By Kim F.B.M. van Winkel MSc. and André J.G.M. van Montfort Ph.D.
Dr. André van Montfort is an associate professor in Public Administration at the Free University in Amsterdam. He gives lectures and carries out research in the fields of policy development, conflict regulation and organizational integrity.
Nowadays business enterprises are investing an increasing amount of time and funds into the development and maintenance of a qualitatively good website. After all, the Internet has become an auspicious medium for online marketing. Literature states that potential clients are only willing to communicate via the Internet and executing business transactions via the Internet if they have sufficient faith in the enterprise in question. The following factors play a significant role in this issue of trust: a notice on the website that payment security is guaranteed; focus on the website for frequently asked questions (FAQ’s); a clearly laid out website; opportunity for direct contact with the business enterprise; rapid feedback from the business enterprise; conscientious protection of the privacy of the individual’s personal information.
A large-scale written survey was carried out in order to determine the actual degree of importance that potential clients attribute to the aforementioned items. The majority of the factors appear to play a significant role in the decision whether or not to go ahead and book a holiday with an on-line travel agency. Furthermore, the significance of a number of factors, for example the notification that payment security is guaranteed appear to be more important to those potential clients with less Internet experience. The study is concluded with a number of recommendations for on-line business enterprises which will enhance the level of trust of prospective clients.
Online marketing has a number of advantages in comparison to the more traditional marketing methods. The Internet provides the opportunity to combine imagery, text and sound effects and the information can be distributed on a global scale. Visitors to websites also have the opportunity to refer to this information for a lengthy period of time. This is clearly different from a more traditional medium such as television, where the information is only transmitted for a short period of time. Another advantage of the Internet is the remarkably up-to-date nature of the information provided. Information can be rapidly and readily altered in keeping with changing circumstances. Furthermore the Internet has an interactive nature. Visitors to a website can immediately respond to the information supplied. Another appealing factor is that the business enterprises incur relatively low expenses for the reproduction and distribution of information. Also there are no boundaries or restrictions related to time or location. The Internet is a global medium which can be accessed 24/7 to conduct business transactions. (Shapiro & Varian, 1999; Porter, 2001: 74; Reicheld & Schefter, 2000; Tiggelaar, 2000: 37-43; Zeithaml & Bitner, 2000: 357-361).
However there are down sides. The business enterprise has no guarantee that the website visitor will in fact make a purchase. The potential client can readily find links to competitor’s websites by using a search engine. Additionally, in order to operate an effective and efficient application of the Internet, a qualitatively good website must be set up, a number of measures must be undertaken to maintain the website and a number of organisational measures must be implemented to ensure that the reaction of the visitor to the website is anticipated in the proper manner. This requires substantial investments. One final, maybe even the most important down side is that it is difficult for the potential client to obtain an impression of the dependability and trustworthiness of the products and/or services on offer. In this context, the fact that the clients often have doubts regarding the security of electronic payment is a key issue. (Reicheld & Schefter, 2000: 107; Tiggelaar, 2000: 512-515; Zeithaml & Bitner, 2000: 357-361).
One recurrent theme during discussions about the use of the Internet is how enterprises and potential clients, who have encountered each other for the first time on the Internet, attempt to find out whether or not the other party is in fact reliable (Tiggelaar, 2000: 512-515). The research carried out by Reicheld & Schefter (2000) shows that certain factors are important to potential clients when determining the reliability of a business enterprise. A number of these factors and their significance for potential customers will be highlighted in this article.
Deciding factors for reliability
Professional literature states various determining factors concerning gaining the trust of potential clients for on-line businesses. Reicheld & Schefter (2000) state that the most important condition for a customer entering into a business relationship with a business enterprise is that the visitor to the website has faith in the intentions of the company. This trust covers aspects such as the customer’s expectation that promises will be kept and that the items ordered will actually be delivered.
Furthermore, the trust of the customer also relates to the security implementations of cash transactions via the Internet. The payment security is related to the perception of the customer that only the agreed sum of money will be transferred from his or her bank account (Reicheld en Schefter, 2000).
The level of control that the individual has with regard to the use of personal information is also a relevant factor. The protection of personal details is of paramount importance in a virtual area. If the customer does not feel that their personal details will be dealt with carefully then the probability is extremely high that they do not trust the on-line supplier and will change to a competitor (Hoffman et al., 1999; Multiscope, 2001; InternetNews-advertising report, 2001).
