managing customer relationships on the internet

MASTER’S THESIS
Department of Business Administration and Social Sciences
Division of Industrial Marketing and e-Commerce
CONTINUATION COURSES
Supervisor: Tim Foster
2005:02 PB • ISSN: 1653 - 0187 • ISRN: LTU - PB - EX - - 05/2 - - SE
Muhammad Ali Khan
Muhammad Amer Shahzad
2005:02 PB
Social Science and Business Administration Programmes
Managing Customer Relationships
on the Internet
ACKNOWLEDGEMENTS
I
ACKNOWLEDGEMENTS

This thesis is a part of our program; Masters in E-Commerce at Division of Industrial
Marketing at Luleå University of Technology. It is written in autumn 2004-05. It was
very interesting to learn this way of study, when we were acting in a new way, with the
websites to find the answers or our questions.

Thanks GOD! We have done it. We would like to thank our supervisor Tim Foster,
without the guidance and supervision of whom, we might not be able to write this thesis
in time. He encouraged and pushed us, in a right direction, to finalize it. We learnt much
from our supervisor, during classed and during his supervision. We would also like to
thank our opponent, whose criticism gave us an opportunity to see our work in another
way and to improve it.

At the end we are very thankful to our friends who helped us during this process of
learning and writing, and our parents who always encouraged and supported us to be
innovative in our life.

Luleå University of Technology, January 2005








__________________ ______________________
Muhammad Ali Khan Muhammad Amer Shahzad
ABSTRACT
II
ABSTRACT

‘Virtual exchange’ is bringing buyers and sellers together electronically rather than
having to go to a physical market place. The Internet is affecting every facet of business
life, obliterating current business models. It is becoming increasingly clear that stalled or
failed CRM projects are often the result of companies lacking a thorough understanding
of what CRM initiatives entail. The purpose of our study is to find out that how customer
relationships are being managed (CRM) on the Internet. Our research explores, describes
and begins to explain, how the most successful airlines of the world are satisfying their
customers by providing services through their websites. How the companies are
describing online environment for their customers. Is it user friendly and meeting their
requirements of customers or not. In our study, we have used individual case analysis for
each company and cross case analysis for both companies. Our finding concerns with the
contents and their customer services, provided on the websites of airlines. The contents
match with theory mostly, but there are still some to implement by them. They are much

efficient in providing online services but still they need to provide complete shipping
information and money back guarantee. Companies should use chat functions for
customer’s immediate interactions, whether cookies are better option. That’s why
companies are spending billions of dollars to process information of their customers for
CRM on internet. Finally, implications for theory, managers and future research are
described.

TABLE OF CONTENT
III
TABLE OF CONTENT


1 INTRODUCTION………………………………………………… ……… 1
1.1 Background……………………………………………………………………1
1.2 Problem Discussion………………………………………………….……… 4
1.3 Research Purpose & Questions……………………………………………… 5
1.4 Outline of Thesis………………………………………………………………6
2 LITERATURE REVIEW…………………………………………………… 8
2.1 The Online Environment…………………………………………………… 10
2.1.1 Key Quality Factors in Website Design…………………………10
Clarity of purpose……………………………………………… 10
Design………………………………………………… ……….11
Accessibility and speed……………………………………… …14
Content………………………………………………………… 15
2.1.2 Determinants of Successful Webs ite Design………….…………17
Page Loading Speed…………………………………………… 17
Business Content…………………………………………………18
Navigation Efficiency……………………………………………19
Security………………………………………………………… 20
Marketing/Customer Focus………………………………………21

2.1.3 APID Model Pro posed…………………………………… …… 21
Attracting……………………………………………………… 22
Informing………….…………………………………………… 23
Positioning……………………………………………………….24
2.2 Customer Services………………………………………………………… 25
2.2.1 Framework of Customer Services……………………………….25
Pla cing Order…………………………………………………….26
Payment Option………………………………………………….27
Shipping Information…………………………………………….28
Returns………………………………………………………… 28
Interactive Services………………………………………………29
Web Policy……………………………………………………….30
2.2.2 Dimensions of Internet Service Quality…………………………31
Performance…………………………………………………… 32
Access……………………………………………………………32
Security………………………………………………………… 32
Sensation…………………………………………………………32
Information………………………………………………………33
2.2.3 Benefits of e-CRM………………………………… ……………33
Improved Customer Satisfaction…………………………………33
3 CONCEPTUAL FRAMEWORK………………………………………… 36
RQ1 How can the online environment be described? 36
RQ2 How are the customers served in this online environment? 38
Emerged Frame of Reference……………………………………………………39
TABLE OF CONTENT
IV

4 METHODOLOGY…… ………………………………………………… 40
4.1 Purpose of Research………………………………………………………….40
4.2 Research Approach………………………………………………………… 41

4.3 Research Strategy…………………………………………………………….41
4.4 Data Collection Method…………………………………………………… 42
4.5 Sample Selection…………………………………………………………… 43
4.6 Analysis of Data…………………………………………………………… 43
4.7 Quality Standards…………………………………………………………….44
5 DATA PRESENTATION……………………………………………………46
5.1 Case 1: Britishairways.com………………………………………………….46
5.1.1 How can the online environment be described? 46
5.1.2 How are the customers served in this online environment? 49
5.2 Case 2: Singaporeair.com……………………………………………………50
5.2.1 How can the online environment be described? 51
5.2.2 How are the customers served inthis online environment? 53
6 DATA ANALYSIS………………………………………………… …… 56
v
6.1.1 Within-Case Analysis of Britishairways.com…….…………… 56
6.1.2 Within-Case Analysis of Singaporeair.com……….…………….58
6.1.3 Cross-Case Analysis………………………………….… ……….60
6.2 How are the customers served in this online environment? 63
6.2.1 Within-Case Analysis of Britishairways.com……….………… 63
6.2.2 Within-Case Analysis of Singaporeair.com…………….……….65
6.2.3 Cross-Case Analysis…………………………………… ……….67
7 FINDINGS AND CONCLUSIONS………………………………………… 70
7.1 How can the online environment be described? 70
7.2 How are the customers served in this online environment? 71
7.3 Implication for managers…………………………………………………….73
7.4 Implications for theory……………………………………………………….73
7.5 Imp lications for further research…………………………………………… 74
REFERENCES…………………………………………………… …………… 75
APPENDIX A – OBSERVATION CHECKLIST…………………… …… ……….81
APPENDIX B – www.britishairways.com 84

