a study on customer contact management determinants and their
influence on business performance
CUSTOMER CONTACT MANAGEMENT
and how to use it to elevate business performance
NAME: R.D. Wijmenga
STUDENT NUMBER: S1657690
SUBJECT: Customer Contact Management COMPANY: Crossover Consultancy B.V.
COMPANY COACH: P. Boekhorst SUPERVISOR RUG: R.A. van der Eijk
DATE: 09-2011
PREFACE
My study started in February 2011, trying to find a subject of my interest and combine it with an internship. I have always had a positive feeling with doing an internship, since I feel that the practical components of business studies are likely to be underrepresented but no less important. I came into contact with Crossover Consultancy, who proposed an interesting offer on customer contact management.
The whole process was not as straightforward as I planned, and took much more time than I expected. Despite the fact my subject was clear, producing a well defined research question proved to be a hard task. Although I received a quick approval of my research proposal, it took me however, another few weeks to give direction to my research. In April 2011, my research was well under way. Doing the interviews and collecting the data was exiting, and working at Crossover Consultancy has been a pleasant experience. Writing a master thesis has been a healthy alternation for me between overcoming difficult obstacles and enjoying working inbound a company.
Helping to find the right direction, I received useful help of the company coach, Pelle Boekhorst and his colleagues. Also the exchange of thesis experiences with my friends motivated me to keep the process rolling. Furthermore, I would like to thank my dad for his accurate feedback and helping me to generate new ideas. With regard to the more academic aspects of my research, helpful feedback was received from Rene van der Eijk. Many thanks to you all.
Rutmer Wijmenga, 16 September 2011
ABSTRACT
Despite its strategic importance, customer contact management appears to be a dynamic process and difficult to organize for many companies. Little research has been conducted on customer contact management. This study provides definitions, and for the first time determinants for this concept are proposed: (1) customer contact related processes, technology and procedures, (2) employees, their knowledge and education, (3) the presence of customer knowledge, and (4) customer contact strategy. Using qualitative data of case research, improvement of customer contact management (variables) has been examined, as well as the relationship with business performance.
Key words: customer contact management, business performance, customer
satisfaction, CRM, case study research.
EXECUTIVE SUMMARY
The management of customer contacts has become a top priority for many large companies today. In practice, customer contact management appears to be a dynamic and difficult process to organize. Simply investing in ICT facilities and CRM products seems a logical solution, while the implementation in the organization received insufficient attention. Too often customer contact management is seen as part of the front office, instead of something that runs through the entire organization. The strategic importance of customer contact management, however, is widely recognized.
Particularly, because successful customer contact management may help organizations to elevate their business performance. The problem is that organization often do not know how to improve the customer contact management and capitalize its opportunities.
Getting a more in-depth insight how an organization can improve customer contact management and thereby increasing business performance, therefore, is the goal of this study. To achieve this goal, assistance was received from a specialist in the field, Crossover Consultancy. They have expert knowledge on customer contact management and help organizations to setup customer contact in an innovative way.
In the process of defining customer contact management, it is discovered that literature is scarce, and little research has been conducted on customer contact management being a standalone topic. However, overlap with other concepts like customer relationship management, customer management and database marketing does exist.
Here, customer contact management is defined as a management process that focuses on managing the customer interaction that occurs between an organization and its customers, including all communication direct to customers and how to organize these contacts. Moreover, it is the integration between people, processes and technology.
Using relevant articles and past research, determinants (or variables) for customer contact management are proposed: (1) customer contact related processes, technology and procedures, (2) employees, their knowledge and education, (3) the presence of customer knowledge, and (4) customer contact strategy. The relationship between customer contact management and business performance is central in this study.
Business performance can be interpreted in many ways. In this study it is used as a
denominator for organizational outcomes: customer satisfaction, efficiency and sales
opportunities. Using qualitative methodology of case research, three customer contact intensive organizations have been analyzed: Proteq (insurances), Route Mobiel (roadside assistance) and ING Rentepuntenshop (online shop for bank). The case organizations differ in terms of orientation (service versus commercial) and inbound versus outbound activities. Data collection happened through face-to-face interviews, observation and gathering company information.
In all three case organizations customer contact-related changes have occurred which led to better business performance. When focusing on the cause of these organizational developments, it can be inferred that the service-oriented organizations (especially ING Rentepuntenwinkel and Route Mobiel) paid most attention to its employees (determinant 2) and supporting processes and technology (determinant 1) to elevate business performance. Work should be designed in such a way it provides opportunities to collaborate with other employees to achieve knowledge sharing and ongoing learning.
