Sunteți pe pagina 1din 38

JCMC 9 (4) July 2004

Collab-U CMC Play E-Commerce Symposium Net Law InfoSpaces Usenet


NetStudy VEs VOs O-Journ HigherEd Conversation Cyberspace Web Commerce
Vol. 6 No. 1 Vol. 6 No. 2 Vol. 6 No. 3 Vol. 6 No. 4 Vol. 7 No. 1 Vol. 7 No. 2 Vol. 7 No. 3
Vol. 7 No. 4 Vol. 8 No. 1 Vol. 8 No. 2 Vol. 8 No. 3 Vol. 8 No. 4 Vol. 9 No. 1 Vol. 9 No. 2 Vol. 9
No. 3
The Impact of Customer Relationship Management on Customer Loyalty:
The Moderating Role of Web Site Characteristics
Assion Lawson-Body
University of North Dakota

Moez Limayem
City University of Hong Kong

• Abstract
• Introduction
• Conceptual Model and Research Hypotheses
o CRM Construct Components

 Customer Prospecting
 Relations with Customers
 Interactive Management
 Understanding Customer Expectations
 Empowerment
 Partnerships
 Personalization
o Loyalty

o "Web Site Characteristic" Construct Components

 The Level of Presence on the Internet


 The Level of Interactivity on the Internet
o The Research Model

• Methodology
o The Web Site Evaluation Procedure
• Results
o Characteristics of Participating Firms

o The Test of Hypothesis H1 with PLS

o The Tests of Hypotheses H2 and H3

 Normality Test
 Homogeneity Testing of the Variance: The Case of Hypothesis H2
 Homogeneity of Variance Testing: The Case of Hypothesis H3 (a,
b, e, and g)
• Discussion
o The Extent of CRM and Customer Loyalty

o The Extent of CRM, Loyalty, and Web Site Characteristics

 Partnerships, Customer Loyalty, and the Level of Presence on the


Internet
 Empowerment, Customer Loyalty, and the Level of Presence on
the Internet
 Relations with Customers, Loyalty, and the Level of Presence on
the Internet
 Personalization, Loyalty, and the Level of Presence on the Internet
o The Extent of CRM, Customer Loyalty, and the Level of Interactivity on
the Internet
 Partnerships, Customer Loyalty, and the Level of Interactivity on
the Internet
 Empowerment, Loyalty, and the Level of Interactivity on the
Internet
 Relations with Customers, Loyalty, and the Level of Interactivity
on the Internet
 Personalization, Loyalty, and the Level of Interactivity on the
Internet
• Conclusion
o Recommendations, and Managerial and Theoretical Implications

• References
• About the Authors
• Appendix: Item Definition

Abstract
The aim of this study is to explain the impact of Web site characteristics on the relation
between customer relationship management (CRM) and customer loyalty. Data collected
from 170 Canadian IT organizations showed that Web site characteristics (which include
the levels of the organizations� Internet presence and interactivity) have a significant
impact on the link between CRM (in terms of partnerships, empowerment, relations with
customers, and personalization), and customer loyalty. In other words, using the Internet
to support CRM allows firms to increase their customer loyalty in the IT sector.
However, the impact of Web site characteristics on the link between CRM, in terms of
understanding customer expectations, customer prospecting, and interactive management,
and customer loyalty has not been tested because the direct link between these three
components of CRM and customer loyalty has not been significant in this study. The
managerial and theoretical implications of these results are discussed.

Introduction
As the new millennium progresses, the business world is focusing more attention on
issues concerning electronic commerce (Teo et al., 2003). The term 'electronic commerce'
encompasses many activities carried out through computer networks and the Internet,
including inter-organizational commerce, intra-organizational transactions, and
transactions involving the individual consumer (Adelaar, 2000). The impact of the
Internet has made a substantial difference in business-to-business (B2B) transactions
(Teo et al., 2003; Venkatraman, 2000).

Many recent studies have predicted that revenues from B2B electronic commerce on the
Internet will hit $6.8 trillion in 2004 (Gartner Group 2000). Such predictions indicate the
importance of the Internet as a way of supporting business activities (Porter, 2001).
Presently, the Internet seems to offer almost unlimited possibilities (Robbins &
Stylianou, 2003). Indeed, numerous firms have already experienced its considerable
benefits (Geyskens, Gielens & Dekimpe, 2002; McMillan, 2001). One of the
consequences of the development of the Internet has been the emergence of the World
Wide Web, an Internet service that organizes information according to hypermedia and
hyperlink paradigms (Chiu, 2003; Joseph, Cook & Javalgi, 2001). Some organizations
have invested in the Web � often with the objective of using it as a way to maximize
resources (McMillan, 2001).

Today, the World Wide Web has great potential as a tool for conducting business and
management activities (Bell & Tang, 1998). Customer relationship management (CRM)
is a leading new approach to business, which has already become established in the
literature (Szeinbach, Barnes, & Garner, 1997). Indeed, CRM refers to all business
activities directed towards initiating, establishing, maintaining, and developing successful
long-term relational exchanges (Heide, 1994; Reinartz & Kumar, 2003). One of the
results of CRM is the promotion of customer loyalty (Evans & Laskin, 1994), which is
considered to be a relational phenomenon (Chow & Holden, 1997; Jacoby & Kyner,
1973; Sheth & Parvatiyar, 1995; cited by Macintosh & Lockshin, 1997). The benefits of
customer loyalty to a provider of either services or products are numerous, and thus
organizations are eager to secure as significant a loyal customer base as possible (Gefen,
2002; Reinartz & Kumar, 2003; Rowley & Dawes, 2000). Recent developments in
Internet technology have given the Internet a new role: to facilitate the link between
CRM and customer loyalty.

Most of what is currently known about the impact of the Internet on business
management is based on anecdotes, experiential evidence, and ad hoc descriptive studies
(Avlonitis & Karayanni, 2000; Peterson, Balasubramanian, & Bronnenberg, 1997). There
is a little existing research that has empirically tested the impact of the Internet on CRM
which leads to customer loyalty. But the Internet still poses opportunities as well as
threats (Geyskens, Gielens & Dekimpe, 2002). The degree to which the Internet is used
by organizations and the considerable praise that it has received may be attributed to its
enhanced informational and interactive communication capabilities. In this way, it can be
used as a business channel and so lead to the development of more effective CRM as well
as the emergence of new network cooperative opportunities (Avlonitis & Karayanni,
2000; Geyskens, Gielens & Dekimpe, 2002). However, the speculation that the Web
presents CRM opportunities (Sheth & Parvatiyar, 1995) seldom has been empirically
tested.

This article consists of two main parts. First, a conceptual model explaining the
theoretical link between CRM and customer loyalty will be presented and explored. The
impact of Web site characteristics on the link between CRM and customer loyalty will
also be explained. The second part of this article will explain the results of an empirical
study conducted to test the impact of Web site characteristics on the link between
business-to-business relationship management and customer loyalty in the IT sector.
Business-to-business relationship management or CRM has been chosen because
business-to-business electronic commerce is more profitable for companies than
business-to-consumer electronic commerce (Forrester Research, 2001). The impact of the
Internet is well known in business-to-consumer transactions: witness the proliferation of
Web sites for facilitating sales and services across a broad range of offerings. However, a
revolution is occurring in business-to-business relationships as companies restructure
their operations with trading partners (Venkatraman, 2000). The IT sector has been
chosen because, according to Datamonitor (1999), more products (hardware and
software) from this sector are sold online or through the Internet on a business-to-
business basis than from any other sectors. Towards the end of the article, the managerial
implications of the study will be considered.

Conceptual Model and Research Hypotheses


CRM Construct Components
There is a considerable body of literature concerning CRM, which covers a number of
different components. CRM is organized as a series of events. These are clustered
together according to types of action that constitute the extent of CRM in the context of
this study. The extent of CRM comprises independent variables presented in the
conceptual model. The seven major CRM components identified are: 1) customer
prospecting, 2) relations with customers, 3) interactive management, 4) understanding
customer expectations, 5) empowerment, 6) partnerships, and 7) personalization. These
components are discussed below.

Customer Prospecting

The term customer prospecting refers to all the various means employed in business to
track, locate, and attract new customers (Reinartz & Kumar, 2003; Shultz, 1995). Many
firms have developed databases that contain detailed interaction data on prospects as well
as customers (Thomas, 2001). In the process described by Payne (1994), the concept of
CRM is understood in terms of a loyalty scale leading from the customer prospect,
through customer, client, and supporter, to partner. According to Payne (1994), customer
prospecting plays a key role at the beginning of the CRM process. Thomas (2001) has
examined a methodology for linking customer acquisition to customer retention. He
found that customer acquisition and retention are not independent processes. Using the
model described in his study, Thomas (2001) shows the financial impacts of not
accounting for the effect of acquisitions on customer retention.

