4.2 The E-Customer

 

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The E-Business, the E-Customer, their Relationship and Interactivity

 

 

KunnskapskildenE-Business –
E-Business, E-Customer, Relationship and Interactivity

 

Dissertation
The E-Business, the E-Customer,
their Relationship and Interactivity 

Jan Vig 

Dissertation  av Jan Vig om E.Business, E-Customer, Relationship and Interactivity  (286 sider) i forbindelse med Masterstudie i Information Technology and Communication Juni 2000.

 

The E-Retailer Business, the E-Customer,
their Relationship and Interactivity

Table of Contents

Chapter One Introduction to the study

Chapter Two Business in Cyberspace

Chapter Three E- Retailer Commerce

Chapter Four E-Customer, Relationship and Interactivity

Chapter Five A Successful Case study – Amazon.com

Chapter Six The Future, Critical Success Factors, E-Business Strategy, Results and Conclusion

Appendix

 

 

Chapter 4

The E-Customer, the Relationship and Interactivity 

 

 

 

Chapter Four E-Customer, Relationship and Interactivity

4.1 Introduction 108
4.2 The E-Customer 111
4.2.1 The E-Customer 111
4.2.2 The E-Customer and Benefits 113
4.2.3 The E-Customer behavior 114
4.2.4 The E-Customer and shopping 121
4.2.5 The E-Customer and shopping agents 123
4.2.6 The E-Customer and privacy 126
4.3 One-to-One Marketing and CRM 130
4.3.1 CRM 130
4.3.2 History One-to-one Marketing 132
4.3.3 Current Situation 133
4.3.4 Why is One-to-one marketing important today? 135
4.3.5 One-to-one marketing, trends and technology 136
4.3.6 One-to-one marketing tools 138
4.3.7 Benefits of One-to-one Marketing/CRM 138
4.3.8 Arguments against One-to-one marketing 140
4.3.9 Examples on One-to-one marketing 141
4.3.10 Implementing One-to-one marketing 143
4.4 E-Retailing, relationship, customer focus and customer experience 145
4.4.1 The E-Retailing and relationship 145
4.4.2 Personalisation 148
4.4.3 Create a great customer experience 152
4.5 The Customer led E-Retailer Web Site 155
4.6 Summary

 

 

 

4.2

The E-Customer

 

4.2.1 The E-Customer

 

In the new digital world, the E-Customer will have all the power. According to (Siegel, 1999:3) “The Customer-led revolution is just beginning. People still want transportation, entertainment, tools, and security, but they are about to ask for them in ways we can barely imagine today”

This means that companies which are not taking seriously the revolution of the E-Customer and are thinking in the old world terms of a supply driven business will face bigger challenges than they can afford in the short and long run.

 

The E-Customer shops on the Internet because they find their choices dramatically increased. They have access too much more information when making purchasing decisions. Busy E-Customer can save time and find shopping more convenient as E-Retailers serve their needs individually. Better information and greater selection, combined with lower operating costs for many Internet businesses may, in turn, drive reductions in prices or improvements in quality.

 

The advantage for the E-Customer could be summarised as follows:

  • Better and more complete information
  • Choice
  • Convenience
  • Customisation
  • Lower prices

 

Despite these advantages, many customers today still remain concerned about the Internet. They are concerned about protecting their privacy and the security of their credit card information. Many do not have computers, or find them too difficult to use. Or, they prefer the experience of shopping and selecting products they can see, feel, or try on in person. For these reasons, shopping in stores will likely be the main way that customers purchase goods for many years to come.

 

However, the barriers to Internet shopping are likely to be lower for younger customers. Children today are growing up with the Internet. Over the next decade, as today’s children become adults, shopping on the Internet will be easy and natural to them.

According to Tapscott (1998:187-208) a new youth culture, one that involves more than just the pop culture of music, MTV and the movies, is emerging out of N-Gen’s (Net Generation) use of interactive media. It also involves the experience of being part of the largest generation in the world. The E-Retailers should pay attention to this culture that will very soon create the workplace and the society of tomorrow. N-Geners using new media have a new set of expectations as E-Customers.

