Effects of Website Attributes on Customer Satisfaction

Effects of Website Attributes on Customer Satisfaction ABSTRACT This study investigates the important attributes of online web stores in e-commerce by examining the possible website elements that determine different aspects of the association between customers satisfaction and e-commerce website attributes. A questionnaire consisting of 24 items was completed by 60 respondents. The instrument for this study was developed on the basis of â€Å"SERVQUAL† using a 5 point Likert scale. There were five independent variables used in the study out of which two were included as a result of stepwise multiple regression model which are: websResponse (accounting for 26.3% of the total variance); and webCustomization (accounting for 5.1% of the total variance). Results of a stepwise regression indicated that two website attributes significantly predict customer satisfaction (31.4% of the combined explained variance). Within the five website attributes in E-commerce website dimension, â€Å"website response† correlated highly with customer satis faction (26.3% of the explained variance). The results of the study indicate that the two website attributes of e-commerce (website response and website customization) impact the customers satisfaction and other three do not have a significant influence. The study concludes with related implications and design guidelines to enhancing customer satisfaction of e-commerce. Effects of website attributes on customer satisfaction in E-commerce SECTION 1: INTRODUCTION The Internet is no longer a niche technology it is mass media and an utterly integral part of modern life. As our lives become more fractured and cluttered, it isnt surprising that consumers turn to the unrivalled convenience of the Internet when it comes to searching and buying product. 1.1 INTROduction to E-COMMERCE The rise of the WWW gives birth to new phenomena in our daily lives, one of which is e-commerce. The internet has played a vital and important part to encourage selling products and services online which makes life convenient for the audiences, which in an inter-connected world, is well, the whole world. E-Commerce is a subset of an overall e-business strategy consists of the buying and selling of products or services over electronic systems such as the Internet. E-commerce seeks to add revenue streams using the World Wide Web or the Internet to build and enhance relationships with clients and partners and to improve efficiency. E-commerce has given rise to the concept of completely online shops selling products and services, efficiently catalogued and available for the shoppers convenience. There are several websites that stock everything from lifestyle items, collectibles, books, electronic appliances etc. The level of e-commerce use can be measured by using an e-commerce capability indicator. E-commerce capability indicator by Molla Licker:  § No e-commerce indicates a company without e-mail or an Internet connection.  § Connected e-commerce represents a company that has an Internet connection and e-mail.  § Informational e-commerce indicates a company using a Web site to publish basic information about the company and its products/services in a static manner.  § Interactive e-commerce refers to the ability of users to search the companys product catalogue, make queries, and enter orders.  § Transactional e-commerce allows online selling and purchasing of products or services including online payment and customer service. E-business applications can be divided into three categories. First is an internal business system in which customer relationship management (CRM), Enterprise resource planning (ERP), and Human Resource management (HRM) type of systems are involved. Second is enterprise communication and collaboration such as content management system (CMS), business process management (BPM) and web conferencing etc. Third is e-commerce that includes Business-to-business (B2B) e-commerce and Business-to-customer (B2C) e-commerce. Online shopping comes under this category on which this study is conducted. Several e-commerce service providers are available on web that provides professional customized web designing services that suit their clients needs. Some common applications related to electronic commerce are the following:  § Online Shopping (Web Shop)  § Online Banking  § Online Marketing  § CRM etc 1.1.1 Online Shopping Online shopping is the process consumers go through to purchase products or services over the services over the web. Online shopping is a type of business-to-consumer (B2C) transactions. The term web shop also refers to a place of business where web development, web hosting and other types of web related activities take place (Web refers to the World Wide Web and shop has a idiomatic meaning used to describe the place). 1.2 service quality The level of service received on a web site. Dependent on reliability, responsiveness and availability of staff and the web site service. Service quality is comprised of five dimensions. These are:  § Tangibles: appearance of physical facilities, equipment, personnel, and written materials (Zeithaml, Bitner Gremler, 2006).  § Reliability: ability to perform the promised service dependably and accurately.  § Assurance: employees knowledge and courtesy and their ability to inspire trust and confidence.  § Responsiveness: willingness to help customers and provide prompt service.  § Empathy: caring, individualized attention given to customers. 