Good Literature Review On Customer Satisfaction- Online Shopping, Risk, Loyalty And Re-Purchase
De Montfort University
E-Business has revolutionized commerce and trade. Gone are the days when businesses were handled manually, for today, in a highly charged up competitive market, it is important for businesses to have information at their finger tips to cater to customer demands. It is information technology that drives today’s business. (Ganguli and Roy, 2011) identified four service quality parameters in the technology‐based banking services; customer service, security and information quality; convenience, reliability. These parameters serve to enhance customer service, and it has a positive and significant impact on customer satisfaction and customer loyalty. When it comes to online shopping, customer satisfaction can be derived by including specific programs such as Customer Relationship Management (CRM) to help in relationship building, and this is a specific target that organizations strive to build in their quest to acquire customers, maintain cordiality, and retain them (Becker, Greve and Albers, 2009). It is no secret that today, businesses are run based on customer needs, and whatever may be the solution or strategy, they must be focused on customer needs rather than organizational. Similarly, when it comes to running a business, there is bound to be intense competition, and how each business succeeds depends on how well they are able to satisfy their customers. The same principle applies to online businesses as well. Any organization that runs an online business has to compete with a number of similar online business organizations, and when they do, they have no other option but to attract customers through innovative practices. While marketing strategies might include price adjustments and discounts, some may also try to attract customers through speedy and committed delivery schedules.
The role of customer service assumes significance in the event of a company being an online service provider. This is equally true if the company is into trading, where a buyer or seller have no knowledge or information about the other. It is the prerogative of the customer service personal to deal with and trouble-shoot any contingencies that may arise from disputes on deliveries, payments, product quality and so on. The success of any transaction routed through the company must be handled with astuteness.
It is unquestionable that businesses are run to target customers, and with more and more competitors entering the fray, there are bound to be innovative methods used to satisfy their needs. One such method is the use of online shopping. Online shopping offers customers the privilege of buying a product or service from the comfort of their homes, and reach out to a wider consumer base at minimal cost. Companies having their own online shopping portals offer a host of benefits to customers who shop with them regularly, and some of these benefits include free shipments, discount coupons, promos, money-back guarantees, and so on. As a customer’s relationship with an organization is built on trust and reliability, one way of pushing toward this goal is through the introduction of technology. Customer Relationship Management (CRM) helps in relationship building, and this is a specific target that organizations strive to build in their quest to acquire customers, maintain cordiality, and retain them (Becker, Greve and Albers, 2009). Customer relationship management will not only enhance the quality of service, but also allow personalization of services that can compensate for indirect marketing. In short, Customer relationship management can improve the efficiency and reliability of operations immensely. According to Mishra and Mishra, (2009) Customer Relationship Management systems support and integrate customer-oriented business processes such as marketing, sales, and customer services to manage business interactions with customers. It is part of an organization’s automation process.
Automation is about introducing technologies to enhance customer satisfaction, and Customer Relationship Management helps managements make decisions and implement them online. CRM systems streamline the automation of business processes that target ‘front office customer touch points’ such as sales, marketing, and customer service through a number of interconnected delivery channels. In short, CRM is used in an organization’s functional area such as customer support and services, sales and marketing (Mishra and Mishra, 2009). It is an essential tool in enhancing customer satisfaction and customer relationship building; the pointers to overcoming risks, increase loyalty, and improve re-purchase possibilities.
Enhancing customer satisfaction and relationship is a crucial factor in online shopping. If online shopping companies are able to achieve a strong relationship with their customers, it will play a major role in building customer loyalty. As Kim, Jin and Swinney (2009) says, “Customer satisfaction enhances the reputation of an organization that leads to enhanced profitability.” Be it customer satisfaction, customer experience, customer delight or emotional attachment, these factors go a lonmg way in developing brand loyalty. The way customers interact with organizations has changed over the years due to the advancement of technology and its influence. The influence of ecommerce in shaping customer behavior and experience cannot be discarded. For example, Customer Relationship Management (CRM) helps overcome risks, helps develop loyalty, and supports re-purchase facilities. Enhancing services is considered to be one of the most important factors in the success of online businesses, and ecommerce has revolutionized how customer services are in comparison to traditional services (Lee and Lin, 2005; Ha and Stoel, 2009). If all the above mentioned factors do satisfy customers, they are bound to use the site again. This is where interaction between customers and the organization assumes significance. Interaction refers to the collection of information that is required for customers to place an order of a product or service, and when customers do request information, it is imperative that the organization respond to it in a professional manner. Since customers who have more disposable income prefer to make purchases online, it becomes an incentive for online shopping portals to offer that much more lucrative purchase options. The rapid expansion of online businesses has posed difficulties for regular retail businesses. As mentioned earlier, customer satisfaction is the key to a successful business, and to enhance customer satisfactions, companies strive to enhancing their services quality and increase features so that customers have the option to choose from various possibilities. This drives customer satisfaction and customer loyalty. Ba and Johansson (2008) found the influence of electronic services leading to customer satisfaction, and that technological capabilities enhanced the efficiency of online shopping. Therefore, it is critical for organizations with online shopping options to enhance their technological capabilities to increase efficiency of services. The enhanced efficiency services will leave a positive impact on customers’ perception of services and add to their value, which is, the true asset to an organization.