Among the themes of these expectations are:

  1. N-Geners want options
    Availability of choice is a deeply held value in N-Gen culture. Having grown up in a free and interactive world, nothing is more foreign to them than limits and monopolies.
  2. N-Gen customisation
    N-Geners are entering a world of highly customised products and services which will be shaped by them, not just as a market, but as individuals. This is causing changes in learning and the relationship between working, learning, and daily life as a customer. Brand names may be able to overcome this obstacle as they have done so many times, however the future may lead to a change in the way products are marketed, and already in the way products are bought.
  3. They want to change their minds
    Video games and the Net are an environment where mistakes can immediately be corrected and situations can be re-created. N-Geners, however, also expect to be able to change their minds, not just to correct their mistakes. They want to be able to change their minds often. Marketers should pay attention to this fact.
  4. Try before they buy
    N-Geners are not viewers or listeners or readers. They are users. They reject the notion of expertise as they shift through information at the speed of light by themselves, for themselves. It is difficult to convince them that they must have anything. Other industries can learn what the software and video game industries have already adopted – make your product free to use for a limited time. If it’s use becomes integrated into the N-Gen routine, making activities faster, brighter, and easier, then the product becomes indispensable and the companies can begin to charge.
  5. The ethics of advertising to N-Gen
    Given the growing influence of the N-Gen in adult purchasing, we can expect that advertisers will launch massive campaigns to deliver their messages to N-Geners – on packaging, billboards, print media, television, and increasingly, the Net. But there are ethical problems that arise when advertisers target children, and those questions are becoming harder to answer.

 

It is obvious that it is a difference in the attitude of younger E-Customer and the older E-Customer because of computer literacy. But as online shopping will be possible from other devices that people are used to and are convenient with the barriers will fall and older people will be feeling more comfortable buying online.

 

4.2.2 The E-Customer and Benefits

The following list demonstrates the power of the web as a powerful medium for customer care and the benefits of the online world for the E-Customer: (Cusack, 1998: 213)

 

Among the themes of these expectations are:

  1. N-Geners want options
    Availability of choice is a deeply held value in N-Gen culture. Having grown up in a free and interactive world, nothing is more foreign to them than limits and monopolies.
  2. N-Gen customisation
    N-Geners are entering a world of highly customised products and services which will be shaped by them, not just as a market, but as individuals. This is causing changes in learning and the relationship between working, learning, and daily life as a customer. Brand names may be able to overcome this obstacle as they have done so many times, however the future may lead to a change in the way products are marketed, and already in the way products are bought.
  3. They want to change their minds
    Video games and the Net are an environment where mistakes can immediately be corrected and situations can be re-created. N-Geners, however, also expect to be able to change their minds, not just to correct their mistakes. They want to be able to change their minds often. Marketers should pay attention to this fact.
  4. Try before they buy
    N-Geners are not viewers or listeners or readers. They are users. They reject the notion of expertise as they shift through information at the speed of light by themselves, for themselves. It is difficult to convince them that they must have anything. Other industries can learn what the software and video game industries have already adopted – make your product free to use for a limited time. If it’s use becomes integrated into the N-Gen routine, making activities faster, brighter, and easier, then the product becomes indispensable and the companies can begin to charge.
  5. The ethics of advertising to N-Gen
    Given the growing influence of the N-Gen in adult purchasing, we can expect that advertisers will launch massive campaigns to deliver their messages to N-Geners – on packaging, billboards, print media, television, and increasingly, the Net. But there are ethical problems that arise when advertisers target children, and those questions are becoming harder to answer. 

 

It is obvious that it is a difference in the attitude of younger E-Customer and the older E-Customer because of computer literacy. But as online shopping will be possible from other devices that people are used to and are convenient with the barriers will fall and older people will be feeling more comfortable buying online.

