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This work was previously published in the International Journal of E-Business Research, edited by I. Lee, Volume 4, Issue 4,

pp. 26-42, copyright 2008 by IGI Publishing (an imprint of IGI Global).
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Chapter 5.11
Do Mobile CRM Services Appeal
to Loyalty Program Customers?
Veronica Liljander
Swedish School of Economics and Business Administration, Finland
Pia Polsa
Swedish School of Economics and Business Administration, Finland
Kim Forsberg
Intrum Justitia Finland, Finland
ABSTRACT
Not until very recently has mobile phone technol-
ogy become sophisticated enough to allow more
complex customized programs, which enable
companies to offer new services to customers
as part of customer relationship management
(CRM) programs. In order to enhance customer
relationships and to be adopted by customers, new
mobile services need to be perceived as valuable
additions to existing services. The purpose of this
study was to investigate the appeal of new mobile
CRM services to airline customers. An empiri-
cal study was conducted among loyalty program
FXVWRPHUVIUHTXHQWÀ\HUVRIDQDLUOLQHWKDWZDV
considering using MIDlet applications in order
to add new mobile services to enhance customer
relationships. The results show that customers do
not yet seem to be ready to fully embrace new

mobile applications. Although the services ap-
peared to slightly improve customers’ image of
the airline, the services did not seem to enhance
their loyalty towards it. However, customers who
already used sophisticated mobile services, such
DVWKH0RELOH,QWHUQHWKDGDVLJQL¿FDQWO\PRUH
positive attitude towards the proposed services.
Thus the success of mobile CRM seems closely
linked with customers’ readiness to use existing
mobile services. Before engaging in costly new
investments, companies need to take this factor
into serious consideration.
INTRODUCTION
During the last two decades the marketing com-
munity has witnessed a transfer from transac-
tion-based marketing strategies to an emphasis
1559
Do Mobile CRM Services Appeal to Loyalty Program Customers?
on creating interactive relationships between the
company and its customers (cf. Grönroos, 2000).
With the overall aim of increasing customer
retention and managing customer relationships
IRUSUR¿W&50KDVEHFRPHDQHVVHQWLDOSDUWRI
many companies’ marketing strategies. One of
the newest tools to improve individual services
to customers is mobile technology. Because of
the rapid development in mobile technologies, it
has recently become a noteworthy tool in CRM
strategies, and therefore marketing strategies
will need to be developed to suit this new chan-

nel (Akhgar, Siddiqi, Foster, Siddiqi, & Akhgar,
2002; Balasubramanian, Peterson, & Jarvenpaa,
2002; Helenius & Liljander, 2005). However, so
far little is known about how companies intend to
incorporate mobile technologies into CRM and
about the effects it will have on customer reten-
tion (Crosby & Johnson, 2001; Okazaki, 2005).
The mobile channel will be of particular interest
to companies that already have a loyal customer
base that has trusted the company with personal
information. This is the case in customer loyalty
programs, which have been shown to positively
affect customer retention and customer share
development (Verhoef, 2003). Loyalty programs
already use online services for loyalty program
details, such as customer services for members
DQGLQIRUPDWLRQRQDFFXPXODWHGEHQH¿WV/DP
& Chan, 2003).
One new software solution for customized rela-
tionship programs is known as Mobile Information
'HYLFH3UR¿OH0,'33URJUDPVVXEVFULELQJWR
this standard are called MIDlets and are coded in
Java, which by the end of 2007 will be included in
most mobile devices in Western Europe (Riivari,
2005). The easy-to-use universal nature of MIDlet
applications offers both corporate programmers
and individual end users a convenient way to create
their own mobile programs to serve company- and
XVHUVSHFL¿FQHHGV
Given the scarcity of empirical research on