Furthermore the research by Tax et al. (1998) has shown that a business enterprise should respond timely to comments, suggestions and any possible complaints made by the customer. It is detrimental to the level of trust if the business fails to do this. The manner in which a complaint is dealt with has a direct impact on the level of satisfaction, and with this the faith in the organization. If a customer is taken seriously during a grievance procedure this contributes to a positive opinion of the business.
In addition, an efficient customer service and after sales service is also beneficial to the level of trust of the customer. It is possible to operate this service by providing individual personal assistance for the customer. Customers must be given the opportunity to contact the business directly if they have any problems, they must also receive feedback within a short period of time. Another possibility for individual customer support is having a section with frequently asked questions (FAQ’s) on the website. In this manner the business let their customers know that they are doing their best to provide as good a service as possible for the customer (Buyways, 2002; Hoffman et al., 1999; Reicheld & Schefter, 2000; Tax et al., 1998; Zeihaml & Bitner, 2000; Venkatraman & Henderson, 1998).
The level of user friendliness (usability) is also a contributory factor for gaining the trust of potential customers. The layout of the website is a significant factor in attaining a high level of usability. The potential customer must be able to readily find what they are looking for. The website must contain sufficient relevant and clear information. The e-commerce system must in fact be capable of supporting the thought patterns of the on-line customer (Chau et al., 2000; Miles et al., 2000).
To what extent are these factors truly significant for potential customers of online organizations? In order to answer this question we set up a written survey at the beginning of 2002 which was completed by more than 100 persons. The respondents were interviewed in the cafeteria at the Free University in Amsterdam and a pub in the centre of Amsterdam. Almost all of the people who were approached were willing to participate in the survey as they were personally approached. The level of response was therefore extremely high. The table below shows a number of characteristics of the group of respondents.
(valid cases = 105; missing cases = 0)
Figure 1: Some characteristics of the group of respondents
The data above shows that the group of respondents is not representative for the Dutch population, as the random survey comprises a proportionally large number of people below the age of 35. The number of respondents with a university education is also high (this is consistent with the relatively high percentage of students who participated in the survey). The random survey is however representative for the population of Internet users in the Netherlands. People who regularly use the Internet are often aged 25 to35 and usually well educated (CBS, 2001).
Contents of the survey
The written survey was specifically aimed at the faith of potential clients in on-line travel/holiday agencies. The respondents answered a number of multiple choice questions. The majority of the questions contained propositions, which the respondents were asked to respond to (Van Winkel, 2002: 68-71). The survey questions relate to the above stated factors, which according to literature are influential factors concerning the faith of clients in on-line organizations:
· Statement on the website that payment security is guaranteed;
· Focus on the website for frequently asked questions (FAQ’s);
· Clear layout of the website;
· Possibility to contact the business directly;
· Rapid feedback from the organization;
· Reliable security measures relating to the privacy of personal details.
The survey also covered the level of Internet experience of the respondent. The level of Internet experience may influence the extent to which the respondent attached importance to the aforementioned factors.
The factors incorporated in the survey can be classified into two categories. The first three factors relate to the layout and contents of the website. The latter three factors on the other hand relate more specifically to the operating methods of the whole organization. These factors are in fact more difficult for business enterprises to have an influence on.
Layout and contents of the website
The following statement was put to the respondents with respect to the factor ‘payment security guarantee statement’: ‘I think that it is important that the payment security guarantee is stated on the website’. 59% of the respondents stated that they found it extremely important that a travel agency emphasizes payment security on the website. 41% of the respondents considered this to be less important. Therefore some people appreciate the payment guarantee more than others. This raises the question as to whether or not there may be a link between how important a respondent finds this aspect of the website and the number of times the person in question has previously used the Internet to search for a holiday. The research results shown in table 2 show that there is in fact a connection. However this is a weak connection (Kendall’s tau = 0.201, p=0.037). The extent to which people attach importance to the statement regarding payment security decreases as their Internet experience increases.
