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Business Process Management Journal

Mobile customer relationship management: underlying issues and challenges

Jaakko Sinisalo, Jari Salo, Heikki Karjaluoto, Matti Leppäniemi,

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To cite this document: Jaakko Sinisalo, Jari Salo, Heikki Karjaluoto, Matti Leppäniemi, (2007) "Mobile customer relationship management: underlying issues and challenges", Business Process Management Journal, Vol. 13 Issue: 6, pp.771-787, https://doi.org/10.1108/14637150710834541

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Mobile customer relationship management: underlying issues and challenges

Jaakko Sinisalo, Jari Salo, Heikki Karjaluoto and Matti Leppa ¨niemi

Department of Marketing, Faculty of Economics and Business Administration, University of Oulu, Oulu, Finland

Abstract

Purpose – The purpose of this study is twofold. First, in order to guarantee a coherent discussion about mobile customer relationship management (mCRM), this paper presents a conceptualization of mCRM delineating its unique characteristics. Second, the authors develop the empirically grounded framework of the underlying issues in the initiation of mCRM. Design/methodology/approach – A single-case-study method is used for the empirical component

• f the study in order to gain a holistic view of the case and access to latent and confidential information
• f the company under scrutiny. Semi-structured interviews of the key informants of the company form

the main data source through which the issues are identified and the proposed framework is built. Findings – The proposed framework identifies issues that can be divided into three categories (exogenous, endogenous and mCRM-specific) the company has to take into account when moving towards mCRM. Research limitations/implications – Since, this is a single-case study the findings cannot be generalized and used in other contexts without reservation. Practical implications – When planning to initiate mCRM, the illustrated framework includes all the vital issues that should be considered and serves as a preliminary guideline from which to approach mobile CRM. Originality/value – This paper shed light on the emerging phenomenon known as mCRM. Keywords Relationship marketing, Mobile communication systems, Customer relations Paper type Research paper

Introduction Customer relationship management (CRM) has recently gained widespread popularity in many disciplines and industries. The essence of CRM for a company is the ability to provide differentiated relationship value and to communicate continuously with customers on an individual basis (Park and Kim, 2003). It is also increasingly imperative to provide CRM activities through media that customers are interested in interacting with the company. In principle, this thinking is well founded, while in practice it can be excessively difficult to implement. The proliferation of technology-based systems and their rapid advancement are bringing about fundamental changes in how companies interact with customers (Parasuraman and Zinkhan, 2002). Digital channels, for instance, are considered to create unique and positive experiences – not just transactions – for customers by

The current issue and full text archive of this journal is available at www.emeraldinsight.com/1463-7154.htm

The financial support of the Finnish Funding Agency for Technology and Innovations is gratefully acknowledged. The authors also wish to thank the organizations whose invaluable collaboration has made this work possible.

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Business Process Management Journal

• Vol. 13 No. 6, 2007
• pp. 771-787

q Emerald Group Publishing Limited 1463-7154 DOI 10.1108/14637150710834541

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mixing aspects of product, service, brand and communication (Wind et al., 2002). In practice, this development has led to a situation where several companies and industries have started utilizing the mobile medium to promote CRM activities. To illustrate this situation, Finnair, the National Airline of Finland (www.finnair.com), was one of the first companies in the world to adopt a mobile phone service for their loyal customers that enables passengers to check in for flights in advance via short message service (SMS). By using this service, passengers can go directly to the departure gate without the hassle of waiting in line at check-in. The advantage for the customer, in addition to time-saving and ease of use, is that the details of the flight are automatically stored on the mobile phone and are accessible whenever needed. The addition of the mobile medium as a channel through which to manage customer relationships not only creates possibilities, but also poses challenges as well. For instance, companies need to build the technological infrastructure that enables the management of customer relationships through the mobile medium. Subsequently, the technological infrastructure enabling the utilization of the mobile medium needs to be integrated to the existing CRM system. In addition, further challenges stem from the fact that customers need to opt in for the mCRM program and provide the company with information necessary for initiating communication with them. Against this backdrop, the objective of this paper is to assess the underlying issues and challenges facing companies when moving towards mCRM. The authors argue that the existing theories do not explain the phenomenon adequately. Since, conceptual agreement is a necessary prerequisite for a coherent discussion about a phenomenon, it is of decisive importance to propose a conceptualization of mCRM delineating its unique characteristics. Following a literature review, we build a theoretical framework

