Impact of e-service Quality on Satisfaction and Loyalty Intentions: Differences between Buyers and Visitors

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1 Impact of e-service Quality on Satisfaction and Loyalty Intentions: Differences between Buyers and Visitors Bressolles G, Durrieu F, BEM Management School - Bordeaux (France) Abstract Past researchers have studied the links between electronic service quality and satisfaction and/or loyalty intentions without differentiating between visitors and buyers. This paper presents some results relating to this differentiation. Based on an online questionnaire administered to 1,557 clients of two leading French e-commerce Websites specialized in online travel and electronic and cultural goods, the results highlight that electronic service quality dimensions (Reliability, Security/Privacy, Ease of Use and Design) could explain Satisfaction, Word-of-Mouth, Visiting and Buying Intentions. Security/Privacy and Ease of Use are important dimensions for converting visitors into buyers. In order to improve online conversion rates, Websites should focus on these dimensions. Introduction Online purchasing is becoming an increasingly commonplace purchasing mode (emarketers, 2006). In 2006, electronic commerce reached 12 billion Euros in France, representing 40% growth from the previous year. However, while both transactional and informational commercial activities on the Web are growing steadily, it is also true that sites directed at consumers do not always meet expectations. A recent study (Benchmark Group, 2007) found that more than 49% of consumers abandon their order before completing it (shopping cart abandonment) because of difficulties encountered during the online process. Moreover, even if there are disparities between sectors and even between sites, "visitor/buyer" conversion rates are still very low (on average less than 5%). So, commercial Websites are nowadays confronted with two major problems: converting their visitors into buyers and developing loyalty. If the Internet intends to succeed as a major distribution channel, a key factor will be exploiting its potential to satisfy customers by delivering high service quality so as to stimulate loyalty. Indeed, as in traditional stores, service quality has an impact on customer satisfaction and loyalty intentions like positive word-of-mouth, visiting and buying intentions (Mathwich, 2002). The purpose of this paper is, therefore to identify the dimensions of service quality in an online context and to try to understand how these dimensions can contribute to customer satisfaction and loyalty intentions; these variables can influence conversion rates between visitors and buyers (Kim and Lim, 2001). With this aim, this paper is divided into four parts. First, a conceptual framework is proposed for measuring the impact of electronic service quality dimensions on customer satisfaction and loyalty intentions. Next, the methodology for testing the model and the principal results are presented and discussed. Finally, limitations and research avenues are developed. 3047

2 Conceptual Framework Electronic Service Quality Whereas aspects of traditional service quality have been studied extensively over the past two decades, the study of the service quality of Websites is a fledgling domain. Zeithaml, Parasuraman and Malhotra (2002) defined electronic service quality as the extent to which a web site facilitates efficient and effective shopping, purchasing, and delivery of products and services. This transactional quality entails the evaluation of the pre- and post-service experience. One of the most important, and probably the most evident, differences between traditional and electronic service quality is the replacement of interpersonal interaction with human-machine interaction. Owing to the specific characteristics of online commerce, direct application of the dimensions of service quality developed in other environments (Parasuraman, Zeithaml and Berry, 1988) is not appropriate or, at best, does not capture all of the subtleties of the evaluation of service quality of commercial Websites. To date, however, there is no consensus concerning the dimensions of electronic service quality, five dimensions proposed recur fairly systematically (Barnes and Vidgen 2003; Bressolles, 2006; Parasuraman, Zeithaml and Malhotra, 2005; Wolfinbarger and Gilly 2003): Information, quality and quantity of the information about the product or the service; Ease of use, refers to how a consumer perceives the ease of navigation offered by the site; Website design, aesthetic elements of the Website like color, graphics, ; Reliability, capacity to fulfill promises (capacity to deliver the right products and with the promised level of quality); Security/privacy, security of financial data and respect of private life. Customer Satisfaction In the service marketing literature, much research has studied customer satisfaction, both in the traditional and online context (Evanschitzky, Iyer, Hessea, et al. 2004; Szymanski and Hise, 2000; Wolfinbarger and Gilly, 2003). Satisfaction is an ex post evaluation of consumer experience with the service, and is captured as a positive, indifferent or negative feeling. Oliver (1997) defines satisfaction as the perception of pleasure fulfillment of a service and loyalty as deep commitment to the service provider. In the e-commerce context, Wolfinbarger and Gilly (2003) identify a positive link between electronic service quality dimensions (design, reliability, security/privacy, customer service) and customer satisfaction. Loyalty intention The survival, growth and profitability of a Website depends, partially, on its capacity to acquire new customers. However, it depends more on the Website s capacity to preserve these factors, that is to develop loyalty (Reicheld and Schefter, 2000). Indeed, it is less expensive to preserve a customer than to acquire a new one. Customer loyalty is "a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behavior" (Oliver, 1997, p. 392). A number of studies have proposed compelling arguments 3048

