Customer loyalty in e-commerce: an

exploration of its antecedents and

consequences

Presenter: H.P.D Jayathilaka

2007ICT031
22.03.2011
About the paper
Source : Journal of Retailing, Volume 78, Number
1, Spring 2002 , pp. 41-50(10)
Press : Pergamon Press
Publisher : Elsevier
Language : English
Document Type : Research article
Affiliations : Drexel University, 19104, Philadelphia,
PA, USA
Publication date: 2002-03-01
Authors
Srini S. Srinivasan

Associate Professor, Marketing

Drexel University, Philadelphia, PA
19104, USA

Kishore Ponnavolu

Partner
McKinsey & Company

Rolph Anderson

Marketing - Professor
Drexel University, Philadelphia,
PA 19104, USA
Outline
Introduction
Objectives of the Research
Concept of customer loyalty
Eight factors potentially influencing e-loyalty
Consequences of e-loyalty
Methodology and results
Conclusion
Introduction
Introduction

U.S. Census Bureau’s Monthly Retail Trade Survey 2010

Introduction
E-retailing

E-commerce

Advantages
 compare and contrast product & services
 minimal expenditure of personal time or effort

E-loyalty
Objectives of the Research
Objectives of the Research

Understanding of the antecedents of e-loyalty

Identify managerially actionable factors that impact in

e-loyalty

Investigate the nature of their impact

Concept of Customer Loyalty
Concept of customer Loyalty
Focused on repeat purchase behavior

Behavioral or Attitudinal dimensions

 True Loyalty
 Spurious Loyalty

Preferential, Attitudinal and Behavioral response

toward one or more brands in a product category over
a period of time.
Concept of customer e-loyalty
As a customer’s favorable attitude toward the e-
retailer that results in repeat buying behavior
Identify Antecedents of e-loyalty
Conduct Interviews

 Individuals - 42
 Online Customers - 15
 Executives in e-commerce - 15
 Professional e-commerce web designers - 12

Online shopping behavior

Between 90 min to two hours

Eight e-business factors – 8Cs
1. Customization
2. Contact interactivity
3. Cultivation
4. Care
5. Community
6. Choice
7. Convenience
8. Character
 Customization
Ability of an e-retailer to tailor products, services, and
the transactional environment to individual customers

Increases the probability of their wish to buy

Perception of increased choice by enabling a quick

focus on customer wants

Lead to a better real match between customer and

product
Contact interactivity
Dynamic nature of engagement, between an e-retailer and
customers

Problems
 hard to navigate
 insufficient information
 response time for inquiries

Solutions
 interactive search process
 Better navigational process
 Increase information
Cultivation
The extent to e-retailer provides relevant information
and incentives to customers

Frequency of desired information and cross-selling

offers
E.g.:
 Amazon.com - related to their past purchases
 Paul Frederick – email notifications about offers
Care
Attention that an e-retailer pays to all the pre and post-
purchase customer interface activities
 immediate transactions
 long-term customer relationships

Solutions

No breakdown in service - Minimize disruptions

Informed about the availability of products
Status of orders
Community
An online social entity comprised of existing and
potential customers
Exchange of opinions and information regarding offered
products and services

Virtual communities of customers

 comment links
 chat rooms
 buying circles
 Individual customers on group
 Shared interest
Choice
Offer a wider range of product categories and a greater
variety of products
Alliances with other virtual suppliers

Benefits

Reduce Opportunity cost

Reduce Time
One-stop shopping
Convenience
Refers to the extent to which a customer feels that the
web site is simple, intuitive, and user friendly

Features of convenience website

short response time

provide fast completion of a transaction
Minimizes customer effort
Character
overall image or personality that the e-retailer projects
to consumers through the use of inputs
 text, style, graphics, colors, logos, and slogans or themes
on the website

jewelry retailer - high quality

graphics
Consequences of e-loyalty
Consequences of e-loyalty
Behavioral consequences

non-loyal Loyal
Consequences of e-loyalty
Direct implications of loyalty

 positive word-of-mouth
 willingness to pay more
 negatively related to their search for alternatives
Methodology and Results
Methodology and results
Website hosting survey
Random sample of 5,000 customers
An e-mail invitation
Respondents would be automatically entered in a
drawing for a prize of $500
produced 1,211 usable responses – 24%
Measurement - Scale items for the 8Cs
01 ●
Generate the initial pool of scale items

02 Conducted in-depth discussions - 30 Individuals

●

●
online shoppers, site administrators, information technology professionals

03 ●
Six academic researchers then evaluated

04 ●
pretested with 25 random online shoppers
Validation of measures
Avoid using the same set of responses to refine the
scale items and evaluate the hypotheses
 an exploratory data set (n - 180)
 a confirmatory data set (n - 180)
 model estimation data set (n - 851)

An exploratory factor analysis - determine whether

the scale items loaded as expected
Calculated Cronbach’s alphas for scale items
LISREL measurement model
 unrestricted model
 restricted model
Results

LY E-loyalty; C1 Customization; C2 Contact interactivity; C3 Cultivation; C4

Care; C5 Community; C6 Choice; C7 Convenience; C8 Character

Consequence of e-loyalty - seemingly unrelated regressions

SRi -Search for alternatives by individual i;

WMi -Word-of-mouth of individual i;
WPi - Willingness to pay of individual i;
Conclusion
Identified 8 factors that potentially affect e-loyalty
Highest elasticity with respect to “Character” and
“Care”
Positive impact on positive word-of-mouth and
willingness to pay more
Research implications
Managerial perspective

 Establish early warning systems

 Use the scale items to benchmark e-retailing activities
 Competitors to identify their comparative strengths and
weakness

Research perspective

 provides an early conceptualization

of the relevant antecedents of
e-loyalty
 provide a basis for the further study
Limitations on research
Does not take individual-level variables
Eg:
customer inertia
reposed trust
Satisfaction

e-retailing depends to a large

extent on the characteristics
of the products and services
being marketed
If you want e-commerce website with
above discussed features…

Visit
www.mclanka.com for
request a quote…