• f the initiation of mCRM, which is completed with the aid of a case study. The

proposed framework illustrates the underlying issues and challenges of the initiation of

• mCRM. In order to do this, this study analyzes the phenomenon from the retailer’s

point of view. The paper concludes by discussing the implications of the results for both theory and practice, outlining the main limitations of the work and identifying avenues for further research in this emerging field. Literature review: from RM to mCRM The origins of CRM can be traced back to the concept of relationship marketing (RM) (Gebert et al., 2003; Zablah et al., 2004). The term RM was initially coined by Berry (1983), who defined it as attracting, maintaining and – in multiservice organizations – enhancing customer relationships. This emphasis on relationships defines how companies interact with their customers (Gummesson, 1999; Sheht and Parvatiyar, 2000). CRM is the outcome of the continuing evolution and integration of marketing ideas and novel available data, technologies, and organizational forms with the goal of engaging in a meaningful dialogue with individual customers (Boulding et al., 2005; Campbell, 2003). While RM does not acknowledge the technology underlying the management of customers, CRM uses information technology (IT) in implementing RM strategies (Ryals and Payne, 2001). In existing literature, there is a consensus that CRM requires the company to manage and coordinate communication with customers across different media (Thomas and Sullivan, 2005; Payne and Frow, 2005). This is because different customers have different needs and thus, the company should treat them differently

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(Boulding et al., 2005). However, with the growing number of channels through which the company can communicate with its customers, getting their time and attention has turned into a major challenge (Davenport and Beck, 2000). Accordingly, it has become more difficult for companies to find the appropriate media and strategies to use in

• rder to communicate with their customers.

Especially, promising for CRM purposes is the potential – established by the integration of electronic media and database technologies – for creating unique and personalized communication with individual customers (Schultz and Bailey, 2000; Peltier et al., 2003). As stated, this potential has been gradually put into practice by several industries. Paralleling this development, the internet as a channel through which to manage customer relationships (eCRM) has attracted significant attention among academics (Bradshaw and Brash, 2001; Feinberg et al., 2002; Fjermestad and Romano, 2003). Despite of being a subset of eCRM, mCRM has gained far less attention (Sinisalo et al., 2006; Schierholz et al., 2006). Although the potential of the mobile medium within CRM is broadly acknowledged among academics (Kannan et al., 2001; Barnes and Scornavacca, 2004; Aungst and Wilson, 2005), there is still a severe lack of research that delves into this nascent phenomenon. Some publications have concentrated purely on mCRM. For instance, the book by Newell and Lemon (2001) can be considered one of the first publications concentrating

• n mCRM. It strives to explain how businesses can incorporate wireless technologies

into existing operations and strategies. Chan and Lam (2004) examined features of CRM implemented on the internet (eCRM) and the mobile channel (mCRM) from the customer’s perspective and, consequently, proposed an analytical framework for examining current practices. Camponovo et al. (2005) explored the value of mobile CRM service offerings to consumers in the Italian market. Additionally, Sinisalo et al. (2006) illustrated the underlying issues of the initiation of mCRM. From the business engineering viewpoint, Schierholz et al. (2006) presented a structured method by which mobile business can be introduced to the CRM field. In addition to these studies, mCRM has generated a number of non-academic works such as white papers. Giving all credit to the previous studies, this investigation, with the inclusion of a case study, is expected to be a welcome addition to this research stream since the main proportion of the literature on mCRM is conceptual in nature and lacks empirical evidence. Mobile customer relationship management: conceptualization and unique characteristics Conceptualization of mCRM When a concept is deeply embedded with technology, as is the case with mCRM, there is a tendency to mistake the technology for the concept itself (Balasubramanian et al., 2002). Because rapid advancement in the mobile industry has created a plethora of divergent technologies, it is necessary to separate the concept from its underlying technologies to accomplish a conceptualization without it becoming subject to the volatility of technological change. Camponovo et al. (2005) defined mobile CRM as “services that (1) aim at nurturing customer relationships, acquiring or maintaining customers, (2) support marketing, sales or service processes, and (3) use wireless networks as the medium of delivery to the customers”. This definition of mCRM, while useful, is inadequate in two respects. First, it does not emphasize sufficiently the critical role of communication in establishing and maintaining profitable customer

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relationships (Duncan and Moriarty, 1998) although communication stands at the core