1.2.1 Service quality dimensions in e-commerce systems Lets examine how customers judge the five dimensions of service quality in perspective of e-commerce systems. Tangibles refer to the physical appearance of an e-commerce website, its structure, layout, theme etc and referred as â€Å"website structure†. Reliability represented as â€Å"website adequacy† which provides the relevant and needed information provided by an e-commerce system when customer clicked or requested for. Assurance termed as â€Å"website security† refers as the trustworthy service provider that could include a well reputable website, reliable payments methods etc. Responsiveness is the prompt and relevant response to the specific request of users described by â€Å"website response†. Empathy knows internal customers as individual; understanding individual needs and concerns such as by providing recommendations that matches the customers needs which is termed as â€Å"website customization† in world of web. 1.2.2 service quality framework (SERVQUAL) SERVQUAL was originally measured on 10 aspects of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding or knowing the customer and tangibles. By the early nineties the authors had refined the model to the useful acronym RATER.  § Reliability  § Assurance  § Tangibles  § Empathy, and  § Responsiveness SERVQUAL has its detractors and is considered overly complex, subjective and statistically unreliable. The simplified RATER model however is a simple and useful model for qualitatively exploring and assessing customers service experiences and has been used widely by service delivery organizations. 1.2.3 customer satisfaction Customer satisfaction refers to the extent to which customers are happy with the products and services provided by a business. Customer satisfaction levels can be measured using survey techniques and questionnaires. Gaining high levels of customer satisfaction is very important to a business because satisfied customers are most likely to be loyal and to make repeated orders and to use a wide range of services offered by a business. The basic definition of customer satisfaction says that Customer satisfaction is a term, is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is an abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product or service. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organizations products or services. 1.3 Customer Satisfaction Based on Perceived service quality of e-commerce systems The overall satisfaction of e-commerce customers can be attained by providing the level of service quality that customers perceive in that system. The five dimensions of service quality are tangibility, reliability, responsiveness, assurance and empathy. The website structure of an e-commerce websites is all about the tangibility dimension. The reliability dimension in this study is measured by the attribute called website adequacy. The website response variable indicates the responsiveness dimension. Website security as another attribute of an e-commerce system refers to the assurance dimension and the empathy dimension described by the website customization The overall customer satisfaction is based on the five service quality dimensions representing various service attributes: tangibility, reliability, assurance, responsiveness and empathy. The detailed model used in this study is presented in figure A. The website design elements are characterized into five different types which are supposed to influence the five service quality dimensions. This study hypothesizes that some website attributes that are based on service quality dimensions has an impact on an online customer satisfaction. In other words, customers satisfaction level will increase if the e-commerce system provides a higher level of service quality through different website attributes. 1.4 Increased trend of Online surfing and shopping in Pakistan The trend of an online surfing is increasing rapidly due to the increased benefits by the use of e-commerce business environment. People visit e-commerce web sites not only for buying but for several other reasons and the smart retailer just should not only focus on boosting online browse-to-buy conversion rates, but should also try to grab the attention of an online visitors who came in for review so as they could become a customer later. Many people feel it comfortable to review the products through an extensive knowledge provided over the internet before actually buying a particular product. For this purpose, e-commerce website provides an interface to the buyers to write their reviews and share their after-purchase experiences. Thus, the e-commerce systems reduce the time and efforts required for the first step of information search in consumer decision making process. That is, by just few clicks a consumer can have a concise analysis for what matches his/her needs. There are some factors emerged as a results of the changes in lifestyle and habits of consumer which has promoted the trend of online searching and shopping in Pakistan. Some of these factors are lack of time, need of convenience and easy access to the desired object. Moreover, e-commerce websites facilitates the visitor in many ways to boost up online browse-to-buy conversion rate. Whenever a new customer lands on an e-commerce website, he/she must be having many questions in their minds regarding the products and services. A well-framed ecommerce site has an enquiry page for their customers. This gives the chance to the visitor to post an enquiry with your site. Main aim of this page is to gather all relevant and necessary information from the customers so that they can be given response in an apt manner. Within the past decade, e-commerce has matured and grown exponentially. The result: now there are many types of e-commerce payment methods available online. If your credit is bad and you cannot afford a merchant account, there are alternative methods of payments on e-commerce websites which can help you. The e-commerce systems give customers controlled access to the data they need. In other words, not only are you managing your relationship with your customers, you are giving your customers the tools to manage their relationship with you. THESIS STRUCTURE This thesis consists of five chapters. Chapter 1 discusses the problem about which the research was carried out and in general about the trends of online shopping in Pakistan. Chapter 2 is about the literature review and the theoretical background is developed. In Chapter 3, researcher describes the methodology adopted including sources of information and data collection procedure is discussed. In chapter 4, the empirical data collected through questionnaire is analyzed and results are concluded on the basis of a survey. In Chapter 5, Conclusions are drawn and necessary recommendations are suggested. 