E-Satisfaction and Social Interaction Create E-Loyalty

Retailers and service providers are moving online in an attempt to raise their financial performance. The online world has some different methods of marketing that help to retain customers. In the online world where there are low switching costs companies will need to spend a greater portion of their efforts on customer retention.  A study by Christodoulides and Michaelidou (2011) helps better understand what companies must do to create e-satisfaction and e-loyalty. 

Companies spend nearly double the amount of their budgets on new customer acquisition while spending half that amount retaining existing customers (Forrester Research, 2008). As a general rule, the cost of gaining new customers is about five times the cost of retaining current customers (Strauss, et. al. 2006).  The existing customers have long tail value and should receive greater emphasis in future strategic considerations. 

How e-companies retain their customers is an important consideration for boosting revenue.  Previous research has indicated that trust, customer service, website and technology, customization, switching barriers, e-satisfaction, and image are key components to successful customer retention. When companies can effectively carry a strong brand, matched with technology, and offer customizable products/services they are more likely to keep their customers coming back. 

Through the analysis of 797 the authors found that e-satisfaction was positively associated with e-loyalty. They also found that convenience, variety and social interaction help create e-satisfaction and slowly encourage e-loyalty. The more convenient the shopping experience the more likely e-satisfaction will rise. When shopping motives are strong and e-satisfaction is high there will likely be more loyalty to e-retailers.  E-satisfaction has some of the highest levels of association with e-loyalty.

Christodoulides, G. & Michaelidou, G. (2011). Shopping motives as antecedents of e-satisfaction and e-loyalty. The Journal of Marketing Management, 27 (1/2).

Forrester Research (2008). The state of retailing online: Marketing report Forrester Research. Inc. Cambridge, MA.

Strauss, J., El-Ansary, A., & Frost, R. (2006). E-marketing. Upper Saddle River, NJ.

Developing E-Loyalty through Websites

Websites are a major source of commerce and revenue in today’s business world. Business without websites suffer loses of potential revenue and fewer market share prospects. It isn't only those without websites that are losing but also those who have poorly designed websites that suffer from a lack of loyalty. Developing e-loyalty can reduce lost customer revenue and increase customer satisfaction drawing more revenue into the future.

All websites should be well designed and planned out. Designing entails, “the process of creating an artifact with structure of form which is planned, artistic, coherent, purposeful and useful “(Cato, 2001). When the website is designed well it will be both aesthetically appealing to the customer as well as provide two way communication features that develop solid relationships (Ramani & Kumar, 2008).

Customers should be able to enjoy the experience of engaging with the company on their website, have their interests maintained, and be able to find what they are looking for with relative ease. It is this functionality and customer focus that helps foster higher levels of sales. Strong e-commerce starts at the very beginning.

When customers can find what they are looking for quickly without having to search around a long time their satisfaction rises and their loyalty is likely to be maintained. Few things are more frustrating than having to search and look for simple purchases. As website design improves so does its overall utility and ease of use.

Research conducted by (Roushdy, 2013) uses 32 items to test communication functions, transactional functions, relational functions, e-satisfaction, e-trust, involvement, switching costs and e-loyalty.  The test population included 695 responses of customers who purchased hotel rooms directly from five star hotel websites in Naama Bay, Sharm El Sheikh over the course of six months.

Findings:

-The most influential dimensions affecting e-loyalty was in the following order of importance which included transitional function, relational function and communicational function.

-Transactional function was related to website design, complexity of transactions, convenience, and website security.

-Relationship was found between e-relationship quality made up of e-trust and e-satisfaction which influences e-loyalty.

-The perception of the e-relationship and e-loyalty were high when the cost of switching between companies was perceived to be low.

-E-relationship quality and e-loyalty were most associated.

Business Application:

Loyalty was associated with the ease of transactions, the relationship with the website and the communication functions. It is important for customers to find what they are looking for easily, feel connected to the website, and be able to communicate with the company when necessary. Having this level of interactivity helps raise the transparency perception of the organization and the impression of the company as concerned with the customer beyond quick sales. When customers could invest little energy to switch between websites but felt that the relationship with the company was positive and loyal organizations know they have a strong customer base.

Organizations often try and make a quick sale but fail to realize that long-term sales require a level of openness and contact with customers. Websites, as outward facing tools, are becoming even more popular in today’s world as a sales mechanism. Website designers must concern themselves with the ease of finding products, the ease of “checking out” with products, and the ease of customers finding help.

Cato, J. (2001), User-Centered Web Design. Pearson Education, London.

Ramani, G. and Kumar, V. (2008). Interaction orientation and firm performance. Journal of Marketing, 72 (1)

Roushdy, A. (2013). The effect of e-relationship quality on e-loyalty: an empirical study on the hotel industry in Egypt. The Business Review, Cambridge, 21 (1).