• f every interaction. In reality, the communication dimension with customers has been

missing since CRM systems have been primarily technology driven (Laczniak et al., 2005). Therefore, in conceptualizing mCRM, it seems appropriate to emphasize

• communication. Second, there is confusion around the terms mobile and wireless as the

definition uses both of them. Wireless is not necessarily mobile (Balasubramanian et al., 2002; Anckar and D’Incau, 2002; Kumar, 2004; Varshney and Vetter, 2000), since wireless access, such as a desktop computer using signals carried over a wireless local area network, can only allow very limited mobility within the range of this access

• point. True mobility, however, can be achieved, for instance, by an underlying mobile

network which implements mobility, basically, across the whole world. In true mobility, the ability to communicate is not contingent of being at the fixed physical location at a particular point in time and possesses the potential to be continuously maintained during a substantial physical movement from one location to another (Balasubramanian et al., 2002). In order to avoid confusion, this is important to keep in mind when defining mCRM. Accordingly, we define mCRM as:

. . . communication, either one-way or interactive, which is related to sales, marketing, and customer service activities conducted through the mobile medium for the purpose of building and maintaining customer relationships between a company and its customer(s).

The mobile medium performs essentially the same function as any other channel within CRM. While the channels share this important purpose, the different channels have certain distinguishing characteristics. The most salient difference with mCRM is that the parties engaged in communication are connected through the mobile medium. This difference, in turn, leads to a number of other differences that are worth mentioning and are elaborated on in the next section. Unique characteristics of mCRM As stated, these unique characteristics of mCRM are mostly due to the exceptional features of the mobile medium. In this paper, we focus on the salient characteristics that are vital in CRM. The first distinguishing characteristic pertains to personalization of communication within the mCRM context. Unlike other media, a mobile phone generally belongs to

• nly one person and, accordingly, a message sent through the mobile medium reaches

the person to whom the communication is targeted almost every time. Thus, advanced personalization is vital in communicating through the mobile medium. This is important, since it is evident that sending a relevant communication to fewer customers will always result in a significantly higher return than sending an inaccurately targeted communication to a great number of customers (Greenville, 2005). In addition, serving loyal customers on a personal and individual basis, for instance by sending relevant and time-sensitive information, may strengthen the emotional relationship between the company and its customers (Nysveen et al., 2005). Actually, personalized communication is a prerequisite in the mCRM context rather than a unique characteristic. The fact that a mobile phone belongs to only one person not only presents an opportunity but also a challenge (Jelassi and Enders, 2006), since companies cannot afford to irritate customers even once due to the intimate nature of mobile devices. To succeed in personalization, customers must first be identified, and

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their preferences, needs and wants need to be understood by the company. Without this identification and understanding, customers are invisible to the company and therefore unmanageable (Park and Kim, 2003). A second distinguishing characteristic pertains to the interactivity enabled by the mobile medium. In dealing with this concept, Hoffman and Novak (1996) made a distinction between unmediated interactivity (e.g. face-to-face communication between two individuals) and mediated interactivity (e.g. communication between two individuals facilitated by a device). Communication through the mobile medium represents mediated interactivity. In fact, numerous studies have emphasized interactivity as one of the main characteristics that make the mobile medium unique (Barwise and Strong, 2002; Barnes and Scornavacca, 2004; Bauer et al., 2005). As such, the mobile phone exhibits all the features necessary in establishing a direct dialogue between the company and the customer. However, the locus of the interactivity exists in the decisions of the actors who choose to interact when it serves their purpose(s) (Stewart and Pavlou, 2002). Therefore, it is crucial that the messages generate interactivity in such a way that responding will serve the receiver’s purposes. It is also argued that personalized dialogues result in enhanced loyalty (Dowling and Uncles, 1997). Accordingly, it is important to utilize this characteristic. Otherwise many of the benefits of the mobile medium will vanish. A third distinguishing characteristic is the flexibility in communication provided by mobile technology. According to Balasubramanian et al. (2002), channels that are time and location flexible are highly valued by customers. Because mobile phone users always carry their devices with them, they are always accessible. Consequently, this means that the mobile medium allows access to an individual virtually anytime and anywhere, whereas all other channels within CRM are restrictive in this respect. Thereby the mobile medium provides access to customers beyond the reach of any

