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Lee, Volume 4, Issue 4, pp. 26-42, copyright 2008 by IGI Publishing (an imprint of IGI Global). 1558 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 5.11 Do Mobile CRM Services Appeal to Loyalty Program Customers? Veronica Liljander Swedish School of Economics and Business Administration, Finland Pia Polsa Swedish School of Economics and Business Administration, Finland Kim Forsberg Intrum Justitia Finland, Finland ABSTRACT Not until very recently has mobile phone technol- ogy become sophisticated enough to allow more complex customized programs, which enable companies to offer new services to customers as part of customer relationship management (CRM) programs. In order to enhance customer relationships and to be adopted by customers, new mobile services need to be perceived as valuable additions to existing services. The purpose of this study was to investigate the appeal of new mobile CRM services to airline customers. An empiri- cal study was conducted among loyalty program FXVWRPHUVIUHTXHQWÀ\HUVRIDQDLUOLQHWKDWZDV considering using MIDlet applications in order to add new mobile services to enhance customer relationships. The results show that customers do not yet seem to be ready to fully embrace new mobile applications. Although the services ap- peared to slightly improve customers’ image of the airline, the services did not seem to enhance their loyalty towards it. However, customers who already used sophisticated mobile services, such DVWKH0RELOH,QWHUQHWKDGDVLJQL¿FDQWO\PRUH positive attitude towards the proposed services. Thus the success of mobile CRM seems closely linked with customers’ readiness to use existing mobile services. Before engaging in costly new investments, companies need to take this factor into serious consideration. INTRODUCTION During the last two decades the marketing com- munity has witnessed a transfer from transac- tion-based marketing strategies to an emphasis 1559 Do Mobile CRM Services Appeal to Loyalty Program Customers? on creating interactive relationships between the company and its customers (cf. Grönroos, 2000). With the overall aim of increasing customer retention and managing customer relationships IRUSUR¿W&50KDVEHFRPHDQHVVHQWLDOSDUWRI many companies’ marketing strategies. One of the newest tools to improve individual services to customers is mobile technology. Because of the rapid development in mobile technologies, it has recently become a noteworthy tool in CRM strategies, and therefore marketing strategies will need to be developed to suit this new chan- nel (Akhgar, Siddiqi, Foster, Siddiqi, & Akhgar, 2002; Balasubramanian, Peterson, & Jarvenpaa, 2002; Helenius & Liljander, 2005). However, so far little is known about how companies intend to incorporate mobile technologies into CRM and about the effects it will have on customer reten- tion (Crosby & Johnson, 2001; Okazaki, 2005). The mobile channel will be of particular interest to companies that already have a loyal customer base that has trusted the company with personal information. This is the case in customer loyalty programs, which have been shown to positively affect customer retention and customer share development (Verhoef, 2003). Loyalty programs already use online services for loyalty program details, such as customer services for members DQGLQIRUPDWLRQRQDFFXPXODWHGEHQH¿WV/DP & Chan, 2003). One new software solution for customized rela- tionship programs is known as Mobile Information 'HYLFH3UR¿OH0,'33URJUDPVVXEVFULELQJWR this standard are called MIDlets and are coded in Java, which by the end of 2007 will be included in most mobile devices in Western Europe (Riivari, 2005). The easy-to-use universal nature of MIDlet applications offers both corporate programmers and individual end users a convenient way to create their own mobile programs to serve company- and XVHUVSHFL¿FQHHGV Given the scarcity of empirical research on mobile CRM and the availability of new applica- tions, the purpose of our study is to investigate how mobile CRM services, developed for a MIDlet application, are perceived by the loyalty program FXVWRPHUV RI DQ DLUOLQH 0RUH