that value that customer require from a company is more important then the value the customer provide to the company. Customers do not stay loyal to a single company unless their requirements are not satisfied; this is more prominent in today's customer-centric environment. Therefore, a successful CRM should first focus on the value that the customer required, consider what value the companies can provide to their customers and how these values can be provided to their customers. CRM should first manage customer value by providing customers with their required value, and to gain customers' return value.

This is said to be a win-win situation for a successful CRM. While in the eCRM environment, web, Internet and online channels provide the convenience and flexibility for a customer to explore information and purchase goods. Web technology enables the companies to provide information about products and services in a quicker way their customers (Mallick et al. 2005).

The Bocheng et al. (2006) stated that a customer has certain requirements in the process of purchasing goods-from product selection, purchase to usage, and these requirements form the customer's additional value requirements. Writer divides the customer interaction process during purchase into three periods: pre-purchase period, in-purchase period, and post-purchase period.

In pre-purchase process diversification of products and huge available information make it difficult for customer to decide purchase. Customers need to spend considerable time and energy to acquire the useful information to help them choose the proper product. This is cost of acquisition containing energy, time and money. After a choice is made, the customer value transferred in purchasing process and expectations in this process contains convenience to place an order, simplicity and time consumed in this process and accuracy. Post purchase value contains minimisation of risk in service, maintenance and repair of product purchased (Bocheng et al. 2006).

Methodology

Due to the complex nature of the domain 'the retail sector' and time limitations, this study will be limited to exploratory findings rather than to prove any pre-considered hypothesis.

There are several method used to collect the data and information needed. In this research, primary and secondary resources are used in order to fulfil the research objectives. Primary data will be collected through:

a. Questionnaire/surveys

b. Case study of retail store

c. Web observation and customers commits/feed back

The second step is secondary resources. Most of the information will be taken from:

a. Books

b. Journals

c. Internet resources

Investigation in the case study retail store will be based on semi-structured interviews with management and concerned employees of the store.

Questionnaires/surveys: Customer's surveys will be conducted through phone calls, e-mails and questionnaires.

The other way is to contact individual selected participants with questionnaires that will give answers to a condensed questionnaire that will cover multiple dimensions of the research. All statements within the questionnaires will be measured using a seven-point Likert scale ranging from "strongly disagree'' to "`strongly agree''.

Web site observations and customers commits/feed back: numerous e-retailers have an active customer feed back/commits system. Customers feed backs regarding the retail services can be analyse and used to collect a customer perspective of the eCRM efforts.

Participants and Sampling

The participants or subjects, in general, will be chosen through the means of theoretical sampling. In qualitative method, the process of selection is based on the ability of the participants to provide information. It is important that the participant can deliver the opinions and other information that is focused in the topic. The survey data will be taken in the participation of 300 customers of retail stores. The responses of the participants are gathered and then, analyzed based on the Likert scale.

Research Questions:

1-How eCRM can enhance the service quality in a retail business environment.

2- What is the impact of eCRM implementation on customers' perception of service quality in retail sector.

Benefits of the Study: The study will be important to retail stores to understand the customer perspective of the eCRM services in this sector. This will help retailers to implement eCRM systems in a more customer's oriented way to achieve higher levels of customer satisfaction and retention. The study will be of importance to online retailers as well in order to manage service quality over the internet. Improved service quality can make online retailers more effective to achieve higher levels of customer satisfaction and retention (Lee 2003). The piece of work is aimed on knowledge generation regarding factors that contribute to the acceptance or rejection of CRM solutions perceived by customers. The research will focus on retailer's CRM strategy and use of CRM-system to maintain customer relations. Therefore, developers and suppliers of CRM systems would find the information valuable as they could use it to produce systems that are better incorporated to customers need. Retailers with highly emphasized customer relations would also benefit from this study. As the study aims to contribute knowledge about new ways to maintain and improve customer relations through eCRM, the retailers would find information in the piece of work that could be applied to their specific situation.

Limitations: This research will focus on retail business that have adopted eCRM and using eCRM systems to develop and maintain customer relationship. Retailers with no experience of using eCRM systems will not be considered during studying eCRM efforts implemented by retailer.

The technology and software systems behind eCRM will not be examined thoroughly. Aspects such as attitudes and perception will be considered instead. Also, the factors of eCRM adoption or rejection might or might not be different between retail services and the comparisons of different retail markets are not of interest in this piece of work. As main focus of this study is to understand and analyse the customer perceptions and retailers eCRM efforts.

Ethical issues:

The probable ethical issues in the study are informed consent and confidentiality. First, it is important to consider that right to privacy follows from the assumption that autonomous individuals have the right to make decisions regarding their lives, together with the information and data that are related to it. Therefore, it is the decision of the respondents if he or she will want to participate in the study. Another important issue is confidentiality, this pertains not just towards the actual use of the data, but also in the process of gathering of data - how the interview questions and survey questions are constructed. The researcher will not disclose personal information of the respondents, thus; the information gathered from the respondents will be used solely for the assessment.

Expected Results

Reach the objectives of the research

Ability to extend this research further into my dissertation and develop a strategic e-CRM model to improve service quality in retail sector.

Learning research techniques and practically approaching myself to social information gathering techniques.