Relations with Customers

The �relations with customers� component of CRM concerns the extent to which firms
initiate, develop, maintain, and improve relationships with other firms (Berry et al., 1991;
Gronroos, 1990; Heide, 1994; Jackson et al., 1985; Morgan et al., 1994; Nevin, 1995;
Peterson, 1995; Reinartz & Kumar, 2003). Most definitions that can be found in the
literature regard �relations with customers� as representing the keystone of CRM. The
concept of relations with customers also relates, according to the literature, to customer
loyalty. Chow and Holden (1997), for example, estimate that firms are oriented towards
the benefits that can be reaped from the construction of customer loyalty. In addition,
these authors specify that there has been a paradigmatic change so that the relationship
with the customer is now seen as the unit of value.

Interactive Management

Interactive management is a key aspect of CRM functions (Gronroos, 1994). It comprises


all actions designed to transform the prospective client who enters into contact with the
business representatives into an active and effective customer (Dufour & Maisonnas,
1997). It is conceptually based on reciprocity, which constitutes one important dimension
of CRM (Bitner, 1995; Gummesson, 1994; Nevin, 1995), and feedback is an important
part of the core of interactive management (Evans & Laskin, 1994). Indeed, Evans &
Laskin (1994) consider customer feedback as a key step of the CRM process and define it
as the best way for firms to keep in touch with their customers� perceptions.

Understanding Customer Expectations

This concept stresses the importance of identifying the customers� desires and
supplying to those customers products and services that meet their expectations (Power,
1988; cited by Evans & Laskin, 1994). Szeinbach, Barnes, & Garner (1997) describe
understanding customer expectations as the strategy adopted by firms to generate more
knowledge of customer expectations and needs and to provide customers with the best
services in order to win their loyalty.

Empowerment

Empowerment generally refers to the process a firm adopts to encourage and reward
employees who exercise initiative, make valuable creative contributions, and do whatever
is possible to help customers solve their problems (Evans & Laskin, 1994; Herzberg,
2003). Reichheld (2001) reports that he has yet to encounter a company that has achieved
extremely high customer loyalty without fostering similarly high loyalty among
employees. Most business representatives prefer to deal with regular customers because
they are easy to serve, they understand the firm�s preoccupations, and make only a few
requests (Bendapudi & Leone, 2002; Chow & Holden, 1997).

Partnerships

Partnerships are created when suppliers work closely with customers and add desired
services to their traditional product and service offerings (Evans & Laskin, 1994). Payne
(1994) puts partnering at the extreme end of his loyalty scale, regarding it as an important
step that usually leads to the development of a close and durable relationship between
supplier and customer. Wilson (1995) has developed an integrated model devoted to the
explanation of CRM process phases. In this model, partner selection is considered to be
the first step in the CRM process.

Personalization

Personalization refers to the extent to which a firm assigns one business representative to
each customer and develops or prepares specific products for specific customers.
Personalization is about selecting or filtering information for a company by using
information about the customer profile (Schubert, 2003) A major component of
personalization is the distribution of customized mail to a customer or customization of
the relationship between firm and customer. This concept outlines a clear distinction,
established by Gronroos (1994), between CRM and the management mix. The latter is a
far more clinical approach in which the seller, or business representative, plays an active
role, while the buyer, or customer, takes up a more passive position. In such a scenario,
there is no personalized relationship between customer and business representative.
Personalization, rather, is only included in CRM.
Loyalty

The development of loyalty involves building and sustaining a relationship with a


customer, which leads to the repeated purchase of products or services over a given
period of time. A loyal customer base allows companies to devote their energies to other
business matters (Gefen, 2002; Rowley & Dawes, 2000). Customers can demonstrate
their loyalty in several ways. They can choose to stay with a firm, whether this
continuance is defined as a relationship or not, or they can increase the number of
purchases, or they can do both (Reinartz & Kumar, 2003; Rowley & Dawes, 2000). For
the purposes of this research, loyalty will be considered as the final result, or the key
element, of effective CRM. Since many authors have suggested that loyalty is a relational
phenomenon (Chow & Holden, 1997; Jacoby & Kyner, 1973; Sheth & Parvatiyar, 1995;
cited by Macintosh & Lockshin, 1997), our purpose is to link loyalty to the emerging
theory of CRM (Macintosh & Lockshin, 1997). Although some authors, such as Dick &
Basu (1994), distinguish between brand loyalty, store loyalty, salespeople loyalty,
product and service loyalty, and so on, in this study the concept of loyalty will be
considered as the combination of all these types. Some authors, such as Evans & Laskin
(1994), have also studied the impact of CRM on customer loyalty, but have not made any
distinctions between different types of loyalty. They have merely specified that their
concept of loyalty went beyond the idea of industrial loyalty. Therefore, the variable
chosen to measure the effectiveness of CRM in this study is �customer loyalty.�

"Web Site Characteristic" Construct Components

One of the more widespread electronic commerce approaches is the digital storefront, i.e.,
the use of Web sites to advertise, display and purchase goods and services (Tagliavini,
Ravarini & Antonelli, 2001). After using the theory of modular design to explain the
concept of Web site characteristics, Iyer et al., (2003) have described how an emerging
Web site�s framework can be used to support dynamic business networks. Based on
previous published work, they defined a business network as a distinct system of
participants that use the network to achieve customer satisfaction and profitability and
where relationships evolve over time. An online feedback mechanism that encourages
buyers and sellers to rate one another (Bakos & Dellarocas, 2002) seems to have
succeeded in encouraging interactive behavior in an otherwise very risky trading
environment. Domingo II & Hui (2003) have examined the high costs of attracting new
customers on the Internet and found that aesthetic characteristics of the Web site have a
positive effect on customer loyalty. Web technologies are complex and offer a variety of
functionalities ranging from the static presentation of content to the dynamic capture of
transactions with provisions for personalization [Chatterjee et al., 2002]. Hoffman,
Novak, & Chatterjee (1995) have proposed a structural framework which classifies the
commercialization efforts that characterize commercial Web sites into six distinct types:
1) online storefronts, 2) internet presence, 3) content, 4) malls, 5) incentive sites, and 6)
search agents. The first three types represent the �Integrated Destination Site,� while
the latter three represent forms of �Web Traffic Control� (Hoffman, Novak &
Chatterjee, 1995). Angehrn (1997) describes an ICDT Model which takes its name from
the segmentation of the space of new business opportunities created by the spread of the
Internet into four �virtual spaces�: a virtual information space, a virtual
communication space, a virtual distribution space, and a virtual transaction space. The
Web site characteristics developed in this study have been adapted from the frameworks
of Angehrn (1997), Hoffman, Novak & Chatterjee (1995) and Tagliavini, Ravarini &
Antonelli (2001). There are essentially two variables that encompass the construct of
Web site characteristics: the level of presence on the Internet, and the level of
interactivity on the Internet.

The Level of Presence on the Internet

A business can use an Internet presence to reach customers all around the world (Chiu,
2003; Jarvenpaa & Tractinski, 1999; Robbins & Stylianou, 2003). Lombard & Ditton
(1997) explain that the concept of presence is central to the use, and therefore the
usefulness and profitability, of the new technologies such as the World Wide Web.
Internet presence has been selected from among six Web site characteristics outlined by
Hoffman, Novak & Chatterjee (1995) because it is the only aspect of Web sites that
dominates in business activities (Hoffman & Novak, 1996). In addition, presence on the
Internet encompasses the concept of virtual information space as described by Angehrn
(1997). This latter concept consists of the new Internet-based channels through which
economic agents can display information about themselves and the products and services
they offer. Essentially, the level of presence on the Internet refers to the virtual presence
of firms and their offerings.

The Level of Interactivity on the Internet

The concept of interactivity is complex and multi-dimensional (Lombard & Ditton,


1997). According to Rafaeli & Sudweeks (1997), as with face-to-face communication,
computer-mediated communication has the capacity of enabling high interactivity. Two
major aspects distinguishing the Internet from other communication media are the
opportunities for two-way interaction, and the capacity for multimedia. A virtual
communication space, as defined by Angehrn (1997), will be incorporated in our
definition of the level of interactivity on the Internet, as it is an extension of the
traditional spaces economic agents use to meet, interact, exchange valuable ideas and
experiences, influence opinions, negotiate potential collaborations, engage in
relationships, and create communities. Therefore, the level of interactivity on the Internet
refers to the extent to which organizations engage in online communication without being
affected by distance and time constraints.

The Research Model

Figure 1 represents the research model of this study.


Figure 1. Research model.

The choices that have been made regarding the content of each construct, and the
arguments used to support them, have led to the redesigning and redefining of the
research model above. In the research model, the extent of CRM variables has a direct
impact on the customer loyalty variable. The use of Web site characteristics to strengthen
existing CRM can increase businesses� loyalty to each other. The Web site
characteristics such as the level of presence on the Internet and the level of interactivity
on the Internet can support the formation and maintenance of CRM because they
facilitate the way organizations understand customer expectations, partner, build relations
with customers, interact, empower and personalize to create loyal customers. In other
words, a key goal of CRM is to improve customer loyalty (Evans & Laskin, 1994).
Effective CRM will lead to greater customer loyalty (Evans & Laskin, 1994). Also,
organizations can use Web site characteristics to build tight relationships with their
trading customers who become loyal to them, rather than to select customers on a
transaction-by-transaction basis from a large pool of non-loyal customers (Reinartz &
Kumar, 2002). Therefore, we expect: 1) the extent of CRM variables to have a positive
impact on customer loyalty; 2) the level of presence on the Internet to have a positive
impact on the link between the extent of CRM variables and customer loyalty; 3) the
level of interactivity on the Internet to have a positive impact on the link between the
extent of CRM variables and customer loyalty. Our theoretical argument, explained in the
previous literature review and model, enables us to posit the following hypotheses:

H1 (a, b, c, d, e, f, and g): The greater the extent of the CRM components (partnerships,
relations with customers, customer prospecting, interactive management, empowerment,
understanding customer expectations, and personalization) the greater the positive and
direct effect on customer loyalty.

