The adoption of information technology in customer service

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of Marketing

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The adoption of information

technology in customer

service

Christine T. Domegan

University College, Galway, Ireland

Introduction

Within the conceptual and methodological domain of marketing, the issue of attracting and retaining customers is of concern to managers. The related question of how to improve customer service, its scope, measurement and management, has received attention in recent years. In practice, “customer service has moved from a descriptive and reactive activity of the 1970s to a proactive management task of the 1990s” (Lalonde et al., 1988, p. 5). Recent evidence shows that improving the quality of customer service is a key to achieving a competitive advantage; a good “product” is necessary, but not sufficient to compete in today’s marketplace (Barnes, 1993; Coyne, 1989). As a direct result, organizations are actively cultivating customer service as a valuable asset in strategically differentiating their products and services (Christopher, 1992; Humble, 1991).

Concurrently with this, dramatic worldwide developments have been occurring in the field of information technology. The strategic use of information technology, as part of a firm’s corporate strategy, can result in significant competitive advantages, e.g. added value-based customer supplier relationships, innovative distribution channels, new products and markets (Earl, 1989; Scott-Morton, 1988; Wierenga et al, 1991).

Information technology (IT) is a strategic resource that facilitates major changes in competitive behaviour, marketing and customer service. In essence, IT enables a firm to achieve competitive advantages. Information technology is a resource that links the “marketing orientation” and “technology exploitation” of an organization, which clearly has to be harnessed and managed correctly (Barnes, 1993; Clear and Votel, 1990; Oasis, 1989). According to Martell (1989, p. 16):

at its simplest, the advent of information technology encourages improved dissemination of marketing expertise, through improving marketing analysis, enquiry handling, product planning and so on.

One of the key contributors to future marketing success, for large and small firms alike, will be the exploitation of IT, which will facilitate the use and management of information. Through the use of IT, firms are presently re-engineering the way in which they conduct their business and market their products and services. Marketing functions (for example, stock handling, sales

European Journal of Marketing, Vol. 30 No. 6, 1996, pp. 52-69. © MCB University Press, 0309-0566

Received June 1995 Revised January 1996

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ordering and logistics, market research and product planning) lend themselves easily to automation and information technology (Martell, 1989). Many marketing functions require an organization to constantly monitor information from the business and the environments in which it participates. Such information allows the company to adjust its offering to match the customer needs, at a profit. Since IT is also about information, information technology can and should facilitate marketing management and customer service. In essence, information technology can act as a powerful catalyst for improving and advancing customer service (Earl, 1989; Humble, 1991; Lalonde et al., 1988; Oasis, 1989; O’Leary, 1990). As articulated by Barnes (1993, p. 45):

successful marketing practice must tackle the dual challenges of marketing information and customer service. Marketers will have to place their emphasis on obtaining accurate and timely information about customers and markets and on providing precisely the type and level of service that customers want.

This argument is highlighted by one of the most extensive senior management surveys ever undertaken in Europe, the USA and Japan (Humble, 1991), where three interacting trends are found to characterize business in the 1990s:

• customer expectations are rising

• complex modern businesses are increasingly relying on the skills and knowledge of their people; and

• the power of information technology lies at the heart of most businesses. Firms must recognize the need to build long-term relationships with their customers if they are to survive. Managing technology in marketing and customer service is both necessary and crucial to companies, just as loyal customers, critical to long-term profitability are as important, if not more so, as attracting new customers (Reichheld and Sasser, 1990).

However, a discrepancy between theory and practice is evident, epitomised by the approach taken to customer service and the associated utilization of information technology, especially among smaller firms. Information about changing consumer needs and changing competitive responses

generally exists in pockets throughout most firms. However, in the main, such information is neither effectively or efficiently utilised by organisations, thereby decreasing its strategic potential (Oasis, 1989, p. 2).

Moreover, despite the fact that technology is transforming the marketing environment, and thus emphasizing the critical need for good and effective customer service, many organizations remain ignorant of the tactical and strategic benefits of information technology in both marketing and customer service (Fletcher, 1990; Martell, 1989; Oasis 1989). Such firms, should they and their managers remain static in a changing and challenging marketing world, face serious competitive disadvantages and losses (Earl, 1989).

Information technology and customer service are relatively new strategic weapons for firms. Both are concerned with the deployment of information. The

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two concepts relate to the building and maintenance of long-term profitable relationships between the buyer and the seller. It is this adoption process of information technology in customer service that provides the theme and scope of this paper.

The two worlds of customer service and IT Overview

As far back as 1976, in the renowned Lalonde and Zinszer customer service study (p. 14) it was stated that the sophistication of customer service depends on the communications systems and the related information orientation within a firm:

without good control of information flow within the firm and between the firm and customers, the customer service function is usually relegated to reporting performance level statistics and reacting to special problems.

Lambert and Lewis (1981) further substantiate this result in their research findings, as does the Oasis report (1989) and Glazer (1991). However, the idea of connecting information technology and customer service remained largely dormant until the 1990s when Peter Keen (1991, p. 23) suggested that, in the business environment of the 1990s:

customer service, operations, products, marketing strategies and distribution are heavily, or sometimes even entirely dependent on information technology.

At its simplest, customer service is being influenced and revitalized by information technology. Regardless of how one visualizes customer service, either from a logistics or marketing perspective, information technology now assumes an important role in customer service. Information technology is a powerful tool or enabler in the arena of customer service. Information technology is essentially in the process of migration, from the support function to the front-line functions where the customer is served, as indeed is customer service itself.

In advancing the capabilities that IT offers the customer service function, Quinn et al. (1990) argue that, with new technologies, executives can manage the strategic elements to achieve competitive advantage with minimum transaction costs. Other authors concur:

information technology promises to help companies provide more consistent levels of service and cement relationships with customers (O’Leary, 1990, p. 44).