Munusamy, Chelliah and Mun (2010) believe that ccustomer value is an asset to an organization. Therefore, in order to develop such customer value, organizations pay a lot of attention to producing and delivering the right products and services. They also ensure that these products and services are supported by the right promotion and made available at the right time. Also, organizations have to build the ‘Wow Effect’ that customers dearly seek, and this can be achieved only through superior customer service. Any business that caters to their customers’ needs will gain their unfailing support and loyalty, says Munusamy, Chelliah and Mun (2010). This will result in repeat purchases, and induce potential referrals. Similarly, it is important for organizations to develop a strong and cordial relationship with their customers. Developing such a professional relationship with customers can empower them with an insight into what they (customers) need. When an organization delivers what they believe is of value to their customers, it will generate the possibility of customers going for repeat purchases. In the same fashion, “assurances, tangibles, empathy and responsiveness have a positive relationship with customer satisfaction” (Munusamy, Chelliah and Mun, 2010). However, there is the possibility that understanding true customer requirements is difficult as customers can and will change their preferences from time-to-time. This is where the continuous relationship building measures between the organization and their customers are maintained. Having a sound recovery mechanism to understand customers’ preferential changes can be met through the introduction of technology.
Shaikh and Khan (2011), in investigating on the relationship between customers and organizations, found that service orientation, service quality, behavioral outcomes and customer satisfaction had a positive role in relationship building. Organizations that were customer-oriented and focused, had a better impact on the perception of customers, which led to their satisfaction and loyalty. (Shaikh and Khan, 2011) determined that a mix of complicated technologies could make customers’ online shopping experience as being demanding and complicated, and the perception of customers on online retailers is dependent on user-friendly interfaces. Therefore, if customers are able to find a product or service matching their requirement with ease, they will be satisfied. Therefore, the quality of an online system; where security, navigation, response time, and ease of use are paramount to customer satisfaction, becomes essentially an unavoidable factor. Once these factors are addressed properly; because it is these factors that enhances the quality of service resulting in responsiveness, empathy and assurance, and, timeliness, accuracy, content, and format, customer satisfaction is bound to happen. Petter, DeLone and McLean (2008) notes that the quality of information and the features that are available on online-shopping websites, instigates customer satisfaction. This is an important determinant for customer satisfaction.
The Influence of Technology in Online Shopping:
The use of technology in enhancing customer buying exoerience has been studied by many researchers. In all these studies that are available through online and through texts, it was found that user-friendliness developed continuity, and as long as the online shopping sites remained user-friendly, they would attract customers. E-commerce has grown considerably to such an extent that a customer can sit in the comfort of his/her home or office, choose from a wide range of products by browsing the internet, and make the payments on an order. Computer giants Dell and IBM have gone the e-commerce way to improve their target audience worldwide. Customer Relationship Management (CRM) has become an important tool in customer-centric strategies today. It not only enhances the quality of service, but also adds more strength to compete in the highly competitive business environment.
A customer’s relationship with an organization is built on trust and reliability, and one way of pushing toward this goal is through the introduction of technology. Customer Relationship Management (CRM) helps in relationship building, and this is a specific target organizations strive to build in their quest to develop customer acquisition, maintenance, and retention (Becker, Greve and Albers, 2009). CRM will not only enhances the quality of service, but also allow personalization of services that can compensate for indirect marketing. In short, CRM can improve the efficiency and reliability of operations immensely. Since CRM allows the marketing and the sales teams to track the frequency at which customers log in and purchase their product(s) online, they can extend certain privilege to these re-purchasers by saving money on shipping, stick to an early delivery schedule, offer a discount, if necessary, and maintain a cordial relationship with them through periodic mailers and sales promotional gifts and vouchers. This will create a brand resonance and develop loyalty. Amazon for example, offers delivery through reputed shipping companies, and stick to a two-day delivery schedule for any purchase made through them. This allows for risk-free delivery of the product, and guarantees the delivery of the product on time.
Organizations are constantly trying innovative things to find new opportunities in order to increase their popularity and reach on the internet. Striving to influence a customer’s buying behavior through online shopping; they go overboard by offering services which traditional shopping will find hard to match. Generally, when a customer wants to buy a product or service, he or she would drive down to the nearest or the better service-provider and search for an appropriate product or service, after seeing and feeling it. Once they select a suitable product, they then sit down to negotiate a favorable price. Such shopping methods have their advantages, as the product can be tested, tried, and felt before buying. Therefore, to counter this threat of personal experience, online shopping sites need to counter these by offering something that general stores don’t offer, or are compatible to them to make them attractive, says Bai, Law and Wen (2008). This is where the influence of technology can turn the tide in their favor.
