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Contemporary Logistics 07 (2012) 1838-739X Contents lists available at SEI Contemporary Logistics journal homepage: www.seiofbluemountain.com Analysis on Cultivation of Customer Loyalty in the Environment of Internet Marketing Cuimin ZHEN*, Lin JIANG School of Economics and Management, Hebei Polytechnic University, 063009, P.R.China KEYWORDS ABSTRACT Internet marketing, Customer loyalty, Strategy In the environment of internet marketing, many businesses have gradually realized that gaining and maintaining customer loyalty is its own important source of long-term profits. This article firstly elaborates the connotation and importance of customer loyalty; then constructs the model of influencing factor to customer loyalty and analysis the barriers of customer loyalty’s formation; finally it proposes the strategy of raising the customer loyalty and obtains the conclusion that customer loyalty does not only wins with the technology, but also needs enterprise to improve its products and service progressively and establish the relation with customer's emotion by the sincere manner and consummation service. © ST. PLUM-BLOSSOM PRESS PTY LTD 1 Introduction With the vigorous development of internet and electronic commerce, people's shopping behavior extends gradually from the traditional entity store to the electronic store. Up to December 31, 2009, the Chinese web cam scale achieves 384,000,000 people; network shopping user scale achieves 108 million at annual growth rate of 45.9%. The rapid development of online shopping, the dramatic increase in the number of online stores, the customers can fully compare the products and services businesses with the shortest time and energy have caused the network market compete steeply and establish and maintain the customer loyal with difficulty. The network operators are very concerned about how to gain the customer loyalty. However, in academic, the research on the customer loyalty is more in the United States and other developed countries in e-commerce, whether its concept and theory can be transplanted to our country still waited for examining. In the customer loyalty’s formation mechanism and cultivation aspect, empirical studies of domestic science are rare. Many researches are only based on experience summary in preliminary examination and the perceptual judgment. Thus the value degree which should receive with the network customer loyalty is very asymmetrical. 2 Customer Loyalty’s Connotation and Important Meaning in the Environment of Internet Marketing The customer loyalty in the environment of internet marketing is also called electron loyalty, E-loyalty. E-loyalty is online customer who approvals and trusts the electronic commerce of enterprise’s product and service, visits enterprise's website and purchases enterprise's product and the service repeatedly, increases and enhances the business interest or image consciously. In other words, * English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD DOI: 10.5503/J.CL.2012.07.017 100 E-loyalty is that online customer who highly and loyally trusts the enterprise in the behavior, psychology and emotion. Regardless of being the entity environment or the virtual environment, the cultivation and maintenance customer loyalty is critical path to enterprise profit. Improving E-loyalty has the following important aspects: 2.1 Revenue grows continuously The loyal customer will not only choose to purchase this enterprise's product or the service redundantly, but also may produce “the overflow effect” to this enterprise, that is, the loyal customer will not only continue to purchase the original commodity, but also increase commodity type in this enterprise. 2.2 Marketing costs decrease continuously It usually needs much advertising costs to develop a new customer, but the loyal customer nearly does not need the propaganda to let them purchase this electronic commerce enterprise's product or the service. The loyal customer who transacts routinely and is familiar with enterprise's product and the flow will save enterprise's service cost. 2.3 Sets up enterprise image continuously The loyal customer can become this electronic commerce enterprise “the missionary”, they will always strive to promote and recommend enterprise products and services to the periphery person, and even they are willing to accept products or services which they should pay a higher price. With the sharply growth of network advertisement, people will pay more attention to the recommendation of friends and family when they decide to purchase. 2.4 Enterprises’ market position consolidates continuously When the customer has produced loyalty to some electronic commerce enterprise, it will basically stop the behavior of searching the related brand information, refuse to buy the business competitor's products or services, and provide valuable information to the enterprise. 2.5 Enterprise develops in a long term and with stability When the electronic commerce enterprise has a stable of loyal customers, its revenue will increase unceasingly; moreover, the marketing expense which has been saved down will use in the improvement of product and service to attract more loyal customers, and the huge loyal customer group may save more costs for the enterprise. Such kind of virtuous cycle would make the enterprise develop chronically and stably. 