APPENDIX C – www.singaporeair.com …………………….…….…………… 85







TABLE OF CONTENT
V
LIST OF FIGURES


Figure 1: Outline of Thesis………………………………………………………………6
Figure 2: Conceptual Model for a quality website…………………………………… 9
Figure 3: Attributes which affect the effectiveness of a commercial Website………22
Figure 4: Preferred Methods of Customer Contact………………………………… 30
Figure 5: An emerged frame of reference…………………………………………… 39


LIST OF TABLES


Table 1: Customer Service Components………………………………………………26
Table 2: Dimensions of Internet Service Quality…………………………………… 31
Table 3: Research Question One………………………………………………………37
Table 4: Research Question Two………………………………………………………38
Table 5: How online environment is described in britishairwas.com and
singaporeair.com – cross case analysis…………….…………………… …61

Table 6: How britishairwas.com and singaporeair.com serve customers in online
environment – cross case analysis……………………………….………… 68
INTRODUCTION

1

1 INTRODUCTION

This chapter provides background information of Customer Relationship Management
and the virtual Customer Relationship Management that will then be followed by a
problem discussion. Finally the chapter will end with the purpose of study, the research
questions and the outline of thesis.


1.1 Background

Customer Relationship Management (CRM) is a comprehensive set of processes and
technologies for managing the relationships with potential and current customers and
business partners across marketing, sales, and service regardless of the communication
channel. The goal of the CRM is to optimize customer and partner satisfaction, revenue
and business efficiency by building the strongest possible relationships and at an
organizational level. Successful CRM requires a holistic approach to every relationship
with the entire organization sharing and contributing to that view. (Greenberg, 2001)

CRM is a comprehensive business and marketing strategy that integrates technology,
process and all business activities around the customers (Anton, 1996; Anton and Hoeck,
2002). The concept of RM spread like wildfire during the 1990s. In its wake followed
first 1to1, then CRM. The last two concepts represent the same basic thinking; together
with less known designations the y re brands for offerings from various consultants.
Today, CRM is the most frequently used term, but as late as 1998 it was only one of

several acronyms that fought for attention. RM is the broader, overriding concept. CRM
and 1to1 do not deal with networks but focus on the customer-supplier interaction (Evert
Gummesson, 2002)

CRM is the values and strategies of relationship marketing – with particular emphasis on
customer relationships – turned into practical application (Evert Gummesson, 2002).
CRM is a process designed to collect data related to customers, to grasp features of
customers, and to apply those qualities in specific marketing activities (Swift, 2001).
CRM is not a new concept. In fact, CRM has continuously existed from the past.
However, CRM has recently become the focus of attention. Because, 1) The relationship
with customers is newly recognized as a key point to solidify competitive power of a
company; 2) As companies procure large volumes of data related to customers, they can
perform customer management more easily and efficiently using data warehousing, data
mining, and other information technologies; 3) The Internet has opened up a new medium
for business and marketing, and we can express customer actions in online into data. In
other words, the scope of data to analyze behaviours of customers is extended, and the
environment for one-to-one marketing has been enhanced. (Ahn, 2001)

CRM technologies can be divided into three functional categories, operational CRM,
analytical CRM, and collaborative CRM. (Trepper, 2000)

INTRODUCTION

2

Operational CRM category includes customer-facing applications that integrate front-,
back-, and mobile offices, with the purpose to increase the efficiency of customer
interactions. (Trepper, 2000) This involves automating business operations processes,
such as order management, customer service, marketing automation, sales- force
automation, and field service. In order to succeed employees must have the right skills

and the company must have a customer-centric focus. (Lawrence et al, 2001)

Analytical CRM category involves applications that analyze customer data generated by
operational tools. (Trepper, 2000) The data is often stored in a data warehouse, which can
be described as a large repository of corporate data (Dyche, 2002). The data stored in the
data warehouse shall give the company information that will allow them to provide value
to their customers. Hence, it is crucial to capture the right data, a process that must be
accomplished with great customer care and understanding (Newell, 2000). A Data
Warehouse is more detailed described below.

Collaborative CRM category focuses on facilitating interaction between customers and
companies (Trepper, 2000). One-way communication must be replaced by two-way
communication, where the customer gets involved early with issues affecting their future
purchase behaviour (Lawrence et al, 2001). In other words, Collaborative CRM involves
any CRM function that provides a point of interaction between the customer and the
supplier. For example, technologies, such as electronic communication, are used to
facilitate relevant, timely, and personalized interaction with the customers (Greenberg,
2001).

In some organizations, CRM is simply a technology solution that extends separate
databases and sales force automation tools to bridge sales and marketing functions in
order to improve targeting efforts. Other organizations consider CRM as a tool
specifically designed for one-to-one (Peppers and Rogers, 1999) customer
communications, a sole responsibility of sales/service, call centers, or marketing
departments. CRM is not merely technology applications for marketing, sales and
service, but rather, when fully and successfully implemented, a cross- functional,
customer-driven, technology-integrated business process management strategy that
maximizes relationships and encompasses the entire organization (Goldenberg, 2000). A
CRM business strategy leverages marketing, operations, sales, customer service, human
resources, R&D and finance, as well as information technology and the Internet to

maximize profitability of customer interactions. For customers, CRM offers
customization, simplicity, and convenience for completing transactions, regardless of the
channel used for interaction (Gulati and Garino, 2000).

