An Analysis of the Impact of Internet Based Customer Service Strategies on Customer Retention: A Case Study of Amazon UK

1.0 Introduction

In the early decades of e-commerce, it has been considered that customer retention and online shopping were mutually restricted. Bakos and Erik (2002) argued that web seeks to lower the customer loyalty of a particular brand. On one hand, with a click of a mouse the customer covers the search of the lowest price, effortlessly, yet the risk of switching over from one site to the next is high. Therefore, in the perspective of the current business scenario, customer service is one of the key marketing components that ensure the sustainability of the e-commerce brands. Consequently, Caves and William (2006) mentioned that customer service is the effectual strategy of a brand that can eventually retain the considerable number of customers to uplift the competitive advantage among its rivals. Harrigan (2010) acknowledged that valuable customer service can influence the customer to bookmark the preferable sites in order to lead usage patters that are loyal and sometimes addictive. As a result the loyal customers increase the visibility on the preferred sites and hence, increase the goodwill and competitive advantage of the particular brands.

Amazon has been considered as one of the popular online retailer retails in various segments of products like: books, sports accessories, electronics and DVDs. Klein (2005) affirmed that the natural stimuli of the customer are to expect the maximum worth of money through the products and services. Therefore, Amazon could provide maximum satisfaction to its loyal customers by delivering the additional services like, after sales service, free repair or replacement of the sold out products. However, Hossain and Wang (2008) pointed out that on the platform of rapid growing cyber usage, a considerable number of retailers have opted for online trading in order to attain a greater volume of the customer reach. Moreover, Ellerman and Brian (2010) contradicted that a lack of sufficient customer service can result in the loss of significant market share in terms of loyalty and potential customers.

1.1 Rational for the study

Herein, the researcher will identify the importance of the online based customer service strategies that help the e-commerce industry to retain its customers. However, the researcher has identified that almost 40% of the respondents have reported that an effective customer service can serve the e-commerce industry to enhance its customer retention. However, Lafontaine (2009) pointed out that customer retention policy can leave an enormous impact effect on the web-site profitability. Therefore, it has been assessed that more than the offline industries the difficulty level is high for the e-commerce industry to simulate a long term economics of the web sites (Hence, the current study would analyze the importance of internet based customer services to serve the e-commerce sector to retain its potential customers and to have a wider market reach amongst the potential mass.

1.2 Research aim

The main aim of the current study is to evaluate on the internet based customer service strategies and its impact on the customer retention approaches.

1.3 Research objectives

  • To identify the factors that influence customer service provided online.
  • To identify the importance of customer retention for Amazon, UK and the current performance indicators in terms of customer retention.
  • To analyse the relationship between online customer service and retention.
  • To identify the gaps in the current strategies adopted by Amazon to service customer online.
  • To make recommendations for Amazon to improve online customer service levels and retention.

1.4 Research questions

  • What are the factors that influences the online customer service?
  • Why customer retention is important for Amazon, UK?
  • What are the current performance indicators of Amazon, UK?
  • How can online customer service strategies promote customer retention?
  • What are the gaps in the current strategies of Amazon regarding online customer service?
  • How could the gaps be minimized through suitable improved customer service and retention strategy?

1.5 Research hypothesis

H1: The effective internet based customer service strategies can support the e-commerce industry to retain its customer.

H0: the effective internet base customer service strategies does not support the e-commerce industry to retain its customer.

2.0 Literature review

2.1 Introduction

Here the researcher has evaluated on the customer service strategies that helps the brand to maintain a relationship with the customer and enhance the retention ratio. As the most important factor of a firm is its customer, thus, a particular firms should come up with innovative strategies to retain the customers. On the other hand the researcher identified the factors that are responsible to create an impact on the customer retention ratio on the internet based customer service process.  

2.2 Internet based customer service strategies and its relationship with the customer retention ratio

Internet based customer service strategy helps organizations to get wider customer reach at a minimal cost. As stated by Michael (2005), several internet based customer service strategies are helping organizations to maintain effective brand image by providing higher quality services. Most of the customers prefer purchasing products from online media due to high security services and brand reliability (Norton and Seth, 2011). Brands like eBay and Amazon are managing to gain and maintain customer trust by providing higher services to them. Furthermore, online customer service facility enhances the customer engagement ratio which is another prime reason of attracting and retaining more customers towards the brand. On the other hand Quelch and Loisa (2008) argued that sometimes a pitfall in the customer service can lead to hamper the good reputation of the firm. As the expectations of the customer always remains high. Therefore, the employee needs to be very carefull in terms of providing the services.

The safe and secure payment process and the availability of the varied product ranges are two prime factors which has created massive trust among the consumers. Long (2007) stated that customer retention ratio is proportionate to the brand trust and the reliability factor. Majority organizations are gaining trust and the reliability by utilizing internet based customer service strategies and maintaining higher customer retention ratio in the competitive market.