1.5 STATEMENT OF THE PROBLEM â€Å"Effects of website attributes on customer satisfaction in e-commerce.† The main purpose of this research is to find out the different attributes which encourage consumers to visit, search and shop on a particular website. 1.6 OBJECTIVE The purposes of this study are as follows: To identify the most important website element of e-commerce with respect to the customer satisfaction. To examine what is important to the customer regarding website attributes in e-commerce with perspective of website builders. 1.6.1 Possible Research Findings The research will also provide the following significances.  § Help the organization to better understand what customers expect in e-commerce and how those expectations impact customer attitude.  § The study will examine what the customer views as major attributes of website in e-commerce.  § Able to investigate the major customer attitudes associated with website structure in e-commerce.  § The study will indicate the link between the website attributes and the customer attitudes. 1.7 HYPOTHESES H1: Website structure has a significant association with customer satisfaction. H2: Website adequacy has a significant association with customer satisfaction. H3: Website security has a significant association with customer satisfaction. H4: Website response has a significant association with customer satisfaction. H5: Website customization has a significant association with customer satisfaction. SECTION 2: LITERATURE REVIEW 2.1 Introduction to e-commerce: The propagation of WWW has originated few facts in our daily lives, one of which is e-commerce. A transaction between two or more participants through an electronic medium is defines as e-commerce (Kalacota and Whinston 1997). As an e-commerce is rapidly raising field, therefore for accomplishing success in this market, a top quality information system is necessary (Margherio et al. 1998). An e-commerce system is designed by selectively integrating many technical (e.g. search system) or managerial (e.g. the level of information related to product) design elements (Lohse and Spiller 1998). It is still very difficult, if not impossible; to make use of all the design factors presently available for the e-commerce system although many design factors have been suggested to improve the overall quality of e-commerce system (Selz and Schubert 1997, Lohse and Spiller 1998). This is because of the recent arrival of new design factors resulted by an increase in the interest of Internet (Selz and Schubert 1997). The main goal of this paper is to explore important design elements that have significant influence on the customer satisfaction regarding the performance of e-commerce systems. In this paper, the study presents a conceptual model of e-commerce websites that includes concrete design elements, perceived level of website quality and the customer satisfaction (JINWOO KIM and JUNGWON LEE 2002). There is remarkable potential for e-commerce in developing countries. Online shopping makes it easy to find things, merchants and best offerings and thus economical in terms of time and effort offerings (Balasubramanian, 1997). According to the Malone et al (1989) communicating a same piece of information through communication networks results in decreased cost and improved speed. There is tremendous potential for e-commerce in developing countries because the use of an e-commerce can potentially reduce transaction costs. As per Malone et al (1989) observation, the search costs such as cost of identifying a market (from where to buy a product) and /or a product or service are likely to reduce with the use of e-commerce systems and can be defined as potential e-commerce cost savings. From an organizations perspective, e-commerce systems provide the organization with the better market reach and an ability to provide their customer a customized service that suits their individual needs and preferences. For example the exchange between â€Å"richness† and â€Å"reach† can be minimized by e-commerce (Evans Wurster, 2000). Richness refers to the quality and quantity of information in terms of accuracy, relevance, customization, etc. and reach measures the number of people who can be got in touch with that information. 2.2 Service quality dimensions: The overall customer satisfaction can be measured by the level of service quality of an e-commerce system that customer perceives. Some researchers (Parasuraman, Zeithaml and Berry 1988) stated that consumer satisfaction or dissatisfaction is as an ancestor of service quality. Conversely, modern evidence recommends that it is an outcome of service quality (Woodside, Frey and Daly 1989; Cronin and Taylor 1992). Service quality attributes are the most important factors for the success of an e-commerce systems For example Liu and Arnett (2000) found that organizations that involve in e-commerce can only ensure the success of their system by keenly looking for the ways to improve their service quality. The customers decision whether to continue using a particular e-commerce system is based on the perceived quality of service (Bhattacherjee 2001) as the service quality impacts the overall satisfaction of a customer. Tangibility, reliability, responsiveness, assurance and empathy are