User Loyalty Articles

In the competitor analysis (refer to Appendix B), websites with similar concepts were rated according to different criteria. The first key finding was that the main competitor of ideatemple was ideen-box.de because it was the only website of that kind in German and it had a high search-engine ranking (Google first result when people search for the German word for ideas, ‘ideen’). Another benefit of the site is its large amount of content in the form of ideas and the possibility of asking a lawyer copyright-related questions. The second key finding was that all examined sites did not have community features, with the exception of globalideasbank.org , but its forum lacked categories and had only a very small group of visitors. The third key finding was that no website provided background information or tutorials that were related to ideas except ideafinder.com, which lacked the possibility of submitting one’s own ideas. The fourth key finding was that the aesthetic and creative aspect was not considered in the websites that were compared.

While ideatemple did not have the resources to compete with the rich content of ideen-box.de, in the short term it was possible to implement community features, background information about ideas and develop an attractive and easy-to-use design that suited the subject.

The key findings of the literature review and the competitor analysis form the foundation of this research and the concept of the first version of the site is based on these findings.

As the internet is an active medium (Chak 2003, p.29) in which customers decide how they interact, it was important to give users various ways to contact the organisation behind the website and meet the demand for user-to-user interaction. The concept of the website included the possibility of getting assistance by email, using the chat feature to get live support, submit their own articles, submit their own news, submit their own ideas, or use the chat or forum to enter into a dialogue with other users. The news section also offered the possibility of writing comments to a news post. These features were included to adhere to the concept of establishing an online community (Rheingold 1993; Preece et al. 2003). A community offers the possibility of establishing relationships and improving the value of information (Tartaglia et al. 2005) and can generate much of the content of a site (Kotha 1998).

In addition creation of content by customers increases their involvement and enhances the credibility of a website (Kotha 1998). Another beneficial aspect of communities is that they produce loyal visitors. Studies show that active community members visit a site up to nine times more frequently (Sterne 2002, p. 180).

Online communities can be categorised as communities of relationship, communities of interest, communities of transaction, and communities of fantasy (Armstrong et al. 1996). The community that was created in this research was primarily a community of interest, in which people who are interested in the topic, ideas and creativity, can meet and exchange. A secondary goal was to establish a community of relationship because increased social interactions among users generate a ‘switching cost’ (Ginsburg et al. 2004) or barrier. Positive interpersonal relationships are viewed as positive switching barriers (Julander et al. 2003) because users would have to leave these interactions behind if they were to defect to another website.

The open source CMS PHP-Fusion was selected because it had several features like a forum, options to submit news and submit articles already implemented. The reason for using open-source software was that it is free to anyone to do modifications on the source code. PHP-Fusion is under the GNU Public Licence (1991) and therefore everyone is permitted to edit the source code.

The content for the site had to be interesting, unusual and related to ideas and innovations, therefore the weblog awards winner of 2004, engadget.com, which is a technology weblog and its sources, were used to gather news for the site. Using the format of weblogs as a news source had several advantages. The main advantage is that they are written by amateurs and not much effort is needed to create a weblog and therefore they can deal with much more specific content than traditional journalists who have to focus on attracting a crowd of people (Rosen 2003). The growing popularity of weblogs shows in a study that in 2004 the weblog readership increased by 58% in the US and 27% of ‘on-line Americans’ read weblogs (BBC 2005).

An example of a weblog that demonstrates the variety of content that is available is the weblog, ‘A star from Mosul’, in which a 16-year-old girl writes about her daily life in post-Saddam Iraq (Abdullah, 2005).

Attractive graphic design is a key element in making interfaces more enjoyable to use (Shneiderman 2004), which enhances the user experience. The importance of consistency (Brannon et al. 2000) and design is crucial for the user experience (Tedeschi 1999) (Lynch et al. 2004). Before the final design was developed several other possibilities were considered (refer to Appendix C). In order to unify the design (Graham 2001, p.84) a three-column grid was used (Graham 2001, p. 112). The decision to use ‘cold colours’ was made because of their relaxing effect on the viewer (Birren 1984, p81). Blue also stands for ‘a sense of balance, calm, and security’ (Lu, 2004), which are attributes that seemed appropriate, as ideas can be very personal (WorldNet, Definition ‘idea’). The minimal use of controls in the top navigation with the only options to choose ‘Home’ or ‘Forum’ emphasised the community features (Hearst 2005). A system for news categories was implemented which should become personalised in the beta phase. Additional fields to add links to news were implemented in the news administration to increase the functionality. To give guests a reason to become a member, the link and the download section were filled with content and became a members-only section. Furthermore, the news arena panel, with additional news for members, was implemented.

