Do Mobile CRM Services Appeal to Loyalty Program Customers?

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) and Kim Forsberg (Intrum Justitia Finland, Finland)
DOI: 10.4018/978-1-60566-154-4.ch005
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Not until very recently has mobile phone technology 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 empirical study was conducted among loyalty program customers (frequent flyers) of an airline that was 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 appeared 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 as the Mobile Internet, had a significantly more 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.
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During the last two decades the marketing community has witnessed a transfer from transaction-based marketing strategies to an emphasis 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 for profit, CRM has become an essential part of 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 channel (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 retention (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 and information on accumulated benefits (Lam & Chan, 2003).

One new software solution for customized relationship programs is known as Mobile Information Device Profile (MIDP). Programs subscribing to 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 user-specific needs.

Given the scarcity of empirical research on mobile CRM and the availability of new applications, the purpose of our study is to investigate how mobile CRM services, developed for a MIDlet application, are perceived by the loyalty program customers of an airline. More specifically, we study the appeal of the proposed mobile services to customers, their intention to adopt the services, and whether the services would improve customers’ 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 commerce and by investigating customers’ attitudes towards mobile CRM.

The paper is structured as follows. First, the concept of mobile CRM and its benefits to 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.

Complete Chapter List

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International Advisory Board
Table of Contents
In Lee
Chapter 1
Keith F. Ward, Erik Rolland, Raymond A. Patterson
Proponents of Customer Relationship Management (CRM) suggest that a firm can develop a value creation relationship, such that an increase in... Sample PDF
Managing the Customer Relationship: A Framework for E-CRM Analysis
Chapter 2
Soumaya Ben Letaifa
This chapter examines how e-CRM has affected both organizational and individual behavior in a leading Canadian bank. The innovative and... Sample PDF
A New Conceptual Framework for Greater Success with Integration of E-CRM
Chapter 3
Tim Coltman
Most sectors of industry, commerce, and government have reported variation in the performance payoff from electronic customer relationship... Sample PDF
Managerial Discretion and E-CRM Performance
Chapter 4
Patricia T. Warrington, Elizabeth Gangstad, Richard Feinberg, Ko de Ruyter
Multi-channel retailers that utilize an e-CRM approach stand to benefit in multiple arenas by providing targeted customer service as well as gaining... Sample PDF
Multi-Channel Retailing and Customer Satisfaction: Implications for E-CRM
Chapter 5
Veronica Liljander, Pia Polsa, Kim Forsberg
Not until very recently has mobile phone technology become sophisticated enough to allow more complex customized programs, which enable companies to... Sample PDF
Do Mobile CRM Services Appeal to Loyalty Program Customers?
Chapter 6
Michael Shumanov
While the managerial rationale for adopting customer relationship management (CRM) has been fairly well articulated in the literature, research on... Sample PDF
Developing a Global CRM Strategy
Chapter 7
John Gallaugher
This article synthesizes and leverages two strategic frameworks when analyzing the true nature of strategy and the Internet: (1) the concept of... Sample PDF
Strategic Positioning and Resource-Based Thinking: Cutting Through the Haze of Punditry to Understand Factors Behind Sustainable, Successful Internet Businesses
Chapter 8
Savvas Papagiannidis
This chapter covers the concept of e-business models and how they relate to the music video and television environments. After identifying the value... Sample PDF
A Tale of E-Business Models: From the Music to the Television Industry
Chapter 9
Kirill M. Yurov
Healthcare technology markets have been recently identified as potential investment targets. Having survived a major environmental shock, the... Sample PDF
Strategic Maneuvering in Healthcare Technology Markets: The Case of Emdeon Corporation
Chapter 10
Olli Kuivalainen
The aim of this chapter is to provide a holistic exploration of the development of the business model of a magazine Web site, and of the factors... Sample PDF
Complementary Role of Website in Business Model Development
Chapter 11
Tobias Kollmann is a German B2C platform for different kinds of service and handcraft orders. Based on the concept of reverse auctions, demanders... Sample PDF
A Reverse Auction-Based E-Business Model for B2C Service Markets
Chapter 12
Denis Caro
The 21st century continues to witness the transformation of organizational systems globally through the deployment of Information and Communication... Sample PDF
Evolving E-Health Systems: Symbiotic Constructs Between Corporate and E-Healthcare Worlds in International Space
Chapter 13
Karl Knapp, Sushil K. Sharma, Kevin King
Offshore information technology (IT) outsourcing has been becoming mainstream alternative to inhouse operations. While offshore development is a... Sample PDF
Socio-Economic Impacts of Offshore Outsourcing of Information Technology
Chapter 14
Indrit Troshani
The eXtensible Business Reporting Language (XBRL) is an emerging XML-based standard which has the potential to significantly improve the efficiency... Sample PDF
Towards Theory Development for Emergent E-Business Innovations: Using Convergent Interviewing to Explore the Adoption of XBRL in Australia
Chapter 15
Bill Vassiliadis
Copyright protection is becoming an important issue for organizations that create, use, and distribute digital content through e-commerce channels.... Sample PDF
An Introduction to the Management and Protection of Intellectual Property Rights
Chapter 16
Tagelsir Mohamed Gasmelseid
The unprecedented advancements witnessed in the field of information and communication technology over the last couple of years are significantly... Sample PDF
Intelligent Contracting: An E-Supply Chain Management Perspective
Chapter 17
Jaeki Song, Eric A. Walden
In this work, we examined the boundary of the applicability of network effects theory. We theorized that when adoption is cheap, the cognitive... Sample PDF
The Applicability of Network Effect Theory to Low-Cost Adoption Decisions: An Investigation of Peer-to-Peer File Sharing Technologies
Chapter 18
Wen-Jang Jih
Two mutually reinforcing forces currently are at work to propel an upward spiraling in the business arena. As wireless communication technology... Sample PDF
An Empirical Analysis of Cellular Phone Users' Convenience Perception and Its Impact on Shopping Intention in Mobile Commerce
Chapter 19
Fang He
Along with the exponential increase in online business transactions, the online payment system has gained in popularity because vendors and... Sample PDF
The Effects of System Features, Perceived Risk and Benefit, and Customer Characteristics on Online Bill Paying
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