H2 (a, b, c, d, e, f, and g): The level of presence on the Internet will be positively
associated with the link between the extent of the CRM components (partnerships,
relations with customers, customer prospecting, interactive management, empowerment,
understanding customer expectations, and personalization) and customer loyalty.

H3 (a, b, c, d, e, f, and g): The level of interactivity on the Internet will be positively
associated with the link between the extent of the CRM components (partnerships,
relations with customers, customer prospecting, interactive management, empowerment,
understanding customer expectations, and personalization) and customer loyalty.

Methodology
Because scales were not available for all of the variables described in the conceptual
model, certain measures had to be developed according to the guidelines suggested by
Churchill (1979). An evaluation grid was used to measure Web sites characteristic
variables, and was mounted according to the guidelines by Kassarjian (1977). In order to
follow the guidelines suggested by Churchill (1979), an exploratory study based on
multiple cases studies was conducted. The results of these multiple case studies enabled
us to refine the measures previously described in the literature review. In total, eight
companies, which belong to the IT sector in Quebec (Province of Canada), were asked to
participate. The managers of these companies were interviewed for one hour, and
recorded on tape. Content analysis was conducted to analyze and process the data from
the interviews. To help conduct the interviews, an interview protocol was used.

Our refined questionnaires were extensively reviewed and evaluated, both by


practitioners (the managers and directors of the IT companies) and by academics. Based
on these evaluations, corrections and improvements were suggested which were included
in the measurement instrument. The questionnaires were sent electronically to the 1000
executive directors of small, medium, and large IT companies in Canada. Of these, 170
electronic responses, or 17%, were returned. This response rate was similar to that
obtained in other studies which used similar survey procedures. A Web page devoted to
the questionnaire was set up and electronic cover letters were forwarded to respondents
inviting them to visit the Web site in order to fill out the electronic questionnaire form.
The responses were sent electronically to the researchers.

The measures used in this study were statistically validated. SPSS software was used to
assess the reliability and the validity of the measures in the exploratory phase. The
technique employed was Exploratory Factor Analysis based on Principal Components
Method with Varimax Rotation. This technique allows the interpretation of the relevant
factors and it is also the most used rotation technique in research (Norusis, 1993). The
criterion used in the reliability assessment was Cronbach�s alpha. The results obtained
from this first analysis are presented in Table 1a. It can be seen that this analysis helped
to identify one factor for the construct �customer loyalty� and seven factors for the
construct �the extent of CRM� (see Table 1a and Table 2a). The reliability assessment
was followed by a Principal Components Analysis (PCA). This analysis was carried out
by calculating Cronbach�s alpha coefficient using SPSS (see Table 1a and Table 2a).
The items that were rejected due to poor loading, after the reliability assessment and
PCA, are presented in Table 1b and Table 2b. Item definitions are provided in the
Appendix.

Items Loads Cronbach's alpha


L1 0.762 0.79
Factor 1: Loyalty L2 0.798
L3 0.836
L4 0.731

Table 1a. Exploratory factor analysis (customer loyalty)


(Principal Components method with Varimax rotation; Loading>=0.50).

Construct: Loyalty
Items
Factor 1: Loyalty L5
L6
L7

Table 1b. Exploratory factor analysis (customer loyalty)


(Items thrown out due to poor loading).
Factor 6: Factor
Factor 1: Factor 2:
Understan 7:
The Interactiv Custome Factor 3: Factor 4: Factor 5:
ding Relatio
extent of e r Partnersh Personaliza Empower
Customer ns with
CRM Managem Prospect ips tion ment
Expectatio Custom
ent ing
ns ers
IM1 0.892 0.002 0.149 -0.003 0.005 -0.189 0.118
IM2 0.835 0.145 0.147 -0.076 0.052 0.137 0.042
IM3 0.796 0.201 0.077 0.088 0.043 0.129 -0.012
IM4 0.795 -0.087 0.115 -0.099 -0.046 -0.015 0.137
CP1 0.177 0.778 0.172 0.119 0.109 0.023 -0.068
CP2 -0.061 0.793 0.167 0.045 0.018 0.242 0.051
CP3 -0.033 0.623 -0.013 -0.242 0.027 0.324 0.007
PS1 -0.051 -0.105 0.788 -0.022 0.171 -0.112 -0.121
PS2 0.044 -0.017 0.763 0.091 0.100 -0.024 0.093
PS3 0.032 0.199 0.747 0.082 -0.267 0.012 0.023
PS4 -0.099 0.250 0.610 0.042 -0.144 0.191 0.223
P1 0.092 0.074 -0.119 0.858 0.156 0.175 0.041
P2 0.296 -0.054 0.281 0.702 -0.015 -0.228 0.295
ITL1 0.134 0.105 0.080 0.041 0.818 0.102 -0.031
ITL2 0.129 0.107 0.048 -0.043 0.811 0.087 0.037
ITL3 0.187 0.256 0.095 0.051 0.752 0.015 0.027
ITL4 0.056 0.266 0.025 0.291 0.569 -0.063 0.004
UCE1 0.024 0.045 -0.039 -0.021 0.014 0.806 0.063
UCE2 0.214 0.179 0.148 0.081 -0.021 0.778 0.037
UCE3 0.259 0.109 0.192 0.157 0.160 0.655 -0.124
RWC1 -0.040 0.082 0.083 0.080 0.280 -0.021 0.789
RWC2 0.341 0.079 0.220 0.035 -0.046 0.053 0.728
RWC3 0.028 -0.071 -0.028 -0.062 0.285 0.192 0.675
Cronbach
0.86 0.70 0.73 0.56 0.72 0.74 0.72
�s alpha

Table 2a. Exploratory factor analysis (the extent of CRM)


(Principal Components method with Varimax rotation; loadings>=0.50).
Construct : The Extent of CRM
Items
Factor 1 : Interactive Management IM5
Factor 2 : Customer Prospecting CP4
CP5
CP6
Factor 3 : Partnership P5
P6
Factor 4 : Personalization P3
P4
P5
Factor 5 : Empowerment ITL5
Factor 6 : Understanding Customer Expectations UCE4
Factor 7 : Relations with Customers RWC4
RWC5
RWC6

Table 2b. Exploratory factor analysis (the extent of CRM)


(Items thrown out due to poor loading).

The rest of the methodology deals with confirmatory analysis. Confirmatory Factor
Analysis, Construct Validity (Convergent and Discriminant validity), and a reliability
assessment with PLS (Partial least squares) were used. To do this, results obtained from
PCA (Principal Components Analysis) using SPSS were submitted to PLS. Results of
this second analysis regarding the confirmatory phase identified one factor for the
construct �customer loyalty� and seven factors for the construct �the extent of
CRM.� All items with a coefficient of Student�s T (t value) more than 1.64 (p<=0.05)
(see Table 3) were retained. The results of this analysis are presented in Table 3.

Student�s
Convergent
Rho/Items of factors Weight Loading T
validity (AVE)
(t value)
Loyalty
Reliability coefficient 0.50
Rho = 0.640
L1 0.5080 0.4351 2.0165
L2 -0.0885 0.1900 0.0869
L3 0.1002 0.4901 2.3467
L4 0.8895 0.8594 3.9825

Interactive Management
Reliability coefficient 0.61
Rho = 0.820
IM1 0.0269 -0.6142 -2.2756
IM2 -0.3362 -0.7773 -2.8419
IM3 -0.9722 -0.9202 -3.3931
IM4 0.3999 -0.3488 -1.3677

Customer Prospecting
Reliability coefficient 0.61
Rho = 0.822
CP1 -0.1294 -0.6157 -2.1025
CP2 -0.6755 -0.9438 -4.0174
CP3 -0.3719 -0.7604 -2.6222

Partnership
Reliability coefficient 0.57
Rho = 0.718
PS1 -0.0742 0.0272 0.1246
PS2 -0.3011 -0.0780 -0.3509
PS3 0.2369 0.5905 2.3464
PS4 1.1191 0.8936 3.3875

Personalization
Reliability coefficient 0.56
Rho = 0.648
P1 0.4498 0.5410 2.1389
P2 1.1132 0.9149 3.4475

Empowerment
Reliability coefficient 0.64
Rho = 0.839
ITL1 0.5292 0.8549 3.5055
ITL2 0.3498 0.8089 3.5682
ITL3 0.3740 0.7314 3.1552
ITL4 -0.3072 0.0290 0.1299

Understanding Customer
Expectations
0.66
Reliability coefficient
Rho = 0.783
UCE1 -0.1660 0.2849 1.0729
UCE2 0.1013 0.5810 2.1475
UCE3 0.9989 0.9896 3.6410
Relations with
customers
0.57
Reliability coefficient
Rho = 0.702
RWC1 1.0952 0.9849 5.2322
RWC2 -0.0279 0.4450 1.7677
RWC3 -0.1950 0.3395 1.4349
Rho = (Σλi)²/
AVE = Σλi�/n
(Σλi)²+Var(ξ)
Var (ξ) = Σ(1-λi²)

Table 3. Confirmatory factor analysis and convergent validity.