3 and presented data that strongly support the links that translate satisfaction into profits, despite the other financial and accounting influences that affect profitability. The profitability sequence has four stages (Oliver, 1997): Service Quality =>Customer Satisfaction => Loyalty => Profitability. In this article, we focus on loyalty intention, which is defined as "an individual's intention to recommend an online retailer, visit that retailer's site, and purchase from it in the future" (Mathwick, 2002). Methodology 4,805 customers of two leading French e-commerce Websites specialized in online travel and electronic and cultural goods were contacted by after their visit or purchase on the Website. 1,557 respondents filled out our online questionnaire. Respondents were buyers (53%) and visitors (47%). Visitors were more likely to be male (63.2%) and single (44.6%) than Buyers (male 57.2%, single 36.8%). The under 35 s represented 61.1% for Visitors and 49% for Buyers. Visitors had a higher rate of high school graduation (28.8%) than Buyers (21.1%). Wages under 35,000 euros represented 65% for Visitors and 53% for Buyers. 65% of the Visitors and 75% of the Buyers had already bought on the sites studied. The questionnaire included a measure of electronic service quality, based on the NetQual scale (13 items) measuring different dimensions of electronic service quality (Bressolles, 2006) and a measure of overall customer satisfaction (1 item from Oliver 1997), and 3 loyalty intentions items: positive word-of-mouth (WOM), visiting intention and buying intention (Mathwick, 2002). All the scales were 5-points Likert ones. Results Initially, Exploratory Factor Analysis (with principal components analysis) was used to find the structure of the NetQual scale for electronic service quality. A Varimax rotation was carried out during the Exploratory Factor Analysis. The reliability with the Rho of Jöreskog (1971), less sensitive to the number of items, was verified for each dimension of the construct. Table 1 shows the structure of the four factors revealed. 3049

4 Table 1: Dimensions of electronic service quality Ease of Security/ Design Reliability use Privacy This site is easy to use 0.81 It is easy to find information 0.81 Organization and setup of site ease information research 0.77 It is easy to move around the site and find what I am looking for 0.77 The site is attractive 0.82 The site looks good 0.77 The site is creative 0.76 When I order, I receive the goods quickly 0.79 This site respects the delivery delays promised 0.78 I obtain exactly product(s) which I ordered 0.75 I think that my personal information is protected on the site 0.86 I have confidence that the site will not misuse my personal information 0.83 Generally I have confidence in the site s security 0.67 %Variance Reliability (ρ of Joreskog) The dimension of Information, consisting of three items, did not define one factor ("in-depth information" and "relevant information" factorized on Ease of Use and "accurate information" on Reliability). The loading of the third item was less than 0.5 so it was deleted. By deleting the first two items, the construct reliability increased ( ). So, the four dimensions of electronic service quality in this study concerned aspects linked to Ease of use, Design, Reliability and Security/privacy. We considered all the constructs to be reliable (ρ = 0.83 to 0.87). Once the factorial structure of the NetQual scale was verified, we used one-way Anova to analyze the differences in electronic service quality dimensions between Buyers and Visitors. For Security/Privacy (Levene=11.94; P=0.00) and Ease of use (Levene=15.10; P=0.02), the significance value of the Levene test did not exceed 0.05, suggesting that the variances between Buyers and Visitors were not equal and the assumption was not justified for these two variables. For the other variables, the Anova test demonstrated that the difference between mean responses for Buyers and Visitors was significant for Reliability (F=17.22; p=0.00) and not significant for Design (F=1.85; p=0.17). Reliability for Visitors was less than for Buyers. Visitors can only have a perception of the reliability of the Website based on their past-experiences (65% of visitors have already bought on the Websites in the past). Finally, we build models by regression analysis, to discover how electronic service quality dimensions influence satisfaction, WOM, visiting and buying intentions. Table 2 presents the results for Buyers and Visitors. 3050