 

4.2.2 The E-Customer and Benefits

The following list demonstrates the power of the web as a powerful medium for customer care and the benefits of the online world for the E-Customer: (Cusack, 1998: 213)

  • Order new features/products·      Check order status
  • Locate nearest branch or store
  • Access directories
  • Check current bills
  • View previous bills
  • Send/receive e-mail
  • Talk to a “live” agent
  • Change account information
  •  Conduct price plan analysis
  • Download software upgrades

 

  • Participate in online chat forums·      Create trouble tickets
  • View frequently asked questions
  • Access documentation
  • Interact with IVR functions
  • Download bug fixes and workarounds
  • Configure utilities
  • Access online knowledge base
  • Technical troubleshooting tips
  • Access product training program.

 

 

 

Other benefits and advantages for the E-Customer in the online world. Below are some of them mentioned:

 

Other benefits and advantages Other benefits and advantages
  • Access to greater amounts of dynamic information to support queries for customer decision making.·      Gathering purchase-related information.
  • The interactive nature of the web.
  • Effective removal of geographic and political boundaries allows trade with a remote specialty product supplier as easily as with a large chain or superstore.
  • Recreational uses of the medium.
  • Customers can test products online, which may stimulate purchase.
  • 24-hour ability to «go shopping» or complete other on-line transactions such as banking, bill-payments and investments.
  • Wider availability of hard-to-find products and wider selection of items due to the width and efficiency of the channel.
  • Customised shopping and products.
  • Time savings (if the E-Customer know how to find it).
  •  
  • Medium provides the closest thing to free market competition.·      Convenience of shopping from home, school, café, anywhere there is an Internet connection.
  • Greater selection of products  and services
  • Competitive prices.
  • An enhanced shopping experience.
  • Reduced costs to buyers from increased competition.
  • Many on-line businesses incur fewer overheads for staffing, warehousing and storage and pass savings on to buyers.
  • Connecting customer to wholesaler directly means more savings.
  • Access to dynamic (relevant, timely) information.
  • Comparison shopping
  • On-line information allows fast, efficient comparison of services.
  • Speed the process of finding items.

 

 

 

4.2.3 The E-Customer behavior

(Sheht, 1999: 5) defines “customer behavior as the mental and physical activities undertaken by household and business customers that result in decision and actions to pay for, purchase, and use products and services. Our definition of customer behavior includes a variety of activities and number of roles that people can hold.”

 

Further he writes” A marketplace transaction requires at least three customers roles:

  • buying (i.e., selecting) a product, (2) paying for it, and (3) using or consuming it. Thus, a
  • customer can be (1) a buyer, (2) a payer, or (3) a user/customer. “(Sheht, 1999: 6)

 

Technology is providing freedom and choice of place, time, methods (ways), and content. Society, and therefore customers, has to adopt new modes of behaviour. There are business opportunities in helping customers, and the same new technology mediums, like the Internet and Web-TV, can deliver this help.

 

As customers gain confidence with the new medium they will use them to define their requirements and their terms for doing business. We are entering an era of Pull Marketing. Companies will need to change their methods if they are to serve informed and pro-active customers. Collaboration with customers is the future for building trust and strong life long relationships.
SRI’s (n.d.) Customer Acceptance of Technology (CAT) is designed to increase new product success by analyzing the human and social aspects of new technology products and services.

 

It is based on research about change leaders—customers who are most positively responsive to new products and services.

 

  • Profile early adopters of new products. Identify other key user groups later in the diffusion process
  • Estimate market potential
  • Target advertising and communications
  • Identify social resistance early and take appropriate action
  • Design, redesign, and position products effectively.

 

 

Technographics

  • Segmentation based on customers’ motivations, usage patterns and attitudes towards technology
  • Internet use heavily dependent on technology – so additional information must be obtained than just demographics and psychographics
  • Conventional Approach doesn’t work as effectively (Web-TV & Photo CD) – can tell you who bought a PC, but not that 4 people use it for different purposes

 

 

Technographic Segments are classified along 3 axes:

  • Primary motivation
  • career – the drive to get ahead
  • family – the need to create a safe and comfortable home and to educate children
  • entertainment – the desire for enjoyment
  • Technology attitude
  • classification based on curiosity and desire to spend time mastering new technological products or services
  • optimists or pessimists
  • Household income
  • population divided into two roughly equal groups

 

 

Below technographics segments.  The optimists and the pessimists.

