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EJM
38,3/4 Improving customer
relationship management
338
through database/
Internet marketing
A theory-building action research project
Chris O’Leary
Acxiom Corporation, Sydney, Australia
Sally Rao
School of Commerce, The University of Adelaide, Adelaide,
Australia, and
Chad Perry
Graduate College of Management, Southern Cross University,
Gold Coast, Australia
Keywords Internet marketing, Database marketing, Customer relations, Action learning
Abstract Firms have only just begun to use the Internet to obtain customer information in their
database marketing processes to enhance customer relationship management. This research uses
an action research approach to develop a new framework about how they can do this. The action
research project was carried out in a large Australian database company because no other sources
of empirical information about the topic were available and it could provide rich findings about an
under-researched, practical area. Results showed that integration of the Internet and database
marketing enhances the effectiveness of customer relationship management practices. For
example, the Internet offers benefits such as increased consumer data collection accuracy and
speed, cost savings, greater interaction and better relationships with customers. This research also
identifies that organizational culture, top management support and collaboration between
marketing and IT teams need to be in place to provide a supportive environment that is critical for
the success of the integration.
Introduction
Many firms have adopted the Internet for promotional purposes (Williams,
2000) but have not yet fully capitalised on its interactive marketing capabilities
(Rowsom, 1998). Nevertheless, some practitioners and consultants are realising
the potential for integrating the Internet with organizational databases. For
example, Rowsom (1998, p. 24) noted the potential of the integration of Internet
information into database marketing for electronic commerce and forecast that
European Journal of Marketing “instituting database marketing on the Web will be like making the leap from
Vol. 38 No. 3/4, 2004
pp. 338-354
playing checkers to playing multi-level chess.” However, comprehensive
q Emerald Group Publishing Limited
0309-0566
academic research about the integration of Internet and database marketing is
DOI 10.1108/03090560410518585 lacking. There has been recognition in the academic literature about Internet
and database marketing separately (for example, Forrest and Mizerski, 1995; Customer
Montgomery, 1999; Hoffman and Novak, 1996), but not about their integration. relationship
Hence the aim of this paper is to develop a framework for integrating the management
Internet and database marketing to help marketers improve customer
relationship management (CRM), based on rigorous academic research.
Essentially, we argue that the advent of Internet/database marketing brings
solutions to some of the difficulties in customer relationship management by
339
providing one-to-one interactivity and customisation. Our contributions are the
first academic study of the integration of Internet and database marketing, and
an example of how the action research methodology can be used to explore a
relatively technical issue in marketing about a general, academic research
problem (Perry and Zuber-Skerritt, 1992).
This paper has three parts. First, a preliminary framework based on the
literature is outlined. Then, the project methodology of focus groups,
convergent interviewing and action research is briefly described. Finally, a
comprehensive framework based on the findings is presented, implications and
limitations are discussed and possibilities for further research are identified.
Figure 1.
The action research
methodology
respondent organization confirms that this research was emancipatory: “This Customer
system has completely changed our business model from a reactive, relationship
non-differentiated style to an interactive, intelligent alternative. We are management
finally getting to understand and maximise the profitability of our customer
interactions. We could never do that before” (K. Anderson, personal
communication, 19 July 2000).
In brief, two action cycles were incorporated in this project to determine how 343
the Internet may be integrated with database marketing within an Australian
Internet portal. These action cycles, in conjunction with the reconnaissance
focus groups and convergent interviews discussed above, led to the
development of the final framework of the integration of Internet and
database marketing strategies that is described next.
Discussion of findings
The project above was done within a particular organization. We now turn to
analytic generalisation (Yin, 1994) of that action research, to build a theoretical
framework linked to extant literature that explains how Internet and database
marketing can be integrated in many other organizations, too. Our findings are
summarised in Table I and the framework is summarised in Figure 2, and they
are discussed next.
2. How can customer data Data integration through data warehousing and data mining
from the Internet be requirement of supportive environment
integrated into database Supportive organizational culture
marketing processes? Appropriate e-commerce infrastructure
Top management commitment
Use of two marketing databases; one for real-time data accruing
from e-business interactions, and the other for integrating other
organizational consumer data and linking this to the real-time
database
System management and data standardisation
Integrated data analytical and campaign management
functionality within the database marketing application
Artificial intelligence learning and personalisation software for
Table I.
