The Impact of Inaccurate Color on Customer Retention and CRM

Introduction Customer relationship management (CRM) is a combination of people, processes, and technology designed to understand and manage a company's relationships with customers by focusing on relationship development and customer retention (Chen & Popovich, 2003). Its purpose is to maximize profit by achieving an optimum balance between corporate investments and customer satisfaction. "CRM applications help organizations assess customer loyalty and profitability on measures such as repeat purchases, dollars spent, and longevity" (Chen & Popovich, 2003, p. 673). CRM traces its roots to relationship marketing, which is aimed at improving long run profitability by deemphasizing winning new customers and emphasizing customer retention through effective management of customer relationships (Christopher, Payne, & Ballantyne, 1991). Relationship marketing refers "to all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges" (Morgan & Hunt, 1994, p. 22). The management of customer relationships is valuable for the company (Morgan & Hunt, 1994; Webster, 1992). Dwyer, Schurr, and Oh (1987) indicate that customer relationships evolve over distinct phases that are related to the customer lifecycle. Greve and Albers (2006) identify three customer lifecycle phases: "Initiation", "Maintenance" and "Retention". These phases are characterized by differences in behaviors and orientations and therefore require different management relationship approaches at each phase (Srivastava, Shervani, & Fahey, 1998). This paper investigates Retention as it is impacted by inaccurate color representation on the web. This is accomplished by considering the complexities associated with color representation, establishing the importance of retention, discussing some of the determinants of retention such as customer satisfaction and service quality, and finally presenting the results of a study of consumers' perception of color inaccuracies on the web and the consequences for an online retailer. Color Representation as an Aspect of Informing Science Color representation, which is a characteristic of many channels used to convey product information (Stone, 2001), impacts the effectiveness of sender-to-client informing. In fact, inaccurate color representation on e-commerce sites can lead to misinforming, defined as providing incorrect or misleading information (Cohen, 2009). When considering e-commerce transactions from the perspective of the Informing Science Framework, the informer is the web site developer acting on behalf of the vendor, providing product information via the Internet to potential consumers. Cohen (2009) points out that the informer, information transmission and receiving media, and receiver of information exist within complex environments that greatly impact them. The upcoming discussion about Color Perception explains how various factors, like ambient lighting, can affect both the information provided as well as the information received. For example, an image of a product may be created under one set of lighting conditions, yet may be viewed under an entirely different set of lighting conditions. Further, the receiving media, in this case a color display, is affected by various factors such as the type, brand, and age of the display device on which the image is viewed, the graphics card to which the display is attached, and operating system settings for number of colors to be displayed and the resolution of the display. Finally, the entity being informed is influenced by its own psychological and physiological fragilities (Cohen, 2009). Because color is actually a sensation, colors are purely subjective, as interpreted by an individual's visual system and brain (Stone, 2001). Color Perception According to Stone (2001, p. 1), color perception is problematic for a variety of reasons: * Color is subjective: It's perfectly obvious that color is an intrinsic feature of an object: Grass is green, the sky is blue, the paint on your living room wall is peach, and so on. …