 

 

IMG_6347cr

 

Figure 4.1 Technographics customers: The Optimist.

 

 

 

 IMG_63cr


Figure 4.2 Technographics customers : The Pessimist.

 

ystemet 

How are the customers generally behavior in the new digital world? (Managing change.com, n.d.)How are customers reacting to these dynamic forces? The use of a behavioural model helps to clarify what is occurring to people.

 

Confusion

  • Historically, most people have lived stable lives both with respect to employment and to their family situation.
  • Market and social forces are producing a de-stabilising impact resulting in the appearance of new models.

Learning

  • People turn to a variety of sources to try to make sense of the situation and, more importantly, identify cooping strategies.
  • Initial sources of information are likely to include less threatening ones such as friends and family and the media.
  • An increasingly technologically familiar society is using the Internet and other mediums as a rich hunting ground for anonymous fact finding.

Experimentation

  • Customers will try new patterns of behaviour, giving rise to new requirements. In the first instance they are likely to turn to the well-established brands, though not necessarily long established. Newer brands, with their open and fresh approach, are proving an attraction for many.
  • Products at this stage are likely to be basic commodity products with limited options. As a form of risk management, customers may have a preference for low cost, short-term products.

Confidence

  • The prior stage leads to a greater awareness of, and increasing expertise in different services.
  • Some use their new found confidence to deal with professionals, whilst others will deal direct with manufacturers. This has given rise to the term Pull marketing.
  • Increasing knowledge and experience is likely to lead to a shift from quantity (i.e. must get some cover) to quality plus service (must get good cover) but all at a competitive price.

 

In a study, «Winning the Online Customer: Insights into Online Customer Behavior”(BCG, 2000)  the online shoppers show every sign of making the Internet a regular part of their shopping behavior.

 

BCG identified three waves of online adopters in USA, distinguished by the length of their time online, as well as their distinctive activities and purchasing patterns.

 

  • The first wave of online customers, the Pioneers, are the 23.2 million users who have been online for three years or more and now comprise 29 percent of the online population.

 

  • The 39.6 million Early Followers have been online for than one but less than three years and represent almost half the current online population.

 

  • The First-of-the-Masses are the most recent customers to go online, having made the leap only in the last year, and represent 18 million users or 22 percent of today’s online population.

 

 

With each successive wave, the online population is becoming more representative of the demographics of the mass market. While the demographics of Pioneers are consistent with the Internet-user stereotype of the young, male technophile, the Early Followers and the First-of-the-Masses are increasingly female, mature, less educated, and less affluent customers.

 

All three waves of online customers view the Internet as more about communication than commerce. More than 80 percent of all Internet users went online originally for communication purposes, while only 2 percent said they were motivated to go online to shop. Internet users spend 43 percent of their time online engaged in communication-related activities, primarily e-mail. Information gathering, representing 27 percent of online time, is the next most popular activity. And time spent online is increasing. A typical Internet user will spend 15 percent more time online in six months than is the case today. Increasingly, online activities are replacing offline activities, such as paper-based correspondence and long distance telephone calls. Leisure and entertainment are also being replaced by Internet time.

 

Customers identified many compromises or barriers to shopping online in the research. Among both new and experienced Internet customers, anxiety over credit card security was the main barrier to purchasing online. Purchase process breakdowns were also a major irritant, as well as a deterrent to further online shopping. Twenty-eight percent of customers who suffered a failed purchase attempt stopped shopping online; 23 percent stopped purchasing at the site in question; and 6 percent also stopped patronising the retailer’s physical store.

 

Despite a rising consciousness about the importance of loyalty marketing, 70 percent of online retailers lack operational strategies for cultivating their all-important customer relationships, according to a survey.

 

The «Customer Development Survey» conducted among a cross-section of E-Retailers by (Follow Up Net, 2000), found that 26 percent of E-Retailers have no customer relationship development plan. Almost half (45 percent) perform their customer development programs on an ad hoc basis. That leaves 29 percent who are actively pursuing consistent, multi-step programs for developing customer relationships.