CRM technology applications link front office (e.g. sales, marketing and customer
service) and back office (e.g. financial, operations, logistics and human resources)
functions with the company’s customer touch points (Fickel, 1999). A company’s touc h
points can include the Internet, e-mail, sales, direct mail, telemarketing operations, call
centers, advertising, fax, pagers, stores, and kiosks. Often, these touch points are
controlled by separate information systems. CRM integrates touch points around a
common view of the customer (Eckerson and Watson, 2000).
INTRODUCTION

3


CRM is defined as an acquisition and retention of customers and the resulting
profitability (Menconi, 2000; Nykamp, 2001). Customer retention is cheaper and more
profitable than customer attraction. As Inc. magazine reports, the customer acquisition
cost per single transactions for online retailers ranges from $100 for amazon.com, to
$245 for fashion retailers such as bluefly.com, to $500 for furniture.com (Inc. Tech 2001,
2001). Furthermore retention contributes to the creation of reputation, which also lowers
customer acquisition costs. Reputation is an intangible asset, which modern corporations
explicitly manifest in the form of brand advertising.

CRM is used to manage and increase the value of B2C relationships. But while the
implementation of CRM helps to acquire and retain customer, it also has increased
operational costs. Managing customer relationship is expensive and cumbersome
especially where cross-divisional communications are required to link customer needs to
fulfilment channel. Web-based CRM uses the Internet to integrate and simplify customer

related business processes, reducing costs of customer facing operations and increase the
interactivity and self-service of the customers. (Web Associates, 2000)

While the objective of CRM remains the same, the development of information and
communication technology allows for a significant increase in the scale and scope of
customer services. The e-CRM is defined as the application of information and
communication technology to increase the scale and scope of customer services. It’s
imperative that a company’s various divisions share a single view of customers, and
project a single view of company back to the customer. So, e-CRM systems need to be
designed fundamentally from a customer’s perspective, and with a holistic approach to
integrated lead generation, lead conversion and customer fulfilment process.

Brent Frei, president and CEO of Onyx software, provide this caution for e-CRM; “e-
CRM is the customer facing Internet portion of CRM. It includes capabilities like self-
service knowledge bases, automated email responses, personalization of web content,
online product bundling and pricing and so on. E-CRM gives Internet users the ability to
interact with the business through their preferred communication channel, and it allows
the business to offset expensive customer service agents with technology. So the value is
largely one of improved customer satisfaction and reduced cost through improved
efficiency. However an e-CRM strategy deployed alone can also backfire and actually
result in decreased satisfaction. If the customer’s interactions through electronic channel
are not seamlessly integrated with those taking place through traditional channels, the
customer is likely is to become frustrated. Also, if the basis for the content being served
up to the customer doesn’t consider all the data gathered by the rest of the business, the
customer is likely being served in a wrong way. Therefore, it’s imperative that e-CRM be
installed in conjunction with traditional CRM and that the two are tightly integrated.
Otherwise the value of e-CRM might actually be negative” (Paul Greenberg, 2004).

With the involvement of the Internet in CRM, its functions have been changed a lot. By
using the Internet, CRM becomes more interactive. Customers are actually transacting

with the companies. The new customer- facing products and services can be implemented
INTRODUCTION

4

more quickly. Besides, the customers served are actually world-wide. Here comes e-
CRM. Companies’ adoptions of e-CRM are slow but success rates are high due to its
complexity (IT-Analysis.com, 2001). Some recent CRM packages integrate the speech-
enabled specific application functions which embrace customer support, order
management, and sales force automation or modules within individual applications.
These products are provided by companies such as Siebel Systems, Oracle, and SAP.


1.2 Problem Discussion

Implementation of e-CRM has resulted in increased competitiveness for many companies
as witnessed by higher revenues and lower operational costs. Managing customer
relationships effectively and efficiently boosts customer satisfaction and retention rates
(Reichheld, 1996a, b; Jackson, 1994; Levine, 1993). E-CRM applications help
organizations assess customer loyalty and profitability on measures such as repeat
purchases, money spent and longevity. CRM applications help answer questions such as
"What products or services are important to our customers? How sho uld we communicate
with our customers? What are my customer's favourite colours or what is my customer's
size?" In particular, customers benefit from the belief that they are saving time and
money as well as receiving better information and special treatment (Kassanoff, 2000).
(Injazz J. Chen, Karen Popovich)

E-CRM was developed on the basis that customers vary in their needs, preferences,
buying behaviour, and price sensitivity. Therefore, by understanding customer drivers
and customer profitability, companies can better tailor their offerings to maximize the

overall value of their customer portfolio. Reichheld (1996) has documented that a 5
percent increase in customer retention resulted in an increase in average customer
lifetime value of between 35 percent and 95 percent, leading to significant improvements
in company profitability.

Without a clear e-CRM strategy, it is difficult to determine and coordinate the
organizational changes needed for e-CRM to be successful long term. E-CRM strategy is
based on an understanding of how the customer wants to do business with the firm, rather
than how the firm wants to do business with the customer. E-CRM strategy development,
therefore, must be a joint process between the customer, suppliers and the seller.

