MANAGING CUSTOMER CONTACT SERVICE THROUGH DATABASE
MARKETING: DEVELOPING A THEORETICAL FRAMEWORK
Sarah Spencer-Matthews
Sunshine Coast University
Sally Rao
The University of Adelaide
Track: Market Orientation and Relationship Marketing
Key words: database marketing, customer contact management, customer service
Abstract
A question facing contemporary service firms is ‘How can customer databases be effectively
used to customise service contact?’ This research aims to answer that question. Although
database marketing is increasingly being adopted in Australian organisations, little academic
attention has been paid to its linkages with database marketing and customer service. This
research uses the case research methodology to develop a new framework about how
organisations make use of customer databases in improving their customer service through
customer contact management (CCM). This framework is the first that explores the issues
within Australian organisations in practical terms. Results are presented in a proposed
framework that shows the process information from the marketing database and customer
service interactions takes to improve customer service. For example, information gathered at
different contact points provides a more complete picture of individual customer interaction
with a firm which in turn, facilitates anticipating needs and providing personalised customer
service.
Introduction
Customer service has strategic importance because it can directly impact on customer
satisfaction (Dean and Terziovski 2000; Barnes 2001). Thus, companies need to continually
enhance customer experience and satisfaction, to deliver quality in a competitive marketplace
(Schneider and Bowen 1999). Customer service refers to the processes and actions that make
it easier for customers to do business with a company (Kotler 2000). In particular, there has
been growth in customer contact services, that is, personal communication channels such as
face-to-face, mail, phone and the web that impact on the way a customer may interact with a
business (Dawes and Rowley 1998; Galbreath and Rogers 1999). This growth of customer
contact points provides opportunities for a business to proactively respond to customers’ need
(Potter-Brotman 1994; Heim and Sinha 2001). Furthermore, there is a developing need for
organisations to manage customer contacts more effectively (Gilmore and Moreland 2000).
The core of customised customer contact service is information about a customer that may be
collected, maintained and retrieved through a marketing database. Indeed, several industries
are recognising that a sophisticated database is a prerequisite for improving customer service
(Colgate and Danaher 2000), including financial services (Dawes and Worthington
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1996), hospitality (Palmer, McMahon-Beattie and Beggs 2000), air travel (Peppers and
Rogers 1999), and vehicle manufacturers (Schoenbachler, Gordon, Foley and Spellman
1997). Database marketing has grown from a narrow tool used for specialist direct mail and
direct marketing campaigns through to a widely used tool that has company-wide implications
in managing relationships with customers. However, combining database marketing and
customer service is still in its infancy and there is little research and practical know-how
about how organisations can facilitate integrated databases to deliver customised contact
service (for example, Weiss 1999; Berry, Seiders & Grewal 2002). Accordingly, further
research is required to better understand this phenomenon.
Hence, the integration of information technology with customer service strategy is a new
strategic weapon for businesses (Domegan 1996; Parasuraman 2000; White and Pearson
2001). Further research into how and why this strategic weapon can be facilitated is required
(Dick, Gallimore and Brown 2002. The aim of this paper is to develop a framework for using
information in marketing databases to help marketers improve their customer contact
management that is, this research addresses the research question, ‘How can customer
databases be effectively used to customise service contact?’ .Essentially, we argue that
information from the marketing database and customer service interactions can be integrated
to improve customer contact service.
This paper is set within the Australian context and has three parts. Firstly, a preliminary
framework based on the literature is outlined. Then, the methodology of case research is
briefly described. Finally, a final framework based on the findings is presented.
A preliminary framework
A preliminary framework for this study was developed from the literature about customer
service and database marketing as shown in Figure 1 (for example, Kellogg 2000, Bitner,
Faranda, Hubbert and Zeithaml 1997). The framework outlines the process of using
information collected at customer contacts to customise customer service. That is, inputs into
a database and other information flow to standardised and individual communication points
that produce strategic outputs of customised customer contact service. The information
gained through the customised customer contact service is then fed back to the marketing
database as another input source. Consider this process in more detail.
Information at
customer contacts
INPUTS
Information
receptabcle
PROCESSING
Service at
customer contacts
OUTPUTS
Figure 1: Process of information at customer contact points
Firstly, harnessing information during customer contact is an issue with the proliferation of
contact points (Rowley 1998). Moreover, information is a fundamental component of
communication channels such as face-to-face, mail, phone and the web impacting on how
customers interact with a business (Dawes and Rowley 1998; Galbreath and Rogers 1999).
Indeed, the provision of seamless customer contact service requires the information
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gathered during customer interactions to be accessible in a real time manner and available at
all relevant customer contact points (Rosenthal and McEachern 1997). For example,
information should be available about individual customer interactions and needs whenever
and wherever a customer makes contact - phones a hotel to make a booking, arrives at the
hotel, requests room service and pays the bill by mail.