Additional findings of the study include:

  • Many online retailers realise attitudinal data is more effective than transactional data for segmenting their customers, yet 25 percent perform no segmentation
  • Among those performing segmentation, only 14 percent uses attitudinal information to segment customers
  • 58 percent of respondents send out untargeted sales promotions
  • 42 percent of respondents send out untargeted newsletters

 

Most E-Retailers recognise the importance of knowing customer behavior and preferences, but few have the skills or resources to acquire such information.

 

There are several stages in the buying process, need identification, development of a consideration set, information search and evaluation of alternatives, choice/decision.
According to Sally, VanSteenkiste, Canobbio, Parker and Vermilion (1999) the online customers were differentiate in four ways:

 

  • Goal-directed shopper.
    The Goal-directed shopper can be a loyal visitor to your site, who is knowledgeable and experienced as how to quickly find an item he is seeking. Or, he can be a first time visitor who wishes to find a specific item and must use the tools the retailer has provided in the market space to accomplish his aim.
  • Experiential shopper.
    The experiential shopper can be equated to a brick-and-mortar window shopper. This shopper may visit the retailer’s site frequently to see what new products are available or simply to explore the content of the site
  • Experienced with a retailer’s site.
    Experienced shoppers can enjoy knowing the site landscape and their familiarity with navigation. Unfortunately, this is the same customer who will get bored if the site remains static. Therefore, experienced users will not have as much «fun» as less experienced users.
  • New visitor to a retailer’s site.
    An inexperienced customer is one who is unfamiliar with an E-Retailer’s site.

 

 

It is important for the E-Retailers to study research reports and demographics about the behavior of the E-Customer. A lot of reports are available online. The attitude of the E-Customers are changing rapidly, because of more and more possibilities to shop for the best prices and because they easily  ‘click away’ to shop by competitors if they are not satisfied.

The E-Customer of tomorrow will not be loyal in the same way as before and the E-Retailer have to do a lot more work than today both in understanding and keeping the E-Customers.

 

 

4.2.4 The E-Customer and shopping

 

If an E-Retailer has a product or service that the E-Customer s need to try before they buy, then the company can put one-to-one web technologies to work for them. E-Customers have typically purchased low-risk products that don’t require trial or demonstration such as computer-related products, music and books online. However, as web technologies advance and bandwidth constraints are better solved more products can be demonstrated online, also in real time. Many of the technologies are still quite expensive to implement, so analysing a company’s customers’ needs regarding how they buy online, and offline, is crucial knowledge to acquire before making the investment.
The goal is to give the buyer a «virtual» and interactive buying experience that take care of some or all of the steps they use to buy in the physical world. Of course, the web will always be limited concerning some real-life experiences such as touch and smell. There are many benefits to adding «try before you buy» applications to an E-Retailer’s web site including increasing the use of the web for online purchasing at a lower cost, reducing the buyer’s sense of risk in online buying, minimizing return rate of products and services, and increasing customer satisfaction.

 

 

Andersen Consulting (2000) identified the top 5 online shopping motivators in a customer study. These are:

 

  • Free product delivery
  • On-time delivery guarantees
  • No sales tax
  • Coupons/promotions such as «buy three, get one free»
  • Customer assistance via a toll-free telephone number

 

 

  • Ensure privacy.
  • Give rich, relevant product info.
  • Provide price comparisons.
  • Know the customer
  • Keep it simple

 

 

For E-Customer to be satisfied shoppers a lot has to be in place by the E-Retailers. The E-Customer demands more and more and it is quite easy to tell a whole community about bad shopping experiences at the Internet. This is more than a challenge it is survival of the fastest and best practices. According to Gengler (1999):
International guidelines to protect customers who buy goods on the Internet are long overdue, according to a global federation of customer groups.

Customers International says customers often suffer limited choice, poor information about charges and order progress, unreliable delivery and difficulty in obtaining refunds.” “The survey points out that unless cross-border shopping on the Internet becomes customer-friendly and secure, electronic commerce will never reach its potential.
The Survey found that one in ten of the items ordered never arrived. Five months later, two buyers are still waiting for refunds, and almost half the products ordered arrived without receipts. Seventy-three per cent of traders failed to give crucial contract terms, and more than 25 per cent gave no address or telephone number. Another 24 per cent were unclear about the total cost of the item that was ordered.