Expanding the empowerment of customer contact employees and increasing
communication skills also contribute to better organizational performance. An
employees‟ expertise and communication to customers are seen as important and
effective relationship building strategies. Furthermore, two case organizations appointed
transparency (in contact processes) towards customers as one of the key success
factors to boost customer satisfaction. More commercial-oriented organizations (Proteq)
are likely to relatively emphasize the utilization of customer knowledge (determinant 3),
and customer profiles in particular, to elevate business performance. In general, many
organizations do not have an integrated customer information facility, and monitoring on
customer performance (and their costs) is not part of their customer contact
management. Optimal service provision, personalization and efficient usage of customer
communication to boost sales are some of the advantages an organization can acquire
when working with customer profiles, and therefore highly recommended. Finally, for an
organization to have a customer contact strategy (determinant 4) can be useful in terms
of uniform vision, targeted campaigns and cost reduction. Despite its importance, the
presence of customer contact strategy seems to be unnecessary for all case
organizations in practice. In that sense, it does not contribute to a boost in business
performance for these organizations. Also, social media as a component of the customer
contact strategy is not viewed as a serious point of attention. Only when reputation
damage is lurking.
TABLE OF CONTENTS
PREFACE 3
ABSTRACT 4
EXECUTIVE SUMMARY 5
1. INTRODUCTION 9
1.1 Background 9
1.2 Problem statement 9
1.3 Research objective 11
1.4 Research questions 11
1.5 Academic and business relevancy 12
1.6 Structure of the paper 12
2. COMPANY PROFILE AND THE MARKET 13
2.1 Crossover Consultancy 13
2.2 Importance of Customer (Contact) Management 14
2.3 Developments in the field 15
2.4 Summary 16
3. THEORETICAL FRAMEWORK 17
3.1 Introduction 17
3.2 The concept of Customer Contact Management 18
3.3 Variables of Customer Contact Management 21
3.4 Business Performance 26
3.5 Conceptual model 28
3.6 Summary 30
4. METHODOLOGY 31
4.1 Introduction 31
4.2 Research design and data collection method 31
4.3 Sample selection 33
4.4 Analyzing data 34
4.5 Description of the cases 35
4.6 Summary 36
5. RESULTS 37
5.1 General notes 37
5.2 Route Mobiel 37
5.3 ING Rentepuntenwinkel 45
5.4 Proteq 47
5.5 Summary 50
6. DISCUSSION 51
6.1 Supporting technology and procedures 51
6.2 Putting the right people on the right place 52
6.3 Customer knowledge and customer profiles 53
6.4 Need for customer contact strategy and social media 55
6.5 Summary 56
7. CONCLUSION 57
7.1 General Conclusions 57
7.2 Implications for theory and practice 58
7.3 Limitations and further research 58
REFERENCES 60
APPENDIX 66
1. Questionnaire (in Dutch) 66
2. CS - Route Mobiel 68
3. CS - Proteq 69
4. CS - ING Rentepuntenwinkel 70
1. INTRODUCTION
1.1 Background
In today‟s complex and dynamic business world, a company must ensure it has the right systems in place for managing customers (Customer Service Manager, 2010). For many companies, it became increasingly important recently to have a customer focus. Many people believe that a clearly defined customer approach also accounts for the success of an organization. Therefore, the management of customer relationships has become a top priority for many companies. Customer management covers all the systems, processes and applications needed to manage the customer relationship. Within the field of customer management, proper integration of all customer processes into other business processes is an important issue. In many competitive markets, companies invest heavily in customer management implementation (Bohling et al, 2006).
Customer management aimed at managing contacts with customers is also known as customer contact management. Customer contact management involves a wide variety of processes: from customer acquisition to relationship management, (after)sales, loyalty programs and customer satisfaction. Adequate customer contact management should be supported by a solid strategy. Furthermore, customer contact management entails a broad field in which knowledge of online marketing, complaint management, social media and drivers of customer satisfaction and loyalty is of vital importance. In the past few years, the scope of customer contact management has broadened from contact centers to basically every layer of the organization. Effective customer (contact) management enables companies to ensure the services they provide are in line with the customer‟s demands. In addition, it can also identify opportunities for growth and, more importantly, it can improve business performance of an organization.
1.2 Problem statement
Understanding of how to manage customer relationships effectively has become an
important topic for both academics and practitioners in recent years (Reinartz et al,
2004). For many large organizations, the management of customer contacts is a process
that belongs to the company‟s core activities. In practice, in appears to be difficult to organize this process. Investments in ICT facilities and CRM software may seem a logical solution, while the implementation in the organization has received insufficient attention. A study of Kerimati et al (2010) shows that CRM processes are more affected by infrastructural CRM resources rather than technological CRM resources. This suggests that customer contact management is largely a problem of process management and organizational culture. Too often it is seen as part of the front office, instead of something that runs through the entire organization. Managers responsible for customer contact, often question themselves how customer contacts can be managed more efficiently, but also how to better meet requirements of their customers and if there are more opportunities to utilize these contacts.
Some companies view CRM primarily as investment in technology and software, whereas others treat CRM more expansively and are aggressive in developing sound and productive relationships with customers (Reinartz et al, 2004). Sometimes, it only takes a few bad, or even slightly negative experiences to cause massive customer defections. Without the proper customer management strategy things can quickly go from bad to worse. Software alone cannot solve these problems. It takes strategy, processes, infrastructure and people - with knowledge, empathy, and proper training - to avert a customer base disaster (CMOI, 2007). Later on in this thesis, the importance of these elements will be made clear.