The far right column on Table 3 shows the convergent validity assessment for each
factor. To obtain these values, an averaged variance shared between each construct and
its measure was used (Fornell & Larcker, 1981). According to Fornell & Larcker (1981),
convergent validity coefficients should be higher than or equal to 0.50. We noticed that
all convergent validity coefficients calculated for all factors in this study were higher than
or equal to 0.50, as recommended by Fornell & Larcker (1981). The first column on
Table 3 shows the reliability of each measure, which is the Rho coefficient. Aubert &
Rivard (1994) report that the guidelines established by Nunnally (1978) for the
interpretation of Cronbach�s alpha also apply to the Rho coefficient. These guidelines
estimate that acceptable reliability coefficients must be higher than 0.6. All Rho
coefficients range between 0.640 and 0.839. These values are considered very
satisfactory.

The discriminant and convergent validities and Student�s T (t value) analysis are
presented in Table 4. Discriminant validity is the extent to which a measure of a construct
differs from measures of neighboring constructs (Fornell & Larcker, 1981). This is the
evaluation of variance shared between different constructs. This shared variance is
represented by a Covariance square (PHI square) between the constructs. To evaluate
discriminant validity, Fornell & Larcker (1981) suggest a comparison between the
average variance extracted (AVE) for each factor and the variance shared between the
constructs. To complete this evaluation, we used the matrix of covariance of the
constructs in which we replaced the diagonal with the square root of the AVE (underlined
in Table 4). The numbers on the diagonal (underlined) are all much larger than the
elements off the diagonal. Based on this analysis, the discriminant and convergent
validity of the measures appeared to be satisfactory.

Relati
Understa Interact
ons
Loy Partne Prospe nding ive Empowe Personali
with
alty rship cting Expectati Manage rment zation
Custo
ons ment
mers
Loyalty 0.50
Partnersh 0.10
0.57
ip 2
Prospecti 0.00
0.178 0.61
ng 3
Understa
nding 0.12
0.000 0.018 0.66
Expectati 2
ons
Interactiv
e 0.15
0.144 0.007 0.006 0.61
Managem 1
ent
Empower 0.18
0.017 0.004 0.008 0.133 0.64
ment 4
Relations
with 0.00
0.002 0.070 0.000 0.054 0.005 0.57
Customer 7
s
Personali 0.00
0.191 0.039 0.112 0.162 0.009 0.065 0.56
zation 0

Table 4. Matrix of covariance squared (PHI square)

The Web Site Evaluation Procedure


To measure the moderating variables (the levels of the organizations� Internet presence
and interactivity), the evaluation grid mounted according to the guidelines offered by
Kassarjian (1977) was used. Web site characteristics (the levels of the organizations�
Internet presence and interactivity) were evaluated by two judges: the researcher himself
and an MBA graduate student. The inter-judges reliability is the percentage of agreement
amongst multiple judges who treat the same communication materials (Kassarjian, 1977).
The reliability assessment currently used is the agreement ratio of codage out of the total
number of codage decisions (Kassarjian, 1977). Therefore, each judge makes 51
decisions per company�s web site (170 company�s web sites in total), which adds up
to a total of 8670 (51*170) decisions. The number 51 is equal to the number of criteria on
the evaluation grid including the perceptions of the judges. Of these 8670 decisions, both
judges agreed with 7613 decisions, which makes an average of 44 (7613/170) decisions
per company. Both judges disagreed with 1057 decisions, which makes an average of 6
(1057/170) decisions per company�s web site. The reliability inter-judges coefficient is
86.27%. Berelson (1952; cited in Kassarjian, 1977) claimed a range located between 66%
and 95% with a concentration at 90% for acceptable inter-judges reliability coefficients.
The ratio of 87.80% appeared to be satisfactory.

Inter-judges
Decisions made Agreed Decisions Disagreed Decisions
reliability coefficient
Total 8670 7613 1057 86.27%
Average 8670/170= 51 7613/170=44 1057/170=6

Table 5. Results of the web site evaluation (measurement of the levels of the
organizations� Internet presence and interactivity)

Results
Characteristics of Participating Firms

The respondents were spread across 9 different IT sub-sectors. However, according to


table 6, seventy-seven percent (77%) of the respondents were primarily involved in the
manufacturing of computer software, or information technology related services, or
information system consulting or high technology or others. In terms of annual sales
volume, 80% of the sample had annual sales of less than $10 million, while 13% sold less
than $50 million. Only 4% sold more than $50 million and 3% sold more than $100
million.

About 86% of the organizations had fewer than 100 employees, while about 10% had
fewer than 500 employees. About 4% of the organizations possessed between 500 and
10000 employees.

About 52% of the participating organizations have been in business for more than 10
years. Of the organizations responding, 35% had between 4 and 9 years in business,
while 13% have been in business for less than 3 years.

Twenty-seven percent of the respondents reported that their firm's Web site had been in
existence between 4 and 6 years, while 64% of organizations claimed to have been online
for more than nine years.

Seventy-four percent of the organizations reported an average duration of sales cycle


between 1 and 8 months, while 8% have more than 13 months as an average duration of
sales cycle. This information indicated that the responses were experience-based.

Industry sector Percentage


IT organisations 100%
Location of firms
Canada 95%
USA 4%
Other 1%
IT sub-sectors
Manufacturing of computer hardware 4%
Information Technology related services 13%
Information System consulting 11%
Wholesale, retail or distribution of computer hardware 5%
Wholesale, retail or distribution of computer software 6%
High technology 10%
Manufacturing of computer software 28%
Internet access and service provider 3%
Multimedia 5%
Other 15%
The number of years firms have been in business Percentage
Less than 3 years 13%
4-6 years 24%
7-9 years 11%
10 years or more 52%
The size of firm (persons) Percentage
1-100 employees 86%
101-500 employees 10%
501-1000 employees 2%
1001-10000 employees 2%
The average duration of sales cycle of firms Percentage
Less than one month 14%
Between 1 and 4 months 38%
Between 5 and 8 months 22%
Between 9 and 12 months 18%
13 months or more 8%
The revenue (sales) of firms Percentage
Less than $10 million 80%
$11-$50 million 13%
$51-$100 million 4%
$101-$500 million or more 3%
The age of the firms Web site Percentage
Less than one year 7%
1-3 years 1%
4-6 years 27%
7-9 years 1%
9 years or more 64%

Table 6. Characteristics of the companies sampled.

The Test of Hypothesis H1 with PLS

The test of Hypothesis H1 (a, b, c, d, e, f, and g) on the 170 questionnaire respondents


was carried out with a statistical tool named PLS-GRAPH. Table 7 shows that
Student�s T (t value) of links between the extent of the CRM components of
partnerships (2.42), empowerment (1.64), relations with customers (2.65), and
personalization (1.74) on the one hand, and customer loyalty on the other are higher than
1.65 (p<=0.05). This first hypothesis test shows that only these four variables among the
seven CRM variables have a positive and direct impact on customer loyalty.

Loyalty
Student�s
Path coefficient (Beta
T
standardized)
(t value)
Partnership 0.179 2.42

Empowerment 0.172 1.64

Understanding Customer
-0.015 -0.2538
Expectations

Customer Prospecting -0.076 -0.8846

Relations with Customers 0.332 2.65

Interactive Management 0.020 0.27

Personalization 0.136 1.74

Table 7. Path coefficient and Student�s T (t value).

The Tests of Hypotheses H2 and H3

To test the interaction effects, analysis was pursued only with the four variables that have
a positive and direct impact on customer loyalty. The two variables of Web site
characteristics that both play a moderating role are highly correlated. It is for this reason
that the following analysis was conducted by separately taking into account each
moderating variable in order to avoid the problem of multi-co-linearity.

The tests of Hypotheses H2 and H3 were carried out with covariance analysis
(ANCOVA). This would satisfy the homogeneity criteria and an examination of the data
would show that the distribution met the normality criterion required by ANCOVA.

Normality Test

The normality criterion was examined using the Lilliefors test, which is based on a
modification of the test of Kolmogorov-Smirnov. This test was the most appropriate one
for this analysis. Table 8 shows the results of the Lilliefors test.

