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Relationships build online success

On-line shopping will never completely replace the traditional retail shopping experience – people will always use both mediums.

The world’s on-line shopping adoption rate is continuing unabated and the 21st century trend for the new economy is “relationship marketing”, focusing on one-to-one approaches to win the loyalty of specifically targeted customers, away from traditional mass advertising.

These are just a few of the insights that came from the Curtin Business School’s recent public lecture “Marketing Success in the New Millennium” by Dr Sharon Beatty, Professor of Marketing and Marketing Doctorate Coordinator from the School of Business at the University of Alabama.

Dr Beatty said marketers were becoming more concerned with precisely targeting their key customers through database analysis, with developing life-long relationships and with “locking customers in” through excellent service plus “switching barriers” to deter them going elsewhere.

This “relationship” focus of on-line businesses contrasted with traditional retailing, where, for example, the local grocer may not know a customer’s name, even though they may have shopped there daily for many years.

Dr Beatty said radio took 38 years to reach 50 million people and television took 13 years to reach the same number. The Internet reached that penetration in just five years, and there has been no technology like it ever before.

She said that despite the rapidly-developing “e-tailing” industry, mark-eting has a long way to go in designing effective online shopping systems and in integrating traditional shopping environments with the online environment.

Up to 40 per cent of online transactions are abandoned because of the complexity of web-based shopping cart software, and 43 per cent of online purchase attempts end in failure. Eighty one per cent of online shoppers browse but do not buy.

Women spend 32 per cent more time online shopping than men and look at 30 per cent more pages.

“Despite the incredible range and variety of online shopping options, Web customers tend to consolidate their purchases with one primary on-line supplier and this becomes part of their routine,” Dr Beatty said.

“Price does not rule. Instead, people want to know they can trust the e-tailer, and need to be comfortable with the relationship they have with the service provider.

“This is why ‘clicks and bricks’ businesses have proved to be more successful than “click only” operations. If the business develops the customer’s loyalty, this will overcome concerns about price.

“Being able to return an unsatis-factory product is a critical need of consumers, as is order fulfillment plus a clear and trustworthy privacy policy.

“In apparel retailing, repeat online customers spend more than twice as much in months 24-30 of their ‘relationships’ with e-tailers, than they do in the first six months.”

Dr Beatty said that new economy businesses were becoming far more focused on acquiring and keeping loyal customers, in contrast to traditional off-line businesses that could expect to lose about 10 per cent of their customers each year, or half their customers in five years.

n Kenley Gordon is the Development and Marketing Manager at Curtin Business School. Tel: 9266 2565. E-mail him at – gordonk@ cbs.curtin.edu.au – to be put on the mailing list for CBS public lectures.

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