In sum, customer contact management appears to be a dynamic and hard to organize
process. However, when successfully managed, organizations can expect significant
returns. Increased efficiency, increased customer satisfaction and boosting sales are not
unusual results. The problem is that organizations often do not know how to capitalize
these opportunities and how to improve customer contact management. Numerous
specialists (i.e. consultancy companies) in the field claim that they know how to improve
these customer contact processes. The question remains however, how an organization
can improve the management of customer contacts in such a way it results in increased
business performance. This issue is the central problem dealt with in this study.
1.3 Research objective
This research aims to better understand the concept of customer contact management and how organizations can improve it in such a way that it contributes to their business performance. As mentioned before, organizations that improve their customer contact management can expect significant returns (Spencer-Matthews & Lawley, 2005; Innis &
La Londe, 1994). The goal of this thesis is: “getting a more in-depth insight how an organization can improve its customer contact management, simultaneously increasing business performance.”
1.4 Research questions
The aim of this thesis focuses on the central question: what customer contact measures should an organization take to improve business performance? In other words: how can an organization improve customer contact management, simultaneously elevate its business performance?
To address the main question of this research, several sub questions should be dealt with. Since customer contact management is strongly related to similar looking concepts (i.e. customer relationship marketing and customer management), distinctions and clear definitions are needed. The first three question concerns: what is customer contact management, why is it important and what are the benefits of managing it effectively?
Next to defining the central concepts, the relevant variables of customer contact management should be examined and how they potentially impact business performance. These questions are: what are the most important factors (or variables) that determine customer contact management? and what is the impact of changes in customer contact management on business performance?
Finally, there are some recent developments in the field of customer contact
management. The last sub question involves: what are important developments in this
field and how do they affect customer contact management?
1.5 Academic and business relevancy
Since theory around the concept of customer contact management is poorly represented in current literature, value and originality is added to this research. For the first time, the concept is divided into variables as proposed in this study. From a business perspective, proper customer contact management is a tough challenge to achieve. In a lot of companies the management of customer contacts is still seen as cost instead of opportunity. This thesis studies when customer contact management, if treated correctly, leads to a better business performance and which factors contribute to that.
Furthermore, this research provides support for organizations to incorporate customer contact management.
1.6 Structure of the paper
The paper is organized as follows. First, a short introduction of the company that commissioned the study is provided (chapter 2). The importance of the topic will be made clear, together with an overview of the most important developments in the field of customer contact management.
Secondly, a discussion on what is exactly meant with the concept „customer contact‟ is presented, followed by a thorough review of the concept of „customer contact management‟ (chapter 3). Especially, how the terminology differs from similar looking concepts like customer relationship management. Next, drawing on these conceptualizations, a conceptual model is presented.
In a subsequent part, the research design is explained (chapter 4), followed by a
thorough presentation of the results (chapter 5). After discussing the results in more
detail, conclusions will be drawn (chapter 6 and 7). Finally, implications and limitations
are reported.
2. COMPANY PROFILE AND THE MARKET
2.1 Crossover Consultancy
Crossover Consultancy is an independent Dutch management consultancy company and specialist in the field of customer contact management. Their consultants help organizations to shape and arrange customer contact processes and focus on the optimization of customer relationships. The company develops campaigns that aim to improve sales (business acceleration), reduce costs, or both. Furthermore, their goal is to inspire and encourage other organizations to be and think innovative when setting up customer contacts. Clients are banks, insurance companies, publishers and other brands such as TomTom, WehKamp and RouteMobiel.
Crossover Consultancy is part of the Crossover Group (around 60 employees), which has been established in 1999. Other companies participating in the holding are Coolminds (internet strategy consultancy), Network Operations (webhosting), Redmarbles (lead generation) and Xooq (search engine optimalisation). All companies share much common ground (not only physically but also overlap in working areas) and knowledge can easily be shared. This construction results in the advantage that there exists the ability to offer customers total business solutions.
To improve an organizations‟ commercial and service-oriented customer contacts, Crossover Consultancy introduced the QuickScan. The QuickScan, based on McKinsey‟s 7S model, identifies the strengths and weaknesses within the customer contact process of an organization. Clients receive a pragmatic scan of the organization that provides them with improvements that fit within the established frameworks.
Moreover, Crossover Consultancy not only provides solutions, but also contributes to the
implementation of these solutions. Therefore, it has access to its own customer contact
center that can be deployed on dedicated projects. In this way Crossover Consultancy
can offer a total customer contact management solution.
2.2 Importance of Customer (Contact) Management
The strategic importance of customer contact management is widely recognized.
Optimal customer contact handling (customer services, contact centers and other customer departments) is of great importance to customer satisfaction, loyalty and efficiency (Interact Advies, 2011). Research shows that there is a strong correlation between customer management (CM) performance and business performance (Starkey and Woodcock, 2001). Also, findings of Keramati et al. (2010) indicate that firms with improved CRM process capabilities enjoy better organizational performance. Eventually, customer contact handling influences organizational success.
