Customer perspective on electronic services

Offering electronic services is nowadays “everyday-life” to most companies. Understand-ing why customers use or decide not to use electronic services is of the utmost importance in this study. However, before moving to consider electronic services from a customers’ point of view, I shall take a short glance at the benefits the companies acquire through offering electronic services, and thereby give financial justifications for electronic service business from the perspective of the service provider. In this regard, at least two primary features are essential and should be mentioned.

First, companies are nowadays intensively looking for effectiveness and cost savings. In terms of costs required to produce a service, electronic services are found to be more cost effective than traditional services (e.g. Verma, Iqbal, and Plaschka 2004; Bitner, Ostrom, and Meuer 2002). Further, electronic services are considered to facilitate the transfer of information, goods, and services between a firm and a customer, and thereby increase the efficiency of business (Cavusoglu, Mishra, and Naghurathan 2004, 69). On the other hand, continuous development of new services makes it necessary for the companies to invest in development work (Verma et al. 2004, 44). Thus, despite the fact that electronic services may be cost effective the case is necessarily not unambiguous. Second, as the

In-ternet is a global network it provides a company with potential and possibilities to reach new markets and new customers, and thereby opportunities to increase sales volume and profits (Boyer et al. 2002; Bitner et al. 2002).

Characteristics encouraging customers to use electronic services

Taking the perspective of a customer, certain characteristics can be found in the litera-ture that encourage the customers to operate in the electronic service environment. These kinds of characteristics comprise: accessibility, time and cost savings, self-service logic, media richness, and customization and personalization. Naturally, the characteristics discussed here do not constitute an exhaustive list of the benefits of electronic services for the cus-tomers but they are picked up from the earlier literature, and discussed in the following paragraphs in order to illustrate, at least in my opinion, some of the most focal features of electronic services for the customers.

Accessibility. One characteristic of electronic services that customers are perceived to appreciate is good accessibility. This feature can be considered through two distinct dimensions: time and place. First, customers in the electronic service environment are de-lighted with the possibility to use the services independent of the office hours of service providers (see e.g. Reichheld and Schefter 2000, 113; Bitner 2000, 55). Customers can use the services whenever, or anytime, as suggested by Fitzsimmons and Fitzsimmons (2006), it is suitable for them. Second, customers are not dependent on place-dimension. They do not have to go to a certain physical location of service provider in order to be able to get service. Instead, they can use the services, for example, from home through the Internet connection, or in general, wherever (or anywhere) they want (Fizsimmons and Fizsim-mons 2006).

Time and cost savings. For many customers using electronic services, time saving is one of the most essential features. For example, in case of paying bills, online banking is usually a faster alternative than going to a physical location of a service provider (e.g.

Bhasin 2005, 152). Time saving can also be considered to be closely related to accessibil-ity elements (whenever and wherever). Similarly as time saving, electronic services are in many cases also more cost efficient than traditional (physical) services. Also here, the above described banking example can be referred to.

Self-service logic. The possibility to have control of the service situation without any interference of service personnel of a service provider by using self-service technologies (SSTs) is also seen as one positive feature of electronic services from the customers’ point of view (e.g. Bitner 2000, 55). In using electronic services based on self-service logic cus-tomers do not have a feeling that someone is watching or looking after them but they can use as much time as they want to fulfill their service needs.

Media richness. Whereas newspapers provide customers with a piece of information in a written form, radio through sound, wall paper advertisement on the walls through sight, TV combines these elements. However, Internet as a channel for providing a cus-tomer with a piece of information does even more: it is an interactive media (Rust and Lemon 2001, 86). There is a wide range of information of different levels, from written information to multimedia, available for customers, which they can use in a way most ap-propriate for them. Moreover, the customers can communicate interactively with the media (Palmer 2002, 153).

Customization and personalization. Although Fitzsimmons and Fizsimmons (2006), while comparing the characteristics of traditional and electronic services, indicate that traditional services are more customized and/or personalized than electronic services, also they can be customized. As an example, Amazon.com learns from customer’s operations (navigation activities) on the Internet, and customizes its electronic service content ac-cording to the customer’s preferences indicated by his moving. However, customization, although it might appear easy to the customers, is a complicated task for service providers.

This is especially the case when services dealing with a large amount of information, such as insurance, are concerned. In this regard, Meister, Patel, and Fenner (2000) have raised their concern by referring to the issue that one of the greatest challenges for developing electronic services is customization of services without making the Web sites more com-plex but rather retaining the simple, accessible, and easy-to-use interface (see also Boyer et al. 2002).