The initial concept was focused on creating an aesthetically designed website (sight experience), establishing an online community to provide users with the opportunity of a co-experience and to create switching barriers through social interactions. Furthermore, the website should motivate users to engage creatively (think experience) in one of the seven forum categories (refer to Appendix D). The main goal was to establish a loyal user base for the field study.

Figure 3: First version of the website.

The website which was created for this project has the title ‘Ideatemple’. It is in German and because it deals with ideas and creativity it focuses on a specific target audience.

The target audience consists of male and female adults between 18 and 30 years. They have completed higher education and understand German. Moreover, they are interested in innovation and are involved in a creative profession or hobby. They are extroverted, open minded, curious and tolerant people who like to socialise. If one would have to name a typical job it would be artist or, in the Myers-Briggs Type Indicator, the person would be an ENTP (Extravert, Intuitive, Thinking, Perceiving) type (Naomi 1999, p.17).

A successful user experience combines several types of experience (Schmitt, 2004). Expectations play an important role in user experience and also for user satisfaction. The goal in order to establish loyalty must be that the value of the user experience exceeds the user’s expectations. The result is a positive experience and satisfaction. Personalisation can deliver benefits in the form of saved time and effort or personal treatment, but a personalisation system has to utilise the right features and form of presentation to work efficiently and create value for the user.

User experience includes several aspects such as branding, content usability and functionality (Rubinoff 2004) and the multi-layered design process (Olsen 2003) is usually supported by a team of experts (McBride 2004).

Previous research in the field of user experience showed that website navigability and relationship services, such as virtual community building and site personalisation, improve the experience and attract users to visit a website (Kotha et al. 2001). The core of user experience is multifaceted and several models have been developed.

Dillon et al. (2001) proposed that user experience is the sum of action plus result plus emotions. Kankainen (2002) in his model describes user experience as the ‘result of motivated action in a certain context’. The previous experiences influence the present experience and the present experience will shape the expectations for future experience.

According to Wright (2003) an experience consists of four threads.

The compositional thread describes the structure of an experience, the sensual thread is the ‘look and feel’ of the experience, the emotional thread consists of feeling involved and the spatio-temporal thread describes the time and space in which the experience takes place. He concludes that the expectations a user has in the next experience are as important as the environment that is provided for the experience.

Budd et al. (2003) describes the term ‘experience design’ with the goal of creating positive user experiences. He demands that, because user experience can be experience from a variety of experience types, practitioners from the different areas must work together in the future.

Schmitt (2004) describes different types of experiences. The sense experience appeals to the five senses, sight, sound, smell, taste and touch. In the feel experience value is created by creating positive emotions. The think experience creates value by engaging user creatively. The act experience creates value by showing users alternative ways of doing something and the relate experience creates value by giving users a feeling that they belong to a group. Batterbee et al. (2003) names the relate experience ‘co-experience’, which is ‘ the experience that users themselves create together in social interaction’.

According to Shapiro (1999, p.44), companies recognise the individuals’ desire for control and start to give customers the ability to personalise their experience with the company. He argues that personalisation on the Internet does not only help customers to interact with companies or persons, furthermore it helps to filter useful information.

Cunningham (2001, p.118) describes the task of personalisation as ‘delivering the right content to those who need it when they need it’.

A study conducted by Karat et al (2003) identifies a function of two variables in the value of personalisation for customers and a function of two variables for the provider: For the customer it is, ‘the cost of divulging personal information and the perceived resulting benefits’, while it is, ‘the cost of gathering information and the perceived benefits’ for the provider. The benefits for providers are usually measurable, while ‘the customer’s value proposition is more complex and can involve factors such as security, privacy, trust, and the value of business relationships’.