Retaining customers and attracting new ones can be a hard task. Managing customer contacts can help a company to avoid customers from moving to competitors. Therefore, companies should analyze the available data to recognize its profitable customers and their needs, but also to manage marketing campaigns and to expand effectiveness (Customer Service Manager, 2010). In order to serve these ends, most smart business leaders are using customer relationship management solutions. Customer relationship management is a process for businesses to approach customer relations in a systematic and effective way. The implementation of a robust IT system for collecting and collating customer data is necessary for most companies these days. Not surprisingly, overall CRM software business is expected to grow with more than 1,3 billion dollars this year (IDC, 2011). To illustrate, figure 1 shows CRM growth trends for most popular CRM solutions.
Figure 1. CRM Growth Trends of world’s most popular CRM software (Gartner.com, 2009)
Even the smallest organization will have a need for some kind of customer management system. In summary, organizations with a successful customer management system can expect to obtain higher profits, growth in revenue, lower costs and stronger customer loyalty.
2.3 Developments in the field
Years ago, several authors already indicated that there was a significant growth in customer contact services. That is personal communication channels such as face-to- face, email, phone and the internet that impact on the way a customer may interact with a business (Spencer-Matthews and Lawley, 2006). According to Klantinteractie Kenniscentrum (2010), there are some major developments in the field of customer contact management. First of all, organizations increasingly apply channel integration (all information has to be available on one spot) and they place more emphasis on providing added value to the customer. However, far more radically is the impact of the internet and all its functionalities (email, websites, social media). The internet increasingly replaces telephone contacts, and more specific, the rise of social media plays a very important but yet not defined role. One thing is already for sure, the relationship between the company and its customers clearly changed by social media (Molenaar, 2010). For example, managing a corporate brand is a task formerly handled by the organization itself. With the advent of social media, it seems that this more and more shifts to the customer. A consequence of social media is that information and discussions about organizations and their services become transparent, which means that customer frustrations as a result of poor customer experience cannot be ignored.
Therefore, social media provides both opportunities and danger. Twitter for instance,
makes it very easy to identify customer who may need service. It has the ability for
companies to monitor exactly what people are saying about their services and quickly
respond to customer issues. It also means that a customer gripe can become a public
relation disaster if it is not dealt with correctly. The power of Twitter is illustrated by a
recent happening where a famous comedian from the Netherlands (Youp van‟t Hek) was
able to cause significant reputational damage to a telecom provider (T-Mobile) due to its
poor customer contact management. He posted a single complaint on his experience
with poor customer service of this provider, which eventually resulted in coverage by the
different television channels and the national press. For business, it is important to know how to use social media platforms before including it in a customer service strategy (Call Centre Helper, 2011). Another development and implication of the internet is that customer contact employees are dealing with a more knowledgeable customer base.
Moreover, these customers expect employees to be knowledgeable, and able to resolve their issues easily and quickly.
A growing number of companies acknowledges that social media play an important role in customer contact (Bouwer, 2010). Social media cannot be ignored and provide organizations with a better insight of what is going on in the heads of their customers.
Furthermore, social media also help other departments within an organization to get involved with the customer and customers awareness will increase. As explained, there is also danger lurking in social media (customers have more power). Organizations should be aware of these developments and take them into account when developing (customer contact) strategy.
2.4 Summary
This chapter started with introducing the co-facilitator of this research. Crossover
Consultancy has expert knowledge in the field of customer contact management and
they help other organizations to setup customer contacts in a innovative way. With its
own in-house customer contact center the organization is able to offer total customer
contact management solutions to its customers. The existence of Crossover
Consultancy is related to the widely recognized strategic importance of customer contact
management. Particularly because organizations with a successful customer
management system may expect to obtain more sales, efficiency boosts and stronger
customer satisfaction. The chapter continuous by reflecting on some of the
developments in the field of customer contact: channel integration, providing added
value to the customer and the internet. According to a growing number of organizations,
special attention should be paid to social media when dealing with customer contact. In
terms of damage control, social media can be crucial in managing the corporate brand.
3. THEORETICAL FRAMEWORK
3.1 Introduction
Customer relationship management has become a topic of concern amongst both practitioners and academics with organizations experiencing major difficulties in implementing CRM programs. CRM is often perceived by managers to be purely about IT, thereby ignoring the more fundamental issues of how far it is possible to develop and manage meaningful relationships with customers and not recognizing the strategic nature of customer management (Hughes, 2005). In a study of Kerami et al. (2010) it is stated that customers are considered to be the central element of all marketing actions, and CRM has become a priority for companies. Moreover, this is highlighted by the claim of academics and practitioners that a customer orientation strategy is necessary for companies to survive and be successful in saturated markets (Heinrich, 2005).
Furthermore, the customer database has been seen as a requirement for the future of a successful organization (Colgate & Danaher, 2000). Database marketing has grown from an instrument for direct mail and marketing campaigns to a widely used tool that has wide implications for managing relationships with customers.