VSHFL¿FDOO\ ZH study the appeal of the proposed mobile services to customers, their intention to adopt the services, and whether the services would improve custom- ers’ perceived image of the airline and enhance customer loyalty. The goal of CRM is to build a competitive advantage that distinguishes the brand from competitors and creates stronger customer loyalty (Crosby & Johnson, 2001). Since few studies have combined CRM and mobile services research (notable exceptions being Lin & Wang, 2006; Mort & Drennan, 2005), the current study contributes to the extant mobile service literature by offering a CRM perspective on mobile com- merce and by investigating customers’ attitudes towards mobile CRM. The paper is structured as follows. First, WKHFRQFHSWRIPRELOH&50DQGLWVEHQH¿WVWR customers are discussed. Second, the empirical study is introduced and the results are presented in the form of descriptive statistics. The paper ends with a discussion of the results, limitations, suggestions for future research directions, and managerial implications. MOBILE CRM Relationship marketing and CRM are frequently used interchangeably, but equally often CRM refers to a company’s technology solutions for managing relationships, such as direct mail, loyalty cards, and e-commerce (Payne & Frow, 2005; Verhoef, 2003). A common conceptualiza- tion of CRM is still lacking: it has been described as a process, strategy, philosophy, capability, and technology (Zablah, Bellenger, & Johnston, 2004). Thus CRM can be viewed in a broad or a narrow sense, as a holistic approach to managing UHODWLRQVKLSVRUWKHLPSOHPHQWDWLRQRIDVSHFL¿F technology solution project (Payne & Frow, 2005). CRM is clearly more than a technology, but in 1560 Do Mobile CRM Services Appeal to Loyalty Program Customers? practice it is often associated with the use of da- tabases and technological applications (Payne & Frow, 2005; Shah & Murtaza, 2005). A distinction is often made between operational, analytical, and collaborative CRM applications (Crosby & Johnson, 2001). Operational e-CRM includes customer service applications (Fjermestad & Romano, 2003), which is the focus of the present study. Thus our study employs a narrow CRM approach, by investigating the potential positive consequences for a company of implementing mobile CRM. :HGH¿QHPRELOH&50 as customer relation- ship management of any kind including interactive communication between an organization and a customer using a mobile device (cf. Helenius & Liljander, 2005; Lam & Chan, 2003; Mort & Drennan, 2005). The special characteristics of mobile CRM in contrast to CRM in general are its temporal and spatial autonomy. Mobile devices include a large number of wireless mobile commu- nication tools, such as regular cell phones, smart phones, pagers, PDA’s, and notebooks, the most common device being some sort of cell phone with more or less sophisticated data transmission capabilities. One of the technological solutions enhancing mobile CRM that is applicable to cell phone devices is MIDlets—the technological solution investigated in our study. MIDlet Applications as a Gateway to Mobile CRM The rapid technical progress has led to new ways of processing data and of serving the mobile con- sumer. Our chosen example is MIDlet applications (Adjari, 2001), which bring the mathematical and information processing functions of a small com- puter into a mobile phone. Through their mobile phones customers can manage information and launch applications in the same way as when us- LQJWKH¿[HG,QWHUQHW$SSOLFDWLRQVDUHLQYLVLEOH to customers, who only evaluate the services as they are offered through the application. To use a company’s services through a MIDlet applica- tion, customers need to download it to a mobile device. Applications can be provided for free by a company as part of its CRM program, or they can be offered to customers as a value-added component at a price. The success of a mobile CRM strategy depends on how well the application is designed, the design of the interface and services, as well as custom- ers’ evaluation of the service content in relation to any additional costs of using it. Although in the past consumers