An empirical study on Web-based services and customer loyalty
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An empirical study on Web-based services and customer loyalty Samuel Otim1 and Varun Grover1 1 Department of Management, Clemson University, Clemson, SC, U.S.A.
Correspondence: Varun Grover, Department of Management, 101 Sirrine Hall, Clemson University, Clemson, SC 29634-1305, U.S.A. Tel: 864 656 3773; Fax: 864 656 6768; E-mail: [email protected]
Abstract E-business success is tied to the ability to foster customer loyalty. Businesses that deliver superior value derived from excellent services and quality products are likely to win customer loyalty. This paper examines Web-based services and the effects of three sets of factors: pre-purchase, transaction-related, and postpurchase services on customer loyalty (measured as repeat purchase intention from a given Web-based store) in a business-to-consumer environment. Based on the study’s results, pre-purchase services that support search and evaluation of products replete in e-commerce systems have limited effect on customer loyalty. Among transaction-related services, transparency of the billing mechanism positively impacts customer loyalty. Customers shun any hidden costs associated with product acquisition. Post-purchase services consisting of support of order tracking, on-time delivery, and customer support positively influence customer loyalty. These findings imply that Web-based stores need to pay more attention to post-purchase services in their strategy to retain customers. This is what will keep customers satisfied and willing to continue the relationship with a company over the long term. European Journal of Information Systems (2006) 15, 527–541. doi:10.1057/palgrave.ejis.3000652 Keywords: pre-purchase services; transaction-related services; post-purchase services; customer loyalty; e-commerce; e-business; B2C transactions
Introduction
Received: 31 August 2004 Revised: 23 August 2005 2nd Revision: 11 April 2006 3rd Revision: 1 July 2006 Accepted: 18 October 2006
The Web serves as an intermediary between buyers and sellers for business-toconsumer (B2C) transactions in e-business. It creates an electronic marketplace that lowers the buyers’ cost to acquire information about seller prices and product offerings (Bakos, 1997), and reinforces merchant– customer relationships through service delivery. Given its potential benefits, a number of organizations now use the Web for marketing, promoting, and transacting products and services with customers. E-commerce businesses are particularly concerned about keeping customers satisfied so that they keep coming back. Winning consumer loyalty is a priority for e-businesses because it is a major driver for success in e-commerce (Reichheld & Schefter, 2000). Over time, loyal customers are known to bring in substantial revenues and demand less time and attention from the firms they patronize. Consequently, customer loyalty can be a major source of sustained growth and profit for a company (Anderson & Mittal, 2000). Businesses that deliver superior value derived from excellent services and quality products are likely
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