UNIVERSITI TEKNOLOGI MARA ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT (E-CRM) MODEL IN SERVICES INDUSTRY

Transcription

1 UNIVERSITI TEKNOLOGI MARA ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT (E-CRM) MODEL IN SERVICES INDUSTRY NOOR HABIBAH ARSHAD FAUZIAH AHMAD SAHARBUDIN NAIM TAHIR SHAH NOOR RAIHAN ABDUL HAMID

2 SEPTEMBER 2009

3 ABSTRACT Electronic Commerce (ecommerce) is very important nowadays due to increasing globalization. More brick and mortar companies believe in the significant value of Internet-based transactions and realize the importance of doing businesses over the Internet. Companies had realized the advantages of using the Internet for making online transactions especially for cost reduction and also improved customers satisfaction. The electronic customer relationship management (ecrm) features are the main factors that contribute to the success of any ecommerce web site. E-CRM features and implementations should focus on effectiveness of managing customer relations on the Internet through effective use of Internet features either to deliver updated and accurate information, allowing customer services support and providing personalized and valueadded services. Thus, the aims of this research are to identify E-CRM features and to integrate these features with consumers preferences. This research will also investigate the extent to which telecommunication companies utilize the Internet technology in building relationships with their customers. The primary data for this research was collected by means of a questionnaire survey, personal interviews and web observations. The findings from this research showed that from the nine determinants identified, ease of use was ranked the most important feature in E-CRM. The detailed analysis also showed that companies are using Internet to disseminate corporate information, promotions, as well as the latest product and pricing list to their customers at a high level. Through the findings, an E-CRM model was developed that could solve or could reduce the current and existing problems of companies websites. iii

4 ACKNOWLEDGEMENTS BISMILLAHHIRAHMANIRRAHIM Many thanks to those who directly and indirectly involve with the work of this research: First of all, we would like to express our gratitude to Ministry of Higher Education (MOHE) for giving us the opportunity to explore and expand the knowledge base. The support and funding has enabled us to pursue our goals and has helped in achieving the objectives of this research. Besides that, our appreciation also goes to RMI of UiTM, Faculty of Computer and Mathematical Sciences of UiTM, and Faculty of Management of MMU in providing facilities during our conduct of research. Not to mention, all the participants involved in the collection of data through surveys and interviews, especially representatives from Celcom, Maxis, TM Net, Time Dotcom, Digi Telecommunications, and U Mobile. Without their cooperation, much of our work would not have been completed and achieved. Last but not least, this research can never be successfully attained without the progressive comments and supports from families, friends and colleagues. Thank you! iv

5 TABLE OF CONTENTS ABSTRACT... iii ACKNOWLEDGEMENTS... iv LIST OF TABLES... x LIST OF FIGURES... xii LIST OF ABBREVIATIONS... xiii CHAPTER BACKGROUND RESEARCH PROBLEM OBJECTIVES OF THE RESEARCH SIGNIFICANCE OF RESEARCH RESEARCH SCOPE RESEARCH ORGANIZATION... 9 CHAPTER INTRODUCTION ELECTRONIC COMMERCE (ECOMMERCE) Advantages of ecommerce Limitations of ecommerce Ecommerce Mechanisms BUSINESS TO CONSUMER APPLICATIONS SERVICE QUALITY E-SERVICE QUALITY CUSTOMER RELATIONSHIP MANAGEMENT (CRM) AND ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT (E-CRM) E-CRM FEATURES Rewards Personalization v

6 2.6.3 Online Community Integration between Online and Offline Channels Perceived Trust Emotional Benefits Perceived Value Information Quality Price attractiveness Ease of navigation Order fulfillment Customer service quality Payment security TELECOMMUNICATION INDUSTRY TELECOMMUNICATION SERVICES TELECOMMUNICATION SERVICE PROVIDERS IN MALAYSIA Celcom (TM International) Maxis DiGi Telecommunications TIME otcom TM Net U Mobile INTERNET TECHNOLOGY AS A TOOL IN RELATIONSHIP MANAGEMENT Database and the Back-End Systems Internet Technology as an Enabler to Interactivity CRM IN MALAYSIA WEB SITES SUMMARY CHAPTER INTRODUCTION RESEARCH DESIGN vi

