JustAnswer



Title PageIntroductionE-Commerce provides a unique and exciting way for businesses to form relationships with customers. It is indisputable that online stores are here to stay. As online shopping becomes increasingly popular, the ability of businesses to gather important information and forge a meaningful relationship with customers increases. However, this also increases the ability for a business to alienate customers and cause dissatisfaction. One of the most important factors of doing business in an e-commerce setting is customer loyalty.Customer loyalty is important for any organization that is doing business in any settings. However, it is of paramount importance in an e-commerce setting where human interaction is minimal. Whereas a local shop owner can easily build personal relationships with customers, e-commerce sites must rely on user experience and quality of service over personal interaction. The key factors in e-commerce quality of service and include product availability, product descriptions, site navigation, search features, checkout process, payment process, shipping speed, shipping costs, packaging, and customer service. There are also issue in the realm of perception. A business may be able to provide excellent service, fast shipping, and wonderful customer support. However, if the e-commerce site is done in a way that does not appear to be highly professional, customers may develop a negative perception of the business and chose to do their shopping elsewhere. If e-commerce is a critical component of the business and the business owners are serious about investing in it as a major driver of sales, then there must be adequate and professional attention paid to the quality of and professional appearance of the e-commerce portal.In the end, business owners and leaders of e-commerce sites must always be aware of the climate of their online presence. Complaints about site navigation, product descriptions, quality of images, and other site-related issues must be taken very seriously. Over time, e-commerce sites that put the quality of the user-experience above all else end up with a reputation as a trusted online business. Such a reputation can and does provide e-commerce business more profit than almost any other business factor.Defensive MarketingThere are many drivers of loyalty. The benefits gains from creating positive image for an e-commerce site are innumerable. One of the biggest drivers of business for any organization is word-of-mouth. As customer gain a more positive feeling toward an e-commerce business, they will tell their friends and family to check out the web site. The effect of this type of marketing can quickly snowball and lead to massive amounts of new business.According to Kassim and Abdullah (2010), once this type of business has been gained, it is vital that organizations do what they can to maintain such loyalty. This is where the authors indicate that defensive marketing comes in. Obviously, other businesses wish to obtain a bigger share of the market in which they operate. For instance, Barnes and Noble would prefer to get as many people as possible to purchase a Nook E-Reader instead of purchasing a new Amazon Kindle. Sprint would prefer that customer sign up with new, two-year contracts with them rather than renewing a contract with another carrier.Defensive marketing is an effort to market toward existing customer in order to maintain and nurture existing loyalty. Other businesses will aggressively market toward a site’s customers in an effort to get them to switch. Unfortunately, some are going to switch and nothing can be done to maintain 100% loyalty. However, it is important that a focused effort is made to keep customers. A good example of this is DirecTV’s loyalty incentives. Every year or two, DirecTV offers loyal customers new devices for little or no charge. Recently, this organization, on their web site, offered exiting, loyal customers a new high-definition digital video recorder absolutely free. The caveat is that the customer must agree to a new two year contract. For those customers who are and will continue to be satisfied with service, this simply acts as a method of making the customer even more satisfied and taking the bite out of the special offers being advertised by competitors. For those customers who will become discontent over the course of the next two years, this provides the organization with insurance on their investment.Trust and SatisfactionAs observed by Ribbink, van Riel, Liljander, and Streukens (2004), there appears to be a large correlation between satisfaction, trust, and loyalty in an online environment. The authors point out that trust is of particular importance in an e-commerce setting because the customers rarely deal directly with the organization or its employees. It is further revealed that the costs involved in obtaining new customers can lead an e-commerce site to become unprofitable. Indeed, the costs of gaining brand new customers usually exceeds the revenue from first-time customers. Profits are realized through repeat business. This clearly demonstrates that there is no factor more important to an e-commerce site than loyalty. As a clear example of this concept, the most well-known e-commerce site, , did not realize a profit for over five years. This organization spent a great deal of time, effort, and money obtaining new customers and positioning itself as a trusted, quality service. It invested massive amounts of money in ensuring that they became a trusted household name. They believed that in doing so, they would eventually be able to make large profits based on their