Findings for each of the consumer inbound marketing
three research issues (continued)
Customer
Research issue Findings about the research issues
relationship
3. How can customer Strategies that are most likely to be derived from the integration of management
information gathered Internet and database marketing to improve customer relationship
through the Internet be management
used to improve customer Prospecting new customers
relationship Segmenting customers 345
management? Retaining customers
Use of one-to-one marketing; where consumer interests are elicited
and refined on an individual basis; and the organization’s
communications, campaigns and offers are structured
accordingly
Forging customer loyalty
Promoting and advertising pertinent to a customer’s identified
interests
Cross marketing and relationship marketing
Affiliate marketing
Stealth marketing
Source: analysis of action research data Table I.
all contribute to the amount of active data that the marketers can obtain
through the Internet. Organizations may use different mechanisms to capture
and update active and passive customer data. The findings also identify
problems associated with these mechanisms, such as the inability of cookies
tracking customers at an individual level.
346
Figure 2.
The final framework for
the integration of
Internet and database
marketing
Step 1. Identifying customers To capture and store customer details (box 1 in The capacity to capture and present information
Figure 2) in a usable form
Sophisticated web sites and appropriate data
capture technology and expertise
Step 2. Differentiate customers To build an understanding of customers’ Supportive organizational environment such as
similarities and differences (box 2 in Figure 2) organizational culture
A sound understanding of customers
Data analytics, such as data mining, modeling
and OLAP
Step 3.Interact with customers To capture each contact and interact with the Flexibility to store and respond to customer
customer (boxes 1and 3 in Figure 2) information
Capability and desire to handle each customer
relationship on a individual basis
Demonstration of the benefits of sharing
information
Capability and desire of the organization to
develop the interaction and the willingness of the
customer to take part
Artificial intelligence routines to enable to
organization to interact effectively with the
multitude of customer data present through the
Internet
Step 4. Customize for customers To meet a customer’s individual needs and put Continually update and responding to customer
customers at the center of their own universe (box information
3 in Figure 2) Tangible rewards for customers from their
interaction with the organization
Personalization
Source: Analysis of the research findings
relationship
management
marketing
through the integration
one-to-one marketing
Table II.
349
EJM assess the value of the integration of Internet and database marketing without
38,3/4 comparing the costs.
The second step is to differentiate customers through customer data
analysis. By differentiating, the organization can capitalize on differing levels
of customer value and prioritize their efforts and gain the most advantage with
the most valuable customers (Peppers et al., 1999). Supportive environment is
350 required at this stage in the one-to-one marketing process. Factors such as
supportive organizational culture, top management commitment, customer
orientation and use of data analytical tools such as data mining and modeling,
all impact on the success implementation of integration of Internet and
database marketing (Figure 2)
The third step in implementing one-to-one marketing is to interact with the
customer. That is, every conversation and interaction with a customer needs to
set up the opportunity for the next. At this stage, the privacy and security
issues are important because many customers are wary about protecting their
personal information from commercial organizations (Peppers et al., 1999). The
bottom line is the practice of permission marketing in the Web environment
and the delivery of superior value to the customer (Mitchell, 2000).
The final step to implement one-to-one marketing is to customize for
customers. That is, organization must use the insights gleaned from the above
steps to meet a customer’s individual needs & being sufficiently responsive and
flexible to respond to the differences between customers. The Internet gives
customers the capability to influence how they interact with an organization
and to customize and personalize the services and offers they receive.
As well, this research has implications for policy makers. For example,
ethical considerations need to be addressed in the Internet/database marketing
process because of the increasing concerns amongst consumers about the
impact of the marketing management techniques on their privacy (Tweney,
1998; Prabhaker, 2000). Therefore, members of the direct marketing industry
should implement self-regulation themselves that met or exceed the regulatory
Personal Privacy Act due in December 2001 by moderating the amount of
intrusive and spam communications. For example, the Australian Direct
Marketing Association and other concerned businesses may require that
Internet pages that prompt users for information explicitly state how the
information will be used.
Further research
This research identifies a number of areas requiring further research. The
findings from this research could be tested from other perspectives. The
organizations included in this research represent only business-to-consumer
organizations. Future research could investigate the integration of Internet and
database marketing in the context of business-to-business because some
elements may differ from those in the context of business-to-consumer context.
For example, different types of data may be collected through the Internet and
different e-commerce infrastructures may by required. As well, further research
is needed to establish the statistical generalisability of these theory-building
findings in survey research when the population of marketing managers with
the requisite expertise becomes large enough for a survey to be done.
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