 

Of all Internet activities, online shopping grew the most this year compared to last year, says the second annual America Online/Roper  Starch Cyberstudy. In 1999, 42% of the 1,000 adults surveyed said they regularly or occasionally purchase online, up from 31% in 1998,

according to a report in W e b P r o m o t e W e e k l y (1999) Women in particular were shopping online more, according to the study:  37% in 1999, compared to 24% in 1998.

 

The study also found that Internet veterans (those connected three years or longer) engage in more everyday Internet activities than  Internet newbies (those connected one year or less). And though the Internet population remains more affluent and educated than the general

public, more people of moderate incomes and educational backgrounds are using Internet.

The following reasons for shopping online was mentioned in the Emerging Digital Economy report (Clinton,1997):

 

Reasons why people shop online
1.      Convenience2.      Ease of Research3.      Good prices/deals4.      Good selection/availability5.      Fun6.      Impulse7.      Customer Service

8.      Other

Source: Forrester Research

 Table 4.3 Reasons why people shop online

 

4.2.5 The E-Customer and shopping agents

As mentioned in Chapter 3.4 we have a lot of different agents, also called bots and spiders.

Despite its great potential for commerce, entertainment, and learning, today’s web suffers one critical limitation it’s a strictly self-service environment. Whether the E-Customers are seeking goods, services, or information, they navigate E-Retailer web sites alone. This mechanical interaction with unknowing, unfeeling machines can frustrate people and discourage transactions

 

According to KPMG (n.d.) the intelligent agents with advanced level of operating features will include the ability to:

  • Filter information
  • Integrate systems and audiences
  • Serve as agents for the user
  • Help navigate vast information resources
  • Contextualize information
  • Authenticate the value of information
  • Allow for trustworthy information
  • Create requests for proposal on products and services
  • Allow customers to leverage their time better

 

Compounding the problem, self-service environments often fail to deliver the positive benefits of active, skillful, personal-touch customer care.  Today’s E-Customers are customers, in the broadest sense of the word, who have come to the web to find information, purchase goods, or participate in community activities
Shopping for the best deals online can be a long and hard process. It’s a big job, checking at different E-Retailers for the lowest prices and best product guarantees. That’s why there are shopping agents. They will investigate all over the web, checking prices at every retailer they can find.
Currently, most programs that claim to be shopping agents are really fixed comparison engines. In other words, instead of searching the Web for good prices on products the E-Customer might want to buy, these engines will quickly check at a set list of major retailers. These can still be fairly useful, but soon actual agents will be available, and bargain hunters will be able to cast their nets a lot wider.


Comparison Engines are a great way to simplify the shopping process. If the E-Customer know exactly what he/she is looking for or need some help narrowing the search, these sites will help him/her save time and money.

 

Tete-a-tete is the result of research conducted by MIT’s Media Lab (n.d.). The idea is to build a connection between the shopping agents used by customers and the sales agents used by businesses. Ideally, this would result in more effective negotiation between stores and customers.

 

The shopping agents are a really treat for the E-Retailers, when they do not use competitors intelligence to see what the competitors are doing online and thinking innovative. By getting information about price, quality, service and other measurements that are important the E-Customer will be the king in the future.

 

4.2.6 The E-Customer and privacy

Electronic Commerce involves the constant tension between the need for an E-Retailer web site to gain information about their customers and the need for these individuals to control the release of this information to others.

 

People’s interest in enjoying ‘private space’ is abused by the intrusions that are inherent in most direct marketing techniques. A further problem is the manipulation of personal behaviour that is the primary purpose of marketing databases and customer profiles. A related matter that disturbs some customers is the presumption by marketers that computer-generated communications based on database content represents a relationship with a person.  (Clarke, 1998)

 

The World Wide Web Consortium (n.d.) is establishing standards that will:

  • enable web-sites to express their privacy practices;
  • enable users to express their privacy preferences; and
  • establish protocols whereby client-side software can assess the acceptability of declarations provided by server-side software.