Sinc e, many businesses are using the Internet to expand their reach, improve customer
service and develop and maintain closer relationships with their customers. For example,
customer relationship management (CRM) software enables marketers to offer online
interactions that are customizable to the individual customer, allowing online marketers
to better match their offerings and the online experience to consumers’ needs, wants and
preferences, even in markets with millions of prospects and customers. Thus, a successful
Web site can be instrumental in its impact on the relationship effectiveness of a firm and
significantly add to the bottom line. Yet, in order to determine what constitutes a
successful Web site, it must be able to understand how users perceive and utilize it.

INTRODUCTION

5

One study of 202 CRM projects found that only 30.7 per cent of the organisations said
that they had achieved improvements in the way they sell to and service customers
(Dickie, 2000). Moreover, a recent and broader survey estimates that 70 per cent of
companies will ultimately fail (Giga, 2001). The Giga survey revealed that: companies
generally underestimate the complexities of CRM, lack clear business objectives and tend

to invest inadequately in the provision of CRM software. While the findings by Giga
highlight a fairly gloomy scenario, it is clear that not all organisations are facing failure.
(Christopher Bull, 2003). It is becoming increasingly clear that stalled or failed CRM
projects are often the result of companies lacking a thorough understanding of what CRM
initiatives entail.

1.3 Research Purpose & Questions

The purpose of this study is to provide a better understanding of how the Internet is used
as a strategic tool in e-CRM.

Based on the above purpose, the following research questions would be posed in order to
address the purpose:

Research Question 1: How can the online environment be described?
Research Question 2: How are the customers served in this online environment?

INTRODUCTION

6

1.4 Outline of Thesis

This study contains seven chapters. We are at the end of the first chapter, which describes
us the background and problem discussion with purpose of our research and two research
questions. The contents of the rest of the chapters are described below the figure.

Figure 1: Outline of Thesis
Source: Created by author

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INTRODUCTION

7

The second chapter provides the literature about two research questions. Chapter three
describes the frame of reference for the study, aimed at conceptualizing the useful aspects
of the literature for our research. Next, the chapter four is methodology describing and
motivating research methodology used in this study.
Chapter five presents’ data collected from the websites of two airlines within the frame of
reference described in the previous chapter. Chapter six is analysis, including within case
analysis of each airline website and cross case analysis, where the data is compare from
both studies of research questions. Finally, chapter seven draws the conclusions of the
study with recommendations for managers, theory and further research.
LITERATURE REVIEW

8

2 LITERATURE REVIEW

The aim of this chapter is to explore the role of Internet as a strategic tool in the
implementation of Customer Relationship Management. Firstly, literature related to the
first question, Website environment will be described. Then, literature related to the

second research question, virtual customer relationship management will be presented.
After that, studies related to third question, benefits of e-CRM will be discussed.


Cox & Dale have been developed a conceptual model for assessing how a Website meets
the needs of customers. The study has identified quality to be judged in four categories.
Each category relates to a different part of the Website experience and serves to enhance
customer satisfaction to the extent that the customers will return.

(1) Ease of use (the design of the Website);
(2) Customer confidence (how the Website inspires trust by the customer);
(3) On-line resources (capability of the Website to offer and deliver products on
services);
(4) Relationship services (how the Website bonds with the customer and inspires loyalty).

Ease of use is given to all the factors relating to the design of the Website. The Key
Quality Factors (KQFs) in this category reflect the usability of the Website during
customer navigation and aim to reduce customer frustration. The virtual nature of a
Website means that communication with the customer has to be enabled through the use
of text, graphics and animation. Guidance through the Website is done by means of links
and searches. All of these factors relate to the design of the Website and its usability
factor. If the design is of poor quality, customers will not be able to navigate pages to
find what they are looking for, and are unlikely to make transactions. (Ibid)

The second category customer confidence refers to how customers feel when visiting a
Website in terms of accessibility, speed, reliability and customer service. The KQFs
identified should help to create a good experience for the customer by making them feel
safe and confident in not only using the site to find information but actually make
transactions. Trust is a crucial factor in e-business and is one of the main barriers to
customers making purchases on-line due to security issues with credit cards and privacy

issues concerning what happens to their personal details. Trust can also be linked to
customer service. Customers need to know that they can contact a company if problems
occur and preferably interact with a company employee either via e- mail, telephone or by
instant messaging on-line. The use of FAQ should satisfy customers and deter them from
using customer service, but the ability to contact a person heightens the feeling of
confidence in the Website. (Ibid)

For the category on-line resources the KQFs refer to the products and services offered on
the Website, with a focus on the Website's ability to provide sufficient information for
customers to make the correct choice and be able to make a purchase on-line. If
customers are making purchases on-line, products need to be shown and described
LITERATURE REVIEW

9

sufficiently well for customers to make choices. Once selected and ordered, confirmation
details and delivery expectations should be communicated clearly and quickly to the
customer and where possible, they should have the means to keep track of their order on-
line. Others refer to the feedback mechanism during the transaction process and
afterwards, which allows the customer to be kept informed of their order. (Ibid)






Figure 2: Conceptual Model for a quality website
Source: Cox & Dale, 2002

The category relationship services contain KQFs that add value to the customer

experience by building a relationship with them or by offering extra services and
information. It contains the quality factors that enable the Website to establish a
relationship with the customer through customisation, frequent buyer incentives and
through offering services that add value. (Ibid)
LITERATURE REVIEW

10


We will follow a “conceptual model for a quality website” in our rest of the chapter to
collect a literature for website environment, customer services.

2.1 The Online Environment

The medium of the Internet and the development of e-commerce are progressing
extremely fast on a global scale (Constantine & Lockwood, 1999). However, while the
Internet acts as a faster and less costly platform for consumers and businesses it has
inadvertently increased the importance of customer satisfaction. By making transactions
faster and easier it has enabled the customer to switch just as quickly between e-
businesses, causing the element of competition to take on a new diversion. Heskett
(1994) stressed the importance of customer satisfaction to achieve good financial
performance in services in the physical world, and the same can be said of e-commerce
where a customer can be lost if unable to access a Website or if the experience proves
unsatisfactory.