These repeated customer contact interactions by individual customers may not necessarily be
with the same customer contact personnel (Gutek, Bhappu, Liao-Troth and Cherry 1999).
This means there may be information gaps between the different contacts. Moreover,
customer contact personnel are not the only customer contact points within an organisation
(Kotler 2000, Rowley 1998). Further, organisations need to learn more about customers and
incorporate this knowledge into individual customer interactions (Dawes and Rowley 1998).
The literature recognises that attention should be given to the more effective collection and
application of information in the database (Rich 2000) and that information collected from a
number of organisational sources will be of more strategic value. However, how this
information can be collected and integrated needs to be further investigated.
Next, an organisation can use these customer contact points to communicate their
understanding of, and ability to meet, individual customer needs or provide customised
customer contact service. That is, organisations can provide customers with immediate,
accurate and relevant service to their needs by anticipating needs and providing personalised
content to customer interactions. However, in order to deliver this improved service,
organisations need relevant and up-to-date data on individual customers. How this
information can be used and to what degree service can be customised needs to be
discovered.
Finally, there are various barriers that hinder the required access to real time information
including empowerment of customer contact personnel (Hartline, Maxham and McKee 2000),
resource issues (Chase 1978), corporate culture and organizational systems (Palmer,
McMahon-Beatie and Beggs 2000), and inter-functional impediments (Potter-Brotman 1994).
How service organisations perceive these barriers and how they are overcome requires a more
comprehensive framework.
Methodology
The rigorous qualitative methodology of case research was adopted to explore research issues
arising from the preliminary conceptual framework (Perry 1998; Yin 1994). This choice of
case research is appropriate for investigations that are pre-paradigmatic in nature and so
require theory development (Borch and Arthur 1995). Qualitative methods such as case
research is particularly relevant for theory building rather than theory testing (Bonoma 1985).
That is, qualitative methods are used to understand the phenomena under investigation and to
interpret the respondent’s experiences and beliefs in their own terms (Gilmore and Carson
1996). The depth and detail of qualitative data can be obtained only by getting physically and
psychologically closer to the phenomenon through in-depth interviews (Carson and Coviello
1996). The approach used is consistent with the procedures recommended for theory
generation by several scholars (Deshpande 1983) and utilized by researchers in marketing.
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Cases were selected using replication logic to cover a range of different industries and
experiences with customer contact management (CCM), that is, hotels, hospitals, government
and financial institutions thus providing a solid base for analysis. A purposive sampling
method was used instead of random sampling because the goal of this research is theory
building or analytical generalisation rather than theory testing or statistical generalisation
(Devers and Frankel, 2000; Neumann, 1994). In total, nine cases were studied, following
normal procedures of case research (Perry 2001). That is, qualified case organisation were
chosen and several in-depth interviews within each case were undertaken. Indeed, multiple
interviews took place for each case, totaling 34 face-to-face, in-depth interviews. To provide
triangulation, interviewees were drawn from different areas of the organisation including
senior management, customer contact personnel and business units such as marketing and
information technology. A semi-structured interview protocol with mainly broad open-ended
questions to ensure a consistent pathway to analysing the interview data (Yin 1994) was used.
Interview questions were developed using prior theory in the areas of customer service and
database marketing and in consultation with several academics and practitioners who had
substantive or methodological expertise. As well, the usual quality control mechanisms like
triangulation were used (Healy and Perry 2000; Carson, Gilmore, Perry and Gronhaug 2001).
A challenging step of case study research is the analysis of the qualitative data. The
technique of content analysis was used to analyse the interview information, attaching codes
to data. This research developed a starting list of codes prior to conducting the fieldwork
(Carson et al. 2001). When the coding was complete, matrices were developed to summarise
the data (Miles and Huberman 1994) and to provide a platform for cross-case analysis (Patton
1990).
Findings and discussions
Findings from the case studies extended the preliminary framework by providing more details
about how customer contact can be improved through using marketing databases. Our
findings are summarised in Figure 2 and are discussed next, for each of the parts of the
framework in turn.
Main customer contact points and sub-databases. Development of effective contact
points provides subsequent opportunity for data capture. In particular, this research identifies
seven contact points that have the most relevance for customer contact management, that is,
those points that can be integrated into the database include face-to-face, telephone, mobile
staff, websites, email, mail and other miscellaneous contact points such as wireless
technology. Amongst them, face-to-face and phone contacts are the most commonly used
CCPs suitable for information collection. Customer information is gathered at single contact
points during customer service interactions. Ideally, this information is then stored in a subdatabase.
