LESSON 10:

LOYALTY, SATISFACTION, AND TRUST IN E-COMMERCE

A. VOCABULARY
Read the article and fill in the blank with suitable words or phrases

product quality experiences exceed incentives

customer loyalty trust special occasions retention
personalized checkout process writing reviews expectations
communicate customer satisfaction  images and descriptions email marketing
navigate physical interactions loyal customers platforms
tools recommendations special days social channels

Five Practices to Build Customer Loyalty for your Online Store

As an online business operating in a competitive and dynamic environment, you need specific strategies to
create and enforce customer loyalty over time. 
Exceed customer expectations
The quality of your products and services is a primary determining factor for whether customers come
back. 88% of consumers agree that (1) _____________ is the most important reason for them to stay loyal
to a brand. 
Since online customers cannot hold and see the product directly; it is all the more important to assure them
of product quality. Customers can only rely on product (2) _____________. Therefore, you have to make
sure that your products’ pictures and descriptions are both appealing and realistic enough. Customers will
continue buying from your store if their first purchase is delivered as promised and at least matches up to
their (3) _____________. 
Excellent customer service is another top priority – it’s what leads to 75% of customers returning. 51% of
customers leave if they are unsatisfied with the service they receive. 
For an ecommerce business, the user experience is just as important. Your site should be well organized
and designed to be easy for customers to (4) _____________ and find their desired items. Your online
store should also be mobile-friendly and integrated with multiple payment and shipping methods. A simple
(5) _____________ is also key to a hassle-free shopping experience.
The steps mentioned above are simply foundational blocks for building (6) _____________. In today’s
marketplace, to make customers satisfied and loyal to your brand, you have to (7) _____________ their
expectations. 
Here’s how you do this. Set and clearly communicate expectations with your customers from the
beginning. Then deliver added value to delight customers. Instead of promising something you cannot do,
you must perform beyond what your customers expect.
Engage with customers on social media channels
In the ecommerce space, you have fewer (8) _____________ with your customers.  Therefore, you
should leverage multiple channels to connect with your shoppers, so they feel truly involved in your
business. 
These days, every business needs an active social media presence. Popular social (9) _____________ such
as Facebook, Twitter, and Instagram, where people choose to share and connect, help you (10)
_____________ and engage with your customers at every touchpoint. 
Encourage your customers to follow your pages and share their (11) _____________. Motivate social
activities like liking, commenting, and sharing with (12) _____________ like giveaways. 
Listen to your followers’ feedback, answer their questions and concerns, and create engaging posts.
Interacting with your customers on a frequent basis is an important step towards (13) _____________ and
loyalty. 
Create personalized experiences
Personalized shopping experiences make your customers feel special and like a part of your brand.
Customers will become more passionate and devoted and stick to your brand. 
Buyers are willing to pay more to receive (14) _____________ offerings. Most of them are ready to give
personal information for a personalized experience. They also report that personalization influences their
buying decisions. 
Some common personalization tactics include welcoming your website visitors by name, using insights
about customers’ tastes and preferences to show them tailored product selections or recommendations, and
sending them details of products that are likely to be relevant to them. 
Sending customized messages and small gifts on (15) _____________ is also a great idea.
Every message you deliver to your customers should be personalized. From newsletters to thank-you
emails, every email sent should be based on what you know about your customers.
In this way, you can convince your customers that you care about their interests. Customers will be more
likely to (16) _____________ you and make repurchases. 
Reward loyal customers
Highly engaged customers generate a much higher lifetime value than others. These customers deserve to
be rewarded. A well-designed reward points system is one of the most effective (17) _____________
strategies. The real reward expresses your appreciation for your valuable customers. When you spend a
few dollars on your (18) _____________, it feels like a sincere “thank you for your purchase”. 
In addition, you should also add a Loyalty Program extension to offer your customers exclusive discounts
based on their purchase history. With this program, you can motivate loyal customers to shop more
frequently. 
You can integrate the loyalty program into your website, social media pages, and (19) _____________ for
comprehensive engagement with your customers. 
An excellent points reward system allows customers to earn points not only from repurchasing, but also
from other behaviors such as (20) _____________, subscribing to newsletters, following social media
pages, and referring your products. 
You should also give your customers points on (21) _____________ to engage shoppers to commit to your
online store. 
Your loyalty program should be developed on a long-term basis. Avoid using it as a quick method to grab
sales. You should plan multiple tiers to give exclusive benefits according to customer contributions. 
Besides, your reward system should be transparent and easy to understand. Customers should easily be
able to check their transactions and balances. Avoid complicated rules that make it more difficult to
persuade buyers to make purchases. Any frustrations caused by a reward program can erode customer trust
and loyalty. 
Empower loyal customers to refer
Nielsen’s report indicates that 77% of online shoppers are influenced by (22) _____________ from family
and friends when considering a new product. 
Happy customers are also likely to share positive experiences with the people around them. 
Implementing a referral system helps you acquire new customers, as well as build customer loyalty.
As a store owner, you have to find ways to encourage your devoted customers to share more with their
relatives as well as (23) _____________. Rewarding your loyal customers with loyalty points, coupon
codes, and gifts is a great idea. Lastly, ensure that you have installed your store with the best (24)
_____________ and resources to entertain the customer with an amazing experience.

