Saturday, February 21, 2009

Trust and e-loyalty

Trust has always been thought to have a significant role in building and maintaining loyalty. Many of the ideas for this blog came from an article in the Journal of Economic and Social Research titled "From Brand Loyalty to E-Loyalty: A conceptual framework" by Gommans, Krishnan and Scheffold. Some marketing gurus will tell you that trust can influence market share maintenance and price elasticity. In fact trust is one of seven components that have been suggested to model e-loyalty. While all seven of the following components are important, the concept of trust needs to be given a closer look since it is so often overlooked. The seven components are:
1. Value proposition - in e-markets price comparing among shoppers is only one click away. Thus, it would appear that having a competitive price is probably more important than customer loyalty.
2. Brand building - Brand names have become very important on the internet. The use of domain names as a possible extension of the brand becomes an obvious move for the saavy marketeer. Customers seem to remember website names that are well known. The website content is also significant (as I have noted in previous blogs) for enhancing the company image.
3. Trust - Many customers today are wary of entering data on a website for fear of identification theft. There are several ways to build trust in the website. Some of the terms that are used to describe the steps toward trust are encryption, authentication and non-repudiation strategies. Most websites use passwords for authentication. Consumers are wary of websites and hence trust plays a significant role in the buying process. There is often a level of trust that is associated with certain brands. These brands have a history and with that history comes trust. Brands like IBM, Apple, Heinz, Proctor and Gamble. Since trust is a component of an attitudinal part of loyalty, the brand trust will often overcome the concern with the Internet.
4. Website friendliness - First impressions of a website have a significant effect on e-loyalty. This coupled with easy navigation, server reliability, quick shopping and checkout, fast page loads, ease of use and a personal interface will build e-loyalty. Studies by Szymanski and Hise noted that convenience and site design are tow of the major factors of customer satisfaction.
5. Technology - Tests have shown that 58% of users make two or more navigational errors while searching for information. There are two additional major contributors to website loyalty; namely, server reliability and fast response times. Navigation through a website should be easy. Any search should be complete in a reasonable amount of time.
6. Security - Some users of the internet see it as unsafe, dishonest, and unreliable. There are now third party companies that assure customers that a company meets specific standard of consumer privacy and transactional security. One such company is
7. Customer service - Internet customers cannot touch, smell, or experience the product before they buy. If a shopper has not physically seen the product before seeing it on the web, there is a built-in feeling of insecurity. Thus, a company doing business on the web needs to have a well organized customer service system. This system should include links to FAQs, a toll-free number to answer questions along with an excellent logistics system to process orders and shipments accurately and carefully since these are also key elements of customer satisfaction. One of the best ways to reduce insecurity for purchasing on the web, the company should offer products that are well-known, have excellent quality and a meaningful guarantees.

The bottom line is that e-loyalty is complicated. It has many components and unlike the brick and mortar store, it is always just a click away from losing a customer. Whereas the brick and mortar establishment can miss a few of these factors and still keep the customer, the internet is not as forgiving. One of the areas that is most often overlooked is trust. Since I believe that trust is both important and not well measured, I will write more on trust in a later blog.

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