In e-businesses there is too much attention pays to the aesthetic design of the Website,
which ends up looking amazing but actually causes frustration because customers have
difficulty in finding what they are looking for. According to Ody (2000), the main
reasons why customers go onto the Internet is to find information or buy a product or
service with an emphasis on convenience and speed. Ziff-Davies (2000) points out that

the concept of the Internet has raised customers' sensitivity to fast customer service. Any
e-business that sticks to this basic princ iple when designing its Website should be
relatively successful.

According to Donlan (1999) although delivery is also highly important in fulfilling
customer needs, perceptions and expectations also need to be managed and the Website
plays a main role in this. Once the basis of the Website function is clear, the type of
customer it is hoped will be attracted can then be assessed and judgement made on what
graphics, effects and other matter can be added to increase the value proposed. (Cox &
Dale, 2002)

2.1.1 Key Quality Factors in Website design

Cox & Dale (2002) has identified a conceptual model of key quality factors (KQFs) in
Website design. These are different KQFs that can be used as a check list when creating a
website or redesigning a new one. The detail of KQFs is:

Clarity of purpose

This refers to what the Website is offering to the customer. It must state clearly whether it
is providing just information or whether it enables the customer to make transactions on-
LITERATURE REVIEW

11

line (Holt, 2000; Creative Good, 2000; Vassilopoulou and Keeling, 2000). One Website
assessed as part of the study offered quotations for insurance, allowing the customer to
fill in details as to what needed to be insured and the conditions required. When the
customer had finished, he or she expected the Website to calculate an insurance package
but instead it thanked the customer and explained that the insurance details were

obtainable by telephone or in person from the relevant branch. The information given on
the home page was clearly misleading and users will probably not access the site again.
(Cox & Dale, 2002)

As well as stating what the Website offers, the information should be clearly and
logically organised (Foremski, 2000; Vassilopoulou & Keeling, 2000): if customers have
to take time to find the information they are looking for, they are unlikely to stay on the
Website. In some cases, user instructions are needed before the customer can navigate the
Website. An example of this is exchange platform Websites where customers can
exchange goods with other customers or offer prices and requests to businesses through
the Website. This type of business model has rarely been accessible offline and is a new
experience for many people. Therefore clear instructions are needed directly from the
home page to avoid confusion and frustration. (Cox & Dale, 2002)

Design

The role of Web designer is occupied by professionals and amateurs alike. Books on the
subject mean that anyone, whether creating a Website as a hobby at home or starting up a
new business, can do it but usability is the key to a successful Website. PR Newswire
(2000), report an IDC study which concluded that "Web performance and design are
currently the largest obstacles to online purchases". The Website should reflect the image
that the company is trying to project and which the customer will remember and return to.
The key issues in design are:

The navigation of a Website cannot be carried out without valid links (Constantine &
Lockwood, 1999; Spool, 1999). Links should cha nge colour once used so that the user
knows they have used the link before and should correctly describe the information to
which they lead (Creative Good, 2000; Vassilopoulou and Keeling, 2000). This is also
relevant for graphics which can be used as links. Well- thought-out Websites feature
graphics which change to text when the mouse cursor passes over them, revealing the

category of products relating to the graphic. (Cox & Dale, 2002)

Constantine & Lockwood (1999) also discuss the problem of page bouncing and deep
drilling. Page bouncing occurs when the user follows links that serve a series of pages
and then has to return to the original page before finding a link to more pages. This
results when the information is finely subdivided. The answer is to us e probability to
decide whether a user interested in one topic will be interested in another and to create a
direct link between the two. The other problem of deep drilling is similar to page
bouncing but refers to Websites where the user has to follow multiple links which are
sometimes confusing and force the user to go back and forth between pages to find
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information which should logically follow on from information found on the earlier
pages. (Cox & Dale, 2002)

Links are the main way for the users to na vigate their way around a site and should be
clear and to the point. Spool (1999) argue that links should not be embedded in pages of
text which requires the user to scroll down to find them and also that the link should not
be so long as to fall on to two lines. This as well as misleading the user into thinking that
there are two links instead of one is also a waste of space. (Cox & Dale, 2002)

Although an increasing number of people around the world are starting to use the
Internet, one should never assume that once a user has navigated one Website, they can
easily navigate them all (Constantine & Lockwood, 1999). Each Website represents a
different business or value proposition and therefore the layout will differ according to
what the Website is offering. Furthermore, the pages within the Website need to be
consistent in appearance and design (Spool, 1999). Vassilopoulou & Keeling (2000)
argue that it is also important that the same procedures occur for similar or related things

wherever the user may be within the site.
In order to achieve this level of consistency many Websites feature a menu which appears
in the same place, with all the main links on every page. Spool (1999) discovered that
menus or navigation bars at the top and bottom of a page allowed more users to navigate
the site successfully than menus at the side. Creative Good (2000) point out that there
should be a "home" button on every page to help the user get back to the home page if
necessary without having to click on the back button in the browser menu, which could
be a lengthy and frustrating process depending on where the user is in the site. Spool
(1999) also found that users navigating sites with a site map were twice as successful in
finding what they wanted, compared to those sites without, and that informing the
customer of where they were was important. Creative Good (2000), on the other hand,
argue that a Website with a clear menu and relevant information should be satisfactory
and that users are not actually interested in where they are within a site as long as the
links are clear.

