August 2000

BY RANDY KEMP

Awash in tidal waves of analyses that predict explosive growth and soaring profits for e-commerce, have you asked yourself if you really know your customers? Along with all of the effort and attention expended on products geared for garnering customer retention and loyalty, e-businesses need to understand how their customers think.

You have seen the figures and heard the prognostications. In spite of a predicted shake out of "dot com" enterprises, research firms generally agree that the global Internet economy will be worth trillions of dollars within three years. Items purchased most frequently online seem to be books, CDs, software, clothing and health and beauty products; but the list grows inexorably. This year has seen e-trading and financial services take off. Interestingly, customer surveys have shown that, while many consumers feel ill at ease about using credit cards for online purchases and have reservations about privacy, neither is an inhibiting factor to e-commerce. At the same time, e-customers expect higher levels of customer service along with the convenience of shopping online. Throw in the Electronic Signatures in Global and National Commerce Act recently signed into law by President Clinton (see Mia Carley's June 2000 column for more information on the law) and you add another spice to the e-commerce statistical stew.

Statistical alchemists transmute peoples' opinions, preferences and behaviors gleaned from surveys into data that, after acute analysis, are molded into programs and strategies to resolve problems, get people elected, identify socioeconomic trends and attitudes and, yes, sell goods and services. While predictive analysis and real-time modeling programs facilitate our manipulation of this data, interpretation is another matter. Due to the ever-increasing pace of e-commerce, the data seems in a constant state of flux. Often, last month's breakthrough analysis becomes this month's pipe dream (or understatement).

In 1929, German physicist Werner Heisenberg gave a series of lectures at the University of Chicago. (Some of you may have read that Heisenberg either did or did not sabotage the Nazi quest for the atomic bomb during World War II.) In these lectures on quantum theory, he defined the Indeterminacy Principle, more commonly known as the Uncertainty Principle. Simply stated, the Uncertainty Principle maintains that it is physically impossible to measure the exact position and the exact momentum of a particle at the same time. Also, the more precise the measurement of one quantity, the less precisely the other is measured. In other words, everything we know is wrong, but only half of the time.

Of course, if you went through life adhering to the philosophical ramifications of the Uncertainty Principle, you would spend each day waiting for something not to happen. That would not do. So we make certain assumptions: there are patterns to what we observe, what we observe is measurable and what we quantify reflects "normal" events that are repetitive and have validity for describing the world around us. The data may not be totally accurate, but it is close enough for jazz. Why? We trust it.

Two years ago, the Better Business Bureau's Web site, BBBOnLine, commissioned a study of consumer confidence in shopping on the Internet. In essence, the study concluded that people would shop more online if they knew (or could be assured) that the e-businesses were reputable, and if they felt confident in the security of the sites for paying online for their purchases. Last year, we learned that as people become experienced online buyers, their expectations of online vendors rise, in terms of service and the "buying experience." (Could it be that familiarity does indeed breed contempt?) In other words, provide an environment that promotes trust and the cybershoppers will beat a packet protocol path to your e-portal.

A Persian proverb from before the age of the overland silk trade with China states Trust in God, but tie your camel. In this brave, new world of e-commerce, trust is a multilane highway. You have trust in your employees, management teams, business plans and strategies, systems, applications, vendors and customers. In turn, by both your virtual "face to the world" and your actions, you must earn the trust of those very same entities. Your customers trust you to provide quality goods and services, a level of privacy with which they are comfortable and effective assistance in addressing their concerns. The cornerstone of what we call customer loyalty is trust. This is a startlingly old concept: failing a customer means losing a customer.

If you want to instill customer loyalty, first build trust. Employ some common sense approaches at your Web site. Ensure that your infrastructure is reliable, responsive, secure and effective. Visitors should feel welcome, not intimidated. The "easy-to-use, multichannel communications tools" you deploy at your site should operate as advertised. For example, many sites provide a self-help application that uses an intelligent knowledge base. Keep it simple. On one Web site, the self-help facility asked me to rephrase my query so many times that I made my purchase at another site. There is nothing more frustrating for customers than being drawn into the mire of a self-help mechanism that cannot even help itself. Educate your customer interaction agents; make certain that they buy into your goals and objectives and are compensated for their trust and loyalty. Borrowing the "bricks-and-mortar" imagery so popular today, trust is built one brick at a time. Each course of brick and mortar, carefully laid, provides greater strength for the foundation of your e-business. Consumers will respond with appreciation of your efforts, trust in your operation and loyalty to your products and services. Most important, provide a level of privacy and security that addresses the fears (real or imagined) of that first-time online buyer. Trust fosters loyalty; loyalty breeds customer retention, which in turn bears the fruits of e-commerce success.

The author may be contacted at Rkemp@tmcnet.com.

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