Saturday, January 17, 2009

Why Customers Are Loyal to a Website

I was in a social gathering the other night when someone asked about my blog and when I mentioned that I was currently looking into eLoyalty (customer loyalty to a particular website) One guest immediately responded with the statement “there is no loyalty on the web.” While not everyone agreed with the comment, few could respond with any good reasons why a customer could be loyal to a particular website. Not wanting to monopolize the conversation, I gave a very limited response by saying that I thought good customer service might be a reason to return to a website. I think it is worthwhile to discuss the various reasons that a customer might decide to return to a specific website.

Reason #1 – Good customer service. As I responded to the comment about no loyalty on the web, I believe that good customer service add value to a website. The question I would pose is, if all else is equal, would a typical customer randomly change from one web site to another if one website gave excellent customer service and the other gave poor customer service for the same product or service?
Reason #2 – Broad product offerings. If I could find a website that offered more products than other websites, and if all else is equal, then a typical customer would migrate to the website that offered the one-stop shopping. I believe that one-stop shopping on the web has the same customer characteristic as it does in the brick-and-mortar business.
Reason #3 – Ease of use. I find some websites confusing and poorly labeled so that it is difficult to find the appropriate page or item. I believe that customers want a website that is easy to navigate and get to the right spot in a minimum number of clicks.
Reason #4 – Company reputation. There are some companies that have an excellent reputation and because of that reputation customers will return to their site. Companies such as Amazon, Staples, Costco have excellent reputations.
Reason #5 - Ease of return. Some customers will buy from a website because the company has a local brick-and-mortar location that will allow them to return the products locally and avoid possible shipping fees.
Reason #6 – Quick delivery from local suppliers. When buying a product on the web, sometimes it is quicker to deal with a company that is local so that low cost delivery can be as little one day. When dealing with companies at great distances, one delivery can impose significant delivery charges.
Reason #7 – Reliability. Some companies (both large and small) are more reliable than others. You can believe them when they make a commitment for delivery at a certain time and are willing and able to give accurate answers to questions.
Reason #8 – Support local businesses. Some customers like to support local businesses even when the price is slightly higher. By supporting local business, they not only are helping to support their community, they have a brick-and-mortar place to go to pick up the product.

I am sure there are addition reasons for eLoyalty, but I believe these reasons make sense without the need to perform any statistical testing.

The bottom line is that price is not the only reason people are loyal on the web. To say that customers always buy items on the web that have the lowest price is naive.

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