impact of customer retention

Upload: ambica-prashar-mishra

Post on 04-Apr-2018

223 views

Category:

Documents


0 download

TRANSCRIPT

  • 7/30/2019 Impact of customer retention

    1/13

    International Journal of Electronic Business Management, Vol. 7, No. 1, pp. 57-69 (2009) 57

    THE IMPACT OF A CUSTOMER PROFILE AND CUSTOMER

    PARTICIPATION ON CUSTOMER RELATIONSHIP

    MANAGEMENT PERFORMANCE

    Ji-Tsung Ben Wu*

    , I-Ju Lin and Ming-Hsien YangDepartment of Information Management

    Fu-Jen Catholic University

    Taipei Hsien (24205), Taiwan

    ABSTRACT

    Customer Relationship Management (CRM) is one important application for e-business.

    Two important factors influencing CRM performance are: customer profiles and customer

    participation. The result of this experimental study demonstrates that the use of customer

    profiles improves the customers perception of the quality of goods and increases the

    effectiveness of Customer Relationship Management (CRM). In addition, customer

    participation can improve customers perceptions the quality of goods and enhance

    performance of CRM through perceived participation. The results indicate that the

    customer profiles and customer participation are two crucial factors for companies to

    maintain good customer relations.

    Keywords: Customer Relationship Management, Customer Profile, Customer Participation

    1. INTRODUCTION*

    Companies are now more than ever focusing

    on high customer retention and maintaining good

    long term customer relationships [3][16][35].

    Customer relationships management (CRM) is a high

    customer retention strategy. It is very important to

    know more about customers needs and offer

    customized products and services in order to improve

    customer satisfaction and loyalty [22][28]. Two

    main strategies, collecting customers' profiles and

    promoting customer participation, are used to probe

    customers' needs. CRM research highlights that

    knowledge of customers is critical, but the tacit

    knowledge of customers is not much emphasized.

    Companies need to make CRM efforts effective

    [17][23]. Therefore, corporations should seek new

    interaction mechanisms to improve customerrelations by achieving complete communication with

    customers, building partnerships with customers, and

    getting more non-structured information about

    customers that is leveraged to drive CRM activities.

    Regarding the urgent demand for tacit information

    about customers, customer participation in the service

    research should be considered as one important

    source of knowledge about customers, in addition to

    customer profiles which are acquired by database

    technologies. Also, gaining customers active

    participation is able to directly increase their

    perception of the services provided by the companies.

    *Corresponding author: [email protected]

    The main objectives of this paper are to (1)

    discuss and integrate related research to infer a

    conceptual model which includes the customer

    profile, customer participation, and measures of CRM

    performance; (2) to investigate the relationship

    between the degree of using a customer profile andcustomers perceptions of the quality of goods; and

    (3) to investigate the relationship between the degree

    of customer participation and customers perceptions

    of the quality of goods and CRM performance.

    2. LITERATURE REVIEW

    To research the impact of customer profile and

    customer participation on the CRM performances,

    this study examines the theories of CRM, customer

    profiling and customer participation.

    2.1 Customer Relationship ManagementThe new marketing paradigm is based on

    knowledge and experience [24][30][31]. The

    knowledge-based marketing paradigm indicates that

    corporations need to know more about customers;

    and an experience-based marketing paradigm

    suggests bringing more interactions into customer

    related activities. Since the 90s, there have arisen

    numerous synonymous terms: customer management,customer information systems, customer value

    management, customer care and sometimes customer

    centricity or customer-centric management, but now

    clearly, the term Customer Relationship Managementhas become the most widely used [6][20].

  • 7/30/2019 Impact of customer retention

    2/13

    58 International Journal of Electronic Business Management, Vol. 7, No. 1 (2009)

    CRM is an interactive process that turns

    customer information into customer relationships

    through actively using and learning from information.

    It is a cycle for encompassing major group of actions:

    knowledge discovery, market planning, customer

    interaction, and analysis refinement [7][35].

    Ryals and Knox [32] determined that thephilosophical bases of CRM are: relationship

    orientation, customer retention, and superior

    customer value created through process management.

    Successful implementation of CRM requires

    cross-functional reorganization, especially marketing

    and IT, to work closely together to maximize the

    return on customer information. The impact of the

    use of IT on marketing includes the fact that database

    marketing grew in significance in the late 1980s [24].

    In summary, CRM integrates practices of database

    marketing to support short-term market tactics and

    conceptual frame to relationship marketing todevelop long-term customer relationship strategies.

    2.2 Customer Profiles

    Some characteristics correlate positively with

    companies performing well in customer relationship

    management: excellent products, excellent

    management, and the informed use of knowledge

    about customers. An insufficient knowledge base of

    customers limits the value which a company can offer

    to those customers [37][40]. Knowing customers

    better, a corporation can precisely invest in valuable

    customers and reduce the cost spent on poorly

    performing customers [16][35]. The basic component

    of customer knowledge comes from a customer

    profile that is obtained by the use of a database and

    data mining technologies used in organizations [1].