 

 


According to Clarke (1999):

“Privacy is the interest that individuals have in sustaining a ‘personal space’, free from interference by other people and organisations. “

 

Clarke (1999) argues that privacy is not a single interest, but rather has several dimensions as privacy of the person, privacy of personal behavior, privacy of personal communications, privacy of personal data.

Cookies provide the E-Retailer with the ability to maintain customer-profile data, and to do so on the customer’s own machine.

 

A cookie is a record that may be stored on a customer’s local hard-disk, and that records data about the web-sites that have been visited.
On subsequent occasions that a user of that machine contacts the same web-site, that data is provided along with the request.
Cookies are a potentially valuable technical means of supporting relationships between customers and marketers.
(Clarke, 1998)

 

Designers of E-Retailer web sites can apply cookies in a manner that addresses the interests of the E-customers. The principles are as follows: (Clarke, 1998)

  • Information. Information needs to be readily available to anyone who seeks it, and needs to be sufficient to enable people to understand how the cookies work, what data they contain, what it’s used for, and whether the data will under any circumstances be provided to a third party.
  • Choice. The customer needs to be able to judge whether they want to accept the conditions, or decline the service.
  • Consent. This needs to be communicated by each customer.
  • Fair Conditions. These need to be such that each customer has grounds for being confident in the nature of the commercial relationship.
  • Recourse. Where marketer behavior does not comply with the conditions they nominate, they need to be able to be brought under control; and, quite critically, it is essential that the customer perceives this to be the case.

 

 

During the purchasing process, marketers have established that customers pass through the following stages: (Hoffmann, 1997)

 

  • Search;
  • Purchase (negotiation, decision, payment);
  • Fulfillment and Delivery; and
  • Post-Purchase Relationship.

 

 

In each of these stages, customers and the E-Retailers are confronted with dissimilar and conflictive interests, outlined in the table below:

Seller/Customer Conflict of Interest at Stages of the Purchasing Process
  Seller Interests: Customer Interests: 
Search Data Mining: Knowing customers’ data to build up a database of customers and their searching/ buying profiles. Anonymity: Customers want to minimize the information disclosed to the seller.
Negotiation Buyer’s Identity: Knowing a buyers’ identity before entering a negotiation may affect the commercial Web providers’ commitment to finish the negotiation. Authentication: Confirming the seller’s identity prior to purchase helps ensure that goods will be genuine, and that                                        service or warranties will be provided as advertised.Anonymity: Customers want to minimize the information disclosed to the seller. 
Decision Buyer’s Authentication: Knowing a buyers’ identity before making a sale may assist in proof of order and guarantee of purchase.Buyer’s Certification: The merchant may need proof that the buyer possesses an attribute required to authorize the sale. For example, some goods may only be sold to those licensed to use them; other goods require that the purchaser be over eighteen. Some products cannot be sold in some parts of the country while others cannot be exported.  Anonymity: Customers want to minimize the information disclosed to the seller.Or Secondary Use of Information Control: The customer may want control over the amount of buyer / transactional information disclosed to third parties.
Payment Confirmation: The merchant needs to be able to prove to any third party involved in the transaction (such as a credit card company) that the customer did indeed authorize the payment.Payment Assurance: This can be achieved by having payment before sale, at time of sale, or by provision of a payment guarantee. A credit reference by a trusted third party provides a lesser form of assurance, but it at least demonstrates that the buyer is capable of making the payment  Confirmation: The customer will want some form of irrefutable proof of the transaction, such as a receipt.Integrity: The customer desires protection against unauthorized payments. Anonymity: Customers will want control over the amount of transactional information disclosed to the merchant.
Fulfillment / Delivery Non-repudiation: the commercial Web providers wants protection against the customer’s unjustified denial that he placed the order, or that the goods were not delivered Recourse: Comfort that there is recourse if the seller fails to perform or deliver.
Post-purchasing relationship Develop an Exchange Relationship: the seller wants the customer to re-purchase in the future, engaging in a long-term relationship. Recourse: Comfort that there is recourse if the product fails to perform or doesn’t comply with the specifications.Develop an Exchange Relationship: the customer may want to have a reliable provider where he can buy repetitively, with a certain price and quality. 