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Inputs
Outputs
Processing
Implementation
issues:
CCP 1
Customised
communication
and customer
contact service
 Top
management
commitment
 Supportive
organisational
culture
 Legacy
systems
…
CCP 2
Integrated
customer
dbase

CCP 7
Feedback
Costs
 Security and
privacy issues
Key: CCP = customer contact point; dbase = database
Figure 2 The proposed framework for managing customer service through databases
These sub-databases are important because customer information is derived from a number of
sources from within or outside the organisation such as from the back office, front office and
external parties at varying times. Customers evaluate their service experiences by the quality
of service received during these interactions and the process of delivering this service
involves issues such as information access. This information access originates from subdatabases at each relevant CCP.
The centralised and integrated customer database. The sub-databases at each contact
point feed into the centralised and integrated database. This major database is central to
customer contact management because of its ability to collect and disseminate information
from and to various contact points. However, the collection and utilisation of database
information relevant for customer contact service through an integrated database brings with
it problems. The main one is associated with the magnitude of information used at contact
points. One of the respondents in one of the cases commented, ‘Clogging up the database
with too much information’. Nevertheless, superior customer service can be provided if there
is visibility or knowledge about the customer across the various customer contact points.
Indeed, to improve customer service interactions, marketers need to generate feedback
through their database to cater for future customer needs.
Customised communication and customer service. This use of centralised and integrated
database leads to the opportunity in customer contact service to provide service individually
tailored to a customer. This opportunity is an academic ideal that, in theory, transforms
outputs from the major database into the prospect for individual communication with a
customer. Information gathered during customer service interactions can be included in the
database for use during future interactions with individual customers. That is, customised
service is the strategic output experienced by customers at the various customer contact
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points.
Indeed, this research identified a number of opportunities for customer contact management
through the use of customer databases. Access to information at various customer contact
points provides a more complete picture of the customer and therefore, companies are more
pro-active in terms of customer service and communication with customers at contact points
are more personalised. This, in turn, provides improved customer service outcomes and better
customer satisfaction.
Feedback. Feedback during the processes of customer service delivery provides the required
access to modifying, refining and delivering information to individual customers at the
customer contact points. This feedback of customer information from various customer
contact points can be incorporated into the integrated database and be used in future
interaction. Feedback is crucial to customer contact management because it is the mechanism
by which the database is kept current and relevant. Indeed, this feedback provides an
iterative, up-to-date and complete picture of individual customer interaction. Furthermore, it
is part of an evolutionary process where many case organisations have envisaged a virtually
closed marketing information system through CCM in the future.
Other implementation issues. Several implementation issues were raised from both
organisations and a customers’ perspective. From an organisation’s perspective, commitment
by top management and organisational culture was considered essential for the smooth
implementation of CCM because customer service is multifunctional and requires interfunctional cooperation. Top management’s support and the cultural acceptance from staff
across the organisation facilitate CCM both financially and philosophically.
Interestingly, most organisations believe they have the readiness and availability of
technological support for the implementation of CCM, however claim major barriers relating
to the numerous legacy systems present. These legacy systems, by their nature, exhibit
problems with access, space, integration and interaction. Costs relating to financing CCM are
also of concern. It was recognised that CCM involves not just a one-off cost and that it takes
funding away from other initiatives. Furthermore CCM has many unknown costs that are
difficult to quantify prior to implementation.
From a customer’s perspective, some apprehensions were raised, including continued
impersonal service, data issues and privacy. In particular, the security and privacy issues are
of concern to both organisations and customers. Information about customers being shared
around a number of people within the organisation could lead to security and confidentiality
breaches. Ambivalence was evident in regard to the issue of privacy. ‘A real problem …
with new legislation’. ‘Government regulation is making this a hot issue for us’. However, no
case organisations felt privacy concerns prevented CCM but some organisations were aware
of the need for caution. ‘Important….. needs passwords, menus etc’. The reason for this
acceptance of privacy was that privacy is an issue that is prevalent regardless of the customer
management system. ‘We already dealt with it’.
Conclusions and implications
In summary, a framework for database marketing facilitating customer contact management,
with four components of inputs, processes, outputs and feedback has been established in this
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research. In addition, identification of barriers that impact on the implementation of customer
contact management is provided.
There is little research about how customer database could be used as a customer contact
service tool. From the sparse literature and our empirical findings, a framework can be
proposed and is shown in Figure 2. That framework is a contribution because it is a new step
towards understanding the important confluence of two streams of business activity. This
paper not only contributes to the body of knowledge about customer contact management and
database marketing in this way but it also has implications for database marketing and
customer service managers - it will help them understand how improve customer service and
hence customer satisfaction. Nevertheless, further research is needed to establish the validity
of these theory-building findings through survey research once the population of marketing
managers with the requisite expertise becomes large enough for such a survey to be done.
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