7 3.2 RESEARCH APPROACH Empirical Approach Exploratory Approach Web Observation SUMMARY CHAPTER INTRODUCTION RESULTS AND DISCUSSIONS Demographic Profiles Cronbach s Alpha Test of Reliability of the test instrument Correlation Coefficients of the eleven determinants of e-service quality Analysis of e-crm Features Analysis of 11 determinants of e-service Quality TO DEVELOP CONSUMERS PREFERENCES MODEL IN TELECOMMUNICATION PARTICULARLY CONCENTRATING ON E- CRM FEATURE CONCLUSION CHAPTER INTRODUCTION RESPONDENT PROFILE Number of Years in Operation Company Size (Number of Employees) Number of Years of Internet-Marketing Adoption E-CRM TOOLS USAGE LEVEL Informational Tools Transactional Tools Relational Tools vii

8 5.3 TESTS OF HYPOTHESES Relationship between the adoption of E-CRM tools and the number of years of experience in Internet-marketing Adoption levels of E-CRM by telecommunication companies IMPLICATIONS FOR MANAGERS CONCLUSION CHAPTER INTRODUCTION DEMOGRAPHIC ANALYSIS WEB EVALUATION WEB EVALUATION FOR SERVICES INDUSTRY LIST OF TELECOMMUNICATION COMPANIES OVERALL E-CRM FEATURES WEB COMPARISON BETWEEN MALAYSIA AND OTHER REGIONS WEB COMPARISON BETWEEN REGIONS Summary CHAPTER INTRODUCTION SUMMARY OF RESULTS AND SUGGESTION FOR FURTHER WORK E-CRM Attributes That Particularly Related To The Area Of Service Industries Consumers Preferences Model in Telecommunication Particularly Concentrating On E-CRM Features The Level of Usage Of E-CRM Tools And E-CRM Level In Telecommunication Companies The Standard of Telecommunication Companies Website and Integrate With the Consumers Preferences Of The E-CRM Features viii

9 7.1.5 An E-CRM Prototype Model REFERENCES BIBLIOGRAPHY APPENDICES ix

10 LIST OF TABLES Table 2. 1 Six Determinants of Active Dimension (Santos, 2003) Table 2. 2 Determinants of Incubative Dimension (Santos, 2003) Table 3. 1 Analysis of data Table 3. 2 Theories from Past Studies on E-CRM Tools and Levels Table 3. 3 Operationalization of Research Variables Table 4. 1 Demographic Profile of the Survey Respondents Table 4. 2 Determinants' Relationship with Service Quality Table 4. 3 Ranked features of e-crm based on customers preferences Table 4. 4 Given mark for each features Table 4. 5 Features under determinant ease of use Table 4. 6 Rank of determinants based on average score value Table 5. 1 Demographic Profile of Respondents Table 5. 2 Results of Cross-Tabulation Analysis for Informational Tools and Experience in Internet- marketing Table 5. 3 Results of Cross-Tabulation Analysis for Transactional Tools and Experience in Internet- marketing Table 5. 4 Results of Cross-Tabulation Analysis for Relational Tools and Experience in Internet- marketing Table 5. 5 Summary of results of test of hypothesis Table 6. 1 List of Regions with Associate Countries Table 6. 2 List of common E-CRM features Table 6. 3 Number of websites for each region Table 6. 4 Overall E-CRM Features Table 6. 5 Scores of Observed Features between Malaysia and Other Regions Table 6. 6 Difference Scores between Malaysia and Other Regions Table 6. 7 Summaries of Range of Differences between Regions Table 6. 8 Scores of Observed Features by Regions Table 6. 9 Difference of Scores by Regions x