According to Kasanoff (2003, p.121), value through personalisation can be provided by remembering information about a person and using this information to deliver unique benefits to that person. One way of delivering unique benefits is by providing content-based recommendations (Adomavicius et al., 2003). These recommendations are similar items to the ones the user preferred in the past.

The data for personalisation is derived from web mining.

The process of web mining for personalisation is divided into three steps, data acquisition, data analysis and data output (Markellou 2004; Albanese 2004).

In web mining, several fields of data are defined. User data is separated into explicit data, which is gathered with knowledge of the user through manual input, and implicit data, which is gathered without direct interaction with the user by utilising web-usage mining to record and accumulate data about user interactions and behaviour whenever a web server receives a request for resources (Zhu, 2004). Both of these forms of data have their drawbacks. Explicit data can be influenced by negative attitudes of the user and implicit data can raise privacy concerns and thereby lead to loss of trust (Scime 2004, p.27 ff; Schubert et al. 2000; Eirinaki et al.2003).

The data is scanned for patterns and rules about users’ navigational behaviour, user and page clusters and can also be combined with other data, such as data from a database with additional information. Discovered rules and patterns can be used for personalising a website or are integrated in a user profile for a different purpose. (Adomavicus et al., 2001)

Examples for these rules can be:

Content Rules to select, sort or modify the information on a website.

Navigation Rules to add, remove, activate or sort any links in the user navigation. Presentation Rules to modify the structure of the published website or acquisition rules that determine how data is collected (Garrigós et al. 2003; Eirinaki et al. 2003).

Adomavicius et al. (2003) describes three delivery methods for personalised information. The ‘pull’ method notifies the user that there is personalised information available but displays it only when the user requests it. The ‘push’ method sends the personalised information to the user and the ‘passive’ method provides the information along with other information without interaction with the user. He also describes de-personalisation, which is the status when a personalisation system is not producing valuable results for a customer any more and therefore they stop using it. The effectiveness of personalisation is a topic of an ongoing debate. (Business Wire 2000) One[EB2] opinion is that ‘You can’t reduce a person to a rule’ (Calvacca 2001; Kastner 2003) because data does not show the reasons why a person acted as they did. The Jupiter Research report, “Beyond the Personalization Myth (2003),” confirms the statement of usability guru Jakob Nielsen (1998) that ‘Web personalisation is much over-rated and mainly used as a poor excuse for not designing a navigable website’. The report also concludes that it is cost ineffective to operate a personalised website because it costs four times more than a normal website (Festa 2004).

The success of online retailer Amazon shows a different picture. Amazon, which is the 74th most valuable brand, according to Businessweek (2004), and has the highest rating of 88 in the American Customer Satisfaction index (Allen, 2004), relies heavily on personalisation. It has spent $800 million since it was founded in 1997 on technology and, according to Jeff Bezos ‘enabled products to find customers’ (Kohavi 2004; Bezos et al. 2002).

In a recent study about on-line customer experience it also had the highest ranking of 8.0 among all companies (Britt 2005). Furthermore, Amazon also has the most loyal customers of all on-line bookstores (Brand Keys 2004).

Previous studies suggest there is a link between customer satisfaction and customer loyalty, even though they differ.

Meyer et al. (2001) assume, on the basis of a comparison of satisfaction levels of customers and rebuying behaviour, a progressive relationship between customer loyalty and customer satisfaction, while Müller et al. (1991) prove with empiric results that the relationship has a plateau phase in which customer loyalty remains the same even with increased customer satisfaction.

Homburg (2003) identified in his construct of customer satisfaction the connection between expectations that had been met, expectations that had been exceeded and unfulfilled expectations. The construct shows that exceeded expectations have enthusiastic customers as a result. Bitner (1998) and Costabile (1998) found evidence of a close connection between satisfaction over time and trust. They found that loyalty and trust were a result of the experience of satisfaction over a period of time.

