Interactive Customer Retention Management for Mobile Commerce

Interactive Customer Retention Management for Mobile Commerce

Dirk Möhlenbruch (Martin-Luther-University Halle-Wittenberg, Germany), Steffen Dölling (Martin-Luther-University Halle-Wittenberg, Germany) and Falk Ritschel (Martin-Luther-University Halle-Wittenberg, Germany)
Copyright: © 2010 |Pages: 20
DOI: 10.4018/978-1-60566-074-5.ch023
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Abstract

Mobile Commerce is of growing interest for vendors and customers and with that its importance within the mix of marketing and distributing channels increases. This is of particular significance when customer retention and improved service are essential success factors. Because of their focus on customer integration the instruments of Web 2.0 offer new interactive possibilities for customer retention management. With a systematization of the new web-based applications linked to an evaluation of existing possibilities of customer retention this chapter offers a reasonable frame of reference for the utilization of Web 2.0 within the success chain of customer retention management in Mobile Commerce. Combined with existing studies of the acceptance of Web 2.0 recommendations for a successful timely order of introduction are offered to reach optimal diffusion and retention rates.
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Introduction

After the significant upheavals brought by the Internet and all the surrounding technologies, the way we work and communicate is changing again. Within just a couple of years, more people will be accessing the Internet from mobile phones, personal digital assistants (PDAs), pagers, and a wide variety of informational devices than from stationary computers (Sadeh, 2002). That includes the necessity of Mobile Marketing and Mobile Commerce as applications and services which become accessible from Internet-enabled mobile devices. Mobile Commerce is defined by the buying and selling of goods and services through wireless handheld devices such as cellular telephones and personal digital assistants. Known as next-generation E-Commerce, M-Commerce enables users to access the Internet without needing to find a place to plug in.

The dramatically growing rate of this kind of mobile utensils is foiled by the marginal usage of Mobile Commerce applications and services. The reasons for these circumstances are different technical restrictions as well as the current user behavior. The consensus is that beside the ownership of mobile devices, three additional factors contribute to the establishment of Mobile Commerce. These are changes in the consumer funding model of mobile services, the establishment of fixed electronic commerce as a business phenomenon, and the accelerated service development ushered in by the Internet (May, 2001). With all these factors making strides of progress within the last few years, the breakthrough of Mobile Commerce is coming closer. In this context, the instruments and strategic applications of M-Commerce and marketing settings need to be discussed to serve the customer according to his specific needs. Scientific works on Electronic Commerce show the need of customer specific interaction and for the establishment of longtime relationships in electronic settings because they allow direct contact to each customer. As intensively discussed lately, the instruments of Web 2.0 make it possible for companies to arrange this kind of interactive business relationships. Hence their classification and usage within the specific stages of customer retention management is of growing meaning for the economic success of Electronic and Mobile Commerce. The management of customer retention comprises the analyses, planning, enforcement, and controlling of all arrangements concerning the actual customer, with the aim to keep the individual relationship alive.

The importance of customer retention rose distinctively within the last decade because of the amplification of global competition, ascending dynamics of markets and the change of consumer behavior in many industries (Boehm, 2008; Homburg, Bruhn, 2005). There is a large consensus in the scientific literature that customer retention is able to provide a considerable input to the economic success of a business operation. Customer retention achieves its contribution through the generation of repurchases, cross buying, recommendations and the improvement of tolerance to increased prices (Bruhn, 2001; Diller, Müllner, 1998). Several studies document that the acquisition of new customers is up to ten times more expensive than the retention of existing customers (Stolpmann, 2000; Gummesson, 1999). The consumer is the central authority in the processes of relationship marketing and obtains a strong position in the market, which is linked to a better negotiating point versus distributing companies. Additionally, the market power of customers is particularly strong on the Internet. The electronic market is characterized by high offer transparency, a comprehensive level of information, and a decrease of changing barriers for customers (Förster, Kreuz, 2002; Diller, 2001). The amount of information provided by vendors is increasing at a much faster pace than the volume the customer is demanding (Lihotzky, 2003). The resulting cognitive overload calls for more individualization of information (Kroeber-Riel, Weinberg, 2003). The combination of the rising market power of customers, the cost benefits of customer retention, and the necessity of individualized information search capabilities create an important need for customer retention management. It presents a plethora of possible solutions through the personalization of interaction and buying processes. Compared to the offline environment more opportunities for personalized marketing are offered as well as greater flexibility and convenience to the customer (Srinivasan et al., 2002; Wind, Rangaswamy, 2001).

Key Terms in this Chapter

Communication: Communication is an instrument of the mobile commerce marketing mix. It contains decisions about the necessary messages and the reasonable utilization of communication material and channels. Additionally the budgets for the different communicational arrangements will be defined by this instrument.

Mobile commerce: Mobile Commerce is the buying and selling of goods and services through wireless handheld devices such as cellular telephone and personal digital assistants (PDAs). Known as next-generation e-commerce, m-commerce enables users to access the Internet without needing to find a place to plug in

Social Networks: Social Networks are advancements of virtual communities where the relationship between users is shown as virtual interaction network. Users of these specific websites are able to post their personal profile and interact with their friends.

Price: Price is an instrument of the mobile commerce marketing mix. Within the pricing policy decisions about the actual extent of prices and other different determinants of purchase decisions such as range of special offers and price differentiation have to be made.

Customer Retention Management: The management of customer retention comprises the analyses, planning, enforcement and controlling of all arrangements concerning the actual customer

Front-End: Front-End is an instrument of the mobile commerce marketing mix. The direct interface to the customer in mobile commerce settings is here defined. Beside this the linkage and the strategic design of the website will be set.

Wiki: Wikis are open and cooperative authoring systems for websites which can be edited from every user equally. With that, they are a group product of several authors where content is gathered collectively

Blog: Blogs or weblogs are online diaries written by usually one author. Readers have free access to the content and are able to comment every article. Additionally each blogger can reference his articles to others which is shown at the end of each comment.

Product Line: Product Line is an instrument of the mobile commerce marketing mix. The instrument contains every decision regarding the determination of distributable goods which are going to be purchased by the customer. It defines the dimensions of the product line and declares the availability as well as the branding of different goods.

Social Shopping: For Social Shopping user build social networks to purchase goods. This application is based on group dynamics where large groups of users recommend products or buy together.

Web 2.0: Web 2.0 is frequently used as a general term for different web based services and applications which aim to generate added value through user integration. Users are able to generate or comment content which establishes a great dynamic and interactivity.

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