The pages on a Website should ideally be short; however, in some cases scrolling pages
are sufficient if the information is suitably laid out and not excessively long. Holt (2000)
argues that the use of headings and paragraphs is as important as in a book, magazine or
newspaper and there should be a button at the bottom of the page or each section asking
if the user wants to return to the top of the page. For transaction purposes, it is crucial that
cus tomers are able to make purchases quickly with minimum pages in the check out
process (see Foremski, 2000; PR Newswire, 2000). Amazon.com have been praised for
their "one click" order process and one or two pages should be the limit in all Websites
enabling ordering on-line. It also goes without saying that the process of opening an
account should also require just one page for ease of use by the customer. (Cox and Dale,
2002)

Foremski (2000) discusses further issues for shopping on-line and points out that some
Websites make simple mistakes which cause frustration for the customer. One such
mistake is not to provide a check out button so that the customer can proceed straight to

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the order process from any page. There should also be a shopping basket button for the
user to press at any time to see what they have placed in their virtual shopping basket,
allowing them to remove items if so wished. (Cox and Dale, 2002)

Constantine & Lockwood (1999) examine the feedback principle which is the basis for
any software design and is especially important for interaction with customers on the
Internet. The principle basically implies telling the user what is happening inside the
system. This could refer to advising the user of an error in their address input and that the
Web page is being updated, allowing the customer to see what is currently in their
shopping basket or confirming order details. Many Websites will inform the user of a
mistake by writing the information in red next to the relevant box or area. This
communicates clearly to the user that they have made a mistake and need to redo
something in order to proceed. The communication of a Website is carried out via text,
graphics and moving animation, with text being minimal and to the point and clearly set
out. Spool (1999) found that Web pages with a lot of white spaces were less successful
than those with few or no white spaces.

Due to the creative input of designing a Website, there can be an overwhelming urge to
use multiple graphics and inappropriate animation. Customers use the Internet because it
is fast and putting large graphics onto Web pages slows down access to the page and will
probably frustrate the customer into abandoning the site. Graphics should therefore be
small and relevant as well as being sharp to the eye (Holt, 2000; Foremski, 2000;
Vassilopoulou and Keeling, 2000). Holt (2000) suggests that colour is very important and
is something that designers ignore at their peril. A dull Website will most likely deter
customers because it projects a negative image.

Constantine and Lockwood (1999) state that animation should not distract users from the
content of the page and the information they are looking for. Foremski (2000) points out
that designers tend to forget that most visitors to their sites still use low modem
connections and may not be able to support animations. Clever e-businesses offer an
option to the user as to whether they want to browse their Website with or without
downloading software to make the site more interactive and animated, which avoids
irritating people who simply want to retrieve relevant information and quickly. (Cox &
Dale, 2002)
The use of a search mechanism to navigate a Website is one of the first strategies used by
customers to a Website. Spool (1999) found that a third of the users tried this facility first
before resorting to links and the menu. One of the outcomes was that users assumed that
the search would cover the entire site and got confused when the search only covered a
particular area; this needs to be made clear next to the search button. The use of drop
down lists can clear up this confusion because it informs the user of what information is
available without the user having to guess what to type into the search box (Creative
Good, 2000; Foremski, 2000).

Once the search facility has been used, the results should be listed in order, starting with
the most relevant. Creative Good (2000) suggest that the results should ideally be on one
page only and limited in number; however, if the site is a search engine, one would
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expect a few pages of results depending on the amount of sites it scans. According to
Spool et al. (1999) one of the important aspects is that the results are relevant and
information such as advertisements will deter users from using that particular search
facility again. Creative Good (2000) also mention the use of language in the search
criteria; they found that many search facilities did not recognise singular and plurals for
searching the same word.

Whether filling in a form to register with a Website or proceeding to order and purchase,
the layout of such forms for personal detail entry should be self-explanatory or provide
examples of the format to be used. Some Websites inundate the user with a mass of
unnecessary instructions. Constantine & Lockwood (1999) comment on the design of the
input fields and how address fields which are equal in length have no link with the
information to be entered. A postcode field should be short enough to hold six or seven
letters and not be given the same length as a field for a city. At the same time, the address
layout, for example, should be relevant to the nationality of the customers using the
Website. (Cox & Dale, 2002)

Accessibility and speed

Perhaps the most critical factor for any Website is accessibility. This refers to the ability
for customers to access the Website of a particular e-business and navigate its site.
Vassilopoulou & Keeling (2000) rate accessibility as the speed with which the home page
and following pages download. Holt (2000) also stresses the importance of a fast
downloading home page. Zona Research (Gann, 1999) have calculated the probability of
customers using a site if the page response was too slow, reporting that, if the page
downloaded under seven seconds, fewer than 10 per cent of customers would leave the
site and that if the page takes eight seconds, 30 per cent of customers will leave, and if it
exceeds 12 seconds, 70 per cent will leave. Bearing in mind that customers use the
Internet for convenience and speed, they will not tolerate slow access. The zone of
tolerance for customer expectations leaves no margin for error and e-businesses must
address speed and anticipated capacity needs as a matter of prime importance. (Cox &
Dale, 2002)

Gann (2000) also emphasises the fact that Websites must be accessible 24 hours a day,
seven days a week, and 365 days of the year. The research group IDC believe that "by
2003, between a third and half of all ecommerce will be conducted outside normal

business hours" (Gann, 2000). Andersen Consulting (1999) carried out a survey of
purchasing on-line over the Christmas period 1999 and discovered that not only were
many sites blocked, under construction or otherwise inaccessible, but that the time for
ordering varied enormously. After attempting to buy 480 gifts at 100 different Websites,
they were only able to complete 350 orders and found that the order time at e-tailers was
shorter than for on-line BAM companies and that it also depended on the time of day.
This finding indicates that e-businesses need to study when customers are making
maximum use of a site and adjust resources accordingly. (Cox & Dale, 2002)