Strongly related to CRM, customer management and database marketing is the concept
customer contact management. While research has been conducted on areas such as
customer relationship management, customer needs and service, there has been little
research on customer contact management being a standalone and comprehensive
area of knowledge (Spencer-Matthews & Lawley, 2005). Customer contact management
can be seen as a part of CRM, but differs by focusing on communication. In this
research the management of customer contacts and the effect of it on business
performance will be central. First (section 3.2), the definition of customer contact will be
discussed together with theories on how to measure customer contact. Second (section
3.3), a broader view will be taken by defining the management of customer contact and
the variables involved. Then, the relationship with business performance is explained
followed by a summary of all relevant theory in the form of a conceptual model.
3.2 The concept of Customer Contact Management
Several authors conclude that literature on customer contact management is sparse and contains a number of differing interpretations and applications (Jones & Farquhar, 2003;
Spencer-Matthews & Lawley, 2005). The concept of customer contact management remains largely overlooked in the academic literature and its role in improving business performance is, as yet, underappreciated.
3.2.1 Defining and measuring customer contact
Before exploring customer contact management, it is useful to focus on the development
of the concept customer contact. Most services are provided in the physical presence of
the customer. Customer involvement in the service production process has important
implications for the efficiency and effectiveness of the service (Mersha, 1990). It may
enhance sales opportunities and customer satisfaction by more easily identifying
customer needs. This infers that the nature and extent of contact between the customer
and the organization (service system) should be carefully evaluated. One approach that
has been considered as a useful conceptual tool for aiding managers in their service
design decisions is the customer contact model. In 1983, Chase & Tansik introduced the
model, which is based on the customer contact approach (Chase, 1981). The customer
contact model sees the extent of customer contact with a service organization as a
major variable affecting system performance. Furthermore, Chase & Tansik (1983) state
that control is more difficult to effectuate in high-contact systems because of the
customer being an uncertain input to the process being controlled. Despite some
interesting contributions, Chase and Tansik wield a too restrictive definition of customer
contact (Chase, 1978). It suggests that a customer has to be physically present to make
a direct contact with a service facility (Mersha, 1990). Insurance companies, travelling
services and telebanking, which perform most of their activities by phone and other
telecommunications systems, are contemporary examples where contact with customers
is possible without their physical presence. Recently, social media proof that intensive
customer contact is possible without physical encounters. According to Mersha, the
major shortcomings of the customer contact model originate from this narrow definition
of customer contact. This author refers to customer contact as a direct encounter
between customer and the organization. This encounter may be face-to face, either by
the customer‟s presence in the service system or the presence of the service system‟s
representative in the customer‟s facilities, or it may be mediated through the use of communication technologies such as the telephone, email or social media.
The question how to measure customer contact is the central issue addressed by Kellogg and Chase (1995). It makes sense to know how to measure the level of customer contact, since a quantification makes it possible to empirically validate existing theory. For example, theories that relate to increased sales opportunities with increased levels of customer contact (Chase & Tansik, 1983) or the linkage between customer contact and service quality (Soteriou & Chase, 1998). Research of Kellogg & Chase provides an empirically derived measurement model for customer contact. According to their study, the weakness in most current work on customer contact has been the inability to define and operationalize the concept. Based on a literature review and their past work, the authors propose some essential variables and dimensions to be considered when defining customer contact, grouped under three theories: coupling (Weick, 1976), interdependence (Victor & Blackburn, 1987) and information richness (Draft & Lengel, 1984). These theories taken into account, the central finding of their research is that the degree or level of customer contact can be measured by averaging the values of: communication time (in seconds), the information richness, and the level of intimacy (both measured by a Likert-type scale).
3.2.2 Defining and implementing customer contact management
Now it is more clear what customer contact is about, a broader view is taken: the management of customer contacts. An integral definition of customer contact management can be formulated as a (management) process that focuses on managing the customer interaction that occurs between an organization and its customers. It entails not only all communication (telephone, e-mail, websites, letters and representatives) directed to customers, but also how to organize these contacts and how each individual channel within the organization‟s disposal will be put to use. This definition is based on gathered literature and will be used throughout this research.
As mentioned, literature on customer contact management is limited. However, some
authors have been able to define the concept. Spencer-Matthews & Lawley (2005) state
that customer contact management is about managing interactions that occur at the
various contact points customers use when doing business with an organization.
Moreover, the management of contact points aims to prevent customers from having to reinvent their story every time they make contact, or as Spencer-Matthews & Lawley describe it, to provide customized customer contact service where possible. Because customer contact management collects, records and accesses relevant information about a customer in real time, an organization can keep building the relationship and adding value to service encounters without customers needing to invest as much time and energy (Palmer, 1997).
Jones & Farquhar (2003) define contact management as the way in which the interface between provider and consumer is managed. Their research explores how contact management influences customer loyalty (in the retail banking industry). The authors conclude that if contact management issues are unaddressed or fail to create sufficiently high levels of customer satisfaction, it is likely that customers will shift to other organizations and recommendations (of that organization) to other consumers will be threatened. A third perspective is offered by Foss & Stone (2001), in which customer contact management is seen as an element of customer relationship marketing. In this instance, customer information is used at the point of contact to improve the management of individual customers. Foss & Stone explain that during a one-to-one encounter between an organization and the customer, the company has the opportunity to boost perceptions of service quality to increase customer satisfaction.