mobile CRM and the availability of new applica-
tions, the purpose of our study is to investigate
how mobile CRM services, developed for a MIDlet
application, are perceived by the loyalty program
FXVWRPHUV RI DQ DLUOLQH 0RUH VSHFL¿FDOO\ ZH
study the appeal of the proposed mobile services
to customers, their intention to adopt the services,
and whether the services would improve custom-
ers’ perceived image of the airline and enhance
customer loyalty. The goal of CRM is to build a
competitive advantage that distinguishes the brand
from competitors and creates stronger customer
loyalty (Crosby & Johnson, 2001). Since few
studies have combined CRM and mobile services
research (notable exceptions being Lin & Wang,
2006; Mort & Drennan, 2005), the current study
contributes to the extant mobile service literature
by offering a CRM perspective on mobile com-
merce and by investigating customers’ attitudes
towards mobile CRM.
The paper is structured as follows. First,
WKHFRQFHSWRIPRELOH&50DQGLWVEHQH¿WVWR
customers are discussed. Second, the empirical
study is introduced and the results are presented
in the form of descriptive statistics. The paper
ends with a discussion of the results, limitations,
suggestions for future research directions, and
managerial implications.
MOBILE CRM
Relationship marketing and CRM are frequently

used interchangeably, but equally often CRM
refers to a company’s technology solutions for
managing relationships, such as direct mail,
loyalty cards, and e-commerce (Payne & Frow,
2005; Verhoef, 2003). A common conceptualiza-
tion of CRM is still lacking: it has been described
as a process, strategy, philosophy, capability,
and technology (Zablah, Bellenger, & Johnston,
2004). Thus CRM can be viewed in a broad or a
narrow sense, as a holistic approach to managing
UHODWLRQVKLSVRUWKHLPSOHPHQWDWLRQRIDVSHFL¿F
technology solution project (Payne & Frow, 2005).
CRM is clearly more than a technology, but in
1560
Do Mobile CRM Services Appeal to Loyalty Program Customers?
practice it is often associated with the use of da-
tabases and technological applications (Payne &
Frow, 2005; Shah & Murtaza, 2005). A distinction
is often made between operational, analytical,
and collaborative CRM applications (Crosby &
Johnson, 2001). Operational e-CRM includes
customer service applications (Fjermestad &
Romano, 2003), which is the focus of the present
study. Thus our study employs a narrow CRM
approach, by investigating the potential positive
consequences for a company of implementing
mobile CRM.
:HGH¿QHPRELOH&50 as customer relation-
ship management of any kind including interactive
communication between an organization and

a customer using a mobile device (cf. Helenius
& Liljander, 2005; Lam & Chan, 2003; Mort &
Drennan, 2005). The special characteristics of
mobile CRM in contrast to CRM in general are
its temporal and spatial autonomy. Mobile devices
include a large number of wireless mobile commu-
nication tools, such as regular cell phones, smart
phones, pagers, PDA’s, and notebooks, the most
common device being some sort of cell phone
with more or less sophisticated data transmission
capabilities. One of the technological solutions
enhancing mobile CRM that is applicable to cell
phone devices is MIDlets—the technological
solution investigated in our study.
MIDlet Applications as a Gateway to
Mobile CRM
The rapid technical progress has led to new ways
of processing data and of serving the mobile con-
sumer. Our chosen example is MIDlet applications
(Adjari, 2001), which bring the mathematical and
information processing functions of a small com-
puter into a mobile phone. Through their mobile
phones customers can manage information and
launch applications in the same way as when us-
LQJWKH¿[HG,QWHUQHW$SSOLFDWLRQVDUHLQYLVLEOH
to customers, who only evaluate the services as
they are offered through the application. To use
a company’s services through a MIDlet applica-
tion, customers need to download it to a mobile
device. Applications can be provided for free by

