How IT improves customer relations

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The Impact of eBusiness on Customer Relationships

Tie in/Switching Costs:

  • The consumer may need to learn how to use the technology and so incur some learning costs in the process.

    Moreover, some consumers may further be required to purchase a specific application in order to be in a position to make use of services made available through an ebusiness channel. 

    Such factors raise the switching costs incurred by the customer to move from one service provider to another;

Disintermediation:

  • eBusiness can do away with the middleman who would otherwise be required to act as a broker between the buyer and the seller. 

    Eg. on-line purchase of airline tickets & hotel accommodation

Reintermediation:

  • Where alternative services are offered through a single gateway.  

    Eg. eBay, Expedia, and Travel Supermarket amongst others.

    A key advantage of using these intermediaries is the possibility to access a wealth of information on price and quality criteria for products and services that may be acquired and compare these in accordance with the customer’s specific requirements;

Faster and Cheaper two way communication:

  • The RCA website was designed by a dude in downtown Brooklyn, New York. The site was coded by William from Malta.

    aCOWtancy was developed in London, UK. The illustrator lives in Israel, and the customers come from all over the world

    Communication between all parties is frequent and immediate

Development of User Communities:

  • Want to know how good your new Jaguar car might be? 

    There will be a forum and website dedicated to in the internet

    Recommendations from user communities are indeed a powerful tool that may be used by the organisations using ebusiness models since prospective customers are viewing an independent opinion on the overall quality and value for money of the product and/or service acquired from the seller. 

    Similarly a negative opinion is bound to put off a sale to a prospective buyer - think of user reviews on Amazon

Easier tracking of consumer patterns:

  • eBusiness Systems retain a trail of all transactions carried out by consumers over the internet thereby making it easier for organisations to collect and analyse consumer patterns in the process;

Enhanced Customisation:

  • Increased interactivity and easier tracking of consumer patterns creates the right framework for segmenting the market and developing dynamic e-business applications which customise the presentation, type and level of information and services posted on the portal.

    E-business is just exchanging information in real-time, using the internet. The world wide web allows for more potential customers and suppliers

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