have felt cautious about us- ing mobile services (Anckar & D’Incau, 2002), in the future mobile applications are expected to have an important impact on customer acquisi- t ion a nd ret en tio n, by offe r i ng a dd it iona l se r v ice s DQG EHQH¿WV WR FXVWRPHUV .DQQDQ &KDQJ Whinston, 2001; Riivari, 2005; Varshney & Vetter, :HZLOOQH[WGLVFXVVWKHEHQH¿WVRIPRELOH CRM using MIDlet applications in the context of IUHTXHQWÀ\HUFXVWRPHUV %HQH¿WVRIWKHMobile Channel to Customers The perceived relative advantage of a new technol- RJ\VXFKDVDGGHGEHQH¿WVLQFRPSDULVRQWRRWKHU service modes is essential for customer adoption (cf. Walker, Craig-Lees, Hecker, & Francis, 2002). 6HYHUDOEHQH¿WVKDYHEHHQPHQWLRQHGLQUHODWLRQ to mobile technologies. Often cited as the main characteristic and added value to customers of mobile services is the possibility of accessing services whenever and wherever required (Hei- nonen, 2004, 2006; Sugai, 2005; Turban, King, Lee, Warkentin, & Chung, 2002). Mobile value arises in particular from spontaneous and im- mediate service needs (Anckar & D’Incau, 2002; Pura, 2005). In CRM the mobile channel can be used to actively communicate with customers wherever they are, offering them access to the VDPHVHUYLFHVDVWKURXJKWKH¿[HG,QWHUQHWRU through personal contact. 1561 Do Mobile CRM Services Appeal to Loyalty Program Customers? Another advantage often mentioned is that FRPSDQLHV FDQ SURYLGH ORFDWLRQVSHFL¿F LQIRU- mation and service to customers (Jukic, Sharma, Jukic, & Parameswaran, 2002; Turban et al, 2002; Wang & Cheung, 2004), for example, informing customers of the nearest physical touch point for the company’s services. The quality and usefulness of mobile services have received less attention than time and place EHQH¿WVEXWDUHLPSRUWDQWIRUFXVWRPHUVDWLVIDFWLRQ and loyalty (cf. Chae, Kim, Kim, & Ryu, 2002; Nordman & Liljander, 2004). There are few studies on the relationship between e-CRM features and customer service evaluations (Feinberg & Kadam, 2002). However, research has shown that mobile services are evaluated on similar dimensions as e-services, while taking into account the limita- tions of the technology (Chae et al., 2002; Lin & Wang, 2006; Nordman & Liljander, 2004). Our study includes customer evaluations of mobile service content and usability; comfort and secu- rity; and mobile feedback services. Service content and usability (SCU) can be YLHZHGDVLQWDQJLEOHEHQH¿WV0RQH\7URPS Wegner, 1988) or as mobile life quality enhancers (Mort & Drennan, 2005). They are of particular importance for customer satisfaction with utility services (Chae et al., 2002), such as airline travel DQGIUHTXHQWÀLHUVHUYLFHV0RELOH&50FRXOG offer completely new services to customers, such as entertainment services or enhancements of existing offerings by adding a new wireless dimen- sion to them. One example would be improving the usability of the main product, for example, by RI I H U L QJ X S G D W H G À LJ KW L Q I R U P D W L R Q W R D L U W U D YH OH U V Until the launch of new application technologies such as MIDlets, such opportunities and intangible EHQH¿WVIRUHQKDQFLQJFXVWRPHUUHODWLRQVKLSVKDYH not been widely available. Our study examines SCU by investigating customer perceptions of the content and usability of services such as access WRÀLJKWVFKHGXOHDQGURXWHLQIRUPDWLRQVSHFLDO offers, booking, payment, and check-in over a mobile phone. Regrettably, digital fraud is becoming in- creasingly widespread, and customers’ feelings of insecurity or discomfort may outweigh the EHQH¿WVWKH\H[SHFWWRJDLQE\HPEUDFLQJQHZ applications (Kaapu, 2005; Kindberg, Sellen & Geelhoed, 2004; Walker et al., 2002). Therefore, we also investigate customer perceptions of the comfort and security of mobile service usage. Customer mobile feedback (m-feedback) is a key component of an e-CRM strategy (Cho, Im, Hiltz, & Fjermestad, 2002). It is important that companies have effective channels for customer feedback and procedures to resolve complaints, recover customers, and reduce switching (Fornell & Wernerfelt, 1987; Johnston & Mehra, 2002). Technological interfaces are important channels for customer complaints and quick service re- coveries (Bitner, Brown, & Meuter, 2000). Such services are an important feature of customer relationship programs (Winer, 2001), and mo- bile CRM could provide one feedback channel. M-feedback can be used for suggesting ideas for service improvements, as well as for giving compliments or voicing complaints. The mobile channel could offer quick resolutions to problems, taking full advantage of mobility. %HQH¿WVWRWKH)LUP Offering mobile CRM applications to customers VKRXOGKDYHSRVLWLYHFRQVHTXHQFHVIRUWKH¿UP One such consequence is increased customer loyalty (Fjermestad & Romano, 2003). Another important consequence is the positive effects that it may have on the image of a brand and the company (Helenius & Liljander 2005; Lam & Chan, 2003; Nysveen, Pedersen, Thorbjørnsen, & Berthon, 2005). A CRM strategy must lead to a more distinct brand and to higher customer loyalty (Crosby & Johnson, 2001). Contacts with customers through different channels can add to or detract from their feelings of loyalty towards the company (Shankar, Smith, & Rangaswamy, 2002). Therefore, the brand assets (cf. Aaker, 1562 Do Mobile CRM Services Appeal to Loyalty Program Customers? 1996; Aaker & Joachimsthaler, 2000) image and loyalty were assessed in our study. METHOD To investigate the appeal of a new CRM technol- ogy solution to customers, that is, mobile services offered through a MIDlet application, a mail survey was constructed. Members of a Nordic DLUOLQH¶V IUHTXHQW À\HU OR\DOW\ SURJUDP ZHUH sampled for the study. The airline is one of the world’s oldest operating airlines, with a turnover of 1,698 million euros in 2004. Among airlines, it has been at the forefront of electronic service GHYHORSPHQW DQG IUHTXHQW À\HUV DUH RIIHUHG self-services on the Internet (e.g., check-in), at the airport (e.g., electronic gates), and when on the move (e.g., an SMS(Short Message Service)-based mobile check-in service). The airline’s frequent À\HUV DUH DOZD\VDPRQJWKH ¿UVWWR EHRIIHUHG new technology services. Previously published data on these customers show that their technol- ogy readiness is comparatively high (Liljander, Gillberg, Gummerus, & van Riel, 2006). Thus they form an attractive segment for mobile CRM. To maintain its technology advantage, the airline is planning to offer new mobile services to its loyalty program customers. The services are designed with MIDlet applications. Our study was conducted to investigate the appeal of the proposed services to loyal customers. Questionnaire Design Background data were gathered on gender, age, loyalty program level (here called: bronze, silver, gold, platinum), and customers’ current use of the airline’s electronic services. To check for the suitability of their mobile devices for MIDlet applications, and their readiness to use such services, customers were asked how often they use mobile phone e-mail, Internet browsing, and WAP(wireless application protocol) services, and whether their mobile phone supports Java DSSOLFDWLRQV $ ³GRQRW NQRZ´ DOWHUQDWLYH ZDV offered for the last question, since many consum- ers are unaware of all available features in their mobile phone. SCU was measured by asking the respondents to imagine that the airline offered a mobile phone- based application that made it possible to look XSVFKHGXOHVFKHFNIUHTXHQWÀ\HULQIRUPDWLRQ ERRNÀLJKWVDQGSHUIRUPFKHFNLQDWWKHDLUSRUW through their mobile phone. The following scale and items were used (7-point Likert scales, strongly disagree-strongly agree): ³,ZRXOGKDYHVLJQL¿FDQWXVHIRU´ PRELOHSKRQHEDVHGÀLJKWVFKHGXOHDQGURXWH information (SCU1) IUHTXHQWÀ\HULQIRUPDWLRQDQGVSHFLDORIIHUV (SCU2) ÀLJKWERRNLQJDQGSD\PHQW6&8 • check-in services (SCU4) An alternative to the formulation of this ques- tion would have been to use a perceived useful- ness scale from the technology acceptance model (TAM) as a basis for our study (cf., Davis, 1989; Featherman & Pavlou, 2003; Venkatesh & Davis, 2000; Venkatesh, Morris, Davis, & Davis, 2003). However, our formulation of the SCU statements was chosen because it corresponded best with the local language. SCU taps into similar issues as the perceived usefulness component of TAM, in that it asks customers to evaluate if the