11 Table Overall Score on 11 Determinants of Internet Service Quality Website Attributes Table Listing Of 37 Important Features Of Ecrm To Be Included As Part Of Telecommunication Company s Websites xi

12 LIST OF FIGURES Figure 2. 1 Model of Service Quality (Santos, 2003) Figure 2. 2 E-CRM dimensions (Source: Ab Hamid & McGrath (2005) ) Figure 2. 2 The Technical Framework of CRM Process (Source: Ab Hamid & Kassim (2004)) Figure 2. 4 VoIP System Architecture Figure 2. 5 purl process Figure 3. 1 Research Methodology Figure 3. 2 Research Model adapted from Noor Habibah et al, Figure 3. 3 Research Model Figure 4. 1 The Model Of Customer Preferences In Telecommunication Figure 5. 1 Informational Items Adoption Level Figure 5. 2 Transactional Items Adoption Level Figure 5. 3 Relational Items Adoption Level Figure 6. 1 A model of E-CRM Features for Telecommunication Company s Websites xii

13 LIST OF ABBREVIATIONS 3D 3 Dimensional Model ANN Announcement ANSI American National Standards Institute B2B Business to Business B2C Business to Consumer C2B Consumer to Business C2C Consumer to Consumer CITEL Inter American Telecommunication Commission CRM Customer Relationship Management CSR Customer Service Representative ECCRM Electronic Commerce Customer Relationship Management E-CRM Electronic Customer Relationship Management EDI Electronic Data Interchange FAQs Frequently Asked Questions G2C Government to Citizen G2B Government to Business G2G Government to Government ICT Information and Communication Technology IDD- International Direct Dial IEC International Electrotechnical Commission ITU International Telecommunications Union JTM Jabatan Telekomunikasi Malaysia MNC Multi National Company R&D Research and Development RSS - Really Simple Syndication TIA Telecommunication Industry Association VOIP Voice Over IP OLAP Online Analytical Processing xiii

14 CHAPTER 1 INTRODUCTION 1.0 BACKGROUND The emergence of Internet technology, particularly the World Wide Web, as an electronic medium of commerce has brought tremendous changes in how companies compete. Companies that do not take advantage of the Internet technology is viewed as not delivering value added services to their customers, thus are at a competitive disadvantage. Obviously, the Internet technologies provided companies with tools to adapt to changing customer needs, and could be used for economic, strategic and competitive advantage. In contrast, companies that utilize the technology (at least having a web site that displays corporate and products information), are viewed as progressive and continuously striving to meet the current needs of customers. In turn, these companies have a low cost base and have begun producing competitive high quality products. This general industry trend has created tremendous cost pressures on traditional businesses. By far, both companies and consumers have acknowledged the Internet as an effective tool for disseminating information. From a marketing perspective the Internet is not just another marketing tool, but also a tool that can reach far to help companies understand customers better, to provide personalized services and to retain customers. Hence, the Internet technology is imperative in managing customer relationship for businesses in the digital economy. 1

15 The Internet is fast becoming popular among Malaysians and this is obvious with the rise in the percentage of users, that is, from 17 percent in the year 2001 to 57 percent in the year 2008, with usage levels increasing annually. A report by Malaysian Science and Technology Information Centre on the Internet population for the year 2008 shows that Internet users comprised mainly those who have received tertiary education and more in the science stream, professionals or those at management levels, above average household income level, youths and those who live in an urban locality (2008). They either accessed the Internet from home (44.8%), cyber cafes (41.2%), offices (25.8%), colleges (12%) and schools (11.6%). Due to increasing globalization, more brick and mortar companies believe in the significant value of Internet-based transactions and realize the importance of doing businesses over the Internet. The growth is also strongly supported by the Malaysian government by which the government is backing its Information and Communication Technology (ICT) vision with a serious financial commitment. According to the Ninth Malaysia Plan ( ), RM 5.2 billion is allocated to ICT development over the next five-year period. Nevertheless, Malaysian markets have recently begun to understand the importance of electronic customer relationship management (E-CRM) (Ab Hamid, 2008; Loh 2000). Primarily, the interest was led by traditional customer management economics. It costs the industry five times as much to acquire a new customer than to retain an existing one; therefore, building long-term and sustainable customer relationships was a good strategy, from the point of view of both building life-time value relationships and the business cost savings involved (Peppers and Rogers 1996). Khatibi et. al., (2002) found that there is a positive trend of increasing awareness of the benefits of Internet marketing. Factors, such as global access and ubiquity, convenience, increased product information and availability of special services on the Internet were cited as possible means enhancing consumer satisfaction in cyberspace. 2