    Building customer profiles is one of the most popular

    strategies for knowing more about customers. In

    summary, using a customer profile is the technique

    which converts raw information about customers into

    the strategic-support knowledge that reinforces the

    value of goods which companies offer customers.

    2.3 Customer Participation

    The customer profile is a more structured partof customer knowledge; whereas a more

    non-structured part could come from customer

    participation. In the service research area, customers

    who contribute information or efforts in the service

    complete the process with the service provider. They

    fulfill the process together while the service is

    produced and consumed at the same time [8][13] [14]

    [26] [36]. For example, patients describe their own

    symptoms to doctors. It makes the process of

    diagnosis go more smoothly. These service

    performances are heavily influenced by customer

    efforts and the information they themselves provide

    [4][13][19].

    There are different dimensions of participation,

    including personal interaction, information sharing,

    and responsible behavior. This suggests that

    participation has a positive impact on customer's

    perceived product/service quality, customer

    satisfaction, and a mixed impact on retention.

    Different aspects of participation do not contributeequally in these models. Specifically, personal

    interaction was found to have more significant effects

    while the information sharing was thought to be of

    particular significance from a conceptual perspective

    [13]. There is a similar result in the new product

    development research area. It indicates that through

    close interactions with customers, designers can

    accurately identify market requirements, quickly

    refine product specification, and reduce time for

    marketing and thus remain more competitive

    [11][27].

    Little CRM research has put specific effort intogetting and using non-structured information about

    customers [23]. Customer participation can fulfill the

    shortage of application towards gaining tacit

    customer knowledge. Customer participation in the

    delivery of service processes has been found to be

    highly related to customers perceived quality of

    service, customer satisfaction and new products

    performance [13][19]. Customers can contribute their

    own information in the process of participation and

    also get information about the corporation. This is a

    two-way communication between buyers and sellers

    which positively impacts the CRMs performance.

    Similar discussions are involved in numbers of

    different research areas. In service research, customer

    participation refers to the contribution of customer

    information and the effort spent in the process of

    service encounters [8][13][26][36]. Customer

    participation influences the quality of service

    [13][19]. In information system development

    research, user participation has been found to

    influence users perception of system success and

    user satisfaction [41]. In advertising research,

    scholars look at the impact which customer

    involvement, advertising and products have on

    purchasing decisions [43].Table 1 identifies similar concepts regarding

    different participation types and customer roles in

    service or product delivery processes value chain.

    3. THE RESEARCH

    FRAMEWORK AND

    HYPOTHESIS

    Figure 1 presents this studys conceptual model

    as it has been derived from the preceding discussion.

    There are two main kinds of knowledge

    sources about customers: customer profiles and

    customer participation. The former represents the use

  • 7/30/2019 Impact of customer retention

    3/13

    J. T. B. Wu et al.: The Impact of a Customer Profile and Customer Participation 59

    of IT to acquire and create information about

    customers in the organization and the latter shows

    there are two-way communications and interactions

    between the corporation and customers. The CRM

    performance construct includes three measurements:

    customer satisfaction, customer loyalty, and customer

    retention [7][9][18][22].

    Table 1: Customer roles in different stages of the product/service value chain

    Stage Type Related ResearchNew Service or

    Product Development

    Customer-oriented design; focus group; close contact

    between designer and customer[11][15]

    Manufacture of Product;

    Service Encounter

    Customer participation; visit factory; customer provide

    information

    [2][8][13] [19][34]

    [36][43]

    Advertising Customer involvement [10] [43]

    Service Encounter;

    Product Delivery and Sell

    Customer self-subscribe which channel and time that

    the product delivery

    [8][13] [19][34]

    [36][43]

    Figure 1: Conceptual model

    1. The effect of the customer profile on perceivedgoods quality

    Goods mean the service or product which

    companies offer to customers. Although there are

    many measurements to examine the quality of

    products, customers usually determine the quality ofproducts on the basis of their own subjective points

    of view. From this viewpoint, the main factor

    concerning a products quality should be based on the

    degree of conformation to customers demands. Of

    course it is harder to measure the quality of a service

    when the goods are intangible [26]. The output of

    service is the process itself. The judgment of service

    quality should be based on customer experiences and

    their perception of the process [27]. The above

    discussion shows that it is crucial to measure

    customers' perception of goods quality.

    A customer profile is a base form of customerknowledge. By obtaining and analyzing customer

    profiles, corporations can develop products and

    services to fit the customers needs. Showing

    customers that the company is using their profiles to

    provide customized goods will also lead users to raise

    their perception of quality. To examine this

    proposition, the first null hypothesis of this research

    is proposed:

    H1: Companies that obtain and use customer

    profiles could not influence its perceived

    goods quality their goods offer to customers.

