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A framework for web-based ecommerce customer relationship management: Research in progress. Howard Rosenbaum hrosenba@indiana.edu Bin-Yun Huang bihuang@indiana.edu August 9, 2002 .

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slide1

A framework for web-based ecommerce customer relationship management: Research in progress

Howard Rosenbaum hrosenba@indiana.edu

Bin-Yun Huang bihuang@indiana.edu

August 9, 2002

http://www.slis.indiana.edu/hrosenba/Pres/ais_02/index.html

slide2

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

slide3

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-Servicehttp://www.rightnowtech.com/resource/whitepaper.html

slide4

What is web-based CRM?

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.

slide5

What is web-based CRM?

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

slide6

What is web-based CRM?

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

slide7

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?

slide8

What is web-based CRM?

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

slide9

What is web-based CRM?

• 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

slide10

What is web-based CRM?

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

slide11

What is web-based CRM?

Generating demand

Communicating about product

Post-sale customer service

Conducting transaction

Fulfilling orders

Customer “touch points”

Levy, M. (2000). E-volve or die.com. New Riders, p 71

slide12

What is web-based CRM?

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

slide13

What is web-based CRM?

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

slide14

What is web-based CRM?

Firm and customer views of customer service

Replacement

Customer’s view

Ownership

Assessment

Acquisition

Firm’s view

Pre-transaction

Transaction

Post-transaction

Time

slide15

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

slide16

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

slide17

Studying web-based CRM

Keywords, search engines, and sample sites

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

Search terms:

“computer sales”

“software”

“cell phone”

“designer clothing”

“stock trading”

“wine”

“books”

“music cds”

“loans”

“online groceries”

slide18

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

slide19

Studying web-based CRM

• 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

slide20

Studying web-based CRM

Summary of findings

Solitary Interactive Totals

Asynchronous 71 (8%) 338 (38%) 409 (46%)

Synchronous 477 (53%) 10 (1%) 487 (54%)

Totals 548 (61%) 348 (39%) 896 (100%)

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

slide21

Studying web-based CRM

The average site used 3.5 CRM options

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

slide22

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

slide23

Studying web-based CRM

A framework for web-based CRM

Social

Solitary

Interactive

Visiting alone

Responses arrive later

Low social presence

Others are present

Responses arrive later

High social presence

Asynchronous

Technical

Visiting alone

Responses arrive immediately

Low social presence

Others are present

Responses arrive immediately

High social presence

Synchronous

slide24

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

slide25

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

slide26

Conclusions

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

slide27

A framework for web-based ecommerce customer relationship management: Research in progress

Howard Rosenbaum hrosenba@indiana.edu

Bin-Yun Huang bihuang@indiana.edu

http://www.slis.indiana.edu/hrosenba/Pres/ais_02/index.html