The online buying process

Companies that understand how customers use the new media in their purchase decision­making can develop integrated communications strategies that support their customers at each stage of the buying process. Considering mixed-mode buying or how a customer changes between an online channel and an offline channel during the buying process is a key aspect of devising online marketing communications since the customer should be sup­ported in changing from one channel to another.

The simple model of the buying process shown in Figure 9.3 is valuable in developing the right online marketing tactics to support each stage of the process for each business.

Individual preferences for using the web will also differ. Lewis and Lewis (1997) identified five different types of web users who exhibit different searching behaviour according to the purpose of using the web.

• Directed information-seekers. Will be looking for product, market or leisure information such as details of their football club’s fixtures. This type of user tends to be experienced in using the web and is proficient in using search engines and directories.
• Undirected information-seekers. These are the users usually referred to as ‘surfers’, who like to browse and change sites by following hyperlinks. This group tends to be novice users (but not exclusively so) and they may be more likely to click on banner advertisements. The research in Figure 9.5 suggests that this behaviour is now less common.

• Directed buyers. These buyers are online to purchase specific products. For such users, brokers or cybermediaries who compare product features and prices will be important locations to visit.
• Bargain hunters. These users want to use the offers available from sales promotions such as free samples or prizes.
• Entertainment seekers. Users looking to interact with the web for enjoyment through entering contests such as quizzes.

These different types of behaviour could be exhibited by the same person in different sessions online, or, less likely, in the same session.

1. Differences in buyer behaviour in target markets

As explained in Chapter 4, in the section Understanding users’ access requirements, there is great variation in the proportion of user access in different countries. This gives rises to dif­ferences in buyer behaviour between different countries or between different segments according to how sophisticated customers are in their use of the Internet.

2. Differences between B2C and B2B buyer behaviour

Major differences in buyer behaviour exist between the B2B and B2C markets, and these must be accommodated in e-marketing communications. The main differences are:

• Market structure
• Nature of the buying unit
• Type of purchase
• Type of buying decision
• Communication differences.

2.1. Market structure

One of the main differences between business-to-business and business-to-consumer which is important when considering the promotion of a web site is the number of buyers. As Kotler (1997) points out, in B2B there tend to be far fewer but larger buyers. What are the implica­tions of this? First, with fewer buyers, the existence of suppliers tends to be well known. This means that efforts to promote the web site using methods such as banner advertising or list­ing in search engines are less important than for consumer brands. Existing customers can be contacted directly, by post or by e-mail where the e-mail address has been captured or col­lected, or sales representatives can be used to make customers aware of the web site and how it can help them in their work. Of course, for business-to-business suppliers with many potential customers, then the promotion methods used will correspond more closely to those of the retail market. Second, the existence of larger buyers is likely to mean that each is of great value to the supplier. The supplier therefore needs to understand the buyers’ needs from the web site and put effort in to develop the web-based content and services necessary to deliver these services. The type of services to support the customer relationship has been summarized well by Patricia Seybold in her 1999 book Customers.com and eight key factors are summarized in Chapter 11 (p. 640) in designing for customer orientation. To implement such principles for a business often implies the development of personalized web content such as Dell Premier which is accessed using an extranet.

To provide potential and existing clients with information each will publish information about new contracts, new products and testimonials from existing customers. This infor­mation will also be of great interest to competitors. The web provides a means of finding such information more rapidly and tends to give greater depth of information than other sources. This has led to companies’ employing staff specifically to find and summarize information from competitors.

With the need to put information on the web to support customers and encourage loy­alty, there is a danger of giving away too much information – ‘giving away the crown jewels’. Thus, a careful balance needs to be struck between disclosing too much information and supplying less information than competitors. The use of extranets where businesses have to log-in to find information is one solution to this, but passwords are notoriously insecure. An employee of a customer could be recruited on the basis of their access to a password or knowledge of competitors.

2.2. Nature of the buying unit

Business purchases typically involve a more complex decision-making process since more people are involved. Webster and Wind (1972) identified:

• Users
• Influencers
• Buyers
• Deciders
• Gatekeepers.

This complexity is needed for financial control and authorization of what may be expensive products. The implications of this are that the content of the web site should be devised according to the different members of the buying unit who are going to visit the web site. While the site should make the buying process straightforward, the content should be tailored for the users, influencers and deciders. However, for situations where the buyer is the same
person as the decider, as may be the case for stationery, it is important to make the whole selection and buying process as easy as possible to encourage repeat purchases. Note that it is not straightforward to tailor content for the different members of the buying unit since it is not practical to label the information under headings such as ‘influencer’ or ‘decider’, and their detailed information needs are difficult to identify!

2.3. Type of purchase

The type of purchase will vary dramatically according to scale. Companies offering B2B services such as consulting and IT management will have low-volume, high-value orders, while others selling items such as stationery will have low-value, high-volume orders. With the low-volume, high-value purchase the Internet is not likely to be involved in the transac­tion itself since this will involve a special contract and financing arrangement. The low-value, high-volume orders, however, are suitable for e-commerce transactions and the Internet can offer several benefits over traditional methods of purchase such as mail and fax:

• Easy for purchaser to assess whether item is in stock.
• Order can be completed at any time of day or night.
• Re-buys or repeat orders are easy to specify.
• Delivery can be tracked online.
• Purchasing history can be reviewed.