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Content

Content refers to what a Website actually offers in terms of information and is as
important as the design aspect. If the information is insufficient, misleading or irrelevant,
the customer will most likely opt to use a competitor site. The content refers not only to
what type of products or services the Website is offering but also what policies the e-
business has, for example, on the use of customer information or on returning goods. This
latter information is not always easily accessible but it is important to customers,
especially when buying products or services on-line or if they have to register to access
the site. (Cox & Dale, 2002)

The breadth of selection of products and services should be relative to the e-business and
what it is offering; however, the access to the selection is important. Creative Good
(2000) commented on sites where the customer has to fill in a survey before they can see
the selection of products and services on offer, which causes frustration and abandonment
of the site. In the same vein, Forrester Research carried out a survey that found that if a
product or service was offered on the second or third page, customers were 50 per cent

less likely to find them (Foremski, 2000). It is important that the selection of items be
immediately accessible from the home page through obvious links; the need for speed
and convenience is emphasised.

Vassilopoulou and Keeling (2000) argue that for any product advertised on the Internet, a
clear picture with all the necessary information of product brand, size, colour, capabilities
and price should be provided so that the customer is not misled. Creative Good (2000)
reported on a Website in which the information relating to the picture of the products was
at the side so customers had to spend time matching the information to each product. It is
often such simple mistakes as this that can cause intense frustration. As well as stating a
product description, the conditions of purchasing a product should also be made available
to the customer. Clicksure (1999) states that information on warranties and guarantees
should be made available to the customer either during the selection process or when
purchasing an item.

One of the most irritating factors for customers shopping on-line is to find that the item
they have requested is not available. If they are informed of this whilst choosing the
product (i.e. the informatio n on stock availability is real-time) they may well continue to
browse the Website and find something else of interest. The worst case scenario is for the
customer to place the order and to be sent an e-mail a few days later informing them that
the product is out of stock (Andersen Consulting, 1999).

Creative Good (2000) gave an example of a Website, where the customers could place
items in their shopping basket but then only found out during the purchasing process
whether the goods were in stock. It also showed a shipping price even though the goods
could not be shipped. In the Andersen Consulting study (1999), it was found that many
companies carried on taking orders to be delivered for Christmas even though the
products were either not in stock or would not make a pre-Christmas delivery. This
indicates the importance of providing real-time information for customer convenience.
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Ideally, any delivery information should be made accessible from the home page or with
the product information so that customers are aware of the prices before they begin to
make any purchases (Vassilopoulou & Keeling, 2000). If customers go through the
purchasing process only to find that the shipping costs are more than they want to pay,
they will leave with negative feelings. If they know this cost from the outset, they may
still proceed with a purchase or be able to contact the company to discuss it further and
thus the company may be able to turn a negative factor into a positive experience. (Cox &
Dale, 2002)

Concerning delivery times, some Websites have managed to streamline their back-end
processes to get orders out to the customer the next day. For products such as CDs, books
and clothes, this delivery expectation can be reached but for other products, expectations
are not so high. As long as the Website advises the customer of the time limit for
delivering a product, the customer will be content if it arrives within that time. As
Creative Good (2000) points out, service quality is heightened if e-businesses take into
account the holiday seasons and issue a warning to customers that they need to order
earlier due to later delivery times.

It is important for the customer when making a transaction through a Website to be aware
of all the company terms and conditions of that purchase. Clicksure (1999) is a company
that offers a quality certification for e-businesses that they can put on their Website. In
return the e-businesses must ensure that company policies on cancelling orders, returning
goods and refunds as well as the terms and conditions of the sales are accessible to the
customer throughout the Website. The Website should also give the choice of law for
settlement of disputes and whether the company is a member of a regulatory board or
ombudsman. (Cox & Dale, 2002)

Due to the global nature of the Web and the ability to make purchases across borders, a
Website should also list any extra charges or tax that a customer will have to pay if they
are not from the same country as the origin of the e-Business. (Cox & Dale, 2002)

Lack of security whilst making transactions online is reported to be the main barrier to
customers shopping on-line. It is crucial that any Website has a security policy accessible
on every page or offers a secure payment method on-line (Verdict, 2000; Vassilopoulou
& Keeling, 2000; Vernon, 2000; Clicksure, 1999). The risk of fraud on-line is proposed
to be the same as paying by credit card in a restaurant; however, customers are far more
reluctant to give out card details on-line and new ways of paying for goods over the
Internet are being rapidly developed. Some e-businesses have their security managed by a
third party, as described by Vernon (2000).

Another key barrier to shopping on-line is privacy (Wiegran & Koth, 2000;
Vassilopoulou & Keeling, 2000; Clicksure, 1999; Vernon, 2000; Holt, 2000; Ody, 2000).
Unless they give permission, customers do not want their personal information being
accessed by third parties or being used by companies to increase their customer base. In
some countries this kind of information is legally protected, in others it is not the case
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and with the Internet crossing many borders, worried customers should learn to look at
the privacy policies before committing any personal details to that e-business. (Cox and
Dale, 2002)

Clicksure (1999), points out that it is a legal requirement that Websites contain a physical
address for the company with title and registration details so that customers can contact
the company or check that it exists. The Internet has become a new arena for fraud and

deceit and customers should be able to check to see whether the companies behind the
Websites are bona fide. (Cox & Dale, 2002)

2.1.2 Determinants of Successful Website Design

The success of e-commerce for any company, especially if it is not a well-known name,
is greatly dependent on the appropriate design of its Website. Gehrke & Turban (1999)
have indicated five major categories of web site design, which are page loading speed,
business content, navigation efficiency, security, and marketing/customer focus. Then, it
is identified that how to create an effective website using these categories of website
design.