Improvements in customer service are being made possible by an underlying network of information technology (Austin, 1992, p. 26).

Smart companies will gain a competitive advantage by improving the delivery of customer service through information technology (Burgetz, 1992, p. 10).

The basic message is clear. Information technology can and is being used to improve customer service, though the use of IT is dependent on the understanding of customer service, marketing and the information orientation

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processing activities. Once this is achieved, IT can generate distribution information to assist in operational decision making.

Information technology can then be applied to CtS, again to automate routine activities, such as sales, and inform the four Ps, e.g. promotions and product turnover.

At this point, qualitative data can be generated about customers and markets, allowing the company to pursue relationship marketing strategies. This can result in competitive advantages for the organization, giving rise to the strategic deployment of information technology in customer service, i.e. CsS.

The progress from one level to another (e.g. from CdS to CtS), and the deployment of information technology, is dependent on the following factors:

• The degree of information orientation – a company must place a high value on information as a management resource and asset. Given this, suitable investment should be made in procedures to acquire, generate, access and analyse such information.

• The use of internal and external information – to progress to the CtS and CrS level, an organization must utilize internal information, pertaining to customers, as a necessary but not sufficient condition. The internal information has to be augmented with external market information, thus enabling the manager to develop marketing strategies based on quantitative and qualitative information.

• The use and extent of databases – to integrate the numerous sources of customer and market information, organizations have to develop and use databases, to move from the CtS to the CrS stage.

• The level and extent of computer packages – accessing information is important to the evolution of information technology in customer service. Equally critical is the ability to analyse information. To this end, computer packages, such as decision support software, have to be incorporated into the marketing function.

• The connectivity and flexibility of IT applications, i.e. the degree of integration of different IT systems in different functions of an organization, which facilitates access and analysis by the marketing manager.

Future research directions

In examining the question of customer service and associated use of information, this study and the findings have raised several more issues. Thus, many areas for additional study and empirical research are evident, given the limitations of this project.

In particular, the degree of marketing orientation and its relationship to both customer service and information technology requires further quantitative measurement. A greater understanding would facilitate marketing managers in identifying other areas in which information technology may be of use.

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The next research stage is to investigate the cross-fertilization of information technology and customer service and marketing, along with the positive and negative factors. In such a study, a longitudinal versus cross-sectional research approach could be adopted. This would generate the much needed data and information about how companies go from one stage of information technology use in customer service or marketing to another. Furthermore, the role of information technology in customer service and marketing, from different industry perspectives, needs to be clarified (e.g. from the industrial or services marketing perspective).

The political dimension, or effect of information technology on the marketing department structure and marketing organization, also needs to be understood. To this end, a joint study by marketing and organization behaviour people should be considered.

On a geographical dimension, this study was primarily limited to Irish companies. Other studies, of a similar nature, in Europe, would provide valuable comparison data for managers and academics, about the cross-fertilization of IT with both marketing and customer service.

Finally, and in broad terms, the evolution and revolution of customer service will continue and therefore deserves further investigation. Specifically, empirical research should aim to crystallize the transitional process and variables necessary for an organization to broaden its definition and understanding of customer transaction service to customer relationship service. This should assist marketing academics and managers face the competitive challenges of a new century.

References and further reading

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Barnes, J.G. (1993), “New technologies, new markets, and changing marketing practice”, Irish

Marketing Review, Vol. 6, pp. 45-52.

Burgetz, B. (1992), “Satisfied customers: the business challenge”, CMA Magazine, Vol. 66 No. 1, February, p. 10.

Christopher, M. (1992), The Customer Service Planner, Butterworth Heinemann, London. Clear, S.E. and Votel, M.F. (1989), “Technology as an enabler”, Finanical Managers Statement,

Vol. 12 No. 1, January/February, pp. 52-6.

Cox, B. (1984), Information Technology: Its Impact on Marketing and Selling, Special Report Series, Butler Cox & Partners, London, December.

Cox, B. (1987), Information Technology and the Customer, Special Report Series, Butler Cox & Partners, London.

Coyne, K. (1989), “Beyond service fads – meaningful strategies for the real world”, Sloan

Management Review, Vol. 30 No. 4, Summer, pp. 69-76.

Donaldson, W. (1986), “Customer service – the missing dimension in marketing”, Journal of

Marketing, Vol. 2, pp. 133-44.

Earl, M.J. (1989), Management Strategies for Information Technology, Business Information Technology Series, Prentice Hall International (UK) Ltd.

Fletcher, K. (1990), Marketing Management and Information Technology, Prentice Hall International (UK) Ltd.

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Materials Management, Vol. 18 Nos. 2/3, pp. 15-18.

Glazer, R. (1991), “Marketing in an information intensive environment: strategic implications of knowledge as an asset”, Journal of Marketing, Vol. 55 No. 4, October, pp. 1-19.

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Keen, P.G.W. (1991), Shaping The Future Business Design through Information Technology, Harvard Business School Press.

Lalonde, B.J. and Zinszer, P.H. (1976), Customer Service: Meaning and Measurement, The National Council of Physical Distribution Management, Chicago, IL.

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Quinn, J.B., Doorley, T.L. and Paquette, P. (1990), “Beyond products: services-based strategy”,

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Scott-Morton, M. (1991), The Corporation of the 1990’s: IT and Organisational Transformation, Oxford University Press, pp. 3-23.

Wierenga, B., Van Campen, P., Huizingh, E. and Oude Ophuis, P., (1991), “Hierarchical scaling of marketing decision support systems”, EMAC Annual Conference, Michael Smurfit School of Business, University College, Dublin, Vol. 1, pp. 89-107.