Electronic commerce relies on customer interactions via a computer and telecommunications infrastructure for the purpose of advertising, promoting, and selling products and services online. Electronic commerce replicates most of the physical activities that take place in the marketplace, to the point where increasing use of electronic commerce is shifting companies to new market spaces. The traditional marketplace emphasizes “customer satisfaction” as a way to earn con- sumer loyalty and attract new customers. Therefore this chaper examines the firm’s approach to customer relationship management in order to account for the new realities of market spaces. To be successful in a market space, a firm must be responsive to its virtual customers’ wants, needs, and desires and manage interactions with them properly in order to arrive at a win/win outcome. Marketing considers that interactions between customers or potential customers and the firm arrive at a win/win outcome, in either a marketplace or a market space, when: (i) such interactions lead to the sale of a given item(s); and/or (ii) such interactions lead to an increased likelihood that a sale of the same or other item(s) will happen in the near future to the satisfaction of both parties. Win/win means the customer wins through a satisfying purchase of a product or service and the firm wins by selling this product or service. Increased customer satisfaction will augment the
likelihood that the customer will purchase again and/or induce other potential customers to buy, through either testimonials or word-of-mouth effects. Under this scenario, moving from the mar- ketplace to the market space poses new challenges to the firm. Many years of experience have enabled them to manage a marketplace, but market space is the result of a recent phenomenon (the Web), which is about twenty years old.
In addition to the new realities of the market space, the constant development of the Web as a new environment medium opens significant challenges to marketers, which they may not be well prepared to face. The key new element is the dynamic nature of the interactive system used by customers to gain access to a firm’s Web site, and what happens after the Web site has been reached. Under this scenario, three important questions must be answered: (i) How does a firm attract potential customers to its own Web site? (ii) Once customers enter the firm’s Web site, how can the Web site “cooperate with the customer” in order to arrive at a win/win situation? (iii) How must the firm adjust its marketing information systems to ensure that proper information and feedback is obtained from market space interactions for better management decision making?
These three questions are not independent; i.e., the satisfaction experienced by potential cus- tomers reaching a firm’s Web site will depend on the prior experience and expectations that they build along the way (both in the past and in this particular Web session) and the design of the Web site, which may or may not handle those expectations in a “cooperative” manner. Management will not have a clue as to what happened if proper arrangements are not made to capture the customers’ satisfaction with the overall process. Because a market space is a unique blend of marketing activities in a “virtual,” interactive electronic environment, this chapter will track the issue of customer satisfaction/dissatisfaction both from the traditional marketing viewpoint and in terms of the more recent information technology views about interactive systems. In particular, given the importance of “cooperation” between the firm and its customers, current knowledge of user satisfaction with collaborative environments will also be included. All these aspects will help the future formulation of a “hybrid model of customer satisfaction” using the Web that accounts for all the components of market space, under the win/win mandate of the “marketing principle.” Based on the foregoing, the purpose of this chapter is to review the state of art for eCRM by examining issues raised by researchers during the past several years, underlying theories and models of eCRM which are rooted in both consumer satisfaction and dissatisfaction in marketing, and other future research issues. This study also reviews consequences of customer satisfaction/
dissatisfaction, such as customer loyalty and complaints.
DEFINING ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT
eCRM has attracted the attention of e-business managers and academic researchers who are inter- ested in increasing repeat business and customer loyalty (Julta, Craig, and Bodorik 2001). Various researchers have defined the eCRM according to different aspects. Based on the review by Jukic, Jukic, Meamber and Nezlek (2002–2003), eCRM is a business strategy that utilizes the power of technology to tie together all aspects of a company’s business with the goal of building long-term customer loyalty. Jukic et al. (2002) also stressed that eCRM, in practical terms, is the manage- ment of customer interactions at all levels, channels, and media. Hansen (2000) sees eCRM as “a process of acquiring, retaining and growing profitable customers. It requires a clear focus on the service attributes that represent value to the customer and that create loyalty.” A review by Romano and Fjermestad (2001–2002) emphasized that eCRM involves attracting and keeping economi- cally valuable customers while repelling and eliminating economically unvaluable ones. On the
market space, eCRM is to build and maximize the value of the relationship with the customer and to improve customer retention rates (Jukic et al. 2002; Cho, Im, Hiltz, and Fjermestad 2002).
Issues of eCRM have been developed from relationship marketing, which is to establish, main- tain, and enhance relationships with customers and other partners, at a profit, so that the objec- tives of the parties involved are met (Grönroos 2000). At the lowest level of a relationship, marketers build a financial bond with customers by using pricing strategies (i.e., periodic e-mail notification of price discounts to individual users) (Strauss, El-Ansary, and Frost 2003). At a level-two rela- tionship, marketers stimulate social interaction with customers. Managing online community is one of the strategies for a level-two relationship. For a deeper-level relationship, e-businesses rely on creating structural solutions to customer problems. Offering customization service is a good example of level-three relationship (Strauss, El-Ansary, and Frost 2003).
Among various levels of relationship marketing, online companies have been paying attention to making stronger relationships in order to retain existing or create future customers. For ex- ample, customization of online communities has been used to maintain a strong relationship with customers. While the Internet services are getting popular, one of the most important challenges is to achieve customer satisfaction and maintain customer loyalty. Julta, Craig, and Bodorik (2001) note that customer metrics affect eCRM; they include customer retention, satisfaction, acquisi- tion, and profitability. Another side of eCRM includes how to minimize customer dissatisfaction and complaints. Cho, Im, Hiltz, and Fjermestad (2002) posit that minimizing customer dissatis- faction and complaints is a key to successful eCRM. Therefore, this study defines eCRM as an e- business strategy that interacts with customers to maximize customer satisfaction, to build customer loyalty, and also to attract potential customers to the firm’s Web site.