a company as part of its CRM program, or they
can be offered to customers as a value-added
component at a price.
The success of a mobile CRM strategy depends
on how well the application is designed, the design
of the interface and services, as well as custom-
ers’ evaluation of the service content in relation
to any additional costs of using it. Although in
the past consumers have felt cautious about us-
ing mobile services (Anckar & D’Incau, 2002),
in the future mobile applications are expected to
have an important impact on customer acquisi-
t ion a nd ret en tio n, by offe r i ng a dd it iona l se r v ice s
DQG EHQH¿WV WR FXVWRPHUV .DQQDQ &KDQJ 
Whinston, 2001; Riivari, 2005; Varshney & Vetter,
:HZLOOQH[WGLVFXVVWKHEHQH¿WVRIPRELOH
CRM using MIDlet applications in the context of
IUHTXHQWÀ\HUFXVWRPHUV
%HQH¿WVRIWKHMobile Channel to
Customers
The perceived relative advantage of a new technol-
RJ\VXFKDVDGGHGEHQH¿WVLQFRPSDULVRQWRRWKHU
service modes is essential for customer adoption
(cf. Walker, Craig-Lees, Hecker, & Francis, 2002).
6HYHUDOEHQH¿WVKDYHEHHQPHQWLRQHGLQUHODWLRQ
to mobile technologies. Often cited as the main
characteristic and added value to customers of
mobile services is the possibility of accessing
services whenever and wherever required (Hei-
nonen, 2004, 2006; Sugai, 2005; Turban, King,

Lee, Warkentin, & Chung, 2002). Mobile value
arises in particular from spontaneous and im-
mediate service needs (Anckar & D’Incau, 2002;
Pura, 2005). In CRM the mobile channel can be
used to actively communicate with customers
wherever they are, offering them access to the
VDPHVHUYLFHVDVWKURXJKWKH¿[HG,QWHUQHWRU
through personal contact.
1561
Do Mobile CRM Services Appeal to Loyalty Program Customers?
Another advantage often mentioned is that
FRPSDQLHV FDQ SURYLGH ORFDWLRQVSHFL¿F LQIRU-
mation and service to customers (Jukic, Sharma,
Jukic, & Parameswaran, 2002; Turban et al, 2002;
Wang & Cheung, 2004), for example, informing
customers of the nearest physical touch point for
the company’s services.
The quality and usefulness of mobile services
have received less attention than time and place
EHQH¿WVEXWDUHLPSRUWDQWIRUFXVWRPHUVDWLVIDFWLRQ
and loyalty (cf. Chae, Kim, Kim, & Ryu, 2002;
Nordman & Liljander, 2004). There are few studies
on the relationship between e-CRM features and
customer service evaluations (Feinberg & Kadam,
2002). However, research has shown that mobile
services are evaluated on similar dimensions as
e-services, while taking into account the limita-
tions of the technology (Chae et al., 2002; Lin &
Wang, 2006; Nordman & Liljander, 2004). Our
study includes customer evaluations of mobile

service content and usability; comfort and secu-
rity; and mobile feedback services.
Service content and usability (SCU) can be
YLHZHGDVLQWDQJLEOHEHQH¿WV0RQH\7URPS
Wegner, 1988) or as mobile life quality enhancers
(Mort & Drennan, 2005). They are of particular
importance for customer satisfaction with utility
services (Chae et al., 2002), such as airline travel
DQGIUHTXHQWÀLHUVHUYLFHV0RELOH&50FRXOG
offer completely new services to customers, such
as entertainment services or enhancements of
existing offerings by adding a new wireless dimen-
sion to them. One example would be improving
the usability of the main product, for example, by
RI I H U L QJ X S G D W H G À LJ KW L Q I R U P D W L R Q W R D L U W U D YH OH U V  
Until the launch of new application technologies
such as MIDlets, such opportunities and intangible
EHQH¿WVIRUHQKDQFLQJFXVWRPHUUHODWLRQVKLSVKDYH
not been widely available. Our study examines
SCU by investigating customer perceptions of the
content and usability of services such as access
WRÀLJKWVFKHGXOHDQGURXWHLQIRUPDWLRQVSHFLDO
offers, booking, payment, and check-in over a
mobile phone.
Regrettably, digital fraud is becoming in-
creasingly widespread, and customers’ feelings
of insecurity or discomfort may outweigh the
EHQH¿WVWKH\H[SHFWWRJDLQE\HPEUDFLQJQHZ
applications (Kaapu, 2005; Kindberg, Sellen &
Geelhoed, 2004; Walker et al., 2002). Therefore,

