Factors impacting online customer loyalty
Developing online customer loyalty is much more difficult than customer loyalty in traditional stores. The internet allows your customer base to be worldwide, but also puts you head to head with a larger number of competing businesses. I’ve noticed there are many different approaches and theories as to why customers develop loyalty to particular online businesses. Here is yet another one. Its important to remember that these theories are not just simple observations, but are developed academic studies. Here is the reference to the article I’m writing about today: Srinivasan et al. Customer loyalty in e-commerce: an exploration of its antecedents and consequences. Journal of Retailing (2002) vol. 78 (1) pp. 41-50. Studies have shown that without a base of loyal customers, any company will struggle financially.
Proven antecedents to customer loyalty
- Customization – Customization caters the products, services, and the shopping experience to you. For me, I think Amazon.com is a great example. They know what I’ve bought, and what I’ve recently viewed, and they try to offer suggestions that are relevant to me. Although I rarely find these helpful (probably my own personality) I think they make a good effort. Effort can also be placed on customization of a product or service.
- Contact interactivity – This refers to communication between customer and business, or the “availability and effectiveness of customer support tools on a website (42)”. I have been frustrated with websites which give only offer a simple faq list, forum, etc without any way to communicate with a human being. While I usually try to work things out on my own first, this is very important. I just had an issue with my Apple MacbookPro today. After not finding a solution in their forums and troubleshoot guide, a very helpful representative quickly found a solution.
- Cultivation – Many businesses follow up with their customers with additional information about the products they purchased, or by offering deals and incentives to keep their business on the customer’s mind, and to offer them additional value through their products or services. Twitter or Facebook can be a useful tools for cultivation.
- Care – The article basically defined this as the amount of attention to all pre and post-purchase customer activities. I would say this basically means providing solid service and products. Keeping the communication lines open is important, frequent updates on shipping, support, etc, is important.
- Community – This feature of online shopping has really gotten a lot of attention. As customers exchange ideas, experiences, and opinions, it helps customers to make choices that will better benefit them. A community will also expose any holes in your service or defects in your product. Responding appropriately when these issues arise in an effective, timely manner is crucial.
- Choice – Having a wide selection of products benefits the seller. Buyers typically prefer a one-stop shopping experience.
- Convenience – Crossed out and italicized because it was not found to significantly impact customer loyalty. Convenience is probably not the most fitting name to describe the ease of use of a website, but I didn’t write the article. This basically includes navigation, layout, ease of use, etc. I find it interesting that this is NOT a significant player in customer loyalty
- Character – This is the identity of a business, which can be fostered by stunning web graphics, video, photos, etc. Some others may label this as the brand or graphic identity of your business.
Implications of customer loyalty
This study also found that the more loyal your customers are, the more likely they are to spend more money AND to talk to their friends about your products or services. Sounds like a great way to increase revenue! Companies can measure their effectiveness on the seven proven points listed above to gauge their customer’s loyalty.
Do you have any creative ways of implementing improvements in any of these seven indicators of customer loyalty?