reputation and customer loyalty. Amazon’s current status is a clear indication that focusing on customer loyalty and making customer satisfaction and trust the number one priority is the best possible path an e-commerce site can take. After all, those who wish to be successful should do what successful people do.The domain of satisfaction is easy to observe and quantify. For a retail-based e-commerce site, this usually involves the speed of shipping, shipping costs, accuracy of product descriptions, product images, and customer service and communication. Of course, this also involves product pricing. Customers want to feel like they can trust an e-commerce entity to provide them with a good deal and high-quality service. Satisfied customers who continue to be satisfied in future transactions quickly build a high level of trust for an e-commerce web site.Of course, it isn’t just about trust that a site will provide good products, accurate descriptions, fast shipping and great prices. Most customers realize that mistakes will happen, and some products will not live up to expectations. A huge factor in trust is the assurance that an e-commerce site will guarantee satisfaction. Trust is hugely affected by any event where this is put into practice. Once a customer knows from experience that an e-commerce site will make an issue right without much of a hassle, that customer is likely to be sold on the trust issue. They can now buy with complete confidence that the e-commerce business has their back. This is a huge part of what makes e-commerce sites like E-Bay and Amazon so successful. Buyers can use their services knowing that, if anything goes wrong, it can be made right without too much of a headache.As suggested earlier, engendering this type of trust, through purchase experience and customer service, can be quite costly. It simple break-even analysis show shows that, given the investment in new customers, it takes a while for a new customer to result in profit. However, it must be considered that these customers result in the best form of marketing that exists, word-of-mouth. Word of mouth marketing is one of the most effective pieces of marketing in existence. While there are indirect costs in getting word of mouth going, there is no direct marketing cost. In addition, the e-commerce site can capitalize on the trust gained from the credibility of the source. For instance, customers who are gained through the word-of-mouth of a loved one are likely to come in with a level of trust that would not otherwise exist through normal marketing channels.Loyalty SystemsEnzmann and Schneider (2005) discuss the benefits of loyalty systems that are designed to encourage repeat and ongoing business with customers. Such programs often provide some type of points or incentive for continued patronage. For instance, E-Bay uses “E-Bay Bucks.” The more that customers spend on purchases through E-Bay, the more E-Bay Bucks they receive. This is a very simple system that provides a percentage of the purchase price back as “store credit” that can be used for future purchases on E-Bay. Likewise, Amazon has a reward program for any customer using their Amazon Visa card. All purchases on Amazon result in three points per dollar. Points can be redeemed for airline miles, hotel club points, or purchase credit on .As pointed out by Enzmann and Schneider (2005), many past loyalty programs were nothing more than somewhat clever attempts to acquire and use customer’s personal and demographic data to perform analysis and marketing accordingly. For instance, Sam’s Club membership allows Walmart Stores to track purchase patterns within age groups and geographic location. They then use this information to set prices in those areas. This ultimately has a negative impact on consumers in any given area. Stores are able to identify items that are most likely to be purchased in any given area and then increase the price. Likewise, this type of gathering of personal and shopping data allows targeted marketing. Ads can be mailed to consumers within a certain age range or demographic.Many e-commerce sites in the past have been very guilty of collecting personal information in the form of membership and loyalty programs and then selling this information to any number of businesses that desire it. This commonly included marketers for the purpose of cross-selling. However, there are also instances of private information being sold to bill collection agencies or other organization that do not have the consumer’s best interest at heart. These common issues became very well-known amongst most early adopters of online shopping. As a result, it is no important that any membership or loyalty program includes a privacy statement that guarantees consumers that their information will not be shared with any third party. For most savvy online shoppers, the lack of such insurances will guarantee that the organization does not get sign ups, making the entire loyalty program pointless.PerceptionAccording to Kassim and Ismail (2009), perception is a huge part of customer loyalty. As discussed earlier, this can be as simple as site aesthetics. The best business in the world, with the highest quality products and wonderful customer service, is unlikely to realize much success in the way of customer loyalty and new customer acquisition if their e-commerce portal is unsightly.Many online businesses make the huge mistake of being stingy with web site design. They believe that their services or products are the most important aspect of their business and their web site is nothing more than a tool. However, in an e-commerce setting, the web site is the public