3 The Barriers of Customer Loyalty’s Formation in the Environment of Internet Marketing Through the related research, it divides the factors into the direct drive factor, the intermediary factor and the adjustment factor according to function way of the formation of customer loyalty. As shown in figure 1. Perceived value Network customer satisfaction Switching costs Product quality E- Loyal Service quality Customer personal characteristics Web site design Network customer trust Network environment Enterprise image Figure 1 Factors on affecting the formation of customer loyalty Based on the model of customer loyalty’s influencing factor, we can get the following barriers of customer loyalty’s formation in the environment of internet marketing. 3.1 The security of virtual transaction cannot be guaranteed 101 Customers’ value sensation about network product and service are not direct-viewing as the traditional business. Most customers are still concerning about network product reliability, security and timeliness of online payment, privacy of individual information; they cannot believe the seeing is true. They only depend on the network enterprise's image and pledge to make the shopping decision-making. 3.2 Click the mouse to achieve the "hurdles" When consumers are facing dazzling online product or service, they only need to click the mouse to "switch" from an enterprise to another enterprise. The low search costs can change customer’s preferences frequently so as to find the best buying decision choice. This feature greatly reduced the online customers’ loyalty to a particular site. 3.3 The “harsh” demand is not easy to satisfy Online business activities have the obvious gap, risk and uncertainty. The consumer is unable to communicate with the sale service face-to-face and cannot feel the commodity immediately. They cannot enjoy the satisfaction and joyfully of bargains. Simultaneously, the high cost of networking products by mail without the guarantee of quality, and the long time of delivery etc. can lead to the customer dissatisfaction. 4 The Strategy on Culturing Customer Loyalty in the Environment of Internet Marketing Based on the model of customer loyalty’s influencing factor, we can achieve the following strategies on cultivating customer loyalty in the environment of internet marketing. 4.1 Enhance network customer's satisfaction degrees 4.1.1 Completes the ful-range service to the customer Establishing and maintaining the network customer's loyalty must provide the transaction of full-range service. The complete customer service system includes: implementation and engagement of pre-sale, sells, the post-sale service. The website should guarantee that the website and customer's information communicate channel be unimpeded, they should understand the customer’s demand accurately and quickly, and provide customers with customized services during pre-sale service; the website should provide quick, convenient and comfortable communication for the customer, supply the more convenient payment ways to customers and the allocation service according to customer needs and product features during selling service. The website must be able to consider the questions that customer will possibly meet after product has been sold, and provide customers with feasible and satisfactory solution that aims at these questions during post-sale service. 4.1.2 Constructs comfortable network shopping environment The network enterprise should positively provide the environment which is similar with the entity shop to enable the customer obtain physical and personal impression as far as possible. The website which is designed successfully should take the customer as the center, update the website content regularly, establish a rich product catalog and product description to ensure the information do not have errors, and pay attention to the design style of all different homepage be harmonious and unification. Moreover, it should simplify the operation flow for convenient shopping. Such as provide search engines to help customers find goods what he needs quickly, provide navigation systems to let customer know where he is, provide the memory function to let customer place orders quickly to avoid inputting related information redundantly during each order. In short, we must provide sufficient information and tools for the customer to make the buying process more convenient. 4.1.3 Set up a good image of enterprise Setting up a good image is the prerequisite for the maintenance of E-Loyalty. Firstly, the enterprise should ensure that commodity provided be quality, consistency, timeliness. The quality means the quality of commodity must good; consistency is the online description of the goods and the actual provision of goods should be consistent; Timeliness is the speed of delivery should be in time. Secondly, the network enterprise's domain name must be bright and succinct. As the network enterprise, it is a positive way to attract customers to let them familiar with own domain name to find own website easily in the Internet. Finally, the network enterprise should promote enterprise's prestige. The network marketing is not the direct money exchange; customers cannot easily use this trading method if enterprises do not have a very good reputation. Therefore, enterprises should treat every customer’s assessment and recommendations correctly. 4.1.4 Implements the personalized network marketing In personalized demand time, the enterprise must grasp opportunities to provide personalized goods and service. Enterprises can use the following two forms to provide personalized service: ①Enterprise site recommends personalized service; according to their database records of customer information and intelligent software, enterprise site infers customers need and preferences in order to provide different customers for different services. ② Customers help personalized service themselves. According to their preferences, customers select the service or the service combination provided by the website freely. The enterprise should respect the uniqueness of customer and let the customer lead own expense experience and feeling. 