 Table 4.4 Seller/Customer Conflict of Interest at Stages of the Purchasing Process

 

According to an Opinion Research and DoubleClick survey, the situation surrounding the online privacy issue is as follows: (Allen, 1999)

  • 68 percent of users would provide personal information
  • 58 percent of respondents would agree to have their Web site visits used for personalization
  • 51 percent of users would agree to have their online purchase information used
  • 53 percent would be willing to have their offline purchase information from catalogs and stores used
  • 52 percent would agree to have their offline and online purchasing information combined
  • 53 percent of respondents say they would agree to the combination of personal information, Web site visits, and on/offline purchases

 

When it comes to the online users’ need to receive a notice, this means a clear written communication of what their personal information will be used for.
The online customer particularly wants to know if the data will be going to a third-party company.
When it comes to their desire for choice, online customers want to choose to participate once they know the benefits and «costs» (i.e., the use of their information) of doing so.
Online customers would also like to manage their own personal information they provide to a web site. (Allen, 1999
)

 

According to a Forrester Research study (1999), almost 90 percent of online customers want to control how their personal information is used.  The activity that scares people away from online shopping or interaction is that they don’t know how much data is being captured and by whom.

 

Here is Forrester Research’s recommendation of a privacy model that will enable companies to establish a trusting relationship:

  • At Level 1, visitors choose anonymity, deliberately forgoing the additional benefits offered by personalization and premium content. Retailers build trust by promising not to collect data or use cookies.
  • With the addition of convenient, targeted content or additional site access, customers enter into Level 2, a one-way communication relationship whereby merchants promise not to initiate contact with the shopper or disseminate personal information.
  • At Level 3, customers agree to two-way communication with retailers. At this stage, visitors share more personally identifying data in exchange for proactive notifications of specials from the retailer.
  • Level 4 is considered a trusting relationship, whereby shoppers seek advice and active solicitations from their favorite merchants, including deals offered by established partners.

 

 

 

Only 25 percent of all dot-coms in the Internet universe have a privacy policy, and many of those that do could use some improvement, according to a survey of 30,000 Web sites by enonymous.com. Of the top 1,000 sites, 37 percent published no privacy policy, and 30 percent had a policy of allowing themselves to share or sell information about people without their consent. (Digitrends, 2000)

 

Ratings of 30,000 Web sites
  .com .org .net .edu .gov
4-star 873 49 41 2 27
3-star 720 23 26 3 6
2-star 2343 65 106 3 11
1-star 2052 48 88 2 8
No Privacy
Policy 18213 1097 1434 299 23
Total 24201 1282 1695 309 75
% With Privacy
Policy 24.7% 14.4% 15.4% 3.2% 69.3%

Source: enonymous.com

Table 4.5 Privacy policy at web sites*

 

A study by Cheskin Research and Studio Archetype/Sapient (1999) has revealed how to build trust in order to build customer loyalty provides exceptional insight into how to effectively build trust on the web site.

 

According to the study, the six building blocks of trustworthiness are:

  • Seals of approval—information, symbols, certificates, etc. that you display on your web site to indicate the site is safe, secure and protects user privacy.
  • Brand—brand awareness and equity that promotes the perception of a quality product or company reputation.
  • Navigation—making it easy for online buyers to easily find what they want or need.
  • Fulfillment—easy and dependable order fulfillment process including recourse and returns.
  • Presentation—the site’s look-and-feel that communicates your purpose with clarity and trustworthiness.
  • Technology—functionality and speed.

 

The conclusion is that the E-Retailers that ask their E-Customers for personal information must form an explicit bargain with them that their information will be used within the company only on a need-to-know basis. E-Retailers that fail to protect their customers’ information are asking for trouble. Further the E-Retailers cannot have a trustworthy web site if they do not have a trustworthy brand. Also, if they have a trustworthy brand but their web site doesn’t meet the expectations of the other building blocks, they will not succeed either.

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