The design of the site should provide facilities such as the modified re-buy or allow the buyer to return to complete a partially complete order. The RS Components web site (www.rswww.com) which focuses on the B2B market highlights these types of facilities.

The buying decision for technical business-to-business products and services will typi­cally be more complicated and lengthy than that for consumer products. There may be a lengthy period of supplier selection and product evaluation. To assist in this, business-to- business exchanges, as described in Chapter 7 (p. 400), have been created.

2.4. The importance of trust

In the online environment, purchasers lack the physical reassurance we have when purchasing from a store or talking to someone over a phone. This is compounded because of stories of fraud and security problems. It follows that consumers are looking for cues of trust when they are on a site and marketers need to understand the nature of these. These cues can include brand familiarity, site design, the type of content, accreditation and recommendations by other customers.

Bart et al. (2005) have developed a useful, widely referenced conceptual model that links web site and consumer characteristics, online trust, and behaviour based on 6,831 con­sumers across 25 sites from 8 web site categories including retail, travel, financial services, portals and community sites. We have summarized the eight main drivers of trust from the study in Figure 9.4 and have added some details about how these elements of trust can be substantiated or proved on the web site.

The model of Bart et al. (2005) and similar models are centred on a site, but perceptions of trust are also built from external sources including the role of social media and friends, in particular, which can have a significant influence on purchase as research from BrandNew- World (2004) shows (Figure 9.5):

3. The net promoter score

Net promoter score (NPS) is a measure of customer advocacy originally popularized by Reichheld (2006) in his book The Ultimate Question which is essentially ‘would you recommend us?’. It is highly relevant to CRM since recommendations are important to acquiring customers, but it is also the ultimate measure of customer satisfaction which is needed to drive retention.

Reichheld explains the main process for NPS as follows:

• Systematically categorize customers into promoters, passives, or detractors. If you prefer, you can call them loyal advocates, fair-weather friends, and adversaries.
• Creating closed-loop processes so that the right employees will directly investigate the root causes that drive customers into these categories.
• Making the creation of more promoters and fewer detractors a top priority so employees up and down the organization take actions based on their findings from these root-cause investigations.

In practice, consumers are asked ‘Would you recommend [Brand/ Company X] to a friend or colleague, answered on a scale between 0 (not at all likely) and 10 (extremely likely). The actual score is calculated by subtracting the percentage of detractors (those giving 0-6 answers) from promoters (9-10s). The middle section, between 7 and 8, are the so-called passives.

The concept of NPS is based on economic analysis of the customer base of a company. For Dell, Reichheld estimates that the average consumer is worth $210 (based on a lifetime-value calculation of future value over a five-year period calculated as Net Present Value), whereas a detractor costs the company $57 and a promoter generates $328. Online Dell uses software from Opinion Labs (www.opinionlabs.com) to both gather feedback and follow up on nega­tive experiences and so reduce the number of detractors with major negative sentiment.

So, the idea is that after surveying as many customers as possible (to make it representative) and show you are listening, you then work backwards to determine which aspects of the experience of interacting with a brand creates ‘promoters’ or ‘detractors’. Some specific approaches that can be used to help manage NPS in the online environment are:

Facilitating online advocacy:

• Page template contains ‘forward/recommend to a friend’ options;
• E-mail templates contain ‘forward to a friend option’;
• Facilitate customer feedback through a structured programme of e-mailing customers for their opinions and NPS evaluations and by making it easy for site owners to comment;
• Showcase positive experiences, for example, e-retail sites often contain options for rating and commenting on products;
• Involve customers more in shaping your web services and core product offerings such as the approach used by Dell in their Ideastorm site (ideastorm.com).

Managing online detractors

• Use online reputation management tools (davechaffey.com/online-reputation- management-tools) for notification of negative (and positive) comments;
• Develop a process and identify resource for rapidly responding to negative comments using a natural and open approach;
• Assess and manage the influence of negative comments within the natural listings of search engines;
• Practise fundamental marketing principles of listening to customer comments about products and services and aim to rectify them to win back the situation!

Kirby and Samson (2008) have critiqued the use of the NPS in practice. For example, they ask: ‘Is an NPS of 40, consisting of 70% promoters and 30% detractors, the same as the same NPS consisting of 40% promoters and 0% detractors?’ They also quote research by Kumar et al. (2007) which shows that while about three-quarters of US telecoms and financial service customers may intend to recommend when asked, only about one-third actually follow through and only about 13% of those referrals actually generate new customers. Keining- ham et al. (2007) have assessed the value of recommendation metrics as determinants of customer lifetime value and also believe that the use of NPS could be misleading. They say the consequence of a simple focus on NPS are:

the potential misallocation of customer satisfaction and loyalty resources due to flawed strategies that are guided by a myopic focus on customers’ recommend intentions.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).