Factors that create loyalty to online retailers

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By: Wise Marketer Staff |

Posted on March 11, 2008

Retailers plan all year long in preparation for the final six weeks of each year, and insights into how shoppers perceive the online holiday shopping experience can help retailers decide on their strategy and even predict consumer behaviour, according to ForeSee Results.

The company's latest analysis of the 'Top 40 Online Retail Satisfaction Index' study therefore aimed to provide strategic insights into online marketing strategies and web development for retailers.

Satisfaction is still king
Customer satisfaction was found to be the best metric for quantifying the bottom line impact of shoppers' perceptions of the online experience, when measured using a proven 'cause and effect' model (such as the American Customer Satisfaction Index).

The data from the study showed how different shopper acquisition sources affect customer satisfaction as online shoppers move through the 'purchase funnel' (from browsing, to conversion, and finally to purchase). The report also examined which strategies most enhance the web site experience and influence conversion.

Questions asked, answers found
ForeSee Results tracked online shoppers through the purchase funnel in an effort to help retailers answer several fundamental, but elusive, questions, and noted several interesting findings:

  • Customer acquisition
    What drives online shoppers to a website? How do different acquisition sources colour shoppers' perceptions and influence their behaviour? Are shoppers coming from one source more likely to buy or be loyal than shoppers coming from another source?

    The study found that familiarity with the retailer's products and promotional emails results in the most shopping visits and the most satisfied shoppers. Shoppers driven to a site by promotional emails are 9% more likely to purchase than those driven by traditional advertising.

  • Conversion
    Which marketing strategies are doing the best job at fostering online purchases, and meeting overall shopper needs? Which marketing strategies support customers' research and purchase channel preferences?

    The study found that free shipping is influential in conversion, especially for search and shopping engine shoppers (consumers who come to a site via these two sources). Customer reviews have also become more prevalent and boost customer satisfaction and purchase.

  • Retention and loyalty
    How do site visitors and infrequent buyers become loyal customers?

    With regard to customer retention and loyalty, price improvements are expected to yield relatively little return on increasing satisfaction and fostering purchase and loyalty.

    The company also recommends that retailers should strive to differentiate their brands through their websites in order to yield the greatest satisfaction increases while fostering purchase and long-term loyalty.

Suggested improvements
While most shoppers are quite content with credit card payment, retailers may be able to significantly increase bottom line profits by offering alternative payment options (such as PayPal). This is particularly compelling for shoppers coming from search engines and shopping engines.

At the same time, the study found that promotional email campaigns and recommendations have significant and comparable impact on increasing retention and loyalty.

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