102 4.2 Enhance network customer's trust Trust is a prerequisite for customer loyalty; the enterprise which only considers truly for the customer benefit and reduces customer's sensation risk can obtain customer trust and win customer loyalty really. Therefore, firstly, the enterprises must ensure the quality of sold products and service quality. This is the most basic conditions for building confidence. Secondly, it must ensure the security of transaction process such as customer registration information and online chatting data. The network enterprise must invest sufficient human and material resources and strengthen the hardware and software's construction to guarantee the security of online transactions and the confidentiality of personal information. Finally, the network enterprise should fulfill the contract accurately and promptly. For the network enterprise, delivery the customer specified products to designate location timely must unify its online service and net's delivery service system. 4.3 Increase customer's switching costs Switching costs will gradually decrease while the network environment improving progressively. Hence, the website enterprise should enhance the customer switching costs and establish the barrier of customer transfer. Firstly, the site could take shopping points, discounts, membership and other promotional activities. The focus should be on retaining old customers and the preferential to attract new customers should not large in order to avoid attracting the price sensitivity and relatively low-value customers, meanwhile it must be on the basis of not letting old customers have discontent and unfair feeling. Secondly, establishing the emotion relation through contacting with customer directly and indirectly is the most important way to establish the barrier of customer transfer. Because the economic benefits may be perishable, the emotional connection between the customers will continue. 4.4 Establish a complete customer information system Different customers have different customer value, E-trust and so on. If the enterprise attempts to cater to all customers’ demand, this will result in great difficulties to the website marketing work. Firstly, the enterprises should establish the customer file accordance with the customer's individual characteristics, network experience and so on. According to the customer file, the enterprise should carry on the classification to the customer and identify the customer who is the most profitable and most worth preserving from numerous customers. Secondly, improve the customer information system in view of the goal customer. Through the customer information system's establishment and consummation, the enterprise can understand customer's demand fully and provide a better service for the customer. 4.5 Improve the entire network environment continually The environmental factor is an important restriction factor on increasing customer confidence. If the entire network consumer environment has the remarkable improvement, it will be advantageous in promoting customer's network trust. To have a good network environment, firstly we must have a secure and reliable communication network to ensure transaction information delivery safely and promptly. The electronic commerce website can establish the correspondence trust through the investment of infrastructure construction as soon as possible; Secondly, the government should establish and improve the relevant legal system, improve the relevant restraint mechanism, establish the authority of the enterprise credit evaluation system, raise the entire social truth standard and so on measures to enhance the security of online shopping; Thirdly, enterprises must abide by credit and gain the trust of customers. It should ensure the provided commodity high quality, timeliness, consistency; strengthen the cooperation with logistics companies, guarantee database server absolute safety to prevent hackers from intruding the network to steal the information, and guarantee customer's individual privacy is not public to the third party before its agreement in order to create the network credit atmosphere. 5 Conclusions In the era of network marketing, the electronic commerce enterprise wants to maintain the competitive edge in the complex global competition must regard the customer as a core, to nurture and retain loyal customers. Loyal customer is not only the important determinant factor to company’s competitiveness, but also a significant source of corporate long-term profits, it is the foundation of enterprise's survival. In the era of network marketing, customer loyal doesn’t only win with the technology purely, but also requires enterprises to improve their products and services continuously and establish the link with customer's emotion by the sincere attitude and perfect service. References [1]. WU Shijun. The Analysis on Factors Influencing the Network of Loyalty [J]. Business Economics, 2009: 82-84 (in Chinese) [2]. LIU Yanyang, YU Zheng. E-Time Customer Loyalty Analysis and Strategy [J]. Theory and Methods, 2007: 31-35 (in Chinese) [3]. BAO Jinlong. The Empirical Analysis on Factors Influencing the B2C Website Customer Loyal [J]. East China Management of Economy, 2007:131-135 (in Chinese) 103 [4]. LU Fengxing. How to Cultivate Online Customer’s "E-Loyalty" [J]. Jiangsu Business, 2004, (3): 38-39 (in Chinese) [5]. LIU Mei. The Empirical Analysis on Factors Influencing the B2C E-Retail Website Customer Loyal [D]. Zhejiang University of Commerce and Industry, 2007 (in Chinese) 104