• ther medium, including the internet. In addition, technologies that are aware of the

context of the user can provide services in a productive way and thus deepen customer relationships (Barnes and Scornavacca, 2004). Aside from simply providing a platform for flexible communication, the proper utilization of the mobile medium for CRM purposes is also expected to deepen customer relationships. The previously mentioned unique characteristics make the mobile medium suitable for CRM. The addition of the mobile medium as a channel through which to manage customer relationships, however, not only creates possibilities but also poses challenges as well. In the next section, we build a theoretical framework around these challenges and the issues facing companies moving towards mCRM. The proposed framework is then further developed empirically, based on a case study. Building a theoretical framework for the initiation of mCRM Once a company has decided to initiate mCRM and add the new channel to promote CRM activities, it faces several challenges and issues. Owing to the many limitations still inherent in the constantly developing mobile medium, such as small screen size, limited bandwidth and device diversity, the mobile medium has to cope with a limited set of visual and audio capabilities (Jelassi and Enders, 2006). Therefore, the mobile medium lacks the ability to provide a complete range of activities for the companies (Nysveen et al., 2005) and it is obvious that the mobile medium needs to be integrated with other traditional channels to gain a competitive advantage (Geysken et al., 2002).

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Accordingly, the mobile medium can be considered complementary, supplementary or as a substitute channel. Table I shows how the mobile medium can act as an additional channel in CRM. Moreover, after the decision has been made, the underlying issues and challenges which deserve closer attention can be roughly divided into three categories: (1) endogenous; (2) exogenous; and (3) mCRM-specific issues. As shown in Figure 1, both the exogenous and endogenous issues affect mCRM specific issues. These issues are briefly elaborated on below. Endogenous Endogenous issues and challenges stem from inside the company. In order for the mobile medium to be an additional channel for companies’ CRM activities, the mCRM system has to be integrated into the companies’ overall CRM system. In addition, the mCRM solution chosen must have the ability to integrate fully into the existing CRM

• system. This system integration is a necessary stage for achieving effective

Substitute Mobile medium replaces one/some of the existing channels through which activities used to be provided. Accordingly, activities that used to be conduct through the replaced channel are relocated to be conducted through the mobile medium Complement Mobile medium as an additional channel providing existing activities for customers who want to interact with the company through the mobile medium Supplement Mobile medium provides novel supplementary activities which are designed for and available through the mobile medium Table I. Mobile medium as a channel in CRM Figure 1. Theoretical framework of initiation of mCRM Exogenous Endogenous mCRM Specific CRM System Customer Database Regulatory Mobile Infrastructure Marketing Technology

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management of the interactions across, and information coordination between, different customer communication contacts (e.g. internet, direct mail, sales calls, mobile medium) (Peppers and Rogers, 2004, p. 170). Accordingly, the existing CRM system has to support the mobile medium as a channel to function appropriately. Therefore, the CRM system adopted has an effect on technological choices made during the initiation

• f mCRM. Nowadays, extending CRM to include the mobile medium is not as

complicated as it used to be, and many CRM systems already support the extension of CRM to the mobile medium. However, in some cases, the mCRM system has to be built separately for technological reasons. A customer database is a prerequisite for any interaction conducted through the mobile medium. Naturally, integration is a necessary prerequisite for mCRM in that it relies upon the existing CRM database. As will be shown in the case study, a permission database can also be gathered purely for mCRM purposes. In order for a company to communicate with its customers, the database must at the very least consist of customers’ mobile phone numbers. However, there are major problems with this kind of simple customer database since it is impossible to communicate with the customer individually, and thus avoiding irritating them is challenging. Therefore, gathering information on a larger scale is recommended. Customers are usually profiled using demographics, psychographics, behavioral and social behavioral data. While demographics, psychographics, and behavioral data are traditionally used in categorizing customers, social behavioral data are being used increasingly within the mobile context. Basically, it refers to the similar sets of behavior within a group of

• people. In general, the profiles in the customer database are used to segment the

companies’ customer base into individuals or groups, in order for communication to meet the needs and requirements of customers. Exogenous There are also two exogenous issues affecting mCRM-specific issues during initiation. First, while intelligent mobile marketing involves the utilization of customers’ personal information, regulatory constraints are the most important element that should be considered when developing mCRM. For instance, mobile marketing in the EU area is regulated by law and involves asking end-users’ permission to send unsolicited marketing messages via all electronic media for marketing purposes (The European Union, 2002). Second, a significant element contributing to technology-related issues in mCRM is the mobile infrastructure. The mobile infrastructure concerns the mobile networks as well as the mobile devices in use. Because the mobile infrastructure is in the middle of an era of transformation, business based on mobile technology will be profoundly different in the near future. Furthermore, the introduction of 3G and 4G technologies in wireless networks provides a foundation for evolving activities, which can be implemented through the mobile medium. While these developments offer various

• pportunities for planning and implementing more advanced campaigns through

the mobile medium, they also make mCRM activities far more challenging since the technological diversity is likely increase. Accordingly, communication through the mobile medium is becoming more complex as the content has to be optimized for a myriad of different devices.

