Sunday, April 4, 2010

Earning your customer's trust - The foundation of customer relationship and customer intimacy

In today’s world of technology services hosted in cloud and the resultant growth in commoditization of technology, the space for product differentiation for internet/ecommerce firms are getting narrower and narrower. Today, anyone can start an online retailing business without having to develop the technology, using services from integrated ecommerce solutions sites such as ecommercehub.com, google apps and enterprise solutions, and payment services such as paypal, google checkout, and Amazon payments. What you can do, your competitor can also do. So in order to have a competitive advantage, many companies including leaders such as Amazon .com don’t rely just on technology and product leadership, but rather concentrate on the other two aspects of value disciplines – customer intimacy and operational excellence, as enunciated by Michael Treacy and Fred Wisrsema in their book Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market.


With hundreds of ecommerce and gaming sites mushrooming, earning customer trust is one of most important means of attracting and retaining customers. Trust is the foundation of any relationship, including customer relationship. When customers are sharing confidential credit card information and paying for goods and services in your ecommerce site for the goods and services they purchase, all other things being equal, a site that appears and that is trustworthy is more likely to have higher conversion rates from visits to positive transactions. Customers, in the absence of any bricks and mortars, look for information in the site before they make a purchase. Some of the ways a site can radiate trustworthiness in their webpage


(a) About me. Having an about me column, and detailed description of who you are, what you do, and some information about the management team, investors, and other customers (if they are big and noteworthy) will certainly help establish the legitimacy of the company and the company interface. Remember, a webpage is the face of the company, and first impression is the best impression. Any customer who gets a negative impression is never likely to come back. Any customer with negative experience while doing business with the site, will not only never come back, but also spread the word around virally and cause negative publicity and prevent his network of friends from doing business with your site.


(b) Live webchat / Toll free number service support. This is not an element found in small sites, yet this can be very powerful tool to increase the trustworthyness of the site.


(c) Transparent terms and conditions. Lets face it. Even the biggies use fine prints. But any stealthy sign ups, deceptive offers, customer recruitment drive using partnership sign ups, affiliate marketing etc are more likely to catch customers off guard when they actually see their credit card bills later. As per Dan Ariely, a professor behavioral economics at Duke, a visiting professor at MIT and the author of the book “Predictably Irrational”, people often spend researching a product online after buying it than they do before buying it, to prove that they should not regret the purchase. Most customers who feel cheated, might not issue a chargeback, but many are not likely to ever come back for repeat purchases. This can have long term consequences in terms of increased churn rates and higher customer acquisition costs, which could be costlier than the deceptive promotion sold to customer.


(d) User Generated Content. It will be very useful if your site has testimonials, product reviews, and user generated content from real customers or users. A customer is likely to believe reviews and content generated by other people from his own content or network. One way to make this happen is to be able to use tools such as facebook connect and encourage users to post reviews using their facebook IDs. Then when a user logs in or browse information, then one serve the user review written by someone from his network, if any. Such advanced tools for collaborative filtering, and precision serving of reviews, can also be a product differentiator apart from improving customer intimacy.


Here is one example of an untrustworthy site and service with hidden charges, disguised acquisition, and deceptive promotion. The site is called make-my-baby.com I clicked their ad on my facebook page, and visited their homepage, uploaded the photo of me and my fiancee, blindly [trusted?] clicked on the terms and conditions, entered my phone number, received a pin through sms, entered the pin, and waited for the promised baby photo of my would be baby. Nothing came. I forgot about the whole thing, until I saw my telephone bill. I was charged $19.99 for apparantely signing up for some receive through the website www.make-my-baby.com for receiving mobile ranging from $9.99 to $19.99. I was signed up without my conscious consent for $19.99 plan. I was shocked, and I called the ATT customer care and cancelled the plan immediately. The site make-my-baby.com is dubious but they are mere customer acquisition tools for the mobile content company that is in the invisible second layer, and the payment is extracted from the customers through the legitimate third layer, which are the mobile service providers such as AT&T, Verizon, etc.


Such disguised customer acquisition using proxy websites, and deceptive promotions are at best suited for fly by night cheaters. If you are wanting to establish a long standing business, then better make earning your customers trust, your no 1 priority. If only you have customers who visit your site often, you can learn more about them and develop intimacy. That is why, I feel that earning the trust of your customer is the first step to developing long standing customer relationships, and developing customer intimacy.

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