Returning to Spencer-Matthews & Lawley (2005), who claim to build theory about
customer contact management for the first time, two other important issues were
addressed. First, the forces driving organizations to implement customer contact
management (the why question) and second the issues involved in implementing
customer contact management (the how question). Results of their study show that the
imperative for the adoption of customer contact management (why) is driven by two
broad categories of market factors: service requirements and organizational
requirements. The first category includes competitor activity, need for non-price
competition and consumer demands for better service. According to the authors,
competitor activity was recognized as a driving force for customer contact management
implementation because competitors were, or will be, embracing it (the new standard for
customer service practice). Another factor driving customer contact management was
non-price competition because it was seen as a platform to differentiate the company
from their competitors (non-price competition is hard to copy). The second category driving customer contact management (organizational requirements) identified by Spencer-Matthews & Lawley was divided into the need for efficiency (in terms of new ways to deliver the service, less duplication through task automation), the desire for knowledge (customer contact management enables them to better predict customer needs and service delivery) and a duty of care (customer contact management was seen as a vehicle to improve communication with customers through increased accuracy).
Spencer-Matthews & Lawley also explore issues behind successful customer contact management implementation (how). To assist smooth implementation of customer contact management, special attention should be paid to: education of employees and customers, development of procedures, and the deployment of resources. The case studies in their research show that recruiting, motivating, training and retaining the right personnel were seen as mandatory investments since employees were considered as crucial components of the „customer contact management mix‟. Furthermore, resource investment into systems turned out to be a key factor because systems and technology provide a basic platform for customer contact management.
Comparing the articles above, it can be inferred that all definitions have a fairly comprehensive approach towards customer contact management. An important conclusion, is that the scope of the concept customer contact management is broad. It does not involve contact centers only. Instead, customer contact management can affect every layer in an organization and forms the integration between people, processes and technology.
3.3 Variables of Customer Contact Management
Since this study is aimed to discover how to improve customer contact management and
its relation with business performance, a closer look at the variables of customer contact
management is needed. This section discusses the various components that drive and
influence customer contact management. Derived from the earlier introduced definitions,
past research, and obtained company knowledge, the following variables (or
determinants) for customer contact management are proposed: (1) processes,
technology and procedures, (2) employees, their knowledge and education, (3) presence of customer knowledge, and (4) strategy. Each component will now be discussed in more detail and supported with relevant literature.
Managing customer contact related processes, technology and procedures. The handling of customer contacts is a game of measurement and management. Customer contact processes are dynamic, primarily because of the nature of the concept (people are involved). Questions of customers reach an organization through multiple channels (phone, email, fax or helpdesk). Since questions often designate an ambiguity or a problem, organizations often seek to minimize the number of customer questions. In this customer contact process it is important to be efficient in serving customer needs, that is a satisfied customer at the lowest possible cost. This can be achieved by, for example first time fix (ability to provide solutions to a problem the first time a customer makes contact), lower average handling times or customer property (the customer contacts the same person within this organization and does not have to re-tell the story). Sometimes organizations have too many systems in place to manage customer contacts and integration is needed. Channel integration involves streamlining different channel activities and information flows in a manner that leads to benefits (cost reduction) for the partners concerned. In research of Beuren et al. (2005), that aimed to improve performance of customer processes, the authors describe interaction management. This concept basically involves designing and selecting communication channels to achieve an optimal channel mix. The objective of interaction management is to increase the quality and value of interactions (i.e. contact) while at the same time decreasing the cost of interactions by shifting customers to less costly channels (for example web-self- service). Sergeant and Frenkel (2000) explored variables that relate to employees‟
capacity to satisfy customers. The authors found out that the quality of interaction with customers is to a large extent dependent on the effectiveness of the technology (e.g.
systems) in supporting the interaction between contact employee and the customer.
Research of Frenkel (1999) indicated that technology will enhance employees‟ capacity to satisfy customers when it is “simple, reliable, fast and embodies the functionality required to deal with all reasonable customer queries”. Another variable indicated by Sergeant and Fenkel is the support of other departments in that organization (e.g.
integration). Customer contact centers have emerged as discrete entities not particularly
well integrated into the larger organizations of which they are part (Sergeant and Fenkel,
2000). Since other departments mostly determine what products and services contact employees provide, including the procedures they should follow, customer contact employees should be fully informed by other departments of that organization when action are taken. Therefore, quality of the service offered by contact employees will be affected by the information provided to them and cooperation across departments is needed. This concludes that the variable management of customer contact processes, systems and procedures largely involves technology (hardware, software, channel integration) but also less technological issues such as contact with other departments and interaction management.