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mCRM-specific factors mCRM-specific issues and challenges stem from the addition of the mobile medium to traditional CRM systems. As mentioned earlier, technology plays a substantial role in CRM (Zablah et al., 2004). Similarly, in order to utilize the mobile medium in CRM, the technological infrastructure needs to be built. On the other hand, customers will not begin using their mobile phones for new functions simply because new technology

• exists. The key challenge is to get customers to opt in for the mCRM program and

subsequently provide the information required to initiate communication with them. Thus, companies have to find the marketing means to attract customers’ attention and convince them to initiate customer dialogue over a mobile medium. So, at the initiation

• f mCRM, there are two aspects to consider:

(1) technology; and (2) marketing. Based on the purpose of the study, the empirical part of this paper aims to enhance understanding of mCRM-specific factors, which are divided into the technology- and marketing-related issues. Before advancing to the case study, the methodology that helped us gain an understanding of the subject phenomenon is described. Methodology Our methodological choices are guided by the basic aim of enhancing existing understanding about the underlying technology- and marketing-related issues of

• mCRM. Owing to the novel nature of this phenomenon in which the researcher has only

little or no control at all over the events as they occur in a real-life context, a case study is the most appropriate method (Stake, 2000). In addition, the case-study strategy can be considered particularly capable of providing new insights into a phenomenon of which very little is known (Eisenhardt, 1989). Case selection is a crucial phase in case-study research, and therefore literature is full of advice on how to select cases (Perry, 1998; Pettigrew, 1989; Stake, 1995; Eisenhardt, 1989). Nevertheless, the decision as to how many and which cases are selected is left to the researcher (Romano, 1989). Here, our empirical strategy is a single-case study, i.e. one central company forms the

• case. The company in question has two non-food department stores in two different

cities and is one of the biggest retailers in Finland in terms of annual turnover. The process of the initiation of mCRM in this particular company was investigated from August until December of 2004. Naturally, the selection of the company was based on the idea that the case should represent the problem of the study. Taking into account the purpose of this study, the single-case study is seen as an appropriate choice for two reasons. First, the aim is to gain an in-depth understanding of this complex subject under investigation. Hence, choosing a single-case study allows a holistic and thorough view of the case. Second, as the information available on this kind of topic is often latent and confidential, the researcher must have access to an organization (Yin, 1994). The chosen approach undoubtedly influences the generalizability of the results of the study (Eisenhardt, 1989). The empirical part of this study consists of various kinds of data. The objective of data collection was to get rich primary data on the phenomenon under study. The semi-structured interviews form the main data source from which the issues were

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identified and the framework was built (Arksey and Knight, 1999; Kumar et al., 1993). Accordingly, the interviewees were encouraged to tell how they see the main challenges and issues underlying the initiation of mCRM. The choice of informants was based on the principle that information is best gained through the people involved in the phenomenon under investigation. Although other respondents working in the same company could have offered additional viewpoints of the phenomenon under investigation, the researchers tried to choose key informants from the company who had been actively involved in the initiation of mCRM and, thus, possessed explicit and definite insight into it. Altogether, four retailer’s key informants were interviewed in order to identify issues concerning the initiation of mCRM. Interviews were conducted with the CEO, the marketing manager, the person in charge of electronic commerce and the technology advisor of the company (Table II). By using multiple informants, the authors has increased both the reliability and the validity of the research (Kumar et al., 1993; Bagozzi et al., 1991). In addition, using key informants enhances the understanding of the companies and the case itself (Harrigan, 1983). The CEO of the company was chosen to be interviewed because of his ability to provide a holistic picture of the business surrounding the phenomenon under investigation. With the aid of the interview with the marketing manager, the authors could take a closer look at the marketing-related issues, while the person in charge of electronic commerce and the technological advisor gave us perspectives on the technology-related issues of the studied phenomenon. The authors also used documents, minutes of meetings, industry reports and company visitstotriangulatetherespondents’answers(Patton,1987;Yin,1994).Withthehelpofthe datatriangulation employed here,the validityandreliabilityof the researchwas increased (Eisenhardt, 1989). Finally, to validate the findings obtained from the interviews, the framework was presented to an industry expert, i.e. the chief technology officer for a leading mobilemarketingand mCRM technology company inEurope, tobe evaluated and commented on. The results are presented in the next section. The identities of the respondents and the company are not revealed for reasons of confidentiality. Initiation of mCRM: a case study In light of the case study, we propose that the initiation of mCRM is based on several technological and marketing-related issues as shown in Figure 2.