    2. The effect of customer participation on perceivedgoods quality and CRM performance

    In addition to getting a customer profile to

    identify customer needs, corporations also need to

    seek solution to gain more tacit information from

    customers to know them better [23]. This situationindicates that corporations should build certain

    channels and launch activities to enable the

    transformation of tacit information with customers.

    Based on preceding discussion on customer

    participation, it is possible for corporations to interact

    with customers and get insights of customer needs

    through customer participation. Getting customers to

    participate in value delivery processes helps

    customers to know corporation ability better and

    raises the customers' perception on goods. The

    customer participation also has positive effects on

    customer satisfaction, customer loyalty, and customer

    retention [11][13][19]. To examine this proposition,the300 second null hypothesis of this research is

    proposed:

    H2: Customer participation could not influence the

    perceived goods quality that companies offer

    to customers.

    3. The effect of goods quality on CRMperformance

    The service quality the companies provide to

    customers positively affects the customer relationship

    quality, customer satisfaction and loyalty. The quality

    of goods will influence the customers buyingdecision-making. When quality of goods is higher

    than customers expectation, customers are motivated

    to buy the goods. The goods quality depends on

    customers subjective perceptions of how these high

    quality goods will bring them benefits [39]. High

    perception of goods quality leads to high customer

    satisfaction, loyalty and retention. To examine this

    proposition, the third null hypothesis of this research

    is proposed:

    H3: The perceived quality of goods could not

    influence performance of CRM.

    H3a: The perceived quality of goods could not

    influence customer satisfaction.

  • 7/30/2019 Impact of customer retention

    4/13

    60 International Journal of Electronic Business Management, Vol. 7, No. 1 (2009)

    H3b: The perceived quality of goods could not

    influence customer loyalty.

    H3c: The perceived quality of goods could not

    influence customer retention.

    4. RESEARCH DESIGN

    To test the relationships of customer profile and

    customer participation on perceived goods quality

    and performance of CRM, this research employs an

    experiment with scenarios of services encountered

    and a recall-base questionnaire. The primary

    advantage of using scenarios is that they eliminate

    difficulties of observation on the use of customer

    profiles and the practice of customer participation in

    organizations everyday operation. Also, the use of

    scenarios reduces biases from memory lapses,

    rationalization tendencies, and consistency factors,

    which are common in results based on retrospectiveself-reports [33].

    Recently, an on-line bank has prompted their

    on-line services and this would be a focal

    development in the future of the banking industry.

    This is the reason that this research used on-line bank

    services as scenarios and focused on five on-line

    services: credit card bonuses and gift exchange

    services; high amount transaction confirmation;

    payment reminder services; comments; and new

    service development conference to narrow down the

    complexity and control the variable manipulation

    more precisely.

    4.1 Sampling Frames and Data Collection

    Methods

    The sample for this experiment was composed

    of students from four departments of EMBA at the

    Fu-Jen University. There were 119 EMBA students

    involved in the experiment and the data were

    collected using individually completed questionnaires

    after the last step of the experiment. Of the 119

    subjects, 96 subjects questionnaires were valid.

    Among these 96 subjects, 68 were male, 28 were

    female.

    4.2 Experimental Design

    The experiment employed a 2X2

    between-subjects design, in which customer profile

    and customer participation were manipulated. Four

    treatments are shown in Table 2 and each treatment is

    a scenario that represents a combination of one of

    two customer profile scenarios with one of two

    customer participation scenarios. Table 3 presents a

    list of model variables and table 4 shows the labels of

    each treatment and observation variable.

    All the subjects were first grouped according to

    three conditions: their answer to experience, recent

    demand for on-line bank, and their interest in finance

    management in the personal-data questionnaire. Each

    subject in the same group was then exposed to one of

    the four scenarios in proper sequence of the subjects

    who finished the personal-data questionnaires in the

    first step in the experiment process.

    Table 2: Labels of manipulated treatments

    High

    Customer

    Profile

    Low

    Customer

    Profile

    High

    CustomerParticipation

    HH LH

    Low

    Customer

    Participation

    HL LL

    Table 3: Label of each variable

    Description Label

    Customer Profile K

    Customer Participation P

    Goods Quality Q

    Customer Satisfaction S

    Customer Loyalty L

    Customer Retention R

    Table 4: Experiment design

    This study deemed these three conditions would

    affect the perception of the subjects during the

    process. The separation of the subjects was based on

    these conditions. Then the subjects were assigned

    according to their questionnaire filling time. This

    would reach random sampling. Table 5 shows the

    grouping process and Table 6 shows the whole

    experiment process and the description of what the

    subjects did in each step.

  • 7/30/2019 Impact of customer retention

    5/13

    J. T. B. Wu et al.: The Impact of a Customer Profile and Customer Participation 61

    Table 5: The grouping process

    The subjects were asked to fill out personal data questionnaire.

    The data were stored into the DB.

    The program allocated the subjects who had the same choices of three conditions into the same array.

    The program drew each record from one array and assigned into one of four treatments in turn.