the five dimensions of service quality. (Parasuraman et al. 1985, 1991, Pit et al. 1995). The tool that is being used in this study to measure the dimensions of service quality is SERVQUAL According to Brown et al. this instrument has been proved valid and reliable and hence used in various domains. (Brown et al.1993, Fisk et al. 1993, Parasuraman et al. 1985, 1993). On the basis of previous researches, service quality despite being a main interesting field in services marketing for the past two decades (Zeithaml et al., 2000); electronic service quality is still in its early stages in research area. Reil el al in 2001concluded that there has been no theoretical conceptualization emerged for customer evaluation of electronic services that could have been accepted generally. Cox and Dale (2001) has supported this conception by the fact that most out of the dominant research on service quality cannot even be valid to e-business environment. By the year 2002, the existing studies on the determinants of electronic service quality were based on measuring B2C interactions (Gilbert, 2000; Barnes and Vidgens 2000, 2001 and 2002) and few exploratory researches on website quality and e-service quality by Zeithaml et al. In early stages of service quality research, researcher were required to find out what is service quality from customers perspective (Sasser et al.,1979; Lehtinen and Lehtinen,1982; Gronroos,1982). It was normally approved that the judgment of service quality came from comparisons between what customers feel a service provider should offer (expectations) and the actual service performance of the company (perceptions) (Zeithaml et al., 2000). This view was reinforced by Parasuraman Zeithaml (2000) and Berry (1985) in their study of service quality in different service industries with which they discussed the concept of service quality as a function of expectations-perception gap. Parasuraman et als, identified the 10 dimensions that customer uses in their assessment of service quality. These 10 service quality dimensions then shaped the source for the development of a scale (SERVQUAL) to measure service quality in direct service interactions. Research extended in other context and as a result refined the scale and reduced it to 5 dimensions (reliability, responsiveness, assurance, empathy and tangibles) Since the SERVQUAL scale has been widely used to measure service quality in many studies across a range of settings (IS Departments; Airlines; Universities; Ocean Freight Shipping; Professional Services; Health Providers; International Markets; Purchasing; Advertising; Banking; E-commerce). Initially the concept of services were created to capture the nature of service encounters (Meuter et al., 2000) which may not be sufficient to capture the characteristics of customer interactions with self-service technologies such as e-services (Dabholkar et al.,1996). Later on, many approaches have been proposed to study online service. (Gilbert, 2000; Gronroos et al., 2000; Parasuraman and Grewel, 2000; Kaynama and Black, 2000; Zeithaml, et al., 2000; ONeill, et al., 2001) proposed the use of existing service theory as a first type. The second type utilizes generated new categories for self-service technologies such as e-services (Szymanski and Hise, 2000; van Riel, et al., 2001; Wang and Tang, 2001; Ruyter et al., 2001). Third type develops information systems and web quality theory (Barnes and Vidgen, 2000; 2001; 2002; Aladwani and Palvia, 2001). These researches have centered on customer interactions with a variety of self-service technologies such as automated call centre technology, ATMs and Web sites and touch screen technologies. A redefined SERVQUAL instrument to measure the service expectations and perceptions of customers of Internet businesses was used by Gilbert in 2000 in which he concluded that to measure online service quality, the altered SERVQUAL scale was a practical instrument. The features that are useful, accurate, relevant and comprehensive information reflect the reliability of quality information (Bailey and Pearson 1983). Bailey and Pearson (1983) also identified that website reliability depends on to what level the information provided on the website about the product or service is true, precise and also depend to what level a customer can rely on a particular website that it provides enough amount of information available regarding each product. (Luedi 1997) stated that website personalization based on the ability of website to deliver individualized interface for a specific user which generated dynamically as per users needs. This may involve making purchase recommendations and /or providing the list of other relevant products that matchs the customer needs. This can be extracted through the previous data available regarding an individual user such as buying behavior, cart items and the current session contents. Providing customized services is the best way to create a loyal customer and make repeat visits on a website Luedi (1997). The concern over security continues to plague the online world. Variables like perceived security, reputation were included in this study to examine the customer attitude towards buying process. Even though the understanding of credit card transactions perceived secure like a waiters and waitresses, still security is the top concern of people who shop online (Salisbury et at. 2001, Luo 2002. Wilson and Abel 2002). Likewise security is the reason why people do not shop online (Luo 2002). The research variable of Security reflects trust in the online system and the variable reputation reflects trust in the specific vendor. Discovering whether vendors receive repeat business reflects the overall buying attitude of consumers. Overall customer satisfaction at online shopping measures which attributes helps the website meets expectations. 