Company Type of contact Date, and duration of interview CEO Interview and e-mail correspondence September 8, 2004, 1 hour 40 minutes Marketing manager Interview and e-mail correspondence September 8, 2004, 1 hour 40 minutes Person in charge of electronic commerce Interview, telephone calls and e-mail correspondence November, 5, 2004, 1 hour 36 minutes Technology advisor Interview, telephone calls and e-mail correspondence October 18, 2004, 1 hour, 45 minutes Chief technology officer Meeting, telephone calls and e-mail correspondence January 17, 2005, 2 hours 20 minutes Table II. Interview data

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Technology At the technological level, there are five critical issues to discuss. These revolve around the sourcing and implementation of mCRM technology enabling communication through the mobile medium. The first issue is that the company had to acquire an mCRM server capable of handling, i.e. sending, receiving and storing, an unprecedented number of SMS and MMS messages. In other words, the server is in charge of what content is delivered to whom under what circumstances. The company has to decide either to build in-house expertise or rely on a partner, and whether to use a managed or a hosted solution. In this case, the company decided to start mCRM with a hosted mobile marketing platform provided by one of the leading companies in the mobile marketing and mCRM applications market. The second issue is that the company had to decide how to acquire a SMS number (the number which directs SMS messages from mobile phones to the mCRM server). In Finland, the user has to apply for the five-digit number from the Finnish Communications Regulatory Authority. In other countries, such as the USA, the number can also be in the format of characters. Before the user submits the application, he or she must provide information concerning how many numbers are needed and the contents of the intended service with sufficient accuracy. To avoid this application procedure, the company can also rent a SMS number from some mobile marketing service providers. Basically, they all have SMS numbers, which can be used when a company does not have a SMS number of their own, or has no interest in applying for the number at the very beginning of the mCRM process. In this case, the company decided to rent the number.

Figure 2. Empirically grounded framework of initiation of mCRM Exogenous Endogenous mCRM Specific CRM System Customer Database Regulatory Mobile Infrastructure Message Pricing Short Number mCRM Application Media Mix Permission Management Campaign Logic Operator Gateways Marketing Technology

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The third issue at the technological level concerns the total number of service

• perators needed to reach the target audience, i.e. the number of connections

established with the operator’s messaging network. Basically, the target audience for every campaign will span all the major networks of a given country. Consequently, the campaign must connect to all networks. In Finland, there are approximately 17 service

• perators. The complexity of connecting to each network directly is significant and has

led to the emergence of mobile aggregators. A mobile aggregator takes up a small margin of the network transmission costs but provides a single point of connection for accessing all networks (FirstPartner, 2003). In Finland, the role of mobile aggregators is not fully recognized. This has led to a situation where marketers have trouble when deciding to start mCRM in-house. However, the major service operators provide a service for connecting to their messaging network. The service is often called a messaging interface, which enables sending and receiving SMS and MMS messages between mobile devices and companies’ information systems. Basically, this service includes three different connections: content gateway, short dial number/SMS number and pricing service. The set-up expenses of mCRM are considerably high, because all

• f the connection charges mentioned above have to be paid individually for every

service operator connected to the mobile marketing server. In this case, altogether seven major service operators were connected to the mCRM server and thus, almost all mobile subscribers were able to start SMS dialogue with the company. The rest of the