5 Table 2: Regression analysis Buyers / Visitors Buyers Visitors Satisfaction Word-ofmouth Buying intention Visiting intention Satisfaction Word of mouth Buying intention Visiting intention Beta T Beta T Beta T Beta T Beta T Beta T Beta T Beta T Ease of use Security/ Privacy Design Reliability cte F sign R² Both models were significant and explained between 33% and 52% of the variance in the dependent constructs. All the dimensions of electronic service quality had a positive impact on Satisfaction, Word-of-Mouth, Buying and Visiting Intention for Buyers and Visitors. All the constants are negative. This result shows that if a Website does not try to improve electronic service quality, then Visitors as well as the Buyers are not satisfied, they generate negative Word-of-Mouth and have no intention of visiting or buying from the Website in the future. Reliability is the first dimension that explains Satisfaction, Word-of-Mouth, Visiting and Buying Intentions for both Buyers and Visitors. This result is consistent with Wolfinbarger and Gilly (2003) for Satisfaction. They consider loyalty intentions as a global dimension so we cannot compare our detailed results for loyalty intentions with theirs. Nevertheless they found design (measuring ergonomic aspects) to be a dimension explaining loyalty intentions, like Parasuraman, Zeithaml and Malhotra (2005) with their efficiency (ease of use) dimension. If we focus on Satisfaction, some differences between Buyers and Visitors can be noticed. The variables explaining Satisfaction (after Reliability) are not the same for the two samples. For Buyers, it is Ease of Use and Security/Privacy, while for Visitors, it is Security/Privacy and Ease of Use. Problems during browsing could generate a low level of satisfaction for buyers (Nantel, Mekki-Berrada and Bressolles, 2005) Now focusing on Word-of-Mouth, the dimensions Reliability, Security/Privacy and Ease of Use explain Word-of-Mouth intentions for Buyers while for Visitors, it is Reliability, Ease of Use and Security/Privacy. In order to generate positive Word-of-Mouth, it is important for buyers to be confident that their privacy and security are respected (Sheehan, 2002). Conclusion, Limitations and Research Avenues The study of electronic service quality is a relatively new phenomenon in the service marketing literature. Perceived quality of a Website may lead to satisfaction and loyalty intentions. These variables are key factors of success for an online retailer. The dimensions of electronic service quality (Reliability, Security/Privacy, Ease of use and Design) have an impact on online Satisfaction, Word-of-Mouth, Visiting and Buying Intentions. Past researchers have studied the links between electronic service quality and satisfaction and/or 3051

6 loyalty intentions without differentiating between visitors and buyers. This paper presents some results relating to this differentiation. Nowadays, online conversion rates are still low (about 3-4%). In order to improve these rates, it is important for an online retailer to manage the Security/Privacy of the online consumer (protection of the user from fraud and financial losses, private data protection, not sharing or reselling data collected online about consumers, ) and the Ease of use of the Website (search engine, intuitive and personalised navigation, ). In this study, only the direct links between electronic service quality dimensions and satisfaction and loyalty intentions are examined. It will be interesting in future research to test the causal chain "Service Quality =>Customer Satisfaction => Loyalty intentions" (Anderson and Srinivasan, 2003; Oliver, 1997) using Path Analysis. A multi-group analysis could also be done to test the differences between Visitors and Buyers. Another limitation of this research concerns the relatively low level of the predictivity of the regression analysis (33 to 52%), so other dimensions of electronic service quality could explain satisfaction and loyalty intentions, for instance, offer, interactivity/personalization (Srinivasan Anderson and Ponnavolu, 2002). Future research could also take into account other variables able to transform a visitor into an online buyer, like impulsivity, time pressure, type of goods sold, online and/or goods expertise, etc. The results of this study are consistent with those found in traditional retailing. Most of the Websites are "click and mortar" so it seems to be determinant to have a global approach in service quality management. The development of customer loyalty involves improvement in the perceived quality of the customer experience with the Website but also in all the means of contact: stores or agency, call center and customer service. 3052

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