Characteristics discouraging customers to use electronic services

In addition to characteristics encouraging customers to operate in the electronic service environment, there is another side of the coin. In general terms, customers’ attitudes and feelings towards electronic services might decrease their willingness to use them (e.g. Hei-nonen and Strandvik 2005, 196). Further, structural characteristics of electronic services might discourage customers in using them as well, or in a worst case make the customers reluctant to use them at all. These kinds of characteristics comprise: lack privacy, lack of security, lack of trust, self-service logic, and poor design. As stated also in the case of the en-couraging characteristics, the list is not exhaustive but in my opinion the above mentioned characteristics certainly are essential from the customers’ point of view.

Lack of Privacy. Customer data is very valuable for service firms trying to develop and improve their electronic services. In this regard, customers’ direct feedback provides the firms with concrete insights into the directions of improvement(s). However, taking the customers’ perspective, the intensive tracking of customers’ movements in the electronic service environment, and thereby, comprehensive utilization of the gathered customer

data might get customers to feel uncomfortable, as if they have been watched all the time when they are browsing on the Internet (e.g. Dinev and Hart 2005; Malhotra, Kim, and Agarwal 2004). In other words, while using electronic services customers desire to retain their privacy to some extent.

Lack of security. Customers are used to operate on the Internet, at least to a certain extent. Searching information, for example, is convenient but when it comes to deliver-ing personal information or especially information related to payment (i.e. credit card numbers) over the Internet, customers still become skeptical. There is lack of trust in the security of the Internet by customers (see e.g. Cavusoglu et al. 2004, Iyengar 2004). The customers are afraid of, for example, security breaches and interferences by unauthorized unknown parties, which might cause troubles or even serious financial losses to the cus-tomers operating on the Internet.

Lack of trust. In general terms, trust, or trustworthiness, is a multidimensional con-cept, and defining it is not unambiguous. This notion is also discussed in the earlier litera-ture (see e.g. Mayer, Davis, and Schoorman 1995). However, in the context of electronic services trust is often considered to be referring to the relationship between the customer and the service provider (e.g. Gounaris, Dimitriadis, and Stathakopoulos 2005; Hwang and Kim 2007), or information available on the Web sites (e.g. Flavián, Guinalíu, and Gurrea 2006). On the basis of the earlier research on trust in the context of electronic services, it can be stated that in terms of trust and trustworthiness it is utmost important to the customers that they can trust in both the content of the electronic service environment (i.e. information) and the service provider.

Self-service logic. The possibility to use SSTs, i.e. using services without the pres-ence of service clerk has also another side. Lack of face-to-face contact namely has been perceived as a negative feature of electronic services by the customers. Especially in cases where customers would need guidance or assistance to support their decision making, the self-service nature means that they have to help themselves (Colby 2002, 31). As to offering personalized services, customers might also feel that lack of face-to-face contact hinders the possibility for personalization. Instead, electronic services might be perceived as faceless and standardized (i.e. same service for all customers). In any case, if customers wish to successfully use electronic services based on self-service logic, they have to possess sufficient physical and mental skills and/or appliances to make self-service possible (e.g.

Vargo and Lusch 2004). In this regard, more might be required of the customers than is required of them in the traditional (physical) service environment by service providers.

Poor design. If electronic services do not work properly, or better said, in a way a cus-tomer expects them to work, cuscus-tomers are not satisfied with the content of the services.

The electronic services could be, for instance, poorly designed technically (functionality), or the service environment could be difficult to use (Bitner 2000, 56). If that is the case,

customers might easily switch to another service provider, or become reluctant to use elec-tronic services at all.

On the basis of what is discussed above about the encouraging and discouraging fea-tures of electronic services, few concluding remarks can be drawn. First, self-service logic can be perceived as both positively and negatively by the customers. If everything goes well self-service logic is perceived positively but if problems occur, customers might need (physical) support and assistance. In that sense, self-service logic is perceived negatively by the customers.

Second, following the insights by Yousafzai, Pallister, and Foxall (2003) trust and trustworthiness of the electronic service environment can be considered to incorporate both security and privacy¹. In my opinion, this indicates the central role of trustworthi-ness in the context of electronic services. In addition, insurance as a service should create trust among customers (see chapter 3.1.3), which emphasizes the role of trustworthiness even more as a crucial characteristic to be considered from the service design point of view.

And third, poor design of the electronic services and service environment in general might cause customers to become reluctant to operate in the electronic service environment. This point of view strengthens the justification for the essential objectives of this research in investi-gating the design of an electronic service environment in the context of complex services, such as insurance.

For the sake of clarity, and in order to complete the general discussion on the nature of electronic services I consider it important to still characterize electronic insurance ser-vices. In this regard, the nature of electronic insurance services is discussed in the next sub-chapter.