(valid cases = 105, missing cases = 0; Kendall’s tau = 0.201, p = 0.037)
Figure 2: Importance that payment security is stated and experience with the Internet
The level of importance which potential clients attribute to the factor ‘focus on the website for frequently asked questions (FAQ’s)’, was measured using the proposition: ‘I think that it is important that there is a list of frequently asked questions (FAQ’s) on the website’. The reactions to this question showed that 79% of the respondents found it important that there is a list of FAQ’s on a travel agency website. On the other hand 21% of the respondents found this insignificant. Once more we can check whether or not the extent of the respondents Internet experience has any bearing on the level of importance they attribute to the presence of a list with FAQ’s. The extent to which people consider the presence of a list with FAQ’s as an important factor decreases if they have previously used the Internet to search for a holiday destination.
(valid cases = 105, missing cases = 0; Kendall’s tau = 0.206, p = 0.038)
Figure 3: significance attributed to the presence of a FAQ section and experience with the Internet
With respect to the last aspect concerning the layout and design and the contents of the website, the factor ‘clear layout of the website’, the respondents were asked to respond to the following statement: ‘I think that the website must be clearly laid out or else I will go to another online travel agency (go to another website)’. 88% of the respondents subscribe to (agree with) this statement. The remaining 12% were neutral on this matter. On this occasion there is no significant statistical link between the level of Internet experience of the respondent and their response (Cramer’s V = 0.134; p = 0.169).
The first aspect of the operating methods of the organization is related to the opportunity for the client to directly contact the business. The respondents were confronted with the following proposition: ‘I think that it is important that there is a telephone number on the front page of the website, allowing me to directly contact the travel agency if I have any questions and/or problems’. 47% of the respondents find it important that they are given the opportunity to directly contact the travel agency. 53% of the respondents find this less important. The level of Internet experience of the respondent plays a role here. The extent to which people consider the possibility of direct contact with the travel agency decreases if they have previously used the Internet to search for a holiday destination (Kendall’s tau = 0.172, p = 0.073).
(valid cases = 105, missing cases = 0; Kendall’s tau = 0.172, p = 0.073)
Figure 4: Significance attributed to the opportunity for direct contact with the travel agency and experience with the Internet
A subsequent factor is the significance attributed to a rapid feedback from the organization. The following statement was put to the respondents: ‘If the organization fails to respond to a question within a specific time period, I will conduct my business with another travel agency (I will go to another website).’ 79% of the respondents agree with this statement, 21% have no opinion. There seems to be no significant statistical link between the level of Internet experience of the respondent and the significance they attribute to a rapid feedback from the organization (Cramer’s V = 0.134; p = 0.169).
The final proposition in the survey was related to the significance attributed by potential clients to the privacy guarantee for personal details. The statement was as follows: ‘I find it important that privacy relating to my personal details is guaranteed’. 60% of the respondents find it extremely important that the privacy relating to their personal details is guaranteed. 40% of the respondents attribute less significance to this matter or have no opinion. Also in this case there is no significant statistical link with the extent of Internet experience of the respondent (Kendall’s tau = -0.016, p = 0.872).
Conclusions and recommendations
Various factors which are deemed as being determining factors for the trust of a potential client in an on-line organization are stated in professional literature. A number of the factors have been incorporated into our investigation into the level of trust in on-line organizations. The majority of the factors do in fact appear to be significant for clients. The main points derived from our investigation are:
· 59 percent of the respondents find it important that there is a payment security guarantee notification on the website;
· 79 percent of the respondents value a FAQ’s section on the website:
· 88 percent of the respondents value a clear layout of the website;
· 47 percent of the respondents value the opportunity for direct contact with the travel agency;
· 79 percent of the respondents value a rapid feedback from the travel agency;
· 60 percent of the respondents value conscientious security of personal details.
The investigation has also highlighted that those respondents with more Internet experience in searching for a holiday destination attribute less importance to certain factors than those with less Internet experience. Those with more Internet experience attribute less significance to:
· the payment guarantee statement on the website;
· the focus on the website for FAQ’s; and
· the possibility to directly contact the organization.
Online organizations who wish to optimize the faith of potential customers are advised to pay specific attention to the factors which have been dealt with in this article. A good starting point is the design and contents of the website. Roughly speaking these factors appear to be no less important than the factors relating to the operating methods of the organization, and moreover they can be more readily influenced. However significant investments will be required into the operating methods of on-line organizations. The great significance attributed by potential clients to this second category of factors does after all not really depend on the level of experience of the customer with the Internet. It is useful to be aware of this in our modern society in which people are becoming increasingly active on the Internet.
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