Page-Loading Speed

According to a survey conducted by Hamilton (1997) speed (i.e., slow speed) was the
number one complaint of Web users (77%). Most potential e-commerce customers do not
want to wait for a seemingly endless page to load. Instead, they hit the browser ‘stop’
button and go elsewhere. Therefore, large, pretty graphic files and “cool” animation may
come at a price to the Web business owner in terms of lost business (Busch, June 1997, p.
98-99). In some cases page- loading speed is out of the control of the Website builder.
Such factors as server speed, customers’ computer power and modem speed, quality of
telephone lines, and other factors are to be blamed. Recommended remedies are as
follows:

Keep graphics simple and meaningful: Wilson (1998) refers to excessive graphics as
“Image Inflammation.” He recommends limiting the total graphics and text for a single
Web page to 60KB. A rule of thumb is to allocate about 5KB, 5KB, 16KB, 8KB, 16KB,
and 10KB, respectively, to each of these elements).

Limit the use of animation and/or multimedia plugin requirements: Animation is a

contributor to slow page loading. Haine (1998) recommends that if a designer thinks it is
necessary to have animation, it should be made to stop cycling after ten seconds to allow
the user to scroll it off the screen. Nunley (1998) suggests that information content should
account for 80% of the site. Audio clips and other multimedia gizmos that require users
to download plug-in programs, install them, reboot and return to the Website drive away
users. Blower (1998) advises against using proprietary tags and graphics requiring a
banner stating, “Best Viewed with Brand X Browser.” An anonymous author in the
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March 1998, Economist recommends that designers should not require viewers to
download software to view a Website’s contents.

Use thumbnails: Thumbnail graphics, which typically contain only about 10 KB, are an
effective way to utilize graphics without significantly increasing the page- loading time.
Thumbnails give the user a choice of whether or not to wait for the loading of a larger
picture without forcing it as a default.

Provide ‘text-only’ choice: Providing an option to load text only increases speed and
allows the use of a greater variation of browsers (Heath, 1998).

Check and monitor your server and Internet route: Sometimes a slow Website is not the
fault of the designer (Smith, 1997).

Use progressive rendering: Sklaire (Janal, 1997, p. 352) describes this term as allowing
text to load first, followed by graphics. This allows the user to read the content while the
graphics are loading.

Business Content

Business content is a major Website issue because the quality of presentation and
usefulness of the content determine whether a potential customer will be attracted to, or
driven away, from the site. Recommended remedies are as follows:

Use clear and concise text with proper spelling and grammar to describe the business:
This is by far the most commonly prescribed recommendation in the literature. Too often
business Websites are ambiguous, one has no clue as to what the business is really about,
what the company sells, or what its services are. (Gehrke & Turban, 1999)

Provide contact information on each page: A site with no information on whom to
contact may drive business away. Smith (1997) recommends installing ‘mail-to’ links on
every page. Maloff (1997, p. 70) suggests a more elaborate method, which is posting
threaded on-line discussions, message boards, or even interactions via real-time, on-line
chat.

Use simple background colors and textures: Heath (1998) prefers green on black, and
Wilson (1998) provides a “how to” dealing with colors and textures.

Provide free services or useful information: Free content is a valuable feature (Bancroft,
1997). But free content is likely to decrease as the Web becomes more mature and
commercial. The Wall Street Journal, Business Week, and others provided free
information for months and then started to charge for it. Wilson (1997) believes that
prospective customers are more likely to purchase when site owners make sure that the
free service is closely related to what is being sold.

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Make regular changes to the site: This is wise for two reasons: 1) Visitors want to see
fresh material, and 2) Updating the site often will ensure that the information is current.
(Gehrke & Turban, 1999)

Limit registration forms and the amount of requested information on them: Another way
to drive away customers is to blitz them with intimidating registration forms, and
especially those that request a burdensome amount of unnecessary information. (Gehrke
& Turban, 1999)

Jokes on the site—avoid or not. There are differing opinions regarding this
recommendation (Heath & Guglielmo, 1998). Contrary to this opinion, Janal (1997, p.
311) states that telling jokes (and adding a new one each day) on the Website is a good
business strategy and results in repeat visits

Create a Frequently Asked Questions (FAQ) section: It enhances users’ understanding of
what is offered at a site. It also helps the site owner by reducing the amount of
correspondence necessary to answer repeatedly the same questions.

Avoid ‘Under Construction’ signs: Berst (1998) listed this as one of his “Seven Deadly
Website Sins.” If you must use such a sign, provide an approximate date of opening.
Tadjer (1998) recommends to “design for flexibility.” This means that urgent changes
can be made without having to take the site off line.

Navigation Efficiency

Without efficient and user-friendly navigation, the user is likely to get confused, lost, or
frustrated and leave the site for good.

Use well labeled, accurate (no broken) links: An ambiguously labeled link or a link that
hits a dead end is one of the most annoying design faults in a Website. Haine (1998)

recommends to word each link carefully so that it answers two questions: 1) “What will I
get if I click here?” and 2) “Why would I want to get that?”.

Avoid the use of frames: One of the reasons for using frames is when a company wants to
make its logo visible from all underlying pages. But frames have been overused in many
Websites. Tadjer (1998) brought out that frames make book marking difficult and some
browsers do not support frames. Wilson (1998) adds: frames cut up the screen into
windows that require excessive vertical and/or horizontal scrolling, they look ugly, they
do not always print out correctly on some browsers, they are resented when site owners
use them to link to from external sites, and their content is often skipped when search
engine “spiders” come to call. Berst (1998) adds: some frames do not scroll when they
should while others do scroll when they should not and some frames produce a miserable
patchwork effect. Bremser (1997) supports the use of frames but only if the frame layout
is made simple.