• perators were excluded mainly for technical reasons, since they did not provide any

kind of service to connect to their messaging network. The fourth issue for the company to consider is that the campaign logic has to be built into the mCRM server, because the mCRM campaign cannot be run without it. Campaign logic refers to the details that customers are supposed to provide, i.e. the details that are asked from the customers during the campaign. Without the campaign logic, the server cannot receive and store messages sent by the service users. In addition, it is almost impossible to turn the data received from customers into customer information without the logic. Well-designed campaign logic includes, at a minimum, plans for a keyword at the beginning of messages sent by a customer and the return message received by a customer. In addition, the campaign generates a variety of valuable data, such as traffic data that is valuable if stored and analyzed. To be sure that relevant information will be saved in the database, accurate plans have to be made. All these logic-related issues with the server have to be considered before the launch of an mCRM campaign. In this case, the campaign logic consists of a keyword, age, gender, and interest areas. With the aid of the keyword, the server can identify received messages as belonging to that particular campaign. In the future, these variables will be used to personalize communication with the customers. The fifth issue is the price collected from the subscriber. Basically, there are three

• ptions for setting up the price per message sent by the service user. The first option is a

normal SMS price, which is charged from the service user according to the pricelist of the

• perator in question, typically around 0.05e in Europe. The second option is a free SMS

message, which means that the service is free of charge for the service user. The last

• ption is a premium-rate SMS message, which means that the price collected from the

service user is determined on the basis of the premium rate price categories provided by the operator in question. The premium-rate price is typically around 1e in Europe.

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In this case, the customers were charged the normal SMS price (cost per sent message for the customer was from 2 to 14 ¢). In light of the above issues, the company can basically rely on the partner – i.e. some service provider – to take care of all the issues related to the technological side of initiation or solve them on an in-house basis. Neither approach – building in-house or relying on partners – is inherently better than the other. It depends entirely on the position, ambitions and resources of the company in question. Marketing Once technically implemented, the key challenge of initiating mCRM is to find marketing means to attract customers’ attention and get them to initiate communication with the company in question. At this marketing level, there are two issues to discuss. The first issue at the marketing level is to consider how to attract the attention of potential customers so they will use the mobile medium in communication. Because the attraction phase is conducted with the aid of other media, the initiation of mCRM for the very first time has the same basic principles as any other traditional marketing campaign. The company must identify the target audience, determine communication objectives, design the message, choose the medium through which to lure customers’ attention and finally collect feedback to measure the promotion’s

• results. When considering mCRM after initiation, a concept should be incorporated into

the overall marketing strategy. A new series of campaigns can be based on the mobile medium alone or on the integration of the mobile medium with the existing marketing

• channels. The latter option, where the mobile medium is integrated into existing

marketing campaigns on other media has proven to be the most effective and efficient method (FirstPartner, 2003). In other words, mCRM campaigns complement

• ther media, such as television, print and internet, and vice versa. In this case, a

newspaper was used to attract the customer to join the mCRM campaign. The second issue is to consider permission management. The purpose is to assure that the mCRM campaign conforms to all requirements, both ethical and judicial. Thus, permission management deals basically with opt-in lists. In order to communicate with customers through the mobile medium for the purpose of managing customer relationships, there are prerequisites. First, customers to whom messages will be sent must have already registered or otherwise given their permission beforehand. Basically, there are three different ways to obtain a database of opt-in mobile numbers: purchasing, renting or developing the database on your own. The company in question decided to develop or collect the database independently, in order to get prior permission to start a mobile dialogue with its customers. The collection of the database was organized around a marketing campaign, where the company was asking customers to send their personal information, such as mobile phone numbers, as well as names and addresses, preferences and permission to send messages to them. The customers could also sign up to the loyalty program. By signing up for the loyalty program, customers automatically opt in for the company’s permission-based mCRM

• database. The campaign was successful, as almost 18,000 out of over 22,000

respondents (approximately 80 percent) signed up to the loyalty program or gave their

• permission. The incentive for the customers to give their personal information was a

chance to win a brand new car in a lottery. In addition, it was promised that valuable information and special offers would be sent to those who gave permission, via SMS.

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Secondly, although permission is given once by the customers, mobile permission is not permanent and the validity of the customer’s permission is depends on the service provided (Sinisalo et al., 2005). Hence, permissions should be updated on an ongoing basis. To summarize, to initiate mCRM the companies have to consider several issues. We found that acquiring or renting the hosting of a mobile marketing server, sourcing and setting up a short number to handle inbound and outbound messages, connections to the networks, the development of campaign logic, and setting the message price are the key technological issues at the initiation stage of mCRM. From a marketing perspective, a database of mobile numbers for the desired target audience, and the integration of mobile marketing into companies’ overall promotion mix should be taken in consideration when designing an mCRM campaign. Conclusions This paper shed light on the emerging phenomenon known as mCRM. The purpose was twofold. First, mCRM was conceptualized to assure a coherent discussion of the