16 Customer relationship is an important determinant of marketing success since loyal customers tend to be less price sensitive and are cheaper to maintain (Galbreath 2002). Further, according to Reichheld (1996) there is a tremendous increase in profits resulting from a small increase in customer retention (Winer 2001). Hence companies who are not giving reasonable consideration on managing customer relationship shall be sidelined and risk losing huge numbers of Internet customers to their competitors. E-CRM refers to the marketing activities, tools and techniques, delivered via the Internet which includes , world wide web, chat room, e-forums and etc. bearing on locating, building and improving long-term customer relationships (LeeKelley, Gilbert and Mannicom, 2003). Driven by economics of customer management well defined segmentation will lead to cost effective marketing efforts and increased profits, enabling technology such as the Internet is vital for firms to identify the differences in customers behaviour, preferences and attitude toward company s products. Coupled with other technology at the back-end such as customers database, warehousing and data mining, value adding and personalized products or services could be offered, which in turn create an edge over competing companies. Driven by intense competition and cost-efficiency inspiration, firms are closely looking at marketing strategies that could win consumer loyalty. Businesses on the Internet are confronted with greater challenges as consumers searching costs for price, quality information and comparisons across stores are much lower (Bakos, 1997; Lynch and Ariely, 2000), hence switching barriers almost do not exist (Yang and Peterson, 2004). E-CRM system must be effective and to achieve this purpose, E-CRM features and implementations should focus on effectiveness of managing customer relations on the Internet through effective use of Internet features either to deliver updated and accurate information (informational), allowing customer services support (transactional) and providing personalized and value-added services (relational). These three major categories of E-CRM elements are believed able to assist telecommunication companies 3

17 enhance customers experience affording long-term relationships (Arnott & Bridgewater, 2002). Hence, with the availability of the Internet tools and technologies, the CRM efforts have swelled to include many other elements which were impossible before. Therefore, the need for Customer Relationship Management (CRM) and Electronic Customer Relationship Management (E-CRM) system has become a priority to integrate business processes and activities, which related to sales, marketing and services, as well as enhancing communication and connection with the customers. Furthermore, the integration of the business process has the capability to assist the companies to gain profits, increase customer loyalty and compete with others. 1.1 RESEARCH PROBLEM An electronic commerce (ecommerce) is known since the inception of the internet. Most business was focusing on ecommerce to acquire more profits and competitive advantage as well (Delong, 2005). In Malaysia, one such ecommerce business is servicing industry. This industry has been expanding since 1987 and always increasing toward the demand. For instance, the telecommunication (telco) industry is one of the high profile industries in Malaysia has 24 million cellular subscribers, 4 million internet subscribers, 4 million fixed line subscribers, and approximately 1.5 million broadband subscribers (statistics as of 1 st quarter of 2008, Malaysian Communications and Multimedia Commission). In servicing industry, the transactions are occurred digitally where the web site application is used. A web site is an important aspect to an ecommerce organization. The role of web site is as a medium for business transactions. The parties especially which are the customers and companies itself has been given with advantages towards the technology usage. Moreover, a web site can give customers a means to obtain information about products and services, buying and selling activities, transferring and exchanging products and many more. According to Turban et al. (2005), ecommerce 4