services would be of use to them. Another reason for not using TAM for our research was that, since the services do not yet exist, customers would have been unable to evaluate their ease of use, which is an important TAM component. Four statements relating to comfortable and secure use of mobile services were included (7-point Likert scales). It should be noted that ³FRPIRUWDEOHXVH´LQWKHORFDOODQJXDJHLQFOXGHV FRQQRWDWLRQVRI³IUHHRIHIIRUW´ZKLFKKDVEHHQ 1563 Do Mobile CRM Services Appeal to Loyalty Program Customers? considered important for technology acceptance (Davis, 1989, p. 320). ,ZRXOGIHHOFRPIRUWDEOHERRNLQJP\ÀLJKW through a mobile phone service (Com- fort1) ,ZRXOGIHHOVHFXUHERRNLQJP\ÀLJKWWKURXJK a mobile phone service (Secure1) ,ZRXOGIHHOFRPIRUWDEOHSD\LQJIRUDÀLJKW through a mobile phone service (Com- fort2) , ZR X O G IH H O V H F X U H S D \ L Q J IR U D À L J K W W K U R X J K a mobile phone service (Secure2) Mobile feedback was evaluated on the follow- ing items (7-point Likert scales): • I would feel comfortable giving feedback through a mobile phone service (MFB1) • I believe that the airline would handle mobile feedback in the same way as conventional feedback (MFB2) • Mobile feedback would make it easier for me to contact the airline (MFB3) • Mobile feedback could help the airline better solve my problems (MFB4) • I would use the mobile feedback service regularly (MFB5) • I would give mobile feedback in instances I otherwise would not (MFB6) As timeliness is one of the key features of mobile feedback, customers were also asked: • How quickly they believed that they would send mobile feedback (MFBSend) • How quickly they expected to receive an answer (MFBReceive) The response alternatives to MFBsend were: a) Immediately after a negative incident, b) Some time later when I sit down, c) Within the same time span as I would give regular feedback, and d) I do not think I would give mobile feedback at all. ,PSURYHGEHQH¿WVWRWKH¿UPLQWKHIRUPRI increased brand assets, were measured with the following statements: • Mobile services would make the airline more desirable as an airline carrier (Image1) • Mobile services would improve my picture of the airline as an airline carrier (Image2) • Mobile services would distinguish the airline from other airlines (Image3) • Mobile services are associated with a modern and technologically up-to-date company (Image4) • Mobile services could be a key factor that keeps me from changing to another airline (Loyalty) In addition, customers’ willingness to pay for new services was asked for regarding mobile IHHGEDFN:LOO3D\)HHGEDFNDQGÀLJKWERRNLQJ (WillPayFlight). They were also reminded of the fact that the price of phoning the call centre was 1.64 euros per call. The alternatives given for both questions were: a) nothing, b) the price of an SMS PHVVDJHF¼G¼H¼RUPRUH Customers’ intentions to use the services (Adopt), were captured with one question: If this application were available, I believe I would: a) Begin using it instantly, b) Wait until I hear from other people who have used it, c) Wait until it becomes the standard way of using the air carrier’s services, d) Probably never use it. Since the service did not yet exist, only adoption intentions could be measured. This is a common problem in many technology adoption studies (e.g., Anckar & D’Incau, 2002; Featherman & Pavlou, 2003; Plouffe, Vandenbosch, & Hulland, 2001). However, since we have collected infor- mation on customers’ adoption of other mobile services, we had data on their actual mobile ser- vice adoption. These data were used to explore . School of Economics and Business Administration, Finland Pia Polsa Swedish School of Economics and Business Administration, Finland Kim Forsberg Intrum Justitia Finland, Finland ABSTRACT Not until. customers and employ- ees. Journal of Marketing, 56(2), 57-71. Bloemer, J. M., & Kasper, H. (1993). Brand loyalty and brand satisfaction: The case of buying audio cassettes anew in the Netherlands Nordman & Liljander, 2004). Our study includes customer evaluations of mobile service content and usability; comfort and secu- rity; and mobile feedback services. Service content and usability