• phenomenon. Second, the empirically grounded framework of the issues that

companies have to take into account when initiating mCRM was illustrated with the help of a case study. The importance of the investigated phenomenon stems from the fact that many companies already utilize the mobile medium to promote CRM activities. This paper makes two theoretical contributions. First, building on extant literature

• n mCRM, this paper advances a conceptualization of this nascent phenomenon

highlighting the unique characteristics of mCRM. The utilization of the mobile medium to promote CRM activities is a relatively new area enabling novel ways for managing customer relationships which were not possible before. The challenge in underlying communication is to ensure that the right messages are received by the right people in the right way (Pickton and Broderick, 2005). There are two problems with traditional channels in CRM. First, there is the possibility that the message will be missed because it was on the wrong medium at the wrong time, and secondly, there is the ever-present threat of information overload (Hulme, 2003). Because communication through the mobile medium is based on customer preferences, and the customer has given permission to receive messages, the utilization of the mobile medium is assumed to

• vercome these problems. Second, this paper contributes to the knowledge of this

nascent phenomenon by outlining the critical issues affecting the initiation of mCRM. When a company is moving towards mCRM it has to take some endogenous and exogenous issues into account. In light of the case study, we propose that the initiation

• f mCRM is based on several technological- and marketing-related issues.

Because mCRM is becoming a topic of major importance across different lines of business, this paper provides significant insights for marketing managers as well. Based on this study, we argue that as customers increasingly expect to be able to choose which channel they use for interacting with a company, companies should take advantage of these emerging channels as well. As stated, approaching the mobile medium as a separate project may result in an inconsistent and unsatisfactory customer experience. Therefore, the greatest challenge for companies is to combine the mobile medium with traditional media effectively. When planning to initiate mCRM, the framework illustrated in this study includes all the vital issues that should be

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considered, and it is a good guideline from which to approach CRM through the mobile medium. The findings of our study should be interpreted in light of certain limitations. Because our empirical results are based on a single-case study in one country, we should not draw far-reaching conclusions from the data. Given the early stage of the market and the lack of profound empirical evidence on mCRM, further refinement of the proposed conceptualization and empirically grounded framework constitute promising avenues for further research. Further, investigations are needed to empirically examine this nascent phenomenon. A natural extension of this study would be to look at how mCRM is utilized in different kinds of companies ranging from B2B to B2C markets.

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Wind, Y., Mahajan, V. and Gunther, R.E. (2002), Convergence Marketing: Strategies for Reaching the New Hybrid Consumer, Prentice-Hall, Englewood Cliffs, NJ. Yin, R.K. (1994), Case Study Research. Designs and Methods, Sage, Thousand Oaks CA. Zablah, A., Bellenger, D.N. and Johnston, W.J. (2004), “An evaluation of divergent perspectives on customer relationship management: towards a common understanding of an emerging phenomenon”, Industrial Marketing Management, Vol. 33 No. 6, pp. 475-89. About the authors Jaakko Sinisalo is a researcher at the University of Oulu, Finland. His research interests lies at the intersection of mobile marketing and CRM. Jaakko Sinisalo is the corresponding author and can be contacted at: jaakko.sinisalo@oulu.fi Jari Salo received his MSc (Economics and Business Administration) degree from the University of Oulu in 2002 and his doctoral thesis is in the review process. Currently, Salo is a researcher at the University of Oulu, Finland. He has previously published in several academic journals and at international conferences including EMAC, ANZMAC, IMP and HICSS. Salo has also published several academic book chapters and served as an ad hoc reviewer for many

• conferences. His present research interests include business relationship and network

digitization, electronic and mobile commerce. Heikki Karjaluoto is a Research Professor at the Faculty of Economics and Business Administration, University of Oulu, Finland. He received his PhD in marketing from the University of Jyva ¨skyla ¨ Finland in 2002. His research interests encompass electronic business in general and mobile business and commerce in particular. He has published extensively on electronic business in marketing and information system journals, and he has collaborated both with several researchers in Finland and abroad and with Finnish high-tech companies in common research projects. Matti Leppa ¨niemi is a researcher in Integrated Marketing Communication at the University

• f Oulu, Finland, and the Project Manager of the PEAR project. His areas of interest include

mobile commerce, especially mobile marketing.

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