AN INVESTIGATION OF AUSTRALIAN ORGANISATIONS' ONLINE CUSTOMER

SERVICE

Jadanne Heuchan, Jamie Murphy, Larry Neale and Fang Liu

University of Western Australia

Abstract

Australian businesses have spent thousands, if not hundreds of thousands, of dollars launching virtual
stores. But when customers come knocking, assuming they find the door, most companies don't answer.
And if they answer the door, it takes a day to get off their feet and say hello.

This research used diffusion of innovations literature (Rogers, 1995) and a mock consumer's email
questions to investigate online customer service in Australia. A company's email answer was used to
measure organisational response rate, response time and response quality. Just one in ten firms had a
website, offered online communication and answered a simple query. In addition to not answering or
silly answers, poor cyber-service included sites without electronic contact details, email addresses that
bounced, web-based forms that crashed and sloppy etiquette.

From a practical perspective, this study of almost two thousand businesses establishes benchmarks and
identifies ways to, improve electronic customer service. The results support diffusion theory as larger
organisations had better response rates and somewhat better response quality. Organisational size
however, failed to show a difference in response time.

Literature Review

Electronic Customer Service

Perceptions of quality influence consumer's behavioural intentions (Zeithaml, Berry and Parasuraman,
1996) and delivering high quality customer service in line with customers’ expectations is essential for
success and survival in a competitive environment (Zeithaml, Berry and Parasuraman, 1996). In addition
to delays, the organisation's perceived control over the delay also affects the customer’s perception.
The greater the perceived control over the delay, the more anger, or associated feelings of annoyance
and frustration the customer feels (Taylor, 1994).

Just as telephones and toll free numbers pioneered new customer service delivery, email adds another
channel that is digital, asynchronous and virtual. Customer service electronically is the task-oriented
activities that involve electronic communications with customers to provide customer satisfaction and
operational efficiency (Lovelock et.al. 2001:219).
Yahoo, Microsoft's Hotmail and others providing free email (Murphy, 1997) give millions of consumers
online communication. By mid 1999, The Australian Bureau of Statistics noted that almost one third of
Australian businesses had Internet access and nine out of ten used email (Timson, 2000). Early results,
however, show poor Australian electronic customer service. Up to one in three large companies did not
respond to an email within a month (Kennett 2000).

Winning customers back after a bad web site experience is difficult (Greengard 2000), which makes
email responses even more important (Hashemian 2000). Organisations using email for customer service
should address the questions promptly and in a friendly manner, including personalised salutations,
appropriate closings, the sender’s name, contact details and position (Strauss and Hill 2001; Yang
2001; Ober 2001). A prompt, personal and polite response increases the customer’s assessment of
overall service quality (Strauss and Hill 2001;Yang 2001).

Diffusion of Innovation

Diffusion of innovation (Rogers 1995) helps explain organisational email use. Applied to a variety of
new technologies, this theory explains how individuals adopt innovations over time. Rogers and others
have subsequently extended this model to organisational adoption, noting that it is less applicable than
for individual adoption (1995).

The five stages of organisational adoption -- agenda setting, matching, redefining/restructuring, clarifying
and routinizing -- occur in sequence, such that later stages cannot be undertaken until the earlier stages
have been settled (Rogers 1995). Organisations however, may overlook the requisite planning in steps
one and two and subsequently face implementation problems in the latter three steps (Urquhart 2000;
Wildemuth 1992). And it is not until implementation that an organisation’s customer service
performance can be influenced (Damanpour and Evan 1984).

For radical innovations, organisational adoption may be unstructured and unroutine (Rogers 1995) due
to high technical, financial and social uncertainty (Gerwin 1988). DiMaggio and Powell (1983) propose
that a desire to improve performance drives early adopters, and in times of uncertainty, organisations
imitate group norm setters. Thus, inefficient strategic choices are common amongst early adopters
(O’Neill, Poude and Buchholtz 1998). Bandwagon theories (Abrahamson and Rosenkopf 1997) argue
that organisations adopt innovations based on the number of adopting organisations not their technical
merit (Rogers 1995).

This is likely the case for many Australian businesses. Little technical knowledge of the Internet scares
many employees. Financial uncertainty occurs given the requisite resources to set up and maintain a site,
without the guarantee of a profitable return. Social uncertainty is evident as stories of stolen credit card
details (Shaw 2000) heighten consumer reluctance to online purchasing. Because of these and other
factors, most Australian businesses have not adopted a strategic plan or structured decision process for
their Internet forays (Urquhart 2000).
Researchers agree on the inconsistency of organisational adoption studies and suggest directing efforts
towards determining the different conditions under which this theory applies (Damanpour 1991; Wolfe
1994). The innovation's attributes and stage of adoption could be secondary determinants of
organisational adoption compared to organisational characteristics. Possible characteristics to investigate
include size, type, strategic orientation and scope for innovation (Abrahamson 1991; Damanpour
1987,1991; Moch and Morse 1977; Rogers 1995; Soutar et al. 2000; and Wolfe 1994).

Conceptual Development

Kimberly and Evanisko (1981) posit that organisational size relates positively to adoption. This
relationship stems from “economies of scale, which enhance the feasibility of adoption” (p. 698). Rogers
(1995) suggests that larger organisations adopt innovations more rapidly as they have greater access to
resources and subsequently stronger need for strategic planning.

Conversely, The National Office for the Information Economy (2000) argues that the Internet levels the
playing field. The ease with which web pages can be created, free email facilities and global customer
opportunities entice smaller organisations to launch their Internet campaign. By mid-2000, most large
West Australian organisations were upbeat on the Internet, especially with relatively simple technology
such as email (Soutar et al. 2000).