    After the assignment was done, each subjects browser was directed to the homepage of each scenario the subject

    belong to.

    Table 6: The experiment process

    Stage Step Description

    Personal-data questionnaire

    The subjects were asked to fill out the questionnaire and set

    their own account and password which would be used to login

    the experiment system as realized scenarios of on-line bank.

    Experiment instruction The explanation of specific terms and notice.

    Pre-experiment

    Waiting for assignment

    The program drew data from the personal-data questionnaire

    to assign subject into one treatment of experiment.

    Login in experiment systemSubjects used their own account and password to login the

    on-line bank of the experiment.

    Customer accounts dataThe first page was subjects accounts data which was default

    value represented the scenarios of on-line bank.

    Transfer accounts for credit card

    payment

    Confirmation of transfer

    Practice

    Transfer success and the

    instruction of next step

    Subjects were asked to perform the transfer used the on-bank

    interface which was a practice for subjects to familiar the

    operation of experiment on-line bank system and also a cue

    that the subject was one of on-bank customer.

    Credit cards bonus and gift

    exchange service

    Confirmation of gifts, rest ofbonus points and receivers

    address

    This step was the beginning of experiments manipulation.

    The different semantics and operation on the page of on-linebank represented each manipulation of the experiment.

    The setting of payment inform

    service

    The different semantics and operation on the page of on-line

    bank represented each manipulation of the experiment.

    The setting of high amounttransaction confirmation

    The different semantics and operation on the page of on-linebank represented each manipulation of the experiment.

    Advice zone

    This step was skipped at the low degree customer

    participations manipulation to represent the manipulation of

    low degree customer participation.

    Experiment

    The invitation of new service

    development conference

    The different semantics and operations on the page of on-line

    bank represented each manipulation of the experiment.

    Data

    Collection

    Observation variable data

    collection questionnaires

    This was the last step of experiment to ask subjects to fill out

    the questionnaires based on the experience of previouslyoperations of the on-line bank system.

    4.3 Manipulation of Factors and Measurement of

    Variables

    Customer profile and customer participation are

    two independent variables of this study. Based on the

    previous research discussed above, each of the two

    independent variables was manipulated as high and

    low degree and represented as an on-line banking

    system. The details of manipulation and the definition

    of independent variables are discussed below.

    4.4 Customer Profile

    Customer profile variable indicated that the

    organization has acquired the customers information

    by different kinds of channels or systems to transform

    this information into practical instruments to provide

    customized goods. This study manipulated low and

    high degree of customer profiles by the different

    semantic descriptions on the webpage, such as these

    gifts are prepared for you based on your past

    transactions via our on-line banking service as the

    cue and let the subjects believe that this on-line

    banking system provided customized service base ontheir own profiles and that this would be a high

    customer profile degree. After the subjects logged

  • 7/30/2019 Impact of customer retention

    6/13

    62 International Journal of Electronic Business Management, Vol. 7, No. 1 (2009)

    into the system, the screen showed the customers

    account information. The customers name was

    drawn from the subjects personal data and all the

    account information entered was the default value, so

    all the subjects saw the same information, which

    allowed them to be familiar with and understand their

    accounts' information in this experiment. Table 7shows the details of customer profile manipulated.

    4.5 Customer Participation

    Customer participation means customers have

    to contribute a certain amount of effort or information

    in the process of purchasing products or services.

    This variable in the study indicated that the

    organization had built mechanisms and also invited

    customers to participate actively. This study

    manipulated this variable by supplying different

    flexibilities of services for customers in the low and

    high customer participation treatments. In the highcustomer participation treatment, the subjects had

    more than one option based on their own demand;

    while there was only one choice for the subjects in

    the low participation treatment. For example, the

    subjects in high participation could decide both the

    means and the time to be informed about the due date

    of a payment, but the subjects in the low participation

    treatment didnt have these options.

    Table 8 shows the details of the manipulated

    customer participation.

    Table 9 shows the detail of each manipulation

    treatment. LL indicates Low in Customer Profile and

    Low in Customer Participation. LH indicates Low in

    Customer Profile and High in Customer Participation.HL indicates High in Customer Profile and Low in

    Customer Participation. HH indicates High in

    Customer Profile and High in Customer Participation.

    4.6 Questionnaire

    After going through all of the experiment steps,

    the subjects were asked to fill out a questionnaire.

    The questionnaire is divided into two sections: the

    first section contains four questions to check whether

    the subject perceived the proper scenarios in the right

    manipulation treatment; the second section contains

    20 questions concerning the intermediary anddependent variables, including perceived goods

    quality, customer satisfaction, customer loyalty, and

    customer retention. All the questions employed the 7

    points likert scales with numbers 7-1 progressively

    representing very strongly agree to very strongly

    disagree and positive semantic statements. Table 10

    presents the questionnaire for variables.