Exercise:
Based on the above information, work in groups, discuss and find out practices to improve customer
satisfactions and loyalty for your online business (the one you have done in Lesson 7)

B. READING COMPREHENSION

Read the text and answer the review questions.

Effective online marketing activity can generate positive effects, which are generally observed as
trust, customer satisfaction, and loyalty. Loyalty is the goal of marketing, while trust and
customer satisfaction are factors that may affect customer loyalty.
Customer Loyalty
One of the major objectives of marketing is to increase customer loyalty. Customer loyalty refers
to the chance that previous customers will continue to repurchase or repatronize a product/ service
from the same vendors over an extended period of time.
Increased customer loyalty can be accomplished by treating people in the way that they expected
to be treated (or better). Loyalty can result in cost savings and increased revenue in various ways:
lower marketing and advertising costs, lower transaction costs, and lower customer turnover
expenses. The expense of acquiring a new customer can be more than $100; even for
Amazon.com, which has millions of customers, the marketing cost to bring in a new customer is
more than $15. In contrast, the cost of maintaining an existing customer at Amazon.com is $2 to
$4.
Customer loyalty also strengthens a company’s competitive advantage because loyal customers
tend not to switch to competitors. In addition, customer loyalty can lead to an increase in
favorable word of mouth. Obviously, most vendors are trying their best to find out what will
make customers loyal.
Loyalty programs were introduced more than 100 years ago and are widely used among airlines,
retailers, hotel chains, banks, casinos, car rentals, restaurants, and credit card companies. Now,
however, loyalty programs have been computerized and expanded to all kinds of businesses. For
example, the Hong Kong company Octopus Holdings (octopuscards.com.hk), a global leader in
stored value smart card payment systems, launched a reward program for members to use their
membership card to shop at any Octopus Rewards Partners.
Users get an automatic discount when they pay with their “Membership Octopus;” cumulative
rewards can be used to spend at the establishment of any Rewards partners. However, the
introduction of social networking
has the potential to undermine brands and reduce customer loyalty. Social media makes it easier
to compare the price of products and evaluate the quality of vendors. In addition, consumers can
get price quotes from several sellers, get honest opinions from friends, and switch to other
vendors based on such information. Customers become less loyal to specific vendors because of
the lower switching costs for them. They can take advantage of special online offers and
promotions and exploit opportunities to try new products or services.
It is interesting to note that loyal customers end up buying more when they have the option to
peruse and purchase items from a company’s website. For example, W.W. Grainger
(grainger.com), a large industrial supply company, found that loyal B2B customers increased
their purchases substantially when they began using Grainger’s website rather than their
voluminous paper catalog. In addition, loyal customers may refer other customers to a website,
especially through communication in social networks. Therefore, it is important for EC
companies to offer Web-based programs to increase customer loyalty.
E-Loyalty
E-loyalty refers to a customer’s loyalty to an e-tailer or a manufacturer that sells directly online,
or to online loyalty programs. Companies can foster e-loyalty by learning about their customers’
needs, interacting with customers, and providing outstanding customer service. Another source of
information is colloquy.com, which concentrates on loyalty marketing.
It is interesting to note that a percentage of positive customer reviews have considerable impact
on increased repurchase intention and e-loyalty. Many factors may affect customer loyalty and e-
loyalty. A typical factor is the quality of the relationship between retailers and their customers.
Customer loyalty is composed of trust, satisfaction, and commitment. Satisfaction and trust are
particularly important because they will lead to commitment. For example, a study by Cyr (2008)
found that e-loyalty is affected by satisfaction and trust across different cultures. The analysis of
Sanz-Blas et al. (2014) showed how satisfaction, trust, and commitment can help strengthen
customer loyalty toward websites selling accommodation services.
Satisfaction in EC
Satisfaction is one of the most important success measures in the B2C online environment. Bashar
and Wasiq (2013) found that customer satisfaction positively and significantly influences the e-
loyalty of cyber consumers. Satisfaction has received considerable attention in studies of B2C e-
commerce. A few measurement indices have been developed. For example, the University of
Michigan developed the American Customer Satisfaction Index (ACSI; theacsi.org), which
measures customer satisfaction with the quality of various product and service sectors. The index
is released quarterly. ForeSee (foreseeresults.com) developed customer satisfaction analytics to
measure customer experience, and publishes the ForeSee Experience Index, ForeSee Government
Satisfaction Index, and ForeSee Word of Mouth Index (WoMI). Several models were developed
to explore satisfaction with online shopping. For example, Cheung and Lee (2005) proposed a
framework for consumer satisfaction by correlating the end-user satisfaction perspective with the
service quality, system quality, and information quality.
Trust in EC
Trust in general conveys several meanings, yet it has been recognized as a major success factor in
e-commerce that must be nurtured (e.g., see Salam et al. 2005). In general, trust means the
willingness of one person to believe in the actions taken by another person. It is a perception
variable. There are several definitions of trust in e-commerce since there are different types of
trust. Examples are:
• Consumer trust in sellers.
• Consumer trust in the computerized system.
• Trust between buyers and sellers.
• Trust in foreign trading partners.
• Trust in EC intermediaries.
• Trust in online advertisements
Most studies of trust in EC concentrate on consumer trust.
EC Trust Models
Trust in e-commerce is often called online trust. Several models are available to explain the
factors that may affect online trust. For example, comprehensive research by Lee and Turban
(2001) examined the various aspects of EC trust and developed a cause-effect framework.
According to this model, the level of trust is determined by three main categories of factors. They
include trustworthiness of Internet merchants, shopping channels, and structural assurance
associated with the business and regulatory environment.
How to Increase Trust in EC
Because consumer trust is fundamental to successful e-retailing, retailers are looking for ways to
enhance the trustworthiness in e-commerce. The following are representative strategies for
building consumer trust in EC.

