online consumer psychology

Online ConsumerPsychologyJacob OrquinDepartment of Business AdministrationAarhus University

Learning objectivesUnderstand how to: Create trust Persuade customers Create loyalty

TrustWhy is trust important to online marketing?Can we imagine economic transactions withouttrust? How do they take place?

Trust and economic exchangesSo what’s the value of trust in e-commerce? Low degrees of trust are detrimental to economic exchanges Increased levels of trust are associated with a higher conversion rate Increased levels of trust are associated with satisfaction and loyalty

Trust and economic growthDenmark is not part of the study, but isprobably somewhere near to Norway (NOR)

Interpersonal trust across nationsDenmark is not part of this graph but it’s up here!

TrustA (very) simple model of trust (Sultan et al 2002)

Trust sealsTrust seals has been used to incease consumerconfidence in e-commerce since the earliestdays of online shopping but the documentedeffect is quite modest.According to Sultan et al. (2002) trust seals onlyaccount for 0.2 % of explained variance in trust!

Trust sealsSecific e-commece vendors claim to haveimproven conversion rates for new visitors withup til 7 % using trust seals. Screenshot from billigvoks.dk

Factors predicting trust

Predictors (cont) Percent of respondents who self motivatedly commented on certain website characteristics influencing website credibility. (Fogg et al. 2003)

Persuasion

Elaboration likelihood model

Persuasion strategiesCialdini identifies 6 compliance strategies Reciprocity Commitment and Consistency Social Proof Authority Liking Scarcity

Reciprocity

Commitment and Consistency

Social Proof

Authority

Liking

Scarcity

LoyaltyWhy is loyalty important to online marketing?What difference does it make if have to attractnew customer for every sale we make?

Retention is (very) profitable! A 10 % change in repeat customer conversion leads to a 10 % change in net present value Agrawal et al (2001) E- performance

Loyalty and satisfactionThe apostle model

WOM and satisfactionThere is a U-shaped relation betweensatisfaction and WOM. Soderlund (1998) Customer satisfaction and its consequences on customer behaviour revisited

Word of mouthWOM: contributes with 30 % of customers andhas no specific budget allocation! Hoffman & Novak (2000)

So what’s the point?Customer satisfaction is a strong predictor bothof WOM and loyalty.Among online marketing initiatives WOM andloyalty have the highest ROI.

WOM and loyaltyCarpenter (2005) Consumer shopping value,satisfaction, and loyalty for retail apparel brands

Antecedents to e-SatisfactionThe Szymanski & Hise (2000) model was testedand re-examined in 2004.

Correlations with convenienceResults from Szymanski & Hise (2000) seem tofocus on general aspects of e-commerce:

E-satisfaction affects retention andconversionBansal et al (2004) Relating e-satisfaction tobehavioral outcomes COMMENT: Web site characteristics comprises various items ranging from ease-of- use, information available, product selection, price to transaction duration.

Antecedents to e-SatisfactionResults from Bansal et al (2004) Relating e-satisfaction to behavioral outcomes

Moderators of e-SatisfactionYes, e-satisfaction does affect e-loyalty … Anderson & Srinivasan (2003)

Online vs. OfflineSatisfaction has an even stronger impact onloyalty online than offline! Shankar et al (2003) Customer satisfaction and loyalty in online and offline environments

Factors affecting loyaltyBorrowed from Reibstein (2002). COMMENT: At the WAW speech 26th of august it was pointed out by Jakob Høi Biegel that in his company (skatepro.dk) delivery times had a very limited effect on customer loyalty and satisfaction.

Touch point analysis Mapping customer touch points: satisfaction can be replaced with performance for fast benchmarking blog Product features websiteimportance Forms / documents support Social team networks Sales News team letter advertising satisfaction

Gather your dataGathering questionnaire data is practically free.What matters is integrating the data sources

Survey social media Get direct input on what you have done right and wrong! Complaint about support center Complaint about broad band service Complaint about support center Ok delivery but bad support

Other web 2.0 tools What are they talking about and how much are they talking? Social media monitoring: Buzzmetrics, Cymphony, Google blogsearch, Blogpulse.comFacebook Lexicon Blogpulse.com Google blogsearch

Integrate the data!Measure and integrate data sources. There are nouniversal truths so always check what works on yourwebsite.E-Satisfaction web analytics pipeline metricsIs there any correlation between the data?

Developing e-SatisfactionSetting expectations: do you deliver what your market communication promised?Website characteristics: how is your websites’s ease of use, content/information, price, and product selection doing?Customer service: check your support, delivery, and complaints.e-CRM applications: there are no killer apps! Feinberg & Kadam (2002)

Recap 1 2 3 4 5

online consumer psychology

by Aarhus University on Aug 27, 2009

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