    Table 7: Detail description of manipulation of customer profile

    Definition Descriptions of Manipulation

    Customer personal data recorded

    by the system

    Customer personal data were drawn from the

    questionnaire of the first step of experiment and the

    customer account data were designed as the default valueof the system in advance.

    Low Degreeof Customer

    ProfileRecognizing and contacting

    customer by system

    The records of customers personal data on the system

    were displayed with proper descriptions on the web-pageinterface.

    Customer personal and

    transactional data recorded by

    system

    Customer personal data were drawn from the

    questionnaire of the first step of experiment and thecustomer account and the historical transaction data were

    designed as the default value of the system in advance.High Degree

    of Customer

    ProfileThere are predictive customers

    demands of services and

    differential customer credit

    displayed on the system.

    The records of the customers personal, transactional and

    also analytical information on the system were

    represented by the proper descriptions on the web-page

    interface.

    Table 8: Detail description of manipulation of customer participation

    Definition Descriptions of manipulation

    Low Degree

    of Customer

    Participation

    There are no customer participate

    mechanisms widespread built in

    the customer contact system of the

    organization.

    Subjects cannot compose the form of service content by

    their own need and have no channel to communicate or

    give advice to company by the web interface.

    High Degreeof Customer

    Participation

    There are widespread built

    customer participation

    mechanisms in the customer

    contact system of the organization

    and invite customer to participate

    actively.

    Subjects can decide which form of service content basetheir own need and have an advice zone to communicate

    or give advice to the company by the web interface.

  • 7/30/2019 Impact of customer retention

    7/13

    J. T. B. Wu et al.: The Impact of a Customer Profile and Customer Participation 63

    Table 9: Description of four treatments

    LL LH HL HH

    Credit card

    bonus and gift

    exchange service

    Exchange by

    bonus points.

    Exchange by bonus

    points, bonus with

    money and allow

    each customer to

    draw bonus in

    advance.

    There is statementemphasis that the gift list

    were referred to subjects

    transaction history and

    offer only one way toexchange as in LL

    treatment.

    There is statement emphasis

    that the gift list were

    referred to subjects

    transaction history and offer

    three ways to exchange as in

    LH treatment.

    High amount

    transaction

    confirmation

    service

    Default amountand way of

    notification.

    Subjects can decidewhich amount and

    way of notification.

    There is statement

    emphasis that the default

    amount and way of

    notification were

    referred to subjects

    exercise history.

    There is statement emphasis

    that the default amount and

    way of notification werereferred to each subjects

    exercise history and subject

    can change the default value

    on the webpage.

    Payment

    notificationservice

    Default amount

    and way ofnotification.

    Subjects can decide

    which amount andway of notification.

    There is statement

    emphasis that the default

    amount and way ofnotification were

    referred to each subjects

    exercise history.

    There is statement emphasis

    that the amount and way of

    notification were referred to

    each subjects exercisehistory and each subject can

    change the default value onthe webpage.

    Advice zoneNo this page in

    the web system.

    This page is showed

    up when finish the

    last step.

    No this page in the web

    system.

    This page is showed up

    when finish the last step.

    The invitation of

    new service

    development

    conference

    Using the form

    of

    advertisement.

    Invite the subject to

    participate.

    There is statement

    emphasis that the new

    service in advisement

    was referred to each

    subjects exercise

    history.

    There is statement emphasisthat the new services were

    referred to subjects exercise

    history and invite subject to

    participate.

    Table 10: Questionnaire

    Construct

    Subjects perception of the using customer profile

    by on-line bank system.

    Subjects

    Perception Check

    (4 items) Subjects perceived participation.

    Modified from

    [42]

    Reliability

    Responsiveness

    Assurance

    Goods

    Quality

    (5 items)Empathy

    Modified from

    [29]

    Perceived usefulness

    Process satisfaction

    Decision-making satisfaction

    Customer

    Satisfaction

    (4 items)Total satisfaction

    Modified from

    [12][21][33][36]

    Positive attitude

    Word-of-mouth communications

    Purchase intentions

    Price sensitivity

    Customer

    Loyalty(6 items)

    Complaining behavior

    Modified from

    [5][25]

    Customer Retention

    (1 item)Consumed the offer again Modified from [18]

    5. RESULTS

    5.1 Data ValidationTo measure the internal consistency of the

    collected data, this study assessed the instruments

    reliability using the Cronbach Alpha coefficient. The

    results are presented in table 11. All Cronbach alpha

    values reach the level of generally considered

    acceptable reliability.

  • 7/30/2019 Impact of customer retention

    8/13

    64 International Journal of Electronic Business Management, Vol. 7, No. 1 (2009)

    The questions were adapted from relative

    research and examined by two experts. Questions

    were modified to reflect problems encountered by the

    pretest subjects. The content validity and face validity

    are considered acceptable. Table 12 shows all

    dependent variables mean and stander deviations in

    the different treatments.To ensure the subjects viewed the scenarios in

    the right aspect, this doubt was tested using the

    two-tailed t-test. The results are presented in table 13,

    14, 15, and 16.