Statistic Degrees of freedom Probability (P)


Relations with customers 0.067 170 0.224
Partnerships 0.055 170 0.185
Empowerment 0.068 170 0.232
Personalization 0.071 170 0.304
Customer Loyalty 0.077 170 0.314
Level of Presence on the Internet 0.058 170 0.232
Level of Interactivity on the Internet 0.041 170 0.166

Table 8. A normality test based on a modification of the Kolmogorov-Smirnov test.

The results, presented in Table 8, show that the Lilliefors test was not significant as all
probabilities are higher than 5% (P>=0.05). That means the data distribution met the
normality criterion. The second test of homogeneity was made simultaneously with the
test of the hypotheses.

Homogeneity Testing of the Variance: The Case of Hypothesis H2

Before running an ANCOVA to enable a test of Hypothesis H2, which expresses the
relation between the level of presence on the Internet and the link between the extent of
CRM and customer loyalty, it is important to ensure regression coefficient equality. This
can be done by using a variance homogeneity test (Conover, 1980). This test was carried
out by adding to the model the effect of the extent of CRM in terms of partnerships,
empowerment, relations with customers, and personalization, level of presence on the
Internet and the interaction between the extent of CRM and the level of presence on the
Internet. The term the extent of CRM * level of presence on the Internet allows us to test
the regression coefficient equality.
Loyalty

Homogeneity Hypothesis H2

(F value) P (F value) P
0.00
Partnership 42.068 42.068 0.000
0
0.84
Level of presence on the Internet 0.037
8
0.69
Partnership * level of presence 0.153 32.756 0.000
6

0.00
Empowerment 34.559 34.559 0.000
0
0.14
Level of presence on the Internet 2.175
2
0.17
Empowerment * level of presence 1.849 13.542 0.000
6

0.00
Relations with customers 42.735 42.735 0.000
0
0.08
Level of presence on the Internet 2.981
6
0.09
Relations with customers * level of presence 2.842 9.795 0.002
4

0.00
Personalization 41.429 41.429 0.000
0
0.41
Level of presence on the Internet 0.659
8
0.33
Personalization * level of presence 0.931 24.389 0.000
6

Table 9. H2 hypothesis and homogeneity testing.

As can be seen, Table 9 includes a column entitled �Homogeneity� as well as terms


{partnership * level of presence on the Internet (F=0.153; P >0.05), empowerment *
level of presence on the Internet (F=1.849; P >0.05), relations with customers * level of
presence on the Internet (F=2.842; P >0.05), and personalization * level of presence on
the Internet (F=0.931; P >0.05)} which meet the criteria of regression coefficient
equality for the construct loyalty. Covariance analysis was used to test Hypothesis H2
because the normality testing and the homogeneity testing were positively verified.

To carry out covariance analysis (ANCOVA) in order to test Hypothesis H2 (a, b, e, and
g), the following terms were simultaneously introduced into the model: 1) the effect of
the link between independent variables and dependent variables; 2) the effect of the link
between the moderating variable (the level of presence on the Internet) and the relation
between independent variables and the dependent variable. Table 9 (the column of
Hypothesis H2 testing) presents the results of this test, including the statistical values of
F and P. According to these results, the level of presence on the Internet positively
influences the relation between the extent of CRM (in terms of partnerships,
empowerment, relations with customers, and personalization) and customer loyalty.
Homogenenity of Variance Testing: The Case of Hypothesis H3 (a, b, e, and g)

Before running ANCOVA to test Hypothesis H3, (which expresses the relationship
between the level of interactivity on the Internet and the link between the extent of CRM
and customer loyalty), it is important to ensure regression coefficient equality. This can
also be done with the test of variance homogeneity (Conover, 1980). This test was carried
out by adding to the model the effect of the extent of CRM in terms of partnerships,
empowerment, relations with customers, and personalization, level of presence on the
Internet and the interaction between the extent of CRM and the level of presence on the
Internet. The term the extent of CRM * level of interactivity on the Internet allows us to
test the regression coefficient equality.

Loyalty
Homogeneity Hypothesis H3
(F value) P (F value) P
0.00
Partnership 121.924 121.924 0.000
0
0.67
Level of interactivity on the Internet 0.176
5
0.72
Partnership * level of interactivity on the Internet 0.122 58.801 0.000
7

0.00
Empowerment 148.854 148.854 0.000
0
0.83
Level of interactivity on the Internet 0.042
7
0.58
Empowerment * level of interactivity 0.295 38.968 0.000
8

0.00
Relations with customers 146.235 146.235 0.000
0
0.51
Level of interactivity on the Internet 0.419
8
0.28
Relations with customers * level of interactivity 1.160 26.331 0.000
3

0.00
Personalization 140.017 140.017 0.000
0
0.65
Level of interactivity on the Internet 0.203
3
0.46
Personalization * level of interactivity 0.545 47.019 0.000
2

Table 10. Homogeneity testing and Hypothesis H3 testing.

Table 10 includes the column entitled �Homogeneity� and the terms {Partnership *
level of Interactivity on the Internet (F=0.176; P> 0.05), Empowerment * level of
Interactivity on the Internet (F=0.295; P>0.05), Relations with Customers * level of
Interactivity on the Internet (F=1.160; P >0.05), and Personalization * level of
Interactivity on the Internet (F=0.545; P >0.05)} which meet the criteria of regression
coefficient equality for the construct loyalty. Covariance analysis was examined for
Hypothesis H3 testing because the normality and homogeneity tests were satisfied.
To carry out covariance analysis (ANCOVA) to test Hypothesis H3 (a, b, e, and g), the
following terms were simultaneously introduced into the model: 1) the effect of the link
between independent variables and dependent variables; 2) the effect of the link between
the moderating variable (the level of Interactivity on the Internet) and the relation
between independent variables and the dependent variable. Table 10 (the column of
Hypothesis H3 testing) shows the results of this test, such as the statistical values of F
and P. According to these results, the level of interactivity on the Internet positively
influences the relation between the extent of CRM (in terms of partnerships,
empowerment, relations with customers, personalization) and customer loyalty.

Discussion
The Extent of CRM and Customer Loyalty

It is clear that Hypothesis H1 (a, b, e, and g) was accepted while hypothesis H1 (c, d, and
f) was rejected. The findings of Hypothesis H1 (a, b, e and g) specify that the extent of
CRM, in terms of partnerships, empowerment, relations with customers, and
personalization, have a positive and direct impact on customer loyalty. On the other hand,
according to the results of Hypothesis H1 (c, d, and f), the extent of CRM in terms of
understanding customer expectations, customer prospecting, and interactive management,
do not have a positive and direct effect on customer loyalty.

The positive impact of partnerships on customer loyalty was previously found in the
study conducted by Evans & Laskin (1994). This finding also corroborated the
speculations of Payne (1994). Indeed, as mentioned above, Payne placed partnering at the
extreme end of his loyalty scale, considering it a stage where a durable and close
relationship between supplier and customer can be developed. The positive effect of
partnerships on customer loyalty also supports the arguments of Wilson (1995), who
outlined an integrated model of the customer relationship process in which the selection
of a partner was the first step of effective CRM. Obviously, effectiveness in the present
study was examined by measuring customer loyalty.

Similar results concerning the test of the hypothesis that the extent of the CRM
component of empowerment positively influences customer loyalty can be found in
Evans & Laskin (1994). Other authors have also been interested in the link between
empowerment and customer loyalty. Uncles & Laurent (1997) have both argued that
customer loyalty is the tangible and measurable benefit of an effective relationship
maintained with employees. There is clearly a strong link between our findings and the
previous findings of these authors. In addition, our findings support the view of
empowerment held by Berry (1983), Gronroos (1990), Morgan & Hunt (1994), and
Bendapudi & Leone (2002), all of whom expanded the definition of CRM by
incorporating the idea of practicing empowerment on employees so that they will serve
customers more effectively. As a result, these authors contend that customer loyalty will
improve. Finally, the results of this study support some of the conclusions reached by
Chow & Holden (1997) who established a positive link between empowerment and
customer loyalty.

The hypothesis positing that relations with customers will have a positive impact on
customer loyalty was also confirmed. This finding is especially important, as a good
relationship with the customer is the keystone of CRM philosophy. The presence of this
variable was also significantly linked to the definition of CRM. Customer loyalty is
considered to be the consequence of an effective relationship initiated and maintained
with a particular customer. Indeed, customer loyalty is presented in the literature as a
relationship phenomenon. All the speculations, suppositions, and research findings
mentioned above are very much confirmed in this paper by the acceptance of this
hypothesis.

The results of the hypothesis tests show that personalization has a positive impact on
customer loyalty. This finding also confirms some of the arguments found in the
literature. We have already discussed the idea that CRM supplanted the management mix
because the latter was a far more clinical approach, rendering the business representative
active and the customer passive, and so ensuring that there was no personalized
relationship with the business representative. Given this, one of the outstanding
contributions that CRM, which influences customer loyalty, has made to business in
general, is the personalization of the relationship between business representatives and
customers (Gronroos, 1994). Finally, the result discussed here corroborates the arguments
of Fournier & Yao (1997) and Macintosh & Lockshin (1997) that effective interpersonal
relations increase customer loyalty.