18 involves products (consumer goods), and services (information services), traditional activities (healthcare, education) and new activities (virtual malls). Otherwise, the web site can also provide the companies with the information about their customers. Therefore, the need for Customer Relationship Management (CRM) and Electronic Customer Relationship Management (E-CRM) system has become a priority to integrate business processes and activities which related to sales, marketing and services, as well as enhancing communication and connection with the customers. However, the integration of the business process has the capability to assist the companies gain profits, increase customer loyalty and compete with others. Thus, the telecommunication companies ought to restructure the current electronic services and seeking for the E- CRM features to improve their web site. As known, the determination of those E-CRM features will allow companies to focus on developing a better web site. Therefore, E-CRM system must be effective and to achieve this purpose, E-CRM features and implementations should focus on effectiveness of managing customer relations on the Internet through effective use of Internet features either to deliver updated and accurate information (informational), allowing customer services support (transactional) and providing personalized and value-added services (relational). These three major categories of E-CRM elements are believed able to assist telecommunication companies enhance customers experience affording long-term relationships (Arnott & Bridgewater, 2002). ecommerce has evolved over time. Since before, the companies only provide general information in their web site. However, once it is evolved, the purpose for doing was differing where from the general information it becomes wider. For instance, customer support, online information exchange, and internet sales features were added value at that time. Of course, the concurrent trend driving industry change is rising customer expectations; this meant companies has to refine their ability and to serve their 5

19 customers well. This leads companies rethinking of how they appeal to their customers and what services levels would attract customers to return As time goes by and ecommerce become important to human life, there are needed to understand deeply the challenges towards ecommerce web sites. According to Silverstein (2001), the problems that arose in the web sites include missing content, weak functionality, and frequent errors. In addition, longer processing time, sometimes the site crashed during process, and never complete the process also causes for poor site performance that may affect productivity and quality of an organization (Black and Daniels, 2001). In general, these are the problems that occurred. However, for the purpose of this research, these problems will be the main factor to estimate the accuracy of the web sites features especially in services industries. More specifically, the research will be focusing on the area of electronic customer relationship management (E-CRM) in Telecommunications sector which has greater impact in our life today. This research also conducted to see how effectively these existing telecommunication companies designed their web sites, either in terms of meeting strategic features needs, or in terms of helping to increase profits or so forth. Therefore, it is needed to identify and investigate the necessary E-CRM features for telecommunication companies. With regard to the increasing in demand, organizations need to employ an effective E-CRM which provide the necessary information toward their products and services (Maswera et al, 2006). Meaning, whether there is any exchange of knowledge between the organizations and the customers in an effort to improve customer service. Meanwhile, companies must also realize that implementing E-CRM requires investment in information technology. To set up a proper IT infrastructure as to enable E-CRM may involve hefty sum of acquisition costs and other implementation costs such as training, customization and maintenance. It is critical that companies be effective in their use of Internet-based relationship marketing activities so as to ensure the appropriate return on the infrastructure investment. 6

20 1.2 OBJECTIVES OF THE RESEARCH The objectives of the research are: To identify the E-CRM attributes that particularly related to the area of service industries. To develop consumers preferences model in telecommunication particularly concentrating on E-CRM features. To investigate the extent to which telecommunication companies utilize the Internet technology in building relationships with their customers. To identify the standard features of telecommunication companies website and integrate with the consumers preferences of the E-CRM features To develop an E-CRM prototype model in which can be applied to any type of servicing industry including telecommunications. 1.3 SIGNIFICANCE OF RESEARCH Past researches have examined the Internet technology usage towards relationship management in small and large firms (Dutta and Segev 1999; Hamill and Gregory 1998; McGowan et al., 2001), and geographic regions (Adam et al, 2002; Arnott and Bridgewater, 2002; Dutta and Segev 1999). However, the literature lacks studies conducted to examine the use of Internet as a relationship marketing tool in the telecommunication services sector. 7