    These results show that most of the subjects

    perceived the right scenario and the high and low

    degree of manipulation also made significant

    differences.

    This study used an F-test to evaluate the effect

    of individual differences in perception of scenarios.

    Table 17 shows the results.

    The results show that individual differencesmake no effect on each dependent variable.

    5.2 The Effect of Customer Profile

    Table 18 shows the results of the main effects

    of two independent variables on all dependent

    variables.

    The results show that the use of a customer

    profile reflects customers' perception of the quality of

    goods (p=0.027). Thus null hypothesis H1 can be

    rejected. That is, the degree of using customer profile

    by a company is positively related to customers

    perception of goods quality. This means the subjects

    have perceived that the service was designed basedon their historic transactions and so they were more

    satisfied, which raised their perception of the goods

    quality.

    5.3 The Effect of Customer Participation

    The results indicated that customer

    participation is not significantly related to the

    subjects perception of goods quality, customer

    satisfaction, loyalty and retention (see table 18). Thus

    there is no significant evidence to reject the null

    hypotheses 2 and 4. Wu and Marakas [41] suggest

    that perceived participation should be an intermediarybetween participation and user satisfaction in the

    information system development research area. It will

    be discussed later of this paper to see if the perceived

    participation makes a difference.

    Table 11: Cronbach alpha coefficient value

    Constructs Number of Items

    Perceived Customer Profile Using 2 0.78

    Perceived Participation 2 0.66

    Goods Quality 5 0.86

    Customer Satisfaction 4 0.89

    Customer Loyalty 6 0.80

    Customer Retention 1 1.00

    Table 12: Mean and St. Dev. of dependence variableGoodsQuality

    CustomerSatisfaction

    CustomerLoyalty

    CustomerRetention

    Mean St. Dev. Mean St. Dev. Mean St. Dev. Mean St. Dev.H 5.22 1.07 5.26 1.11 4.92 0.85 5.31 1.18Customer

    Profile L 4.68 1.31 5.00 1.18 4.63 1.13 5.40 1.14H 5.08 1.17 5.27 1.00 4.83 0.88 5.29 1.18Customer

    Participation L 4.85 1.27 5.01 1.26 4.73 1.11 5.41 1.13ALL 4.96 1.22 5.13 1.15 4.78 1.00 5.35 1.15

    Table 13: Mean and St. Dev. of high and low customer profile

    Manipulation Treatment Subjects Mean St. dev.

    H 49 5.73 1.24Perception of Customer Profile Manipulation

    L 47 4.75 1.63

    Table 14: T-test result of high and low customer profile

    T-value D. F. P-value

    Perception of Customer Profile Manipulation 3.328 94 0.001*

    *p

  • 7/30/2019 Impact of customer retention

    9/13

    J. T. B. Wu et al.: The Impact of a Customer Profile and Customer Participation 65

    Table 16: T-test result of high and low customer participation

    T-value D. F. P-value

    Perceived Participation 2.016 94 0.047*

    *p

  • 7/30/2019 Impact of customer retention

    10/13

    66 International Journal of Electronic Business Management, Vol. 7, No. 1 (2009)

    Figure 2: Modified model

    This study investigated the effects of customer

    profiles and customer participation on the quality of

    goods. The findings suggest that the organizations

    would be wise to apply customer profiles into

    practical characteristics of products or services.

    This will raise the customers perception goods

    quality and further affects the CRM performance. In

    this study, the condition was simulated. It can beargued that the effect would be greater when the

    customers see that their real profiles are used.

    Based on this studys findings, the impact of

    customer participation on goods quality and CRM

    performance is mediated by perceived participation.

    In this study, users did not actually interact with

    representatives from the company. It can be argued

    that the effect would be greater when the customers

    interact with real people. This process changes

    customers attitudes towards this organization and

    reflects customer satisfaction, loyalty and retention.

    Although every effort was made to enact the

    experiment scenarios in something like a near-real

    environment, limitations do exist because the subjects

    knew that they were participating in an experiment

    and had different levels of perception as customers of

    an on-line bank. These factors will naturally cause

    some inaccuracy in the results when compared to

    real-world cases.

    Overall, the research discussed in this article

    explores the different dimensions of CRM theoretical

    development drawn from service research area in the

    context of the service industry as a main trend in the

    business world. These findings can be considered as

    the elements of building a strong customerrelationship that ultimately is needed in order to

    survive in todays competitive environment.

    REFERENCES

    1. Adomavicius, G. and Tuzhilin, A., 2001, Usingdata mining methods to build customer

    profiles, Computer, Vol. 34, No. 2, pp. 74-82.

    2. Barki, H. and Hartwick, J., 1989, Rethinkingthe concept of user involvement, MIS

    Quarterly, Vol. 13, No.1, pp. 52-63.

