Customer Information Systems
This article focuses on customer information systems, especially as they relate to the marketing function. We are constantly in search of finding ways to satisfy our customers, and we attempt to collect this information so that we can analyze trends. Evaluating a customer's orientation is believed to provide valuable information about customer preferences and habits. There is a discussion of how customer orientation and information systems assist organizations with collecting data on customer behavior. In addition, there is an introduction of customer relationship management (CRM) systems and how the Internet has created a need to be able to collect customer information.
Keywords Customer Orientation; Customer Relationship Management; Information Service Quality; Internet Marketing; IT Capability; Relationship Marketing; Site-centric Model; Symbiotic Marketing
There are current trends in the marketing field which suggest that our society is a consumer-oriented economy (Watkins & Vandemark, 1971). We are constantly in search of ways to satisfy our customers, and we attempt to collect this information so that we can analyze trends. "A long standing marketing principle is that understanding and satisfying customers leads to superior business results" (Zhu & Nakata, 2007, p. 187). Evaluating a customer's orientation is believed to provide valuable information about customer preferences and habits. Organizations can collect examples which illustrate that attentiveness to customers, or customer orientation, reaps large rewards (Zhu & Nakata, 2007).
Information systems have been viewed as a mechanism to assist organizations with completing customer intelligence tasks and response activities (i.e. collecting detailed data on purchase habits, distributing this data across functions to analyze critical market trends and developing actionable marketing plans (Day, 1994; Glazer, 1991). "Yet, when information systems for marketing firms are examined, there is little evidence that retailers regularly or systematically attempt to obtain an evaluation of how customers regard their products, service, and performance, or the performance of their competitors in providing an acceptable marketing mix" (Watkins & Vandemark, 1971, p. 50). Therefore, many organizations have resorted to looking at IT capability and information services quality as a way to understand the relations between customer orientation and efficiency (Bharadwai, 2000).
IT Capability, the technological component of information systems, refers to the ability of many computers and similar technologies in a business to conserve, disect, and convey information (Bakos & Treacy, 1985). Storage, processing, and communicating information are viewed as key activities of an IT capability (Molloy & Schwenk, 1995). Given the differences in components and configuration, there is a variation in IT capability as it relates to capacity, quality and speed in performing these information functions (Zhu & Nakata, 2007).
Information Service Quality, the human component of information systems, is the extent to which information services are provided to system users by computer technicians. The services have desired properties, which include timeliness, appropriateness, and reliability (Pitt, Watson & Kavan, 1995). "The rise of microcomputing, advent of the Internet, and an explosion of IT products have only increased the demand for and diversity of information services. Services range from the rather mundane (i.e. manning technical help desks) to the highly evolved (i.e. integrating legacy systems)" (Zhu & Nakata, 2007, p. 190). Many of these services fall under customer orientation by providing marketing managers assistance and training in operating customer relationship management (CRM) systems.
Relationship marketing has grown over the past ten years (Sheth & Parvatyar, 2000) based on the belief that the efforts will yield substantial profits. However, there is no data to support this belief and research is mixed. There needs to be more studies conducted in order to validate these claims. Two of the main issues that will be need to be reviewed focus on the actual payoff when an organization uses different relationship marketing programs to create various forms of relational bonds and norms in order to create different levels of return (Berry, 1995) and the types and levels of returns an organization receives from a relationship marketing program are based on factors such as participant influence (Reinartz and Kumar, 2000). "Researchers in service and consumer markets have linked relationship marketing activities to intermediate outcomes (i.e. sales growth, higher customer share, lower price sensitivity) that should enhance a firm's profit" (Palmatier, Gopalakrishna, & Houston, 2006). However, the overall findings in both B2B and consumer markets is that relationship marketing attempts have a direct effect on the customer’s financial worth to the company by extending the length, depth, and extent of the purchasing relationship and the generation of helpful hearsay.
Several criterions are utilized to describe relationship marketing efforts and they include:
- Customer bonds formed.
- Exchange control mechanisms used.
- Benefits offered.
- Functions served.
- Content area supported.
The criterion uses several perspectives in order to recognize the viable categories for arranging activities intended to build and boost relationships. Most of the categories deal with economic, societal and structural factors and imply that customer-seller relationships are similarly arranged Despite which category they belonged to. However, the connections may differentiate by level of effectiveness among the categories. Many researchers have used Berry's (1995) model of explaining economic, societal, and structural relationships and the marketing programs associated with them. According to his model:
- Financial Relationship Marketing Programs “include discounts, free products or other financial benefits that reward customer loyalty” (Palmatier, et. al., 2006, p. 479). Organizations, however, must be one-of-a-kind in their offerings so that competitors may not easily duplicate their campaign. Otherwise, there will be no benefit.
- Social Relationship Marketing Programs “include meals, special treatment, entertainment, and personalized information” (Palmatier, et. al., 2006, p. 479). Research has shown that social bonds are not easy to duplicate. Therefore, there is a strong possibility of strong customer relationships and customers will therefore ignore enticing offerings from competitors due to loyalty and satisfaction with a product.
- Structural Relationship Marketing Programs “increase productivity and/or efficiency for customers through investments that customers would probably not make themselves (i.e. customized order processing system, tailored packaging) (Palmatier, et. al., 2006, p. 479). These programs tend to offer unique benefits and require substantial setup efforts. Therefore, the customers may be reluctant to change vendors given the benefits of the relationship.
In order to keep track of all of the above-mentioned initiatives, some companies have implemented customer relationship management (CRM) systems to track their progress on how well they meet the needs of their customer base. There are two primary types of CRM systems, and they are: Contact centric and account centric. Contact centric systems tend to be used when the primary organization is around independent contacts. On the other hand, account centric systems are used when there are two separate ranks involved in the simple arrangement. There tends to be a business or account level to which many contacts can be connected.
- Contact Centric: The database is organized around individual contacts in this type of system. For example, if an organization is working with 500 different people and they are all employed by the same business, the database would have 500 separate contact records, each listing the name of the corporation. Examples of such a database would be GoldMine and ACT!. The advantage of this type of system is that it is useful if an organization is dealing with individuals and there is no need to work with the company's combined history. However, one may experience problems if there is a need to track information about a company separate...
(The entire section is 3842 words.)