The Extent of CRM, Loyalty, and Web Site Characteristics

Partnerships, Customer Loyalty, and the Level of Presence on the Internet

The hypothesis that the level of presence on the Internet has a positive impact on the link
between the extent of the CRM component of partnerships, and customer loyalty is
significant. The explanation that comes directly to mind concerns the arguments of
Ghosh (1998) that presence on the Web is international by definition because Web sites
allow a company to attract international consumers. To this argument it is added that
business globalization is supported by such an opportunity. Partnerships between firms
from different countries are a common occurrence. Another argument is that a Web site
presented in many languages and available 24 hours a day will help to develop stronger
links between companies and their customers. The arguments by nGhosh (1998)
mentioned above enable us to understand the reasons why Internet presence greatly
fosters the link between partnerships and customer loyalty. A further explanation of why
this hypothesis is so significant is that a company�s Web site that presents its partners�
logos induces the partners to stay for a long time with this particular company.
Companies also have the option of including connections to their partners� Web sites,
which can encourage loyalty.

Empowerment, Customer Loyalty, and the Level of Presence on the Internet

Another significant hypothesis is that the level of presence on the Internet has a positive
impact on the link between the extent of the CRM component of empowerment and
customer loyalty. This is interesting because this hypothesis accords with the speculations
of Elfrink et al. (1997) who show that the majority of firms list their expertise on their
Web site, and often include such material as curriculum vitae, important references, and
employees� accomplishments. Companies that take such steps empower their
employees when they have to negotiate with external customers. This empowerment
process has repercussions on the relationships that employees initiate and maintain with
their customers in order to get their loyalty. Finally when employees are well informed
about their company�s Web site content, the customers will most likely be satisfied with
their services, and so loyalty will develop.

Relations with Customers, Loyalty, and the Level of Presence on the Internet

The level of presence on the Internet positively influences the link between the extent of
the CRM component of relations with customers, and customer loyalty. This hypothesis
corroborates much of the following information collected during our literature review. A
company�s brand image has an impact on the relationships with customers (Elfrink et
al., 1997). Thus a firm that presents a Web site using both graphics and text will improve
its brand image, which can encourage its customers to stay in a lasting relationship with
it. According to the literature examined above, the effectiveness of this relationship will
positively influence a customer�s loyalty.

The presentation of key headings on a Web site will allow customers to peruse the most
important parts of the site without getting lost. By proceeding in this way, customers will
save time when exploring the Web site because they will not waste time on useless
details and diversions. This can improve the relationship that the firms maintain with
their customers, and as a result, the loyalty of the customers will be positively affected.
Also, the first impression that a customer has of a company, or its first contact with the
company, can also influence the development of the relationship. A well-presented home
page encourages customers to continue exploring the Web site and so will help to
develop loyalty. A firm which has, for example, a �What�s new� heading on its Web
site will be able to communicate new developments to its customers frequently. This is a
pretext for keeping in touch with loyal customers, since the Web creates �one-to-one�
relationship opportunities for business representatives (Hofacker & Murphy, 1998). Other
factors attracting customers to a Web site that are often mentioned include the newness of
the home page as well as the entertainment and variety found there (Dholakia & Rego,
1998). The frequency of changes to the Web page is another factor (Dholakia & Rego,
1998). Launching new products into the market will favor the building of relationships
with customers. Moreover, this way of doing business will constitute a pretext for the
customers� repeating their purchase of goods and/or services.

Personalization, Loyalty, and the Level of Presence on the Internet

The hypothesis that the level of presence on the Internet favorably influences the link
between personalization and customer loyalty was accepted. This confirms the assertion
that Web sites allow a �one-to-one� relation between the business representative and
the site visitor. Companies can, for example, deliver personalized messages to their
customers (Sen et al., 1998). The acceptance of this hypothesis leads us to theorize that
using password-protected personalized Web sites to offer products and services to
customers helps the commercial relations between a firm and its customers.

The Extent of CRM, Customer Loyalty, and the Level of Interactivity on the
Internet

Partnerships, Customer Loyalty, and the Level of Interactivity on the Internet

The hypothesis that the level of interactivity on the Internet positively influences the link
between the extent of the CRM component of partnerships, and customer loyalty was
significant. The test of this hypothesis confirms that firm�s representatives share ideas,
influence views, and establish partnership potential through news groups, forums, and e-
mail with their customers. Such methods of doing business can allow firms to develop
customer loyalty. Firms involved in virtual exchange, via interactivity on the Internet,
will be motivated to become loyal to each other if the partnership is based on a �win-
win� relationship. The positive impact that the use of interactivity on the Internet has on
the link between partnership and customer loyalty can be explained by the fact that when
firms are committed to a partnership, they will include a link to their partner�s site.
Such a Web site will contain forms, e-mail, and so forth, which favor interactivity. It is to
be expected that this kind of relationship will result in loyalty. In conclusion, a
partnership supported by the interactivity of the Internet can increase the loyalty between
partners.

Empowerment, Loyalty, and the Level of Interactivity on the Internet

The hypothesis that the level of interactivity on the Internet acts positively on the relation
between empowerment and customer loyalty has been confirmed. This is not surprising
when taking into account information in the literature review. In fact, one study has
claimed that companies often empower one or several employees to answer questions or
to make comments online (Ghost, 1998). These actions are carried out by e-mail or
through online discussion (online conferences, forums, or chat rooms) and allow
companies and customers to make the most of the online contact time to share their
views. Companies empower their employees who react promptly to customer complaints.
The companies train their employees to offer various services, solutions, or products
during interactive online contact with the customers and to modify on the screen the
CRM statements that companies use to convince customers to buy, on the basis of
customers� reactions and views. The home page tries to convince customers to accept
the firm�s position in regard to certain circumstances (Dholakia & Rego, 1998). The use
of these different tools to create customer loyalty is confirmed by the results of this
research.

Relations with Customers, Loyalty, and the Level of Interactivity on the


Internet

The hypothesis that the level of interactivity on the Internet has a positive impact on the
link between relations with customers and customer loyalty was found to be significant.
There are arguments that explain the positive impact of this hypothesis. Simply by
participating in news groups, companies can initiate, develop, and improve relationships
with customers. The literature showed in many ways that maintaining such relationships
leads to loyalty. Customers who have made purchases, who take part in news groups, and
who involve themselves in online discussions are motivated to repeat their purchases
from these companies. Customers will be loyal to these companies because they share the
same ideology and views. When companies take part in forums and news groups, they
will be able to recognize the customers who want some information, and who ask specific
questions about their industry. Customers will demonstrate loyalty to the company which
has answered their specific questions by way of news groups. Firms often create virtual
clubs with the features of a virtual community. Customers will be ready to commit
themselves to a relationship maintained through such a virtual community.

Personalization, Loyalty, and the Level of Interactivity on the Internet

The acceptance of Hypothesis H3(g), which states that the level of interactivity on the
Internet reinforces the relationship between personalization and customer loyalty, seems
to be justified. The personalization of the messages and of the relations between a firm
and its customers simplifies and reduces the sales cycle, and allows a one-to-one
relationship (Borg, 1997), which can lead to customer loyalty. The literature helps us to
understand that the interactivity offered by the Internet is very favorable to one-to-one
relationships, especially with e-mail and forums. Thus, the use of forums on the Internet
to share information and to engage in a dialogue with customers allows personalization
and can ultimately lead to loyalty.

Conclusion
Recommendations, and Managerial and Theoretical Implications
The results of this study will allow Internet and information systems experts to inform
businesses about the impact of Internet network use on customer loyalty. These experts
have to show businesses reliable methods of fixing customer loyalty that involve
increasing the level of presence and interactivity provided by the Internet.

Regarding the theoretical contribution of this study, it is important to point out its
originality because it facilitates the development of a new conceptual model, which will
help future research. This study could, in fact, be considered as one of the first in the
electronic commerce field to employ scientific literature and an evaluation grid in order
to measure Web site variables. The use of the statistical PLS and SPSS tools is another
distinctive element of this research. Finally, the combination of qualitative and
quantitative approaches constitutes a further contribution of this study.
The findings of this research will help IT companies identify the CRM factors, which
they should emphasize when Web site characteristics are used to augment customer
loyalty:
• At a minimum, CRM, supported by Web site characteristics in order to increase
customer loyalty, should center on these factors: partnerships, relations with
customers, empowerment, and personalization.
o Partnership factors, leading to customer loyalty, could be supported by
some features provided by Web sites, for example, the presentation of a
partner�s logo on a firm�s Web site, or references on a firm�s Web
site to a partner�s products and services.
o Businesses should initiate, maintain, and develop relationships with loyal
customers by using, for example, forms, forums, chat rooms, online
conferences, news groups.
o In terms of empowerment, employees should be empowered in their tasks
to generate repeat purchases by the use of Web site characteristics (Web
site training in the use of the online selling and buying system used by the
company, and online research capacities to find useful information to
solve customer problems).
o Web site tools, such as personalized Web sites for each customer, or
cookies, should personalize or customize services for loyal customers.
• The results of this study show that it is a mistake to believe that the unique use of
sophisticated Web sites could augment customer loyalty. It is rather through a
combination of sophisticated Web sites and effective CRM that customer loyalty
will grow.
There are several limitations to this study. First, the study focuses on only one industry
(IT companies) and it remains to be seen if the results apply to other industries (e.g.,
banks and insurance). Second, there were limitations concerning the questionnaire used;
in particular, the characteristics of respondents. From certain statements, we became
aware that some respondents were managers or Webmasters who did not necessarily have
a sound knowledge of their organizations. In addition, some responses were based on
respondents� opinions and subjective perceptions and not on objective data.

