Page 227 - Electronic Commerce

Chapter 4

CRM as a Source of Value

Harvard Business School researchers Jeffrey Rayport and John Sviokla observed that firms
today do business in both a physical world and a virtual, information world. Rayport and
Sviokla distinguish between commerce in the physical world, or marketplace, and
commerce in the information world, which they term the marketspace. In the information
202
world’s marketspace, digital products and services can be delivered through electronic
communication channels, such as the Internet.
In Chapter 1, you learned that the value chain model described the primary and
support activities that firms use to create value. This value chain model is valid for
activities in the physical world and in the marketspace. However, value creation requires
different processes in the marketspace. By understanding that value creation in the
marketspace is different, firms can identify value opportunities effectively in both the
physical and information worlds.
For years, businesses have viewed information as a part of the value chain’s
supporting activities, but they have not considered how information itself might be
a source of value. In the marketspace, firms can use information to create new value for
customers. Many electronic commerce Web sites today offer customers the convenience
of an online order history, make recommendations based on previous purchases, and
show current information about products in which the customer might be interested.
Successful Web-marketing approaches all involve enabling the potential customer to
find information easily and customizing the depth and nature of that information; such
approaches should encourage the customer to buy. Firms should track and examine the
behaviors of their Web site visitors, and then use that information to provide customized,
value-added digital products and services in the marketspace. Companies that use these
technology-enabled relationship management tools to improve their contact with
customers are more successful on the Web than firms that adapt advertising and
promotion strategies that were successful in the physical world, but are less effective in
the virtual world.
In the early days of the Web, many companies attempted to create comprehensive
CRM systems that captured every bit of information about every customer. Many of these
systems failed because they were overly complex and required company staff to spend too
much time entering data. In recent years, companies have had more success with CRM
systems that are less ambitious in scope. By limiting data collection to key facts that
matter to salespeople and customers, these systems provide valuable information, yet they
do not overly burden sales and administrative staff with data entry work. More companies
are getting better at automating the collection of data, which also increases the likelihood
that a CRM implementation will be successful.
Today’s CRM systems use information gathered from customer interactions on the
company’s Web site and combine them with information gathered from other customer
interactions, such as calls to customer service departments. As you learned earlier in this
chapter, the occurrence of contact between the customer and any part of the company is
called a customer touchpoint. A good CRM system will gather information from every
customer touchpoint and combine it with information from other sources about industry

Copyright 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.