Customer Relationships in Electronic Markets


Consider the following three scenarios drawn from contemporary practices of serving customers in electronic markets:

American Airlines (See http://www.cio.com/archive/071500/window.html for details)

  • * Before: Huge amount of customer data was collected, but such data was not used. It just lay dormant , even when the airline had permission to use it. Customers' service expectations amplified, on the other hand, after they had been asked detailed questions about their travel- related needs. Such customers naturally assumed that since American Airlines (AA) knew a lot about them and their preferences, they would receive better services. Satisfying such expectations, however, was not easy.

  • * After: Web-based CRM systems allowed AA to customize communications and services more finely and in cost-effective ways as well as offered the ability to conduct transactions. The new systems let AA customize Web pages according to the customer's tier level (Gold or Platinum) and location. Personalized Web pages allowed American Airlines to try out offers on small test groups, and this proved successful. American Airlines is working on integrating the customer profile database with the AAdvantage frequent-flyer program database across the company. American Airlines expects that giving all its call center reservation agents a complete view of the customer will allow the company to increase efficiency, and speed up the ticket-buying process at airports. American Airlines established a partnership with AOL to boost customer loyalty via the Web. AOL rewards program and AAdvantage program were combined.

  • * Benefits: Web traffic yielded nearly $500 million in booked revenues . Web-based transactions were running 5% of total annual revenue of over $ 10 billion. (Case adapted from Lynch, 2001).

My Twin (See http://www.cio.com/archive/051501/hello.html for details)

  • * Before: My Twin makes and sells a highly specialized product: personalized one-of-a-kind dolls that resemble their owners . Because of strong seasonality in demand, My Twin outsources call center operations. Call center agents, however, have to be knowledgeable and friendly since the product is personalized and complicated. Outsourced call centers have high turnover rates. Outsourced agents are often unfamiliar with the products, and not brimming with empathy for customers.

  • * After: To overcome these problems, My Twin ( www.mytwinn.com ) installed Alpine Access - a Web-based virtual call center. Alpine Access offers the outsourced call center agents greater flexibility than a traditional call center. Much of the information that the agents need is Web-delivered. This makes the agents happy, leading in turn to happy customers. The system can even monitor agents working from home. It allows My Twin to see online what the agents are doing. My Twin supervisors manage the virtual call center via the Web. It is possible to train the agents through the Web and motivate them to provide superior customer service. Agents can tap into the customer order processing system. They report via the Web and upload customer data directly to the database.

  • * Benefits: Alpine Access-equipped agents converted 30% more inquiry calls into orders than before. Agent turnover rate decreased by 88%, and that led to reductions in training costs. The escalated calls, letters , and e- mails from irate customers dropped by 90%. Revenue per employee increased significantly since the agents closed more sales and related better to the customers. (Case adapted from Shein, 2001.)

Wells Fargo & Co. (See http://www.cio.com/archive/021501/crm.html for details)

  • * Before: In its education loan business, Wells Fargo bank had a hard time finding the right customer paper files while dealing with college loan customers. What is worse , some files even got lost in the rising mountain of paper. Customers had to wait a long time until the loan request was confirmed.

  • * After: Wells Fargo started retaining loan records for customers' life span so as to build better customer relationships. The messy and manual process was reengineered and became highly streamlined. High-volume scanners were deployed to scan all hard-copy documentation coming into the mailroom within two hours of arrival. The scanned documents were then tied to the student/parent's account and moved into workflow queues for processing. Online loan applications submitted through Web site and fax machines converged with the imaged documents to join the queue. A team reviewed the documents, and expedited approvals , within hours or even minutes. For loan applications transmitted electronically by schools , a hard copy of a partially completed promissory note was generated and sent to the borrower for signing. Once the signed copy was returned, the document moved to a review queue in workflow and the loan was flagged as ready to disburse. Online applications were even faster.

  • * Benefits: The bank was able to reduce simultaneously the approval time and error rate. Customers could use the Web site to get loan approvals online. With the new system, Wells Fargo provided its employees with a clean and paperless working environment. Student loans increased from $800 million to $2.1 billion. Wells Fargo became aware of favorable word-of-mouth effects from the students they disbursed their loans to. (Case adapted from Fickel, 2000).

While customer relationship management (CRM) and Knowledge Discovery in Databases (KDD, or datamining) technologies and practices are evolving in all e-markets, the three companies profiled above illustrate clear patterns of success in terms of having good customer relationships.

As the 'before' narratives of the three situations indicate , however, each company had its own problems. Such problems are not atypical. A large number of CRM systems fail to meet their objectives. According to the Gartner Group , nearly 55% of CRM projects during 2002-2006 are expected to fail.

In terms of managing customer relationships, these three companies overcame the difficulties and turned themselves into successful service companies.

What exactly was done in the 'after' situations that came to be perceived as a 'good job' in terms of sustaining good customer relationships? Customer orientation, knowledge discovery, and the right systems to support the customer relationships constitute the components of the answer to this question.

Due to competitive pressures or manifest customer dissatisfaction, the need for stronger customer orientation became very obvious to these three companies. My Twin started providing a good working environment to call center employees, which led to better service to the customers. Even when recruiting, they tried to find the right people as sales representatives. American Airlines personalized the Web pages for its customers. Wells Fargo cut the loan approval waiting time drastically for its educational loan customers and some customers could even get their loans approved instantly through the Web site. Also, Wells Fargo started retaining loan data for customers' life span so as to build better customer relationships. The services provided through the Web to customers were designed to improve the service encounters. In all cases, CRM technologies, KDD methods , and Relationship Marketing strategies dovetailed better than before.

What these three cases illustrate in conceptual terms is the need for linking the technological capabilities of CRM and KDD with the behavioral and strategic insights from market orientation studies and relationship marketing. In this chapter, based on ongoing research streams in MIS and marketing as well as our own ongoing research program, we outline and illustrate a model that links CRM technologies, KDD techniques, and relationship marketing concepts. Before presenting the framework linking these three key elements of relationships- intensive e-markets, we first provide quick overviews of these three key elements. Then the model and its theoretical justification are presented. This is followed by elaboration and illustration of some of the linkages in the model. Finally, in the concluding section, practical and theoretical challenges are revisited, the current state of knowledge is summed up, and future research possibilities are outlined.




Contemporary Research in E-marketing (Vol. 1)
Agility and Discipline Made Easy: Practices from OpenUP and RUP
ISBN: B004V9MS42
EAN: 2147483647
Year: 2003
Pages: 164

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