Despite continued market growth, a number of Web sites have been unprofitable. Some notable failures were eToys. com, boo.com, bluefly.com, buy.com, and valueamerica. com. An examination of the companies’ IPO filings suggests that the collapses were caused by cut-price strategies, overinvestment, incorrect expectations, and non-profitability. Surviving in the digital market has become a critical challenge for Web managers. To face the business challenge, Web managers and marketers demand information about Web site design and investment effectiveness (Ghosh, 1998). As the rate and diversity of product/service innovation declines and competition intensifies, Web managers need better research on Internet-related investment decisions (Donath, 1999; Hoffman, 2000). The original article examined the role of customer retention actions in these decisions (Forgionne & Ingsriswang, 2005). This article updates the original analysis by incorporating new research on comprehensive e-business strategy models.
Modeling E-Commerce Loyalty
E-commerce customer loyalty, or stickiness, results from goodwill created by the organization’s marketing efforts (Reichheld, 1996; Reichheld & Sasser, 1990), orStickiness = f (Goodwill) (1) and
Goodwill = f
(Marketing Mix). (2)
Key Terms in this Chapter
Stickiness Model: A series of interdependent equations linking stickiness to an organization’s financial performance.
Stickiness: The ability of a Web site to create both customer attraction and customer retention for the purpose of maximizing revenue or profit.
Customer Retention: The ability to retain customers and their allegiance to the Web site.
Customer Loyalty: The ability to develop and maintain long-term relationships with customers by creating superior customer value and satisfaction.