we also investigate customer perceptions of the
comfort and security of mobile service usage.
Customer mobile feedback (m-feedback) is a
key component of an e-CRM strategy (Cho, Im,
Hiltz, & Fjermestad, 2002). It is important that
companies have effective channels for customer
feedback and procedures to resolve complaints,
recover customers, and reduce switching (Fornell
& Wernerfelt, 1987; Johnston & Mehra, 2002).
Technological interfaces are important channels
for customer complaints and quick service re-
coveries (Bitner, Brown, & Meuter, 2000). Such
services are an important feature of customer
relationship programs (Winer, 2001), and mo-
bile CRM could provide one feedback channel.
M-feedback can be used for suggesting ideas
for service improvements, as well as for giving
compliments or voicing complaints. The mobile
channel could offer quick resolutions to problems,
taking full advantage of mobility.
%HQH¿WVWRWKH)LUP
Offering mobile CRM applications to customers
VKRXOGKDYHSRVLWLYHFRQVHTXHQFHVIRUWKH¿UP
One such consequence is increased customer
loyalty (Fjermestad & Romano, 2003). Another
important consequence is the positive effects
that it may have on the image of a brand and the
company (Helenius & Liljander 2005; Lam &
Chan, 2003; Nysveen, Pedersen, Thorbjørnsen,
& Berthon, 2005). A CRM strategy must lead

to a more distinct brand and to higher customer
loyalty (Crosby & Johnson, 2001). Contacts with
customers through different channels can add to
or detract from their feelings of loyalty towards
the company (Shankar, Smith, & Rangaswamy,
2002). Therefore, the brand assets (cf. Aaker,
1562
Do Mobile CRM Services Appeal to Loyalty Program Customers?
1996; Aaker & Joachimsthaler, 2000) image and
loyalty were assessed in our study.
METHOD
To investigate the appeal of a new CRM technol-
ogy solution to customers, that is, mobile services
offered through a MIDlet application, a mail
survey was constructed. Members of a Nordic
DLUOLQH¶V IUHTXHQW À\HU OR\DOW\ SURJUDP ZHUH
sampled for the study. The airline is one of the
world’s oldest operating airlines, with a turnover
of 1,698 million euros in 2004. Among airlines,
it has been at the forefront of electronic service
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self-services on the Internet (e.g., check-in), at the
airport (e.g., electronic gates), and when on the
move (e.g., an SMS(Short Message Service)-based
mobile check-in service). The airline’s frequent
À\HUV DUH DOZD\VDPRQJWKH ¿UVWWR EHRIIHUHG
new technology services. Previously published
data on these customers show that their technol-
ogy readiness is comparatively high (Liljander,
Gillberg, Gummerus, & van Riel, 2006). Thus

they form an attractive segment for mobile CRM.
To maintain its technology advantage, the airline
is planning to offer new mobile services to its
loyalty program customers. The services are
designed with MIDlet applications. Our study
was conducted to investigate the appeal of the
proposed services to loyal customers.
Questionnaire Design
Background data were gathered on gender, age,
loyalty program level (here called: bronze, silver,
gold, platinum), and customers’ current use of
the airline’s electronic services. To check for the
suitability of their mobile devices for MIDlet
applications, and their readiness to use such
services, customers were asked how often they
use mobile phone e-mail, Internet browsing, and
WAP(wireless application protocol) services,
and whether their mobile phone supports Java
DSSOLFDWLRQV $ ³GRQRW NQRZ´ DOWHUQDWLYH ZDV
offered for the last question, since many consum-
ers are unaware of all available features in their
mobile phone.
SCU was measured by asking the respondents
to imagine that the airline offered a mobile phone-
based application that made it possible to look
XSVFKHGXOHVFKHFNIUHTXHQWÀ\HULQIRUPDWLRQ
ERRNÀLJKWVDQGSHUIRUPFKHFNLQDWWKHDLUSRUW
through their mobile phone. The following scale
and items were used (7-point Likert scales,
strongly disagree-strongly agree):

