In order for the e-business company to build customers’ e-loyalty, the company can have two dimensional strategies. One is pull strategy and the other is push strategy. Pull strategy is to entice customers, while push strategy is to push customers to have transactions. Providing trust is understood as pull strategy to enable customers to have visited continuously and voluntarily, while setting up high switching costs is understood as push strategy to enforce customers to have stayed in the Web site, regardless of their preferences.
Before explaining two dimensional strategies, antecedents of two strategies need to be explained. These antecedents can explain two dimensions like trust and switching cost. Subsequently, two dimensions influence e-loyalty in Internet markets.
Trust and switching cost play roles of building e-loyalty as mediators. Simultaneously, Web page design, ease of Web use, and price premium are factors to have positive or negative effects with trust and switching cost. These are antecedents of mediators in an e-loyalty context. Web page design includes continuous update, visual appeal, and so on. Ease of Web use refers to the degree of easiness to use the Web site. While Web page design is comparable to the physical facilities of the store in traditional markets, ease of Web use is comparable to the actual experience in the store. The Web page design includes information that customers are looking for such as cost information, cheek-out procedure information, product information, FAQs, and policies (Lohse and Spiller, 1998). Ease of Web use includes ease to use (Dabholkar, 1996; Lohse and Spiller, 1998), enjoyment (Dabholkar, 1996), and so on. The Web page design and ease of Web use may be “signaling investment” of the company. Signaling investments indicate investment on physical facilities like buildings and logos (Boulding and Kirmani, 1993). Thus, customers who perceive that the company designs Web pages visually appealing and maintains a Web site easy to use tend to have trust in the company. Because the company may invest more on the Web site and subsequently customers can face better Web page design and perceive the Web site easy to use, the company cannot exit from the market without lots of loss in such investments.
In addition, Web page design and ease of Web use may be related with switching costs. Once customers are familiar with the Web site and provide personal information, they may have invested to the Web site. The investments could create mental switching costs not to quit the ongoing transaction because their mental efforts and knowledge are going to be useful. They may feel that the benefits from the current Internet company are higher than those from the alternative at some levels.
On the other hand, perceived price premium may be another factor to explain trust and switching cost. Perceived price premium is understood as “difference between super high price and perfectly competitive price” (Rao and Monroe, 1996). Higher perceived price premium may explain trust. According to agency theory, high-perceived price premium signals that customers will get more benefits for customers than those from other companies in the same industry. Thus, high-perceived price premium may result in high level of trust (Singh and Sirdeshmukh, 2000). By the same logic, high-perceived price premium may indicate more benefits. The customers who perceive more benefits may not switch the Internet company. This means that high-perceived price premium may be high switching cost because customers perceive large benefits from the company, considering actual price. This will grab customers to stay in their Web sites. From companies’ viewpoint, they set up high switching costs for customers not to switch by making customers perceive that they have large benefits.
Marketing strategies have push strategy and pull strategy. Push strategy pushes customers to purchase their products, while pull strategy pulls customers by enticing customers to their store. Switching cost setting is comparable to push strategy. If the competitor provides better services or benefits, the customer will go there. Pull strategy is comparable to trust building. If companies instill trust to customers, they will not go away. Pull strategy like building trust is more desirable than push strategy like setting up switching cost. So, companies must focus on mainly building trust rather than setting up high switching costs.
To build trust, Web page design as physical facilities and ease of Web use as actual experiences have the signaling effect that the Internet store invests a lot to the business. So it is trustworthy. Price premium also has signaling effect. The early stage of Internet markets, e-business companies had competed with low price. But, as the market is getting mature, price competition has its limitation. Rather than competing with low price, e-business companies must focus on providing many benefits, considering actual price, such as making the Web site easy to use or providing neat design of Web pages. This will make price premium high. When customers feel that they have lots of benefits from the Web site, they will revisit and subsequently be loyal.
Colgate and Lang (2001) discussed switching cost as a way to build loyalty by lockingin customers. For example, Amazon.com provided one-click service that customers do not need to input personal information again once they did so initially. The service makes customers want to revisit Amazon.com. Thus, higher switching cost is expected to make them loyal customers by forcing them to revisit Internet companies. But, this strategy has risks. If the competitor provides better services or benefits to offset the switching cost, the customers will go to the competitors.