E-Commerce: Hazardous to Your Wealth?

Can going online be a hazard to a retailer’s financial health? Quite
possibly, at least according to a recent industry study that found that
encouraging customers to go online
leads to a decline in customer loyalty, referrals to friends and over the
long term, a decline in profits.

“Taking relationships online requires more than technical capability,” said
Jim Barnes, executive vice president of consulting company Bristol Group and author of “E-business
at the speed of like: a report from the future.”

“As customers have told us, it’s still about how we make them feel. Our basic
online strategy must reflect our commitment to genuine relationships, not
technology-driven transactional encounters,” Barnes said.

The study, which examined Internet business relationships in the United
States, Canada, Ireland, and the United Kingdom, concludes that the key to
ensuring long-term retail success, both online and off-line, lies in the
relationship that retailers have with their customers.

Rather than focusing
on the technology that makes e-commerce
possible, retailers need to focus on the customer relationships that are at
the heart of their business.

“This may be a classic case of ‘ignorance is bliss’,” said Barnes. “In the
short term, many retailers are generating a lot of additional revenue because
of their online customers. But if their customers don’t feel any loyalty,
they are just as likely to shop elsewhere the
next time.”

The North American component of the study, which surveyed almost 1, 600 adult
residents of Canada and the United States, concluded that over 60 percent of
off-line customers say that they are very likely to continue to buy from any
particular retailer, compared to only 43 percent of online customers.

Barnes concluded that retailers must develop online strategies that focus on
more than just price, access to inventory, speed of shipping and other
distribution issues.
“Customers need to feel that the retailer understands their needs and will
provide a human touch when necessary.”

E-business at the speed of “like”: a report from the future is available in
its entirety at here.

Bristol Group is a marketing communications and information consulting firm
with a speciality in customer relationships.

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