    3. Beatty, S. E., Mayer, M., Coleman, J. E.,Reynolds, K. E. and Lee, J., 1996,

    Customer-sales associate retail relationships,

    Journal of Retailing, Vol. 72, No. 3, pp.

    223-247.

    4. Bienstock, C. C. and Stafford, M. R., 2006,Measuring involvement with the service: A

    further investigation of scale validity and

    dimensionality, The Journal of MarketingTheory and Practice, Vol. 14, No. 3, pp.

    209-221.

    5. Bloemer, J., Ruyter, K. and Wetzels, M., 1999,Linking perceived service quality and service

    loyalty: A multi-dimensional perspective,

    European Journal of Marketing, Vol. 33, No.

    11/12, pp. 1082-1106.

    6. Brown, S. A., 2000, Customer RelationshipManagement, John Wiley & Sons Canada, Ltd,

    Toronto.

    7. Buckinx, W., Verstraeten, G. and Poel, D. Vanden, 2007, Predicting customer loyalty usingthe internal transactional database, Expert

    Systems with Applications, Vol. 32, No.1, pp.

    125-134.

    8. Carman, J. M., 1990, Consumer perceptions ofservice quality: An assessment of the

    SERVQUAL dimensions,Journal of Retailing,

    Vol. 66, No. 1, pp. 33-55.

    9. Chou, T. J., 2000, The management ofcustomer value and establishment of customer

    loyalty, e-Business Executive Report, Vol. 7,

    pp. 21-29.

    10. Csipak, J. J., Chebat, J. C. and Venkatesan, V.,1995, Channel structure, consumer

    involvement and perceived service quality: An

    empirical study of the distribution of a service,

    Journal of Marketing Management, Vol. 11, pp.

    227-241.

    11. Datar, S., Jordan, C., Kekre, S., Rajiv, S. andSrinivasan, K., 1996, New product

    development structures: The effect of customer

    overload on post-concept time to market,

    Journal of Product Innovation Management,

    Vol. 13, pp. 325-333.

    12. Davis, F. D, 1989, Perceived usefulness,perceived ease of use, and user acceptance ofinformation technology, MIS Quarterly, Vol.

    13, No. 3, pp. 319-339.

    13. Ennew, C. T. and Binks, M. R., 1999, Impactof participative service relationships on quality,

    satisfaction and retention: An exploratory

    study, Journal of Business Research, Vol. 46,

    pp. 121-132.

    14. Huber, F., Herrmann, A. and Henneberg, S. C.,2007, Measuring customer value and

    satisfaction in services transactions, scale

    development, validation and cross-cultural

    comparison, International Journal of

    Consumer Studies, Vol. 31, No. 6, pp. 554-564.

    15. Huovila, P. and Sern K. J., 1998,

  • 7/30/2019 Impact of customer retention

    11/13

    J. T. B. Wu et al.: The Impact of a Customer Profile and Customer Participation 67

    Customer-oriented design methods for

    construction projects, Journal of Engineering

    Design, Vol. 9, No. 3, pp. 225-238.

    16. Hwang, H., Jung, T. and Suh, E., 2004, AnLTV model and customer segmentation based

    on customer value: A case study on the wireless

    telecommunication industry, Expert Systemswith Applications, Vol. 26, pp. 181-188.

    17. Jayachandran, S., Sharma, S., Kaufman, P. andRaman, P., 2005, The role of relational

    information processes and technology use in

    customer relationship management,Journal of

    Marketing, Vol. 69, No. 4, pp. 177-192.

    18. Jutla, D., Craig, J. and Bodorik, P., 2001,Enabling and measuring electronic customer

    relationship management readiness, The 34th

    Annual Hawaii International Conference on

    System Sciences.

    19.

    Kelley, S. W., Donnelly Jr, J. H. and Skinner, S.J., 1990, Customer participation in service

    production and delivery, Journal of Retailing,

    Vol. 66, No. 3, pp. 181-188.

    20. Lee, H. H. and Kim, J., 2008, The effects ofshopping orientations on consumers'

    satisfaction with product search and purchases

    in a multi-channel environment, Journal of

    Fashion Marketing and Management, Vol. 12,

    No. 2, pp. 193-216.

    21. Liang, T. P. and Doong, H. S., 2000, Effect ofbargaining in electronic commerce,

    International Journal of Electronic Commerce,

    Vol. 4, No. 3, pp. 23-43.

    22. Liljander, V., 2006, Does relationshipmarketing improve customer relationship

    satisfaction and loyalty?International Journal

    of Bank Marketing, Vol. 24, No. 4, pp. 232-251.

    23. Lin, T. C., 2002, Some theoretical models andimportant issues of CRM relative researches,

    Journal of Information Management, Vol. 9, pp.

    31-56.

    24. McKenna, R., 1991, Marketing is everything,Harvard Business Review, Vol. 69, No. 1, pp.

    65-69.

    25. Methlie, L. B. and Nysveen, H., 1999, Loyaltyof on-line bank customers, Journal ofInformation Technology, Vol. 14, pp. 375-386.

    26. Mills, K. P. and Moberg, D. J., 1982,Perspectives on the technology of service

    operations, Academy of Management Review,

    Vol. 7, No. 3, pp. 467-478.

    27. Nambisan, S. and Baron, R. A., 2007,Interactions in virtual customer environments:

    Implications for product support and customer

    relationship management, Journal of

    Interactive Marketing, Vol. 21, No. 2, pp.

    42-62.

    28. Osarenkhoe, A. and Bennani, A. E., 2007, Anexploratory study of implementation of

    customer relationship management strategy,

    Business Process Management Journal, Vol. 13,

    No. 1, pp. 139-164.

    29. Parasuraman, A., Zeithaml, V. A. and Berry, L.L., 1988, SERVQUAL: A multiple-item scale

    for measuring consumer perceptions of service

    quality, Journal of Retailing, Vol. 64, No. 1,pp. 5-6.

    30. Payne, A. and Frow, P., 2005, A strategicframework for customer relationship

    management, Journal of Marketing, Vol. 69,

    No. 4, pp. 167-176.

    31. Payne, A. and Frow, P., 2006, Customerrelationship management: From strategy to

    implementation, Journal of Marketing

    Management, Vol. 22, No. 1, pp. 135-168.

    32. Ryals, L. and Knox, S., 2001, Cross-functionalissues in the implementation of relationship

    marketing through customer relationshipmanagement,European Management Journal,

    Vol. 9, No. 5, pp. 534-542.

    33. Smith, A. K., Bolton, R. N. and Wagner, J.,1999, A model of customer satisfaction with

    service encounters involving failure and

    recovery, Journal of Marketing Research, Vol.

    36, No. 3, pp. 356-372.

    34. Song, J. H. and Adams, C. R., 1993,Differentiation through customer involvement

    in production or delivery, Journal of

    Consumer Marketing, Vol. 10, No. 2, pp. 4-12.

    35. Swift, R. S., 2001, Accelerating CustomerRelationships, Prentice Hall PTR, NJ.

    36. Tanner Jr., J. F., 1996, Buyer perceptions ofthe purchase process and its effect on customer

    satisfaction, Industrial Marketing

    Management, Vol. 25, pp. 125-133.

    37. Tiwana, A., 2001, The Essential Guide toKnowledge Management: E-Business and CRM

    Applications, Prentice Hall PTR, NJ.

    38. Verhoef, P. C. and Donkers, B., 2001,Predicting customer potential value an

    application in the insurance industry,Decision

    Support Systems, Vol. 32, No. 2, pp. 189-199.

    39. Wang, H. C., Pallister, J. G. and Foxall, G. R.,2006, Innovativeness and involvement asdeterminants of website loyalty: A test of the

    style/involvement model in the context of

    Internet buying, Technovation, Vol. 26, No. 12,

    pp. 1357-1365.

    40. Wayland, R. E. and Cole, P. M., 1997,Customer Connections: New Strategies for

    Growth, Harvard Business School Press.

    41. Wu, J. B. and Marakas, G., 2006, The impactof operational user participation on perceived

    system implementation success: An empirical

    investigation, Journal of Computer

    Information Systems, Vol. 46, No. 5, pp.

    127-140.

  • 7/30/2019 Impact of customer retention

    12/13

    68 International Journal of Electronic Business Management, Vol. 7, No. 1 (2009)

    42. Yang, H. L., 2000, The impacts of customerexpectation and participation on service failure

    attribution in extended education, Institute of

    Business Management, Yuan Ze University,

    Taiwan, Master Thesis.

    43. Zaichkowsky, J. L., 1985, Measuring theinvolvement construct, Journal of Consumer

    Research, Vol. 12, No. 3, pp. 341-352.

    ABOUT THE AUTHORS

    Ji-Tsung Ben Wu received his D.B.A. degree from

    Indiana University, U.S.A. He is now an assistant

    professor in the Department of Information

    Management, Fu-Jen Catholic University, Taiwan.

    His research interests are Knowledge Management

    and Web 2.0.

    I-Ju Lin received her M.B.A. degree from the

    Department of Information Management, Fu-Jen

    Catholic University, Taiwan. Her research interests

    are Customer Relationship Management and

    Knowledge Management.

    Ming-Hsien Yang received his Ph.D. degree fromNational Taiwan University, Taiwan. He is now the

    dean of the College of Management, Fu-Jen Catholic

    University, Taiwan and a professor in the Department

    of Information Management, Fu-Jen Catholic

    University, Taiwan. His research interests include

    Electronic Business, Collaborative Commerce, and

    Business Process Reengineering.

    (Received February 2009, revised March 2009,

    accepted March 2009)

  • 7/30/2019 Impact of customer retention

    13/13

    J. T. B. Wu et al.: The Impact of a Customer Profile and Customer Participation 69

    *

    510

    *

    [email protected]