For the success of online shopping and for boosting online shopping experiences, organizations have to make sure that they can provide shopping conveniences to their customers. If a customer has easy and speedy access to information that they require in the shortest period of time, then they will prefer that option. It is for this reason that organizations must pay attention towards meeting these needs. While shopping online, customers prefer to use those sites that are easy to operate, don’t have too many administrative or log in headaches, and offer better services (Ranjbarian, Fathi and Rezaei, 2012). Organizations ensure that customers find browsing their site easy, convenient, and pleasurable, and provide updated, and reliable information (Ranjbarian, Fathi and Rezaei, 2012). Due to increased utilization of the internet, security threats have increased. As providing personalized shopping experiences are difficult, online shopping organizations have to create innovative strategies that offer customers a better shopping experience than retail and wholesale shopping experiences, says Chang and Chen (2008). As more and more customers begin to enjoy online shopping from the comfort of their homes without having to drive several kilometers to shopping malls, there is an increase in online shoppers. Thanks to online shopping, many organizations have enhanced their earnings through the augmentation of customer services. Customers can order from the comfort of their homes, or check a merchandise before making an actual purchase and pick it up from a store to save time. Katariya, Çetinkaya and Tekin (2014), in Inventory Decisions in Dell’s Supply Chain say that Dell integrated all its suppliers and sellers in the supply chain to form an inter-informational entity. Its Value Chain program extended its successful direct-sales approach into the supply chain to improve performance through faster and quality information flow between itself and its supply base. The official Website, www.valuechain.dell.com, extranet, shared information such as, points of contact, inventory, supply and demand data, component quality metrics, and new part transitions. This site allowed virtual interaction between Dell and its suppliers on their (suppliers) current data, forecasted data, new product ideas, and other dynamic information that kept the team on their toes, and in the bargain, optimized the flow of information and materials in the supply chain. By integrating the process and tools that Dell developed with www.valuechain.dell.com, it became a part of Dell’s and its suppliers’ Procurement -business processes. Dell and its suppliers could thus, through the Value Chain share such information as target inventory levels to support collaboration on future improvements, which was imperative to better business prospects in the future. By allowing customers to access information before, during and after sales, it enhances a customer-to-company relationship, and develops a healthier and pro-active customer service base. The internet allows companies to reach customers in a low-cost mode.
Risks in Online Shopping
As the technological advancement had changed the business world and enhanced the ease of the living, it has brought some risks as well. They are very common and include security of information risk and privacy. Internet hackers pose significant risks to websites, and customers do not trust online shopping due to the lack of privacy and security. Both of these have been identified as important issues for experienced and new users. It has been determined that perceived risk in traditional shopping is far lesser in comparison to online shopping. Lower perceived risks have a positive impact on the experience of online shopping. Experienced online shoppers or internet users may have lower concerns regarding online frauds and security, but they are however, concerned about online privacy (Li and Huang, 2009). The ease of usage reduces the concerns regarding the online shopping risks, as time related risks, financial, social, psychological, and performance risks are some areas of perceived risk. There is the possibility that a product ordered by a customer may not meet the customers’ expectations. Financial risk is about the net loss to the customer, and this loss involves product replacement, refund, or repair risks. In order to reduce online risks, most organizations try to build trust through the support of social and financial institutions that stand as guarantors or financiers. It has been analyzed that shoppers, who are used to purchasing goods online, perceive less risk as compared to new ones. Risks of online shopping are advertised as key factors that are used to explain the purchasing behavior of customers. One risk that is most common in online shopping is the failure of service; customers perceive that the risk that online service failure is higher than those that are direct. Risk of online shopping also includes the misuse of credit cards, disclosure of proprietary information, product failure, other fraudulent practices, and shipping problems (Gordon, 2014). Such factors pose significant hurdles in engaging customers in online shopping decision-making. Thanks to globalization, the internationalization of businesses has increased the chances of risks considerably. People can purchase a product far away as in China, but they run the risk of having to wait for eternity for the product to be delivered at their dorrstep. Whatever is seen on the website need not necessarily be the product that is despatched to the customer, and the transportation cost, the time taken to deliver the product, and seeking replacement if the product is not what was ordered is time-consuming and money laundering. Similarly, there is the possibility of theft during transit. When dealing with purchases internally, concerns regarding security are higher than when customers make a purchase from malls and showrooms that sell the same products of international quality. Because of the security concerns, organizations are focusing on increasing online security and privacy, and are taking significant efforts to reduce online shopping risks. For example, buyers may not prefer to buy online because they fear that their confidentiality will be lost. They hesitate to share financial information online, and fear that they may not know what will be sent to them and when. There is the question of perceived risk whenit comes to deciding on sopping online.