- Improve Your Website

A most important factor that affects online trust is the quality of the company’s website.
The ease of navigation, visual display, and information design of a website affects
consumer trust. Gregg and Walczak (2010) reported a positive relationship between
website quality and trust; based on a survey of 701 eBay users, they concluded that good
website quality induces higher trust and price premium. Therefore, knowing how to design
the EC website that delivers high-quality information and provides easy and effective
navigation is a key to increased consumer trust in the sellers and their websites.
- Objective Third-Party Seals
Webstores can be certified by third-party seals of approval such as TRUSTe (truste.com)
and BBBOnline (bbbonline.org), the online version of the Better Business Bureau.
Escrow providers and reputation finders (e.g., cyberalert.com) also are useful. These
agencies provide business critical intelligence such as how brands are being used on the
 Internet as well as research on businesses spying on their competitors. Stories about fraud
on the Internet, especially when unknown parties are involved, may reduce EC trust.
Reputation systems can affect trust either positively or negatively.
- Establish Trustworthiness
Trustworthiness can be facilitated by the use of integrity, competence, and security.

Other Methods for Facilitating Trust

Several other methods are used to facilitate trust on the Web. For example, relating cognitive style
to communication with customers (Urban et al. 2009) is designed to build trust. Smith (2014)
believes that customers should know that they can trust a website (e.g., businesses should set up a
trusted payment gateway, provide security and privacy, and provide a well-designed website with
a short load time). Another method is to build reputation. Trust can be facilitated by positive word
of mouth.
Reputation-Based Systems
A seller’s reputation is important in online commerce. Reputation-based systems are used to
establish trust among members of online trading systems where parties who have never done
business with one another use feedback from others.
Reputation is often influenced by examining a website’s rating. A major player in this area is
Yelp.com, which aggregates reviews that contain highly subjective judgments. A Harvard study,
using data from all Yelp reviewed restaurants in Seattle, Washington during from 2003 to 2009,
concluded that a one-star increase in a restaurant’s Yelp rating led to an increase of 5% to 9% in
revenues (Luca 2011).
Online Word of Mouth
Due to the increase in online conversations and social networking, online word of mouth can
influence the trust level and may impact reputation (positively or negatively). Online word of
mouth may occur in different forms, such as consumer online feedback or participation in social
media forums. Hence, fostering positive word of mouth is an effective strategy to build stronger
trust in a website.

REVIEW QUESTIONS
1. Describe the concept of customer loyalty and e-loyalty.
2. What are the key factors that affect customer satisfaction with a webstore?
3. Describe the issue of trust in EC.
4. What influences consumer satisfaction online? Why do companies need to monitor the
satisfaction?
5. How can trust be increased in EC?
6. Define reputation-based systems and relate them to trust in EC.