The link between satisfaction, trust and loyalty could not always be confirmed. (Jacoby et al. 1978). Singh et al. (2000) findings show that trust is not the most important factor for creating loyalty. He finds that customers want extra value, which is the optimal combination of time, effort and cost savings. The different findings show the need for further research in this area, but in general, one can see a loose connection between customer satisfaction and customer loyalty. However, highly satisfied customers do not have to be highly loyal customers and vice versa.

Another driving force for loyal behaviour can be barriers. People might stay loyal to a company because of the high switching cost. In 2004 a study, conducted by InterUnity Group, showed that the IT company SAP had the most loyal customers, even though it might not have the most satisfied. In this case 30% of the respondents said they would feel trapped because of the high cost of change (Bailor 2004; McCue 2004).

Online loyalty involves special aspects. Chau et al. (2002) finds that the design of websites strongly determines the motivation of a user to use them.

Murray et al. (2003) suggests that the interface of a website attracts new users when it can be handled with skills a user already has. To establish long-term interface loyalty one has to encourage the development of non-transferable user skills.

Koufaris (et al. 2002) found that positive experiences with a website lead to increased trust in the company that runs the website and this has a positive impact on customer retention and intention to buy. Vatanasombut et al. (2004) suggests that retention initiatives for internet-savvy users ‘should focus on measures that create commitment and trust in the relationship’. Possibilities to do that include ‘implementing effective and proactive communications and ensuring perceived security’. Kim (2000) findings show similar results as he proposes that ‘comprehensive information, shared value, and diverse communications affect the level of trust, which in turn influence customer loyalty’.

The significance of this research is the increasing importance of loyalty on the Internet. For companies websites play a significant role in creating loyal customers.

A survey conducted by FGI Research (Kontzer 2005), in which 4000 consumers were questioned ‘about a range of shopping factors’, shows that those customers who did online research before buying a product in a store were more satisfied than those who did not. The most satisfied and loyal customers were the ones who did research and bought online.

Furthermore, studies show that preventing only 5% of a company’s customers from defection can result in an 85% profit gain over time (Reichheld et al. 1990). Word-of-mouth marketing, which is one of the most efficient ways to get new customers (Hof 2004; Pagado 2005), further increases the profit through recommendations from loyal customers to potential customers. Loyal customers also show an increased buying frequency and companies have reduced costs for data management of customer data, while the possibility of cross-selling products is increased (Elke 2003).

The same applies for non e-commerce websites. Online portals like MSN, Yahoo or AOL try to increase the stickiness of their sites (Hansell 2004) because their capital is users, even though they gain money from their customers who advertise on their sites (Tedeschi 2004).

Scope of the research

The scope of the research was to measure the impact of dynamic personalisation features on the members’ level of loyalty to the site. Members were chosen because, according to the German “Online-Datenschutz-Prinzipien” (transl: Online-Privacy-Principles) a website provider has to inform a user if identifiable data about them is collected. This is done in the disclaimer of the site when a member registers.

Another aspect was that members were able to use all features of the site and therefore benefited from all personalisation features.

Because this research was based on an emotional definition of customer loyalty, the goal was to fulfil higher-level needs (Chak 2002, p.2). The effect of the personalisation features also benefits from that because higher-level needs are more personal and therefore they have a bigger impact on the user (Kasanoff 2001, pp.113-119).

The hierarchy of needs and the personalisation ladder both derive from Maslow’s hierarchy of needs (Huitt 2004) and can be merged therefore. The result shows that most of the levels of the personalisation ladder are already in the highest level of user needs (fig. 1)(Kasanoff 2001, p.113).

Figure 1. Framework for this study

That is the reason adjustments to the website, that were made during the development process, focussed on creating a desirable, useful, credible and valuable user experience. The aspects of user experience that a website must be usable, accessible and findable were only dealt with to the extent that they fulfil the expectations of the users (Moreville 2004).

Loyalty in the sense of the word which is a ‘feeling of allegiance’ (WordNet n. d.) is also described as emotional loyalty. For emotional loyalty it is important to exceed customers’ expectations and offer an over-all satisfactory experience from which customers really benefit (Newell 2000, pp 18-20).