There are five types of perceived risks; time, performance, social, economic and psychological risks. According to Crespo et al (2009), psychological risk refers to the danger of making bad choices, while social risks are related to suffering from status loss, being embarrassed and disappointed. Economic risk refers to the condition when an individual senses a financial loss due to maintenance or potentially fraudulent practices, while performance risk includes the feeling of unfulfiled expectations of the ordered product or service. Time risk is associated with loss of time when making a purchase or the excess time utilized in searching and buying a suitable product or service, and finally, delivery risks are associated with factors that impact online shopping, which includes the possibility of receiving damaged goods, goods lost in transit, delivery made at a wrong place, late deliveries, and so on (Brosdahl and Almousa, 2015).
Masoud (2013) analyzed how online shopping depended largely on how much of a risk factor was involved. For this, he considered the six variables such as financial risk, time risk, social risk, security risk, product risk, and delivery risk, to understand a customer’s online shopping behavior. The result of the study revealed that information security risk, product delivery risk, financial risk, and product risk had a negative impact on customers’ online shopping behavior. This meant that if risks increased, it would have an adverse impact on consumers. However, when risks such as perceived social risk and perceived time risk were considered, they did not have a direct impact on a customer’s online shopping As strategies evolve, so too does the behavior pattern of online shoppers, and this has kept marketers constantly engaged in the formulation of new innovative strategies to reduce online shopping risks. A factor that is of considerable interest to online shopping organizations is the importance of repurchase.
If customers are satisfied, they indulge in repeat purchases, and the most important driver of a customer’’ purchase behavior is service value. Service value is defined as the outcome that consumers attain in association with the total cost of a product or service (Lusch, Vargo and Tanniru, 2010). Customer satisfaction is also defined as a core driver of re-purchasing behavior (Ranjbarian, Fathi and Rezaei, 2012). According to a report, it was determined that about eighty percent of all online customers who were highly satisfied of ther experience of online shopping, shopped again within two months of their first purchase. There was also the posssibilityt hat they would recommended the service to other online shoppers (Cheung and Lee, 2008). Repeat purchase is the icing on the cake for marketers, as it gives them the belief that their efforts were not wasted, and that their strategy paid dividend. Organizations do not just want to attract new customers but emphasize on retaining existing customers in order to ensure market credibility and profitability of repeat business (Kim, Jin and Swinney, 2009).
In order to be successful in such a competitive landscape, organizations need to constantly remain innovative to be competitive. If ecommerce organizations want to enhance trust and repeat orders, they will have to focus on delivering better online shopping experiences. Customer satisfaction and perceived values are amongst the core determinants for future repurchase and trust (Petrick, 2004). Fang, Chiu and Wang (2011) included two more variables to core determinants; trust and justice. In order to increase revenue, online shopping organizations strive to ensure that customers repurchase a number of times. Lin, Fang and Tu (2010) defined customers’ satisfaction as an important determinant for repurchase, and in order to determine this, they used four factors that have been used by multiple researchers before them, such as enjoyment, concentration, perceived ease of use, and perceived usefulness. They determined that customer satisfaction is an important factor for making and influencing return intentions. Managers need to pay attention to developing additional features through which interaction between users and organizational representatives can occur. This will enhance a customer’s loyalty with the organization, and increase a customer’s satisfaction, which lead to continued repurchase intentions. Ha and Stoel, (2009) state that e-services has enhanced customer experiences and thus, it has lead to higher customer satisfaction. Similarly, Anand (2007) probed the different factors that enhanced customer experience while shopping online. These factors included convenience, ease of ordering, efficiency and improved customer services, and online shopping. In the end, he was able to confirm that when customers are satisfied, they are more than likely to initiate repurchases.
A customer’s relationship with an organization is built on trust and reliability. A customer relationship strategy can reshape and influence the thought process of a customer, and organizations need to build a strong customer base if they are to become successful. Focusing on people, business processes, performance management systems and technologies are sure ways to satisfying customer needs. Organizations that do online business need to attract customers through innovative and customer-centric business strategies, and introducing CRM would be an ideal platform to overcome risks, develop royalty, and encourage re-purchase. In order to maintain an inveterate relationship with consumers, companies need to stress more on relationship marketing. There are bound to be questions asked regarding the risks involved in online shopping, but this can be mitigated to a major extent by introducing relationship developing measures. Relationship marketing involves the creation of a strong, long-lasting relationship, by which consumers feel privileged and important. Since the focus of organizations has shifted from attracting customers to assessing their needs, there has to be a strong marketing strategy that can make them talk about them judiciously.
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