Further research is necessary as Internet technology evolves so rapidly. It is important for


future studies to make use of longitudinal research. Future research should also expand
the range of Web site characteristic variables and examine their effects on the link
between CRM and customer loyalty. It may also be beneficial to test the impact of Web
site characteristics on the strategic advantages of firms. Finally, further research could be
to apply the conceptual model used in this study to other industries, or to make use of the
model to compare industries and companies of different sizes.

References
Adelaar, T. (2000). Electronic commerce and the implications for market structure: The
example of the art and antiques trade. Journal of Computer-Mediated Communication, 5
(3). Retrieved 25 June 2004 from http://www.ascusc.org/jcmc/vol5/issue3/adelaar.htm.
Avlonitis, J. G., & Karayanni, A. D. (2000). The impact of Internet use on business-to-
business marketing. Industrial Marketing Management, 29(5), 441-459.
Angehrn A. A., (1997). The ICDT model: Towards a taxonomy of Internet-related
business strategies. CALT at INSEAD, France.
Aubert, B., Rivard, S., & Patry, M. (1994). Development of measures to assess
dimensions of IS operation transactions. Proceedings of the International Conference on
Information Systems, Vancouver, 15, 13-26.
Bakos, Y., & Dellarocas, C. (2002). Cooperation without enforcement ? A comparative
analysis of litigation and online reputation as quality assurance mechanisms. Proceedings
of the International Conference on Information Systems, 23, 127-142.
Bell, H., & Tang, N. K. (1998). The effectiveness of commercial Internet Web sites: A
user's perspective. Internet Research: Electronic Networking Applications and Policy,
8(3), 219-228.
Bendapudi, N., & Leone, R. (2002). Managing business-to-business customer
relationships following key contact employee turnover in a vendor firm. Journal of
Marketing, 66(2), 83-101.
Berry, L. L. (1983). Relationship marketing. In L.L. Berry, G.L. Shostack, & G.D. Dpah
(Eds.), Emerging perspectives on service marketing (pp. 28-38). American Marketing
Association.
Berry, L. L., & Parasuraman, A. (1991). Marketing services: Computing through quality.
MA: Free Press/Lexington Books. Lexington.
Berthon, P., Pitt, L. F., & Watson, R. T. (1996). The World Wide Web as an advertising
medium: Toward an understanding of conversion efficiency. Journal of Advertising
Research, 1(1), 43-54.
Bitner, J. M. (1995). Building service relationships: It's all about promises. Journal of
Academy of Marketing Science, 23(4), 246-251.
Borg, K. (1997). A decision Internet tool for Web marketers. New Technology Showcase,
14(5), 12-20.
Chatterjee, D., Grewal, R., & Sambamurthy, V. (2002). Shaping up for E-commerce:
Institutional enablers of the organizational assimilation of Web technologies. MIS
Quarterly, (26)2, 65-89.
Chiu, C-M. (2003). Towards integrating hypermedia and information systems on the
Web. Information and Management, 40(3), 165-175.
Chow, S., & Holden, R. (1997). Toward an understanding of loyalty: The moderating
role of trust. Journal of Managerial Issues, 9(3), 275-298.
Churchill, G. A. (1979). A paradigm for developing better measures of marketing
constructs. Journal of Marketing Research, 16(1), 64-73.
Datamonitor (1999). B-to-b ecommerce software sales to dominate. Retrieved 25 June
1999 from http://www.nua.ie/surveys/.
Dholakia, U. M., & Rego, L. (1998). What makes commercial Web pages popular? An
empirical investigation of Web page effectiveness. European Journal of Marketing,
32(7/8), 724-736.
Dick, A. S., & Basu, K. (1994). Customer loyalty: Toward an integrated conceptual
framework. Journal of the Academy of Marketing Science, 22(2), 99-113.
Domingo II, G. E., & Hui, K-L. (2003). The effects of retail format characteristics on e-
loyalty. Ninth Americas Conference on Information Systems, 139-148.
Dufour, J-C., & Maisonnas, S. (1997). Marketing et services: Du transactionnel au
relationnel. Sainte-foy, Quebec: Les presses de l'Université Laval.
Dwyer, F. R., Schurr, P. H., & Oh, S. (1987). Developing buyer-seller relationships.
Journal of Marketing, 51(2), 11-27.
Elfrink, J., Bachmann, D., & Robideaux, D. (1997). Internet marketing: Evidence of a
viable medium. The CPA Journal, 1(1), 17-21.
Evans, J. R., & Laskin, R. L. (1994). The relationship marketing process: A
conceptualization and application. Industrial Marketing Management, 23(5), 439-452.
Fornell, C., & Larcker, D. (1981). Structural equation models with unobservable
variables and measurement error. Journal of Marketing Research, 18(1), 39-50.
Forrester Research. (2001). Business-to-business forecast. Retrieved 1 September 2001
from http://www.forrester.com.
Fournier, S., & Yao, J. L. (1997). Reviving brand loyalty: A reconceptualization within
the framework of consumer-brand relationships. International Journal of Research in
Marketing, 14(5), 451-472.
Gartner Group. (2000). Gartner Group forecasts worldwide business-to-business e-
commerce to reach $7.29 trillion in 2004. Press release. Retrieved 17 February 2000
from http://gartner11.gartnerWeb.com/ public /static/aboutgg/pressrel/pr012600c.html.
Gefen, D. (2002). Customer loyalty in e-commerce. Journal of the Association for
Information Systems, (3), 27-51.
Geyskens, I., Gielens, K., & Dekimpe, M. G. (2002). The market valuation of Internet
channel additions. Journal of Marketing, 66(2), 102-119.
Ghosh, S. (1998). Making business sense of the Internet. Harvard Business Review, 2,
126-135.
Gronroos, C. (1990). Relationship approach to marketing in service contexts: The
marketing and organizational behavior interface. Journal of Business Research, 1(1), 3-
11.
Grönroos, C. (1994). From marketing mix to relationship marketing: Towards a paradigm
shift in marketing. Management Decision. 32(2), 4-20.
Gummesson, E. (1994). Making relationship marketing operational. International
Journal of Service Industry Management, 5(5), 5-20.
Heide, J. B. (1994). Interorganizational governance in marketing channels. Journal of
Marketing, 58(1), 71-85.
Herzberg, F. (2003). One more time: How do you motivate employees? Harvard
Business Review, 81(1), 87-96.
Hofacker, C., & Murphy, J. (1998). World Wide Web banner advertisement copy testing.
European Journal of Marketing, 32(7/8), 703-712.
Hoffman, D. L., Novak, T. P., & Chatterjee, P. (1995). Commercial scenarios for the
Web: Opportunities and challenges. Journal of Computer-Mediated Communication, 1
(3). Retrieved 25 June 2004 from http://www.ascusc.org/jcmc/vol1/issue3/hoffman.html.
Hoffman, D. L., Novak, T. P. (1996). Marketing in hypermedia computer-mediated
environments: Conceptual foundations. Journal of Marketing, 60(2), 50-66.
Jackson, B. B. (1985). Build customer relationships that last. Harvard Business Review,
63(6), 120-128.
Jacoby, J., & Kyner, D.B. (1973). Brand loyalty versus repeat purchase behavior. Journal
of Marketing Research, 10(1), 1-9.
Jarvenpaa, S. L., & Tractinsky, N. (1999). Consumer trust in an Internet store: A cross-
cultural validation. Journal of Computer-Mediated Communication, 5 (2). Retrieved 25
June 2004 from http://www.ascusc.org/jcmc/vol5/issue2/jarvenpaa.html.
Joseph, V. B., Cook, R. W., & Javalgi, R. G. (2001). Marketing on the Web: How
executives feel, what businesses do. Business Horizons, 44(4), 32- 40.
Kassarjian, H. H. (1977). Content analysis in consumer research. Journal of Consumer
Research, 4(1), 8-18.
Lombard, M., & Ditton, T. (1997). At the heart of it all: The concept of presence.
Journal of Computer-Mediated Communication, 3 (2). Retrieved 25 June 2004 from
http://www.ascusc.org/jcmc/vol3/issue2/lombard.html.
Macintosh, G., & Lockshin, L. S. (1997). Retail relationships and loyalty: A multi-level
perspective. International Journal of Research in Marketing, 14(5), 487-497.
McMillan, S. J. (1998). Who pays for content? Funding in interactive media. Journal of
Computer-Mediated Communication, 4 (1). Retrieved 25 June 2004 from
http://www.ascusc.org/jcmc/vol4/issue1/mcmillan.html.
Morgan, R. M., & Shelby, D. H. (1994). The commitment-trust theory of relationship
marketing. Journal of Marketing, 58(3), 20-38.
Muhammad, T. K. (1996). Marketing online. Black Enterprise, 1(5), 85-88.
Nevin, R. J. (1995). Relationships marketing and distribution channels: Exploring
fundamental issues. Journal of Academy of Marketing Science, 23(4), 327-334.
Norusis, M. J. (1993). SPSS for Windows base system user's guide, release 6.0. Chicago:
SPSS Inc.
Payne, A. (1994). Relationship marketing making the customer count. Managing Service
Quality, 4(6), 29-31.
Peterson, A. R. (1995). Relationships marketing and the consumer. Journal of Academy
of Marketing Science, 23(4), 278-281.
Peterson, A. R., Balasubramanian, S., & Bronnenberg, B. J. (1997). Exploring the
implications of the Internet for consumer marketing. Journal of Academy of Marketing
Science, 25(4), 329-346.
Porter, M. E. (2001). Strategy and the Internet. Harvard Business Review, 79(3), 63-78.
Rafaeli, S., & Sudweeks, F. (997). Networked interactivity. Journal of Computer-
Mediated Communication, 2 (4). Retrieved 25 June 2004 from
http://www.ascusc.org/jcmc/vol2/issue4/rafaeli.sudweeks.html.
Reichheld, F. F. (2001) Lead for loyalty. Harvard Business Review, 4, 76-84.
Reinartz, W. J.. & Kumar, V. (2002). The mismanagement of customer loyalty. Harvard
Business Review, 80(7), 86-94.
Reinartz, W. J.. & Kumar, V. (2003). The impact of customer relationship characteristics
on profitable lifetime duration. Journal of Marketing, 67(1), 77-99.
Robbins, S. S., & Stylianou, A. C. (2003). Global corporate Web sites: An empirical
investigation of content and design. Information and Management, 40(3), 206-212.
Rowley, J., & Dawes, J. (2000). Disloyalty: A closer look at non-loyals. Journal of
Consumer Marketing. 17(6), 538-549.
Sen, S., Padmanabhan, B., Tuzhilin, A., White, N. H., & Stein, R. (1998). The
identification and satisfaction of consumer analysis-driven information needs of
marketers on the WWW. European Journal of Marketing, 32(7/8), 688-702.
Schubert, P. (2003). Personalizing e-commerce applications in SMEs. Americas
Conference on Information Systems, 9, 737-750.
Sheth, N. J., & Parvatiyar, A. (1995). Relationships marketing in consumer markets:
Antecedents and consequences. Journal of Academy of Marketing Science, 23(4), 255-
271.
Shultz, D. H. (1995). Marketing consuling services on line. Journal of Management
Consulting, 8(4), 35-42.
Szeinbach, S. L., Barnes, J. H., & Garner, D. D. (1997). Use of pharmaceutical
manufacturers' value-added services to build customer loyalty. Journal of Business
Research, 40(3), 229-236.
Tagliavini, M., Ravarini, A., & Antonelli, A. (2001). An evaluation model for electronic
commerce activities within SMEs. Information Technology and Management, 2, 211-
230.
Teo, H. H., Wei, K. K., & Benbasat, I. (2003). Predicting intention to adopt
interorganizational linkages: An institutional perspective. MIS Quarterly, 27(1), 19-49.
Thomas, J. S. (2001). A methodology for linking customer acquisition to customer
retention. Journal of Marketing Research, 38(2), 262-268.
Uncles, M., & Laurent, G. (1997). Editorial. International Journal of Research in
Marketing, 14(5), 399-404.
Venkatraman, N. (2000). Five steps to a dot-com strategy: How to find your footing on
the Web. Sloan Management Review, 41(3), 38-67.
Wilson, T. D. (1995). An integrated model of buyer-seller. Journal of Academy of
Marketing Science, 23(4), 335-345.
Yuan, Y., Caulkins, J. P., & Roehrig, S. (1998). The relationship between advertising and
content provision on the Internet. European Journal of Marketing, 32(7/8), 677-687.