2.3 Factors responsible to impact customer retention ratio

Brand image, brand loyalty and the brand value are three basic parameters which generally influences customer attraction and retention ratio in the online purchase process. Lafontaine (2007) argued that not all customers get attracted on the brand alue, majority of the cutomers gets influenced by the services offered by the particular brand. As cited by Quelch and Loisa (2008), it is very difficult and challenging for organizations to maintain a positive brand image. As a matter of fact, majority of well established brands are found experiencing higher customer retention ratio in the global market. Not only this, a few brands have also established higher degree of customer retention like the pioneer brands by providing higher level of customer service (Mittal and Kamakura, 2011). Brand like Flipkart is operating its online customer service segment since last six years and it has already achieved the establishment like Amazon or eBay in the market. Flipkart has achieved this due to its higher brand loyalty and brand value across the global market. Hence, it can be stated that operational duration is not the concern factor while, brand loyalty and brand reliability are the basic parameters for creating higher customer retention in the online customer service media.

2.4 Factors influencing customer retention ratio on the internet based customer service process

Internet based customer service tool has achieved significant degree of customer acceptance because of convenient accessibility and higher security services.

Convenient accessibility

The details, specific feature, price, offerings, various sizes etc are easily accessible in the online service and product domain. Apart from this, all brands have become able to display their offerings in the internet and these are easily accessible. As cited by Lafontaine (2007), this service domain provides customers to add their preferences in the cart and allows customers to purchase as per their convenience. It has improved the satisfaction ratio of the customers and the same could become a vital agenda for improving customer retention ratio.

Secured login and payment gateway

The login process is made highly secured to restrict the unauthorized entry into the system. As cited by Michael (2005), it has been made to secure all the provided details of the customers. However, payment gateway system also involves highly secured process of the purchase transaction and it allows Visa, maestro, Amex card for proceeding online transaction. It has created higher flexibility in the overall operational process and made customers more satisfied with the service thereby improving customer retention ratio in the global market.

Conclusion

Here the researcher has identified the importance of the internet based services for the ecommerce brands like Amazon in order to enhance the customer base and retention ratio. However the researcher identified that brand image, brand loyalty and the brand value are three basic parameters which generally influences customer attraction and retention ratio in the online purchase process. On the other hand the safe and secure payment process and the availability of the varied product ranges that are two prime factors which has created massive trust among the consumers. Therefore, the brand needs to focus on these primary factors that can serve the particular brand to create a brand awareness in the competitive market and the to retain its potential customers.

2.4 Conceptual framework

 

Figure 1: Conceptual Framework

(Source: Self created)

3.0 Research methodology

3.1 Type of investigation

The researcher receives a clear image of the study through the research methodology to conduct the research work. Brannen (2009) mentioned that the methodology is clearly based on each and every step on which the research work can be formulated. However, the research methodology focuses on the strategies like: sampling, data collection, methods of reality and validity of concept. In this particular research work the researcher has selected the explanatory and deductive approach (Cameron, 2009). On the other hand, the researcher would select descriptive research design while conducting the study. As mentioned by Corner (2002), positivism philosophy deals with relevant facts and the realism associated with it. Furthermore, positivism philosophy helps to analyse varied types of real facts associated with the events. Hence, positivism philosophy could help researcher to gather relevant facts about the impact of employee performance on the effective service delivery and customer attraction in the UK hotel industry.

Additionally, the researcher would analyse the relationship between employee performance and customer attraction ratio by using positivism philosophy. Hence, choosing positivism philosophy can be considered as realistic to conduct overall study. On the other side, deductive research approach would help researcher meeting the accuracy of the research. As cited by Kothari (2004), deductive research approach contradicts the nature of inductive research approach. Inductive research approach starts with creating new theories rather than analysing past theories, while deductive research approach evaluates past theories while conducting the research. Furthermore, Corner (2002) mentioned that deductive research approach would help researcher maintaining accurate flow of the study. When it comes to present study, the researcher would analyse several past theories on improving employee performance in order to increase customer attraction in the hotel industry, the UK. Henceforth, deductive research approach could be considered more authentic for conducting the study.

The researcher could select descriptive research design to conduct the study. As stated by Bryant and Oliver (2009), descriptive research design would help researcher to identify research problems by resolving ample of research questions. Furthermore, Kothari (2004)  cited that solution on the questions need to be clarified which could significantly evaluate another issue associated with the same. Similarly, the researcher needs to prepare survey questionnaires for addressing real problem statement. Hence, descriptive research design could become a compatible way for conducting the study.

The researcher has analyzed the effectiveness of the internet based customer service strategies scheme to retain the customers of the particular brand. Thus, the explanatory approach has been followed. Moreover, the implementation of no new model has been improvised in the particular research work. Hence, the selection of the deductive approach has been done by the researcher.

3.2 Data collecting method

Several methods of data collection are being followed in the current research work. Corner (2002) suggested that the quantitative details are descriptive in nature, hence, cannot be quantified as the quantitative information. The quantitative details will be collected by the personal interview session.

