Providing value to customer in E-Commerce environm

1PREPRINT:chaptertoappearinContemporaryResearchine-MarketingVol2(2005).IdeasGrouppublishingPROVIDINGVALUETOCUSTOMERINE-COMMERCEENVIRONMENTS:THECUSTOMER’SPERSPECTIVEShaileyMinocha1,LiisaH.Dawson2,AnnBlandford3andNicolaMillard41,2DepartmentofComputingFacultyofMathsandComputingTheOpenUniversityMiltonKeynes,MK76AA,UKS.Minocha/[e-mail]3UCLInteractionCentreRemaxHouse,31/32AlfredPlaceLondon,WC1E7DP,[e-mail]4BTExactAdastralParkMartleshamHeath,Ipswich,IP53RE,[e-mail]2PROVIDINGVALUETOCUSTOMERINE-COMMERCEENVIRONMENTS:THECUSTOMER’SPERSPECTIVEAbstract:Effectiveadvertising,goodusabilityandcreatingvalueareimportantinanE-Commerceenvironmenttoattractandretaincustomers.IntheHuman-ComputerInteraction(HCI)literature,researchintothesuccessorfailureofBusinesstoConsumer(B2C)E-Commercesiteshasprimarilyfocusedontheusability.Whileincreasingtheusabilityisimportant,evenifanE-CommerceWebsiteconformstotheWebdesignheuristicsandusabilityguidelines,itmightnotalwaysgenerateapositiveTotalCustomerExperience(TCE).Therefore,itisimportantthatalongwithusabilityheuristics,CustomerRelationshipManagement(CRM)strategiesareintegratedintothedesignoftheE-Commerceenvironmentsfordevelopingrobustandlong-termon-linecustomer-organisationrelationships.Wereportonaprojectthatisapartofanon-goingcross-disciplinaryresearchprogrammeattheOpenUniversity,UK,whichaimstointegrateHCIandCRMstrategiesintothedesignandevaluationofE-Commerceenvironments.Inthisproject,wehaveexaminedthecustomer’sinteractionwithE-CommerceenvironmentsandhowaB2Crelationshipcanbeeffectivelysupportedfromacustomer’sperspective.BasedonintensiveresearchthatinvolvedcollectingdatafromnaturalisticobservationsofcustomersshoppingonE-Tailingenvironments,interviews,groupinterviews,andbyidentifyingthenegativeincidentsorobstaclesthatmarthecustomer’sTCE,wehavedevelopedE-SEQUAL(E-SERviceQUALity),aframeworkforon-lineservicequality.E-SEQUALisanevaluationinstrumentconsistingofe-CRM(CRMforE-Economy)orcustomer-relationshipenhancingheuristicsandHCIheuristicswhichcanbeappliedtointegratecustomers’perceiveddimensionsofservicequalityintothedesignanddevelopmentofE-Commerceenvironments.E-SEQUALcanprovideguidancetoE-Businessesregardingintegrationoffront-andback-endbusinessprocesses,andacrossdifferentcustomertouchpointssuchasphone,fax,e-mail,andsoon.ItcanbeappliedbyWebdesigners,marketingprofessionalsanddeveloperstocomeupwithrequirementsforintegratingcustomers’expectations,andperceptionsofservicequalityandvalueintothedesignofE-CommerceWebsites.Furthermore,itcanbeusedasanevaluationinstrumentbyusabilityprofessionalsforevaluatingtheconformanceofanE-CommerceenvironmentagainstHCI(usability)ande-CRMheuristics.3IntroductionOn-lineretailwillgrowfrom$95.7millionin2003to$229.9billionin2008,accordingtoareportfromForresterResearch(Forrester,2003).Moresignificantly,on-lineretailsalesareexpectedtoaccountfor10%oftotalUSretailsalesby2008.IntheUK,on-linesalesalreadymakeup4%ofthetotalretailsales.Despitethegrowthinon-lineretailsales,statisticsshowthat67%oftransactionsontheWebarenevercompleted(Cohen,1999).Only36%ofcustomersaresatisfiedbyelectronictransactionsandthisbadexperiencetendstodrivecustomerstootherchannels(Chatham,2002).Ofthetransactionsthatarenotcompleted,53%ofabandonedtransactionsrequireaphonecalltothecustomerservicesoranoff-lineaction.Consequently,thecallcentrecostsincreaseduetocallvolumesrising–withareportedrateofincreaseinvolumeofupto65%asInternetuseincreases(Millard,2001).Evidently,whiletherearegrowingnumbersofE-customers,suchstatisticssuggestcustomers’dissatisfactionwithE-Commerce.Customersarenotbeingsupportedinthecompletionoftheirtransactions,andthedefectionratesareconsequentlyhigh.WithincreasingcompetitionintheE-Marketplaceandwithachoiceofoff-linebusinesschannels(forexample,physicalstoresandmailorder),itisdifficultforE-Businessestofirstattractandthenretaincustomers.Customerretentionandloyaltyaffectprofitandgrowthtoasignificantextent.Dependingontheindustry,increasingthepercentageofloyalcustomersbyaslittleas5%canincreasetheprofitabilityby30%oreven85%,(ReichheldandSasser,1990)–aratioestimatedtobeevenhigherontheWebthanthroughtraditionalretailchannels(ReichheldandSchefter,2000).ThisreflectsanimportantchallengetoE-Commercetoshiftthefocusfromcustomeracquisitiontocustomerretention.Toretaincustomers,itisnecessarytoensurethatthecustomerperceivesvaluefromtheexperiencewithanE-Business(Weinstein&Johnson,1999).Valuefromacustomerperspectivemaybedefinedintermsofsatisfactionwith,andperceivedqualityof,theservicereceivedinthecourseoftheE-Commerceexperience.Apositiveperceptionofvalue(whencustomers’experiencesmeetorexceedtheirexpectations)willexhibitgreatinfluenceinpersuadingacustomertoreturntothesite.Therefore,4generatingapositivecustomerexperience,andthencontinuouslyprovidingone,isimportantfor(B2C)E-Businessestoattractandretaincustomers(Seybold,2001).IntheHCIliterature(e.g.Spooletal.1999,Nielsenetal.2001,Vividence2002),researchintothesuccessorfailureofE-Commerceenvironmentshasprimarilyfocusedontheusabili