About the Authors


Assion Lawson-Body is an Assistant Professor at University of North Dakota. He
obtained his Ph.D. and MBA in MIS from the Laval University, Quebec, Canada. He also
received DESS-CTCI from IAE, University of Montpellier 2, France. His publications
have appeared in Management Science. He has also published in several conference
proceedings such as Association of Information Systems, International Conference on
Electronic Business (ICEB), Wuhan International Conference on Electronic Business,
and Association for Information and Management. He worked for companies in France
and lectured at Laval University before joining University of North Dakota. His research
interests include Electronic Commerce and E-business, Customer Relationship
Management, E-loyalty, Management information technologies, and Database systems.
Address: Department of Information Systems, College of Business and Public
Administration, University of North Dakota, P.O. Box 8363, Grand Forks, ND, 58202;
Phone: (701) 777-3505; Fax: (701) 777-2518; Office: 365P.

Moez Limayem is an Associate Professor at City University of Honk Kong. He obtained


his Ph.D. and MBA in MIS from the University of Minnesota. His publications have
appeared or have been accepted for publication in Journal of Organizational Computing,
Group Decision and Negotiation, Small Group Research, Management Science,
Accounting Management and Information Technologies, Journal of Computer
Information Systems, DSS Transactions, Communications of the ACM and more. He has
also published in several conference proceedings such as International Conference on
Information Systems, Association of Information Systems, IEEE International
Conference on Systems Man and Cybernetics, Hawaiian International Conference on
Systems Sciences. He was the chair of MIS department at Laval University, Quebec,
Canada before joining City University of Hong Kong. His research interests include
Decision support systems, Electronic Commerce and Business Process Reengineering,
management of information technologies, and knowledge management.
Address: Department of Information Systems, City University of Hong Kong, 83 Tat
Chee Avenue, Kowloon Tong, Hong Kong; Phone: (852) 27888530; Fax: (852)
27888694; Room: P7817.

Appendix: Item Definition


Factors and their
Item definitions
items
Loyalty
Of the existing maintenance agreements, the percentage of these
L1
agreements that are being renewed is :
The percentage of sales to regular customers (customers with whom
L2 your firm maintains business relationships)
out of your firm�s total sales is :
L3 The average yearly revenue per regular customer is :
L4 The number of your firm's regular customers is :
The average number of years during which your firm maintains
L5
business relationships with its customers is:
The percentage of revenues from regular customers out of your
L6
firm�s total revenues is :
L7 In general, your firm negotiates with its customers.

Interactive
Management
Your firm uses customer feedback to improve your products and
IM1
services.
Your firm records customer feedback about your products and
IM2
services.
In general, your firm actively solicits customers' opinions on your
IM3
products and services.
IM4 Your firm discusses with its customers their feedback.
IM5 Your firm seeks formal customer product evaluations.

Customer
Prospecting
Your firm uses a database for tracking and prospecting new
CP1
customers.
In general, your firm devotes resources to help with the prospecting
CP2
of new customers.
Your firm develops and distributes promotional material
CP3
(brochures, booklets, pamphlets, Web pages, etc�)
Salespeople from your firm use current customers' testimonials or
CP4
references when prospecting new customers.
Your firm participates in trade shows, conferences, expositions,
CP5
etc�
CP6 Your firm invests in media publicity (TV, radio, press, etc�)

Partnerships
PS1 Resale of your firm�s products and services by your customers.
Reference to your firm�s products and services when customers
PS2
sell their own products and services.
PS3 Creation of joint ventures with customers.
PS4 Joint development of products and services with customers.
PS5 Joint advertising programs with customers.
PS6 In general, your firm builds partnerships with its customers.

Personalization
P1 Your firm sends customized mail to customers.
P2 Your firm assigns one salesperson to each customer.
P3 Your firm manages its customers technique problems
P4 Your firm assigns one salesperson to each customer
Your firm develops or prepares specific products for specific
P5
customers.

Factors and their items Item�s definitions


Empowerment
Your firm rewards employees who do their very best to solve
ITL1
customer problems.
Your firm has policies indicating to employees their degree of
ITL2
responsibility and authority in solving customer problems.
In general, your firm empowers employees with regards to
ITL3
customer relations.
Your firm has a management training program for technical
ITL4
service employees.
Your firm has a technical training program for business
ITL5
representatives.

Understanding Customer
Expectations
UCE1 Your firm organises focus groups with customers
UCE2 Your firm conducts market studies on customer expectations.
UCE3 Your firm conducts satisfaction surveys among customers.
In general, your firm makes an effort to determine customer
UCE4
expectations.

Factors and their items Item�s definitions


Relations with customers
RWC1 Salespeople from your firm maintain contacts with customers.
RWC2 In general, your firm conducts customer follow-ups.
RWC3 Your firm actively initiates contacts with customers.
Your firm devotes resources to support the installation of its
RWC4
products at customer locations.
Your firm actively seeks to improve business relationships
RWC5
with its customers (promotions, discounts, etc...)
RWC6 Salespeople from your firm visit customers.

©Copyright 2004 Journal of Computer-Mediated Communication

S-ar putea să vă placă și