CASE STUDY: JOHNSON & JOHNSON USES NEW MEDIA MARKETING

The Problem
Johnson & Johnson is the world’s largest medical and health care product company. In 2014, the
company has more than 128,700 employees worldwide. A major problem facing the company is
that their production and marketing must comply with strict global government regulations. In the
Internet age, it is important for the company to use online communication tools to reach and
support its customers. Moreover, the company has about 30,000 Internet domains. In the past
several years, Johnson & Johnson has applied Internet media (called “new media” by the
company) extensively and as a result, achieved significant performance improvement.
Using New Media Channels
Using new media, Johnson & Johnson (jnj.com) has grown in online activities and strategies over
the years. Some of their strategies are introduced next:
• Web 1.0 Stage.
In 1996, Johnson & Johnson had its first presence on the Internet and presented its products as a
static brochure format. This grew to include about 30,000 domains in 2014.
• Web 2.0 Stage.
1. Kilmer House (kilmerhouse.com; Johnson & Johnson’s First Blog). In 2006, the company
introduced its first Web 2.0 adverting tools after using Web 1.0 for over 10 years. The blog was a
natural way for the company to enter the Web 2.0 era.
2. JNJ BTW (Second Blog Web 2.0). In 2007, the company launched its second blog after a year
of Kilmer House. This blog promised to become “the voice for the company.” JNJ BTW became
a place for conversation about subjects related to Johnson & Johnson. It also offers public
education about health care and JNJ’s products.
3. JNJ Health Channel on YouTube. Johnson & Johnson is producing videos about health. In May
2008, the company launched two JNJ health test videos: “Ask Dr. Nancy – Prostate Cancer” and
“Obesity and Gastric Bypass Options,” which were watched by hundreds of thousands of viewers.
Several hundred viewers posted their comments. For Johnson & Johnson, the site has turned out
to be a great tool for interacting with consumers.
4. Twitter and Facebook. In March 2009, the company started a Twitter channel. In April 2009,
the company created its first Facebook page. The page contains biographical information about
the company. Twitter and Facebook also serve as a “bridging communicative tool” to integrate
viewers into JNJ BTW for more detailed information about Johnson & Johnson.
• Mobile Advertising Campaigns.
As of 2007, Johnson & Johnson has integrated several mobile advertising campaigns.
1. The company created a game called “Saving Momo” for IM users working with Microsoft
Digital Advertising Solutions

2. Using a multichannel mobile campaign. According to Butcher (2008), the company used in-
call audio ads, SMS, and mobile websites to create a new way to send advertising messages to its
target audiences in 2008.
3. Johnson & Johnson’s Zyrtec and iPhone 2.0. Zyrtec is a popular over-the-counter allergy
medication. According to Butcher (2009), Zyrtec generated $315.9 million in sales in 2008. In
2009, Johnson & Johnson conducted a mobile advertising campaign together with The Weather
Channel (TWC), putting an interactive Zyrtec banner ad on the TWC mobile app. Johnson &
Johnson then extended to a new platform, TWC’s upgraded iPhone application.
• Social Media.
Johnson & Johnson is very active in the use of social media. For example, on the company’s main
Facebook page (facebook.com/jnj.com), the company provides extensive health information (on
the J&J Channel). There are over 625,000 million ‘Likes’ in English and the most engaged city is
San Paulo, Brazil (August 2014 data). On Twitter, J&J has the most active account is its
@JNNews. Finally, J&J is using social media to save lives
Results
The intensive campaigns that used various new media have resulted in significant performance
improvements financially and managerially.
1. According to Ploof (2009), the company’s reputation is one factor in figuring the ROI (return
on investment) of using new media. YouTube provides usability metrics, such as views over time,
trends, and viewer retention rates, which has helped the management team make better decisions.
2. Mobile advertising has shown to be very effective. In 2007, ACUVUE’s one-month campaign
promoted a new product by creating a shared game, called “Saving Momo,” for Windows Live
Messenger. The game was played 200,000 times, while approximately 300,000 personal
expressions (for IM) were downloaded. The campaign drove sales, improved the target markets’
connection to the brand, and had a positive viral impact on the brand. In 2008, Johnson &
Johnson used the In-Call Network as another option to engage consumers, which made it easier
for users to get a free trial of ACUVUE.
3. The Weather Channel remained the number one download for iPhone users in the Apple Store.
The direct interaction between consumers and the brand illustrates the reach of mobile
advertising.

Sources: Based on Butcher (2008), 2009),

Microsoft (2009), and Ploof (2009).

Questions
1. Identify the online advertising actions adopted by Johnson & Johnson.
2. Search the Internet to find more details about Johnson & Johnson’s marketing activities on
YouTube.
3. Search the Internet to find more details about Johnson & Johnson’s marketing activities on
Facebook and Twitter.
4. Search the Internet to find more details about Johnson & Johnson’s marketing activities on
mobile devices.
5. Outline the major benefits from Johnson & Johnson’s online marketing activities