face of the organization. It is how the organization presents itself. Displaying a poorly designed or amateur web site to a potential customer is tantamount to meeting a prospective client in a filthy t-shirt and shorts. It gives the customer a very negative perception. Many customer may very accurately believe that any business that is not willing to present their company is a highly professional, polished manner is neither serious about their business nor likely to be very conscientious about customer care or product quality.The fact is that good web site design is not something that a business can obtain for $19.99 at a one-stop overnight web site hosting service. Recently, the web has been flooded with such e-commerce initiatives powered by word press plugins. The problem is that most of the time, it is very evident to most internet savvy consumers that the proprietors of these sites have pieced these sites together with no real expertise or professional effort. Good site design is going to require an adequate investment and a professional designer and/or web developer. The key is to create an e-commerce portal that sets the business apart from all of the competition. The consumer should feel that they are on the site of a fully-realized, successful, and trustworthy company. Opting to create your own site that is functional but contains none of the polish of a professional site will make most customers feel very uneasy about entering payment information on the web site.Switching CostsYung-Shen (2010) points out that one avenue to customer loyalty is creating and maintaining an evident switching cost. This is a cost that customer will incur as a result of switch providers. This is common in telecommunications. However, it is often implemented in a very negative manner (i.e., Switch and you will incur severe penalties). There are other options that could be made evident.One method of ensuring that consumers are keenly aware of the switching cost of a product is by predominantly placing exclusivity on products. For instance, video games are oten created exclusively for a particular console. In these instances, it is common for the products to say something akin to “Exclusively for Nintendo Wii” or “Exclusive to the Playstation 3.” The switching cost here is the loss of the ability to play games. If a consumer is considering selling their existing console and purchasing a different one, they will be aware that doing so will mean that they can no longer play many of their favorite games. Product exclusivity and termination fees are both examples of potential switching costs that could cause a customer to remain loyal to their current provider.DissatisfactionLu, Lu, and Wang (2012) have discussed the impact that dissatisfaction can have on customer loyalty and how organizations react to consumer dissatisfaction. As earlier discussed, no e-commerce site will ever experience 100% customer satisfaction. Some items will be lost, some will not be what the customer expects. In fact, many times customer dissatisfaction can be directly linked to inaccurate expectations on the part of the customer. However, in most instances, ensuring a positive experience for the dissatisfied customer results in more profit than pointing out the customer’s error.In terms of trust, very little can be done by a business to gain a consumer’s trust than handling dissatisfaction in a manner of which the consumer approves. For many modern e-commerce sites, this translates to offering returns, within a specified time-frame, with no questions asked. Most consumers understand that dissatisfaction is going to occur. However, when an organization shows the consumer that the organization takes the satisfaction of the consumer very seriously, loyalty is increased. In the study performed by Lu, Lu, and Wang (2012), this was clearly demonstrated. A positive resolution to a dissatisfying situation significantly increases customer loyalty.ConclusionsCustomer loyalty is a key to profitability in the realm of e-commerce. Defensive marking strategies, loyalty programs, and great customer service are a few items that can engender loyalty from customers. Professional presentation and user experience is also critical. In the end, loyalty begets loyalty. Word-of-mouth can create a loyalty snowball effect that results in massive success and profits. It is vital that any e-commerce endeavor invests enough time and effort into gaining customers for life, not just today.ReferencesEnzmann, M., & Schneider, M. (2005). Improving customer retention in e-commerce through a secure and privacy-enhanced loyalty system. Information Systems Frontiers, 4(4-5), 359-370.Kassim, N., & Abdullah, N. (2010). The effect of perceived service quality dimensions on customer satisfaction, trust, and loyalty in e-commerce settings: A cross cultural analysis. Asia Pacific Journal of Marketing and Logistics, 22(3), 351-371.Kassim, M. N., & Ismail, S. (2009). Investigating the complex drivers of loyalty in e-commerce settings. Measuring Business Excellence, 13(1), 57-71.Lu, Y., Lu, Y., & Wang, B. (2012). Effects of dissatisfaction on customer repurchase decisions in e-commerce – an emotion-based perspective. Journal of Electronic Commerce Research, 13(3), 224-237.Ribbink, D., van Riel, A. C. R., Liljander, V., & Streukens, S. (2004). Comfort your online customer: Quality, trust and loyalty on the internet. Managing Service Quality, 14(6), 446-456.Yung-Shen, Y. (2010). Can perceived risks affect the relationship of switching costs and customer loyalty in e-commerce?. Internet Research, 20(2), 210-224. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download