21 The study provides empirical data on the various categories of e-crm features adopted by telecommunication companies. In particular, this research provides useful information for service industry on features that contributed to websites success or failure so that lessons can be learned for future websites development. In addition, the research provides information on the adoption level of E-CRM by company demographics that is the number of years in Internet-marketing.. An E-CRM model proposed in this research can be useful for providing guidelines for organizations to develop their websites. The development of E-CRM model could be an alternative solution to describe and outline the appropriate E-CRM features that can be applied for servicing industry in Malaysia such as telecommunication industry in specific and service industry in general. 1.4 RESEARCH SCOPE The scope of this research is to conduct the availability of E-CRM features in telecommunication companies websites both locally and globally. Meaning, what are the common features that this web site should have in order to provide its customer with better quality of services, high productivity and performances, and sustain the customer satisfaction and loyalty as well. The scope will specifically for company s web site which provides telecommunication services world wide. This research also focuses on telecommunication service providers in Malaysia. These companies are: Telekom Malaysia Sdn Bhd. (TMNet) Celcom Maxis Sdn Bhd. DiGi Sdn Bhd 8

22 TimeDotCom Sdn Bhd UMobile For the purpose of this study, we selected major telecommunication service providers that have strong to moderate presence in the local market. All other companies above have been in the marketplace for more than 10 years except for UMobile Snd Bhd. 1.5 RESEARCH ORGANIZATION The outlines of the remaining chapters of the thesis are as follows: Chapter 2: Electronic Customer Relationship Management (E-CRM) This chapter presents a literature review of Customer Relationship Management (CRM), electronic Customer Relationship Management (E- CRM) including the definition, web site features, and the categories of those features. The reviews provide crucial inputs to this research. Chapter 3: Research Methodology This chapter deals with research design and detailed presentation of research model. The research model discusses the hypothesized relationships and perception among the research variables. Thorough reviews of data collection methods involving questionnaires, interviews and web observations are also discussed. Chapter 4: Consumers Preferences Model of E-CRM Applications This chapter discusses the result of the analysis. Discussion will be on the E-CRM features and E-Service quality determinants Based on the 9

23 analysis findings, formulation of consumer preferences model will be developed.. Chapter 5: Utilization of the Internet Technology In Building Relationships With Customers This chapter focuses on the results of interviews with selected organizations. Results pertaining to hypotheses relationships will also be discussed. The research findings will offer empirical support and shed lights on areas that need to be improved in the utilization of the internet technology in building relationships with customers. Chapter 6: Model of E-CRM in Telecommunication Industry Model of E-CRM in Telecommunication Industry is proposed. The proposed model outline the appropriate features that can be applied for servicing industry in Malaysia such as telecommunication industry specifically and service industries generally. Chapter 7: Conclusions This is the final chapter, which concludes the research by summarizing the findings of the survey and the proposed model. It also provides suggestions and draws further implications for future research in this area. 10

24 CHAPTER 2 ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT (E- CRM) 2.0 INTRODUCTION Internet becomes necessity in developed country as well as in developing country. Today, users are interested to search for information through this medium. Besides reduce wasting time and costs to capture information; with the variety of information available in the internet, users able to collect and obtain the valuable information from it (Scullin et. al, 2002). Instead of only searching for knowledge and information, users able to make transaction through internet such as banking, orders, purchases, payment and so forth (Anumala et al., 2007). To business people, the emergence of the internet makes them think wider than usual. They tend to use this technology to assist them in build up, improve and expand their business worldwide. By using the internet, they will be able to create, and develop new networks with other business people to establish relationship and expand their business process (Huang et. al, 2001). Internet is not only focusing on establishing relationships between businesses, however, it also can support on creating relationship with customers. As known, customers are main factor driving towards the sales and profits for the business. In other words, attracting and establishing network with customers to contribute will provide profits to the companies in doing their business. Therefore, the internet can be defined as a global network of networks that is well suited to communications with a wide variety of stakeholders (Rao, 2000). It was supported by Stagg et al., (2002) which claimed that internet works to support applications such as 11