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 PRELOHSKRQHEDVHGÀLJKWVFKHGXOHDQGURXWH
information (SCU1)
 IUHTXHQWÀ\HULQIRUPDWLRQDQGVSHFLDORIIHUV
(SCU2)
 ÀLJKWERRNLQJDQGSD\PHQW6&8
• check-in services (SCU4)
An alternative to the formulation of this ques-
tion would have been to use a perceived useful-
ness scale from the technology acceptance model
(TAM) as a basis for our study (cf., Davis, 1989;
Featherman & Pavlou, 2003; Venkatesh & Davis,
2000; Venkatesh, Morris, Davis, & Davis, 2003).
However, our formulation of the SCU statements
was chosen because it corresponded best with the
local language. SCU taps into similar issues as
the perceived usefulness component of TAM, in
that it asks customers to evaluate if the services
would be of use to them. Another reason for not
using TAM for our research was that, since the
services do not yet exist, customers would have
been unable to evaluate their ease of use, which
is an important TAM component.
Four statements relating to comfortable and
secure use of mobile services were included
(7-point Likert scales). It should be noted that
³FRPIRUWDEOHXVH´LQWKHORFDOODQJXDJHLQFOXGHV
FRQQRWDWLRQVRI³IUHHRIHIIRUW´ZKLFKKDVEHHQ
1563
Do Mobile CRM Services Appeal to Loyalty Program Customers?

considered important for technology acceptance
(Davis, 1989, p. 320).
 ,ZRXOGIHHOFRPIRUWDEOHERRNLQJP\ÀLJKW
through a mobile phone service (Com-
fort1)
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a mobile phone service (Secure1)
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through a mobile phone service (Com-
fort2)
  , ZR X O G IH H O V H F X U H S D \ L Q J IR U D À L J K W W K U R X J K 
a mobile phone service (Secure2)
Mobile feedback was evaluated on the follow-
ing items (7-point Likert scales):
• I would feel comfortable giving feedback
through a mobile phone service (MFB1)
• I believe that the airline would handle mobile
feedback in the same way as conventional
feedback (MFB2)
• Mobile feedback would make it easier for
me to contact the airline (MFB3)
• Mobile feedback could help the airline better
solve my problems (MFB4)
• I would use the mobile feedback service
regularly (MFB5)
• I would give mobile feedback in instances
I otherwise would not (MFB6)
As timeliness is one of the key features of
mobile feedback, customers were also asked:
• How quickly they believed that they would

send mobile feedback (MFBSend)
• How quickly they expected to receive an
answer (MFBReceive)
The response alternatives to MFBsend were:
a) Immediately after a negative incident, b) Some
time later when I sit down, c) Within the same
time span as I would give regular feedback, and
d) I do not think I would give mobile feedback
at all.
,PSURYHGEHQH¿WVWRWKH¿UPLQWKHIRUPRI
increased brand assets, were measured with the
following statements:
• Mobile services would make the airline more
desirable as an airline carrier (Image1)
• Mobile services would improve my picture of
the airline as an airline carrier (Image2)
• Mobile services would distinguish the airline
from other airlines (Image3)
• Mobile services are associated with a modern
and technologically up-to-date company
(Image4)
• Mobile services could be a key factor that
keeps me from changing to another airline
(Loyalty)
In addition, customers’ willingness to pay
for new services was asked for regarding mobile
IHHGEDFN:LOO3D\)HHGEDFNDQGÀLJKWERRNLQJ
(WillPayFlight). They were also reminded of the
fact that the price of phoning the call centre was
1.64 euros per call. The alternatives given for both

questions were: a) nothing, b) the price of an SMS
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Customers’ intentions to use the services
(Adopt), were captured with one question: If this
application were available, I believe I would:
a) Begin using it instantly, b) Wait until I hear
from other people who have used it, c) Wait
until it becomes the standard way of using the
air carrier’s services, d) Probably never use it.
Since the service did not yet exist, only adoption
intentions could be measured. This is a common
problem in many technology adoption studies
(e.g., Anckar & D’Incau, 2002; Featherman &
Pavlou, 2003; Plouffe, Vandenbosch, & Hulland,
2001). However, since we have collected infor-
mation on customers’ adoption of other mobile
services, we had data on their actual mobile ser-
vice adoption. These data were used to explore