2.3 Website elements: The first phase of consumer decision making process that is the information search starts the minute customers look at the interface of e-commerce website and ends until they decide whether to place the purchase order or not (Schmid 1995). The role of website structure remains important during the phase of information search process such as site maps, navigation, content settings and layout of website etc. The content, structure and website elements should be portrayed explicitly on the e-commerce interface. Website structure that includes the presentation of design elements determines how the information is actually displayed on the screen to acquire the customer attention (Morris and Hinrich 1996). Convenient website structure defined as to what extent a customer feels that the e-commerce website is user friendly, simple and instinctive. (Ki-Han and Shin, 2008) Website adequacy describes the quality and quantity of the information provided in the e-commerce system. Content based on usefulness and comprehensiveness involves the type and scope of information to be included in the system (Morris and Hinrich 1996, Kim et al 1997). After the collection of appropriate information regarding the identified products or services, the contents must be placed in a well organized manner so that the customer can understand the interface easily (Gronroos 1982, Rosenfeld and Morville 1998). A well-defined and properly placed content is a feature of website which indicates the ability to made information easily available to visitors (Ki-Han and Shin, 2008). When adequate and reliable information has been properly dispersed across different web pages within the structure of the e-commerce website, an efficient interaction system must be provided to enable the customer to switch between different pages easily (Kim and Yoo 2000, Park and Kim 2000). Ballantine (2005) has found the impact of interactivity and product related information on customer satisfaction in an online trade setting. He argued in his study that the amount of product-related information affected consumer satisfaction of online shopping. An important design element that relates to the interaction system includes the involvement of website response and website customization ability. Website Customization is referred as the extent to which an e-commerce website can identify a customer and then modify the choice of products and shopping experience for that customer (Srinivasan et al., 2002). Cook and Coupey (2001) in their research argued that the improved accessibility of information on internet is likely to result in informed customers. And educated customers are able to make better quality decisions and will then experience more satisfaction with the visits and purchases they make. The connection between all of the five individual variables describes the basic architecture of web pages (Steinmetz and Nahrsted, 1995). The overall satisfaction of e-commerce customers can be attained by providing the level of service quality that customers perceive in that system. Satisfied customers have more potential to spread positive word-of-mouth (Gremler and Brown, 1999), and they avail further services (Zeithaml et al., 1996). The five dimensions of service quality are tangibility, reliability, responsiveness, assurance and empathy (Parasuraman et al. 1985, 1991, Pit et al. 1995). Attributes related to the website structure such as physical appearance of e-commerce websites are represented by tangibility dimension. For example, the tangibility measures the appeal of the website design of e-commerce system presents to their customers. The ability of the website to provide the dependable, accurate service is represented by reliability dimension. (Pit et al. 1995). For example, the reliability dimension measures how often an e-commerce system provides useful and comprehensive information regarding the relevant products or services. The responsiveness dimension indicates how prepared the website is to promptly response the customer with the clicked option. (Parasuraman et al. 1991). For example, the responsiveness dimension measures how often an ecommerce system voluntarily provides services that are important to its customers such as less loading time. Or it can be measured by how often a website provides accurate and rich information after a user clicked a particular product. The trust and confidence encouraged in the customer by the information provided on e-commerce system refers to the assurance dimension (Parasuraman et al. 1991). For example, the assurance dimension can be measured by extent to which a website is able to give a secure feeling to an online buyer. The empathy dimension described as the individual attention to the customer that is being provided by the dynamic e-commerce website (Pit et al. 1995). For example this dimension measures how often an ecommerce system voluntarily offers recommendations that match to its customers needs in order to provide the individual customers benefit. In summary, the overall quality of an e-commerce system can be measured by the service quality level perceived by its customers and ultimately leads to the customer satisfaction (JINWOO KIM and JUNGWON LEE, 2002). Parasuraman, Zeithaml et al. (1988, 1991) in study on SERVQUAL found that the interactive elements of e-commerce systems are e-business features that help in building relationships with customer and are fall into five main sets that are tangibles, reliability, assurance, responsiveness and empathy. Due to the consistency of research findings stated in literature, it become easy to propose that the five main determinants of e-commerce include website structure, website adequacy, website security, website response and website customization (D. HORN, R. FEINBERG and G. SALVENDY, 2005). In an e-business structure, the customer interaction with the business is through the e-commