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

Operations & Information Systems > Customer Information Systems

Overview

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

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 from contact information.
• Account Centric: The databases have a level that lies above the contacts, the organization or account. There is an ability to tie multiple contacts together. Examples of such databases would be Maximizer, SalesLogix and Sage/ACCPAC CRM. The advantage of this type of system is that it can follow business related research aside from contact-oriented information. This method can be helpful if one wants to:
• View every opportunity available for an account or business.
• View the entire history.
• Update addresses.
• View the corporation and each of its contacts in one, simple, viewing screen.
• Easily research the business versus its individuals.

The Internet & Customers

Many organizations seek to understand the benefits of the Internet as they move their products to the medium. However, they recognize that having an Internet presence does not guarantee a successful venture. There has to be a significant number of people visiting the site and buying the product. "In reality, many websites have very small traffic with over 90% of Internet traffic flowing through less than 10% of the most popular sites (Ennew, Lockett, Holland & Blackman, 2000). In order to achieve success, organizations must be able to attract customers and establish a solid customer base.

"If websites exist in a market-space that is so vast that their existence is not a sufficient condition for gaining traffic and the development of a viable Internet venture requires customers, the building of a customer base becomes a key component of any company's marketing strategy toward the Internet" (Lockett & Blackman, 2001, p. 49). Additionally, the growth of a strong customer base will benefit different functions in marketing like market studies and tests (Lockett, Blackman & Naude, 1998). Therefore, having an online customer following is essential for an online marketing strategy.

There are two different methods used to build a customer base through the World Wide Web. The models are based on specific websites and involve symbiotic marketing. In the site-centric model, customers are interested in a particular organization's brand that meets their requirements. The central site focuses on attracting and retaining customers so it invests in building strong brand recognition for the organization. The site-centric approach utilizes an umbrella strategy that has a variety of techniques. All of the techniques have the same theme - attract customers to the business's own website. Once the techniques have been implemented, the internet company is able to document the characteristics, patterns and habits of its customer base.

Application

Customer Relationship Management

Besides relationship marketing, other determinants such as the customers, salespeople, and selling firms might influence the exchange performance in B2B customer interactions. Customer commitment to a selling firm is based on the customer's willingness to maintain a connection with the firm and the partnership is considered valuable. The customer's perception and interaction frequency are key factors in determining how long the relationship will last. "A customer's sales growth can lead to increased selling firm sales" (Palmatier, Gopalakrishna, & Houston, 2006, p. 480). It has been found that a salesperson's skills and motivations are important factors to successful sales and profit results. A motivated sales staff has the ability to find and close opportunities for new relationships, which equates to increased profits. If the customer is satisfied with the sales staff's performance, it can lead to a long and prosperous relationship.

Finally, there are opportunities for a sales firm to utilize subtle and obvious attempts to develop and secure customer relationships that will yield a significant profit. Palmatier, Gopalakrishna, and Houston (2006) identified different techniques to measure how effective the direct and indirect efforts were in securing successful relationships.

• Direct Efforts: The employment of customer relationship management (CRM) is evaluated, which would require a deliberate approach to developing shareholder values by building connections with crucial customers by using research, facts, and information technology. Access to the customer database will allow organizations to direct their work more efficiently.
• Indirect Efforts: Average tenure of sales force at the organization is reviewed because tenure causes more powerful customer alliances, more infrequent customer deficiencies, and additional customer-specific information that can help to decrease customer turnover and increase profit margins.

Viewpoint

Building a Customer Base on the Internet

There are two different methods involved in creating an online customer base. The models are specific to certain websites and are also symbiotic marketing. The two models can be viewed as opposite approaches. However, some organizations have used techniques from both approaches. The site centric model will be discussed in this section. This model involves many different techniques that are able to gain customers attention and lead them to a main website that offers them a certain product. Ebay is an example of a website that uses the site-centric model. If a person is looking for a particular item, he may google the item. One hit may be an eBay link if the product is available on its site.

In the site-centric model, customers are interested in a particular organization's brand that meets their requirements. The central site focuses on attracting and retaining customers so it invests in building strong brand recognition for the organization. For example, eBay has invested time in building recognition for Gotham Online as a site offering upscale name brand shoes at discount prices. A customer seeking shoes such as Stuart Weitzman or Kenneth Cole could go through eBay in order to take advantage of Gotham's discounted prices for these brands. Although Gotham Online has a site, the shoes tend to be cheaper on the eBay site because the auctions start at a lower price. If the customer wants a variety of upscale shoes and is not concerned about prices, she may go to Gotham Online site for more choices. The purpose of the auctions at the eBay site is to get the customer familiar with Gotham Online. One of the attractions is low price bid auctions for upscale shoes. In addition, there is a significant discount on shipping and handling charges for multiple purchases. Once the customer becomes comfortable with the organization, Gotham Online provides opportunities for the customer to sign up for a newsletter regarding upcoming sales on eBay as well as the opportunity to see the latest styles at the organization's site.

The site-centric approach utilizes an umbrella strategy that has a variety of techniques. All of the techniques have the same theme — attract customers to the company's own web site. According to Lockett and Blackman (2001), some of the techniques include:

• Portal Sites: It's either the first site a user sees when logging in or by performing a search on a search engine. The screen upon log-in is usually arranged by the Internet service provider (i.e. AOL, EarthLink) or the Internet software browser (i.e. Netscape or Microsoft Internet Explorer). Examples of search engines include Google and Yahoo.
• Purchase Links To A Portal Site: Companies may develop their own portal links and purchase prominent links in crucial portal sites that already exist. For example, Citigroup agreed to pay Netscape 40 million dollars to contribute to the personal finance information for use by the Netscape Personal Finance website.
• Purchase Advertising: After the customer purchases the product from the central site, a direct link is provided so that the customer can pay immediately at the organization's site. The larger portal sites tend to be advantageous, as they sell advertisements that have been directed toward certain groups.
• Keywords can be used to select an appropriate banner advertisement
• Advertisements can be presented on Internet pages with related topics
• Regional-specific advertising can be provided on regional-specific search engines
• Detailed information can be collected in order to assist buyers with determining the success of specific-banner advertisements.
• Direct E-mail: Registered Users or Subscribers to E-mail Services: Customers can agree to receive regular emails or newsletters when the company has new products.
• Direct E-mail: Junk Mail or Spam-Mail: Spammers use the unprotected servers of other companies to distribute emails about their products.

Although this model has been a successful Internet strategy, some companies are seeking alternatives. One of the concerns with the technique is the additional costs that accompany the process of drawing attention to a key website and developing a strong customer base.

Conclusion

There are current trends in the marketing field that suggest that our society is a consumer-oriented economy (Watkins & Vandemark, 1971). 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. "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 in order to understand the relationship between customer orientation and performance (Bharadwai, 2000).

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 different layers to the simple construction. There tends to a business or account level to which different contacts can be associated.

There are two different methods used in developing a customer base online. The models are site-centric and symbiotic marketing. The two models can be viewed as opposite approaches. However, some organizations have used techniques from both approaches.

Terms & Concepts

Customer Orientation: The firm-level competency of identifying, analyzing, understanding, and answering the needs of the users.

Customer Relationship Management: The approaches and tools used to aid companies in managing customer relationships efficiently and effectively.

Information Service Quality: The human component of information systems, and the extent to which information services offered by computer technicians to systems users having solicited service properties.

Internet Marketing: Using the World Wide Web for advertising and the selling of goods and services. Internet Marketing techniques include search engines that have been optimized and incorporated with pay-per-click advertising, banner advertisements, e-mails, and affiliate and interactive advertising.

IT Capability: The technological component of information systems. The ability of many computers and similar technologies within a business to keep, dissect, and relay information.

Relationship Marketing: The strategy of establishing a relationship with the customer which continues well beyond the first purchase.

Site-centric Model: A variety of methods that are employed in the hopes to gather customers to a certain, key site that will then offer them specific products.

Symbiotic Marketing: A form of marketing where one seller markets its completed products to another seller who will resell the product under its own label because access to the desired market and customer base is already established for the manufacturer doing the re-selling.

Bibliography

Bakos, J., & Treacy, M. (1985). Information technology and corporate strategy: A research perspective. MIS Quarterly, 10, 106-119. Retrieved November 21, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4678882&site=bsi-live

Berry, L. (1995). Relationship marketing of service-growing interest, emerging perspectives. Journal of Academic Marketing Science, 23, 236-245.

Bharadwaj, A. (2000). A resource-based perspective on information technology capability and firm performance: An empirical investigation. MIS Quarterly, 24, 169-196. Retrieved November 21, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=3205166&site=bsi-live

Day, G. (1994). The capabilities of market-driven organizations. Journal of Marketing, 58, 37-52. Retrieved November 21, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9410316032&site=bsi-live

Ennew, C., Lockett, A., Holland, C., & Blackman, I. (2000). Predicting customer visits to Internet retail sites: A cross industry empirical investigation. Nottingham: University of Nottingham Business School.

Glazer, R. (1991). Marketing in an information-intensive environment: Strategic implications of knowledge as an asset. Journal of Marketing, 36, 223-238.

Handley, A. (2013). Behavioral theory. Entrepreneur, 41, 72. Retrieved November 24, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=88307882&site=ehost-live

Lambrecht, A., & Tucker, C. (2013). When does retargeting work? Information specificity in online advertising. Journal of Marketing Research (JMR), 50, 561-576. Retrieved November 24, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=90376388&site=ehost-live

LaPointe, P. (2013). The dark corners where research strategies hide: Throwing light at the intersection of the new and the old. Journal of Advertising Research, 53, 9-10. Retrieved November 24, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=86178717&site=ehost-live

Lockett, A., & Blackman, I. (2001). Strategies for building a customer base on the Internet: Symbiotic marketing. Journal of Strategic Marketing, 9, 47-68. Retrieved on May 3, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4782033&site=bsi-live

Lockett, A., Blackman, I., & Naude, P. (1998). Using the Internet/WWW for the real time development of financial services: The case of Xenon Laboratories. Journal of Financial Services Marketing, 3, 161-172.

Molloy, S., & Schwenk, C. (1995). The effects of information technology on strategic decision making. Journal of Management Studies, 32, 282-311.

Palmatier, R., Gopalakrishna, S., & Houston, M. (2006). Returns on Business-to-Business relationship marketing investments: Strategies for leveraging profits. Marketing Science, 25, 477-493. Retrieved June 6, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22883062&site=bsi-live

Pitt, L., Watson, R., & Kavan, C. (1995). Service quality: A measure of information system effectiveness. MIS Quarterly, 19, 173-187. Retrieved November 21, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9507260424&site=bsi-live

Reinartz, W., & Kumar, V. (2000). On the profitability of long-life customers in a noncontractual setting: An empirical investigation and implications for marketing. Journal of Marketing, 64, 17-35.

Sheth, J., & Parvatiyar, A. (2000). Handbook of relationship marketing. Thousand Oaks, CA: Sage Publications.

Watkins, E., & Vandemark, V. (1971). Customer information strengthens market information systems. Journal of Retailing, 47, 50-57. Retrieved November 21, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4673041&site=bsi-live

Zhu, Z., & Nakata, C. (2007). Reexamining the link between customer orientation and business performance: The role of information systems. Journal of Marketing Theory and Practice, 15, 187-203. Retrieved November 21, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=25741099&site=bsi-live

Suggested Reading

Calculating costs of integrating information systems. (2004). Baseline, , 37. Retrieved November 28, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=15143204&site=ehost-live

Pike, G.H. (2005). Privacy and the database industry. Information Today, 22, 17-19. Retrieved November 28, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=17004162&site=ehost-live

Stonham, L. (2006). Interactive online compliance database. Pipeline & Gas Journal, 233, 68-69. Retrieved November 28, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=20658363&site=ehost-live