Hallberg (2002) describes the Ogilvy Loyalty Index, which is a study conducted by Millward Brown about emotional loyalty. They have identified four levels of emotional loyalty and in the highest level, which they call bonding, a customer has eight times the value for a company than in the lowest level. They also claim that heavy buyers who are in the bonding level can have a 10 to 15 times higher value for a company than an average buyer at the base of the emotional loyalty pyramid.

Emotional loyalty is an expression that is not very often used in customer loyalty literature. As an example, Brandi (2005) includes the emotional aspect in her description of loyalty. She defines loyalty as ‘a genuine emotional attachment that occurs when your customers appreciate the value of your product or service, as well as the way you deliver it’.

To establish emotional connections with their customers companies have to create products and services with personality (Norman 2003, p.56).

Introduction

Since American Airlines started its first database-driven loyalty program in 1981 (Frequent Flyer) and the boom of database marketing in the late ‘80s and early ‘90s (Rosenfield 2002; Ragusa 2001), many things have changed in the marketing world.

Today, customers have a bigger variety of services and products available and international competition has made the battle for customers fiercer, while decreasing the price differences (Kenzelmann 2003, p. 10-13).

These factors result in an empowerment of customers. The Internet, where the competitor is only one click away, especially contributes to the fierce competition (Reichheld 2001, pp. 192). Amazon founder and CEO Jeff Bezos says that people go to a store and buy because they are already there, but on the internet, where no effort is needed to visit the store of a competitor, companies have to focus on providing a good customer experience (Srivastav et al. 2003). The same applies for user experience on websites in general. The importance of the aspect of trust in the experience of a customer (Koufaris et al. 2002; Jarvenpaa et al. 2000) might be less important for a user of a website (Bickmore et al. 2001), but a certain amount of trust is still essential for every website. Trust and expertise build the credibility of a website, which is important for establishing a relationship with users (Fogg 2003, p. 156 ff.) and is of special importance for websites that provide information (Jodoin, pers. com. Feb. 19, 2005).

Studies show that the value, which is provided, is the main reason that drives loyal behaviour (Singh et al. 2000). Tom Heater (pers. com. Feb. 19, 2005), marketing manager of ‘The Loyalty Research Center’, believes also in this context that the ‘the value proposition drives behaviours ultimately’. One way of creating value on line is by personalisation. Websites utilise the advance in technology to track and store user data on a mass basis and tailor the information and content they provide according to the user’s preferences (Schubert et al. 2000).

This research analyses the process of building a website that tries to create a valuable user experience and evaluates the impact of personalisation features on the level of members’ loyalty to the site. The website s about the topic ‘ideas and creativity’ and the focus of the site is on building a community and thereby establishing a loyal user base which later participates in A/B testing of the personalisation features.

This research tries to prove that: “With an understanding of the aspects that are essential for a valuable user experience, it is possible to increase user loyalty to a site utilising dynamic personalisation.”

Key Terms

This research is based on an emotional definition of customer loyalty (Kenzelmann 2003, p. 25). Customer loyalty is defined as a person’s feeling or attitude of attachment to an organisation or brand that is the result of their experience with it (Srivastava 2005). The experience includes all forms of interaction and service.

In this research user loyalty describes customer loyalty on the Internet. User loyalty can be part of customer loyalty if an organisation interacts with customers off line as well, or user loyalty can be equal to customer loyalty if the organisation only interacts with people online (Stratigos, pers. com. Feb. 23, 2005). The same applies for user and customer experience (Instone, pers. com. Feb. 23, 2005).

The ‘user experience’ consists of all interactions and the resulting experiences a user has with an organisation. The first step is to meet the user’s expectations and needs. The second step is to make the product or service enjoyable and exceed user expectations.

While user loyalty consists of emotions, ‘stickiness’ is the average time users spend on a website and the frequency of their visits (Kim 2004).

Personalisation is customising some feature of a website so that the user enjoys a benefit (Personalization Consortium n. d.).

Dynamic personalisation is personalisation that uses data gathered from the user’s browsing behaviour to tailor the information for the user.

These data are stored in a user profile. A user profile includes personal data about a user, their interests and behaviour when browsing a web site (Albanese 2004).