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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 4 |
The E-Customer, the Relationship and Interactivity |
Chapter Four E-Customer, Relationship and Interactivity4.1 Introduction 108 |
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:
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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:
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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:
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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)
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Other benefits and advantages for the E-Customer in the online world. Below are some of them mentioned:
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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:
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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.
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Technographics
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Technographic Segments are classified along 3 axes:
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Below technographics segments. The optimists and the pessimists.
Figure 4.1 Technographics customers: The Optimist.
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
Learning
Experimentation
Confidence
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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.
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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:
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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:
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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:
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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):
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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:
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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:
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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)
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During the purchasing process, marketers have established that customers pass through the following stages: (Hoffmann, 1997)
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In each of these stages, customers and the E-Retailers are confronted with dissimilar and conflictive interests, outlined in the table below:
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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)
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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:
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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)
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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:
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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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