On the other side, the details of the secondary information will be gathered by the brand pages of the e-commerce industry along with the published materials like, article, journals, adequate information based on the internet and news paper reporting will be used. However, the past publication will be evaluated and the review of the brand will be assessed to collect the information related to the research topic. The customer who has already perceived the service of the particular brand will have a virtual communication with the counselor of the particular brand, hence, gathering the data of the regular customers from the specific brand. Thus, the developed questionnaires will be forwarded to the sample respondents to utilize the benefits of the questions. Based on the particular outcome, the final questionnaire will be designed and forwarded to all the respondents to attain their feedback.

3.3 Sampling method

The researcher selected the probability sampling for not being partial during the time of the data collection. The sampling techniques will be used for the quantitative details collection. However, within the current process, the researcher has followed the simple random sampling. Kothari (2004) mentioned that the process of simple random provides equal chances to each of the individual respondents to be a part of the current study, hence, not being biased during the data collection process. Thus, the respondents’ selection will be done randomly to prevent the researcher from being biased during the data collection process.

Moreover, the quantitative details will be gathered through non-probability sampling process. The quantitative details collection have been done by interviewing the 40 random customers perceiving the service of the particular brand, and their assumption will be forwarded on the purposive basis. Bryant and Oliver (2009) stated that purposive sampling has been followed to collect the data of the respondents having prior information regarding the research study.

3.4 Accessibility issues

It can be determined that due to the accessibility issues, the researcher have not been able to collect sufficient data for the research work (Brannen, 2009). However, to confront the accessibility issues, the researcher will tend to collect the data from the latest journals and various publications on the internet. As it is not required to have the new outline of the theories, thus, the past publications will be signified to guide the researcher to assemble detailed information regarding the research study. Internet seems to be an informative for the collection of the sufficient details regarding the customer service strategies to retain its potential customers. Hence, to fulfill the other objectives, the researcher will collect the primary data through the interview and survey process. The questionnaires will be sent over to the respondents and the qualitative details will e accumulated via interview process.

3.5 Ethical issues

The researcher has ensured that the current study complies with ethics. As mentioned by Cameron (2009), a research study failing to maintain the ethical standards might not be accepted in the society. Thus, the researcher has ensured that none of the respondents are being forced to participate in the primary research process. The questionnaire has been developed in a specified manner to avoid the controversies.  None of the questions are set to affect the human sentiments. Lastly, the respondents will be made aware of the reasons behind the data collection, to make the respondents feel free to answer the questionnaires.

3.6 Data analysis plan

It has been inferred that data analysis plan signifies the decoding process in terms of the primary data collection (Kothari, 2004). Therefore, the analysis plan of the current study varies on the data type. However, the quantitative responses have been gathered in a narrative format, while the quantitative responses have been calculated on the percentage basis. Based on the percentage of the quantitative response, the researcher will be able to create tables and graphs, required for the current research. The illustrated responses will serve the reader to evaluate the possible conclusion of the study. The quantitative data will be maintained through MS Excel. On the other side, the percentage of the quantitative data will be calculated via MS Excel, which will support the researcher to account on the suitable data.

3.7 Research limitations

The limitations of the primary data are its specified time frame. It had been difficult to manage the entire data within the specified time frame. Hence, the researcher had to develop the Gnatt chart, with the specified time frame for each of the research activities. However, the researcher had been able to establish subsequent respondents regarding the benefits of the quality service delivery on gaining the attention of the customers, yet the process could have explained better. The explanation process has served the researcher with immense help in detailing the research conclusions. However, the researcher had tried to collect sufficient pertinent data from the chosen sample, to provide accurate direction to the research project. Finally, the vital limitation of the current study is the time consumed by the respondents during the questionnaire time. Thus, the researcher had a specified advance in the return date in order provide justification to the research questions.

4.0 Anticipated findings

It has been determined that the findings of the research project reflect the importance of strategies regarding the internet based services in order to increase the ratio of the customer retention. However, effective customer service strategies can create an overall awareness of Amazon in the UK market, and serve the particular brand to empower its brand value and to increase its customer loyalty with its customized service. On the other hand, due to the higher customer acquisition cost, the relationship manager of the particular brand needs to convince the potential customers with its customized services to have a frequent visit on the specified site. Knowing the consequences of the online industry, the manager of Amazon needs to measure on CRM strategies in order to lower the risk of negative word of mouth, as it directly creates an impact on the reputation of the brand.   

5.0 Appropriateness of proposed dissertation structure

The proposed structure of the dissertation structure is comprised of the five chapters including introduction, literature review, data analysis, anticipated findings and conclusion. It is assumed that the proposed structure supports an effective flow of the information throughout the research study. For instance, the objectives have been set initially followed by reviewing the literature and identification methods. Accordingly, primary data has been analyzed and compared with the findings from secondary data and accordingly conclusion has been derived. The structure reflects a systematic approach which is compatible for addressing actual research scenario.

 

 

Gantt Chart:

The following table shows the different processes and  time taken to complete the different activities related to the research:

 

Research Activities 1st Week 2nd Week 3rd Week 4th Week 5th Week 6th Week
Literature review
Methodology and Research design
Survey fame
Primary data collection
Conclusion and Data analysis
Suggested recommendation

Figure 3: Gnatt chart

(Source: Self created)

 

 

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