While larger organisations have more financial resources and personnel to deal with email inquiries,
smaller organisations could provide more personalised electronic customer service. This thesis tests the
application of Rogers’ theory with respect to organisation size. Two measures of size -- annual revenue
and number of employees -- test the following hypotheses.

H1: Based on organisational size, response rates differ.

H2: Based on organisational size, response quality differs.
H3: Based on organisational size, response times differ.

Method

Two organisational sampling methods are intratypical and intertypical. The former is common for
structure related studies. The latter, used in this research, draws from a heterogeneous group (Kimberly,
1976). This September 2000 survey used Dun and Bradstreet’s 1999 “Business Who’s Who of
Australian Businesses” with 22,451 organisations, including 7,479 with web sites.

Database listings are free to organisations with over 10 employees or over one million dollars in annual
sales (Dun & Bradstreet, 2000). It took a stratified sampling of 1,795 organisations across ten industry
groups to harvest 45 valid email addresses per group, or 450 addresses. Another 60 addresses were
collected to pretest message content and formatting.
To reduce possible bias, the query stemmed from Hotmail rather than a university email address. Pre-
testing indicated that the better question was “Do you have a toll free number? If so, would you please
send it to me? Regards, A. Watson”. All email addresses were collated on a word document and
pasted into Hotmail's BCC field, which means recipients were unaware that their email was
simultaneously sent to others. As this field limits the number of characters, the emails were subdivided
into four groups, which were then mailed within minutes of each other.

Results

Of the 450 emails, three were eliminated due to incorrect email addresses. One in ten of the emails
never arrived due to mechanical errors such as an inability to load the email form, send the email form,
invalid user name or server not found. Six misspelled addresses were found within minutes of sending;
their addresses were corrected and the email re-sent.

About half the organisations listed their revenue or employees with Dun and Bradstreet, the others were
treated as missing values. Recoding and summing five quality measures -- answering the question,
addressing the customer, providing further information, how the email was closed and using the person’s
name -- yielded an ordinal measure of quality.

H1: Based on organisational size, response rates differ.

Of the roughly four hundred companies that received an email, just over half responded. A natural
logarithmic transformation corrected the abnormal distribution of sales and employees. Next, a
multivariate analysis of variance compared annual sales and number of employees for organisations that
did or did not respond. Combining these four tests -- Pillai's Trace, Wilks' Lambda, Hotelling's Trace
and Roy's Largest Root (p=0.005) -- provides more robust results and found that responding
organisations were significantly larger than non-responding organisations. This supports hypothesis H1.

H2: Based on organisational size, response quality differs.

The Kruskal-Wallis test (ordinal dependent variable quality and ratio independent variable size)
examined if revenue or employees differ at each of the six points on the quality scale. Although large
revenue organisations performed better, there was no significant difference (χ2 = 6.491, df 5, p =
0.261) in quality. Testing number of employees however, showed that large organisations answered
better (χ2 = 11.774, df 5, p = 0.038). These mixed results partially support hypothesis H2.

Nine of ten respondents addressed the question by providing a toll free number, answering that they did
not have a toll free number or answering “no” but providing an alternative. Of those who thwarted the
question, almost four in ten answered “yes” but failed provide a number, and others responded with a
question. Only three out of ten respondents offered further information -- fax number, opening hours or
web site address.
Just one of three opened with the customer’s name or an impersonal hello, good morning, etc. And one
out of eight went so far as to use both an opening greeting and the customer' name. Closing manners
improved, with seven out of ten emails finishing with yours sincerely, regards, thanks for your inquiry or
speak to you soon. Still one fourth of the respondents answered impersonally, using the business name
rather than their name.

H3: Based on organisational size, response time differs.

Response times ranged from a couple minutes to over ten days. One third of the companies answered in
two hours and nine out of ten responded within two days. A natural logarithmic transformation
corrected the abnormally distributed response times. A regression analysis between response times and
income (p=0.591) as well as number of employees (p=0.735), suggests no relationship between email
response time and organisational size and fails to support hypothesis H3.

Guarded Conclusions and Future Research Avenues

This snapshot of organisation's implementation of electronic customer service generalises to 22,000

entities that met criteria and volunteered corporate information in order to make Dun and Bradstreet’s
“Business Who’s Who of Australian Businesses”. In addition to longitudinal studies, sampling could
explore other Australian business databases. While technology made measuring response time easy,
quality measures were cumbersome and less reliable. Content analysis would help future researchers
measure email response quality (Krippendorf, 1980).

Caveats aside, these results tend to support past research; larger organisations adopt innovations better
(Kimberly and Evanisko, 1981; Rogers, 1995). Larger organisations, both in revenue and employees,
had a better response rate. Larger organisations gave a higher quality response based on number of
employees but not based on revenue. Size also had no apparent influence on response time. In addition
to size, future research could address organisational diffusion by industry classification, strategic
orientation, scope for innovation and product or service offering.

One in four, from a pool of 1,795 businesses offered a website with email, but listing communication
differs from communicating. About one in ten queries went on an electronic walkabout -- the email
address bounced or the online form failed. Less than half the businesses replied; even less addressed the
question.

Online etiquette, or netiquette, was sadly lacking. Just one in three took the time to reply with a salutation
or greeting. And half again, or one in six, greeted the customer by name. The closings were better.
About two in three closed with phrases such as yours sincerely, regards or thank-you.

Electronic customer service has ample room for improvement. Similar to past “new media”, society often
misuses and overestimates the short run influence of emerging technologies and underestimates their long
run effects (Rogers 1995; Fidler 1997). As Strauss and Hill (2001) found, large and small organisations'
alike, can improve customer service and enhance relationships through simple email policies. Address the
query politely, personally and quickly.
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