Managing customer contact employees, their knowledge and education. The quality of
contact between an organization and its customer is very depended on the employee
that facilitates the contact. The more knowledge the employee possesses (of the service
provided by the company, the customer‟s problem and work processes), the greater the
change that the customer can be served in its needs resulting in increasing customer
satisfaction. Furthermore, an employees‟ customer contact skills and techniques can be
crucial in boosting sales (cross-selling for example) or decreasing costs (more efficient
and faster problem solving). Batt (2002) states that customer contact employees with
high individual discretion are able to respond immediately to customer demands and
take advantage of sales opportunities when interacting with customers. To improve
employee knowledge in an organization it can be necessary to educate employees or to
share knowledge with other customer contact employees in that organization. Education
of contact employees is important because it helps them to develop the kind of firm-
specific human capital (e.g. knowledge) that enables them to interact effectively with
customers (Batt, 2002). Firm-specific human capital is important because the behavior of
these employees shape customers‟ buying behavior. Furthermore, Batt points out that
work should be designed in such a way that it provides opportunities to collaborate with
other employees to achieve ongoing learning. According to Hartline and Ferrell (1990)
the management of customer contact employees has been extensively discussed in the
services marketing literature. Findings of their study show that responses of customer
contact employees heavily influence customers‟ perceptions of service quality and the
service encounter. Furthermore, results show that managers who are responsible for
managing customer contact employees and committed to service quality, are more likely
to empower their employees. To increase customers‟ perceptions of service quality,
managers must increase employees‟ job satisfaction and self-efficacy. In the article
„when do customer contact employees satisfy customers?‟ of Sergeant and Frenkel (2000) the authors state that customer satisfaction is a result of an environment in which employees are satisfied and committed. According to their study, job satisfaction had no direct effect on employees‟ capacity to satisfy customers. However, it did have an impact on organizational commitment, which in turn affects employees‟ capacity to satisfy customers. An important conclusion of Palmatier et al. (2006) says that employees dealing with customer contact should be carefully selected and well trained. Moreover, an employees‟ expertise and communication to customers are some of the most effective relationship-building strategies. According to this research, it will not only lead to commitment and trust but also to customer satisfaction and relationship quality.
Spencer-Matthews and Lawley (2005) also pointed out that organizations should pay special attention to the selection and education of (the right) personnel for customer contact. The authors considered employees as crucial components of customer contact management. Results of Beuren et al. (2005) again show that employee expertise, results in better and faster service to customers. With regard to measuring performance of contact employees, research (Carayon, 1993) pointed out that electronic monitoring creates employee disaffection and stress, which can have negative spillover effects on interactions with customers. From the previously discussed articles, it can be inferred that customer contact employees are likely to play a key role in the quality of the customer interaction. Managing them, their skills and performance, therefore seems to be a crucial component of customer contact management.
Managing customer knowledge. To retain and attract customers, insight in customer
needs is critical. According to Gates (1999), information accessibility is a key to business
success. Indeed, the more an organization knows about its customer, the better the
organization is able to meet their needs. Especially in organizations that offer
customized services, employees need customer-specific knowledge. Moreover,
Parasuraman et al. (1991) argues that the key to providing superior service is
understanding and responding to customer expectations. In the already heavily
discussed article of Spencer-Matthews and Lawley it is stated that information
availability and potential for responsiveness to customer needs can lead to greater levels
of customer satisfaction. However, delivering value to customer requires both internal
coordination of information within a company and rapid real time dissemination of such
information (Peters, 1997). Koenig and Srikantajah (2000) examined customer knowledge more closely and state that having good processes and systems to manage customer knowledge is important for customer commitment, loyalty and the synergy of collaboration (which results in customer satisfaction). Garcia-Murillo and Annabi (2002) also researched customer knowledge and state that gathering, managing, and sharing customer knowledge can be a valuable competitive tool. In addition, they conclude that if an organization better understands customer‟s expectations and needs, the organization will be able to achieve customer satisfaction and retention. Better relationships with the customer lead to increased sales and the acquisition of new customers. All in all, the presence of customer knowledge in an organization can smoothen the interaction with customers, which in turn is likely to affect customer satisfaction.
Customer contact strategy and management objectives. Good customer contact management is supported by a solid customer contact strategy. This strategy determines the policy of how an organization deals with its customer contacts.
Developing a customer contact strategy is important, not only because the concept customer contact has become a strategic issue for a lot of organizations nowadays, but also because it monitors the objectives and budgets (how much money should be spend to a customer) involved. Reinartz et al. (2005) address the issue of balancing resources between customer acquisition efforts and customer retention efforts in the context of customer contact strategies. The authors state that the allocation of a budget to customers and across different contact channels (e.g. telephone, direct mail or personal selling) is a classic problem for organization that receives growing attention in today‟s multichannel environment. According to Reinartz et al, the optimal contact strategy should maximize the customer‟s profitability, the acquisition likelihood, and the relationship duration.
Customer contact strategy also includes decisions about what contact channels will be
used for different customer groups. Furthermore, there should be a link between an
organization‟s customer contact strategy and its customer value strategy. The strategy
describes the method of communication that an organization intends to use to achieve
its customer value strategy. With regard to recent developments in the field of customer
contact management discussed in the second chapter, provisions how the organization
and its employees deal with social media should also be included. Reinartz et al
confirms this issue in their study by stating that with the rise of Internet, the question of how firms should interact with their customers is gaining in importance. Organizations increasingly consider the cost differences between traditional communication media and e-mail for instance.
Literature dedicated to the concept of customer contact strategy is scarce. A plausible reason for this can be attributed to, again, the newness of the concept. As stated in the introduction of this research, without the proper customer management strategy things can quickly go from bad to worse, and therefore it cannot be ignored. This concludes that the last variable of customer contact management is an overarching component that also appears to play an important role in the success of managing customer contacts.
3.4 Business Performance
Previous chapters already hinted that there exists a relation between customer contact management and business performance. Since the study aims to improve customer contact management and thereby elevating business performance, it is useful to understand the concepts involved. Here, it is explained what is exactly meant with business performance for this study. Business performance is a broad term that can be defined and interpreted in various ways. This paragraph defines (and divides) business performance in terms that are relevant for this study, as well as it explains why the relationship is assumed.
As mentioned earlier, organizations that successfully and effectively manage their
customer contacts can expect significant returns. Improved customer satisfaction,
increased sales and decreasing costs are not unusual results. Despite the fact there is
no research at hand specifically aimed at this relationship, there are studies that strongly
assume this relation exists. For instance, research of Starkey and Woodcock (2001)
shows that there is a significant correlation between customer management
performance and business performance. In addition, findings of Keramati et al. (2010)
indicate that firms with improved CRM process capabilities enjoy better organizational
performance. Moreover, in this article the authors provide a list of (11) studies that
positively link customer relationship management to firm performance. Such research
makes it plausible that a similar relationship exists between customer contact
management and firm performance. Also Innis & La Londe (1994) show that customer service is the key to customer satisfaction, loyalty and market share (i.e. business performance). After all, customer relationship management, customer service and customer contact management have strong similarities. Furthermore, a conclusion of Spencer-Matthews and Lawley (2006) contains that companies should consider customer contact management as an avenue for differentiation and competitive advantage. To simplify business performance, it can be divided into several variables or indicators. In this research, business performance is used as a denominator for a number of organizational outcomes or outputs, which can be found below.
Customer satisfaction. Soteriou and Chase (1998) state that designing the service encounter in such way it delivers high levels of customer satisfaction and quality is one of the major issues facing service organizations. Jones and Farquhar (2003) state in their article that organizations need to manage customer contact to achieve high levels of customer satisfaction. Findings of their survey suggest that contact management plays a significant role in customers‟ stated intention. Service management literature argues that customer satisfaction is the result of a customer‟s perception of the value received, where value equals perceived service quality relative to price (Cronin, 2002).
Efficiency (decreasing costs). Improvements in efficiency are not always easy to obtain.
Integrating customer contact systems can reduce costs, but quality must be monitored.
Furthermore, efficiency is significantly affected by employees. Increasing the speed of production (e.g. decreasing contact time per customer) can result in a fall in quality.
Sales opportunities (increased revenues). In 1983, Chase and Tansik already concluded that increased levels of customer contact relate to increased sales opportunities. Also skilled customer contact employees in combination with rich customer knowledge can lead to more sales. It must be noted that this organizational outcome is most likely for organizations with commercial customer contact rather than customer service.
There also exist relations between the proposed variables of business performance
itself. Higher customer satisfaction for example, can result in higher customer loyalty
which eventually can lead to increased revenues. Satisfied customers are more likely to
increase the number of their purchases than dissatisfied customers (Jones and
Farquhar, 2003). These relationships however, are not important for this study. The primary focus is on the customer contact management variables, that subsequently affect customer satisfaction, efficiency and sales.
3.5 Conceptual model
3.5.1 Propositions
The relationship between customer contact management and business performance has been made clear. This research however, aims to find out which variables (or determinants) of customer contact management cause increased business performance to happen. Therefore, expected relationships between components of customer contact management and business performance have been proposed.
Proposition 1: Managing customer contact related processes and introducing new technology, positively influences business performance of an organization.
Proposition 2: The more attention paid to the selection of customer contact employees, their education and knowledge, the better an organization will perform in terms of increased customer satisfaction, efficiency and sales opportunities.
Proposition 3: Better management of, and more customer knowledge will result in increased business performance (customer satisfaction, efficiency or extra sales opportunities).
Proposition 4: The presence of a customer contact strategy will positively contribute to
the business performance of an organization.
3.5.2 The model
The conceptual model (figure 2) and its proposed relations are based on previously discussed literature. The central (assumed) relationship between customer contact management and business performance is displayed by the big upper arrow, while specific (proposed) relationships are represented by the smaller arrows. To be more specific, customer contact management variables are expected to have an effect on one or more determinants of business performance. The arrows indicate the direction of the relationship.
Proposition 1
Proposition 2
Proposition 3
Proposition 4
Figure 2. Conceptual Model
Customer Contact Management
Integration of people, processes and technology
Managing processes, technology and procedures
Managing customer knowledge Managing contact employees, their knowledge
and education
Customer contact strategy and management objectives
Business Performance
Optimizing the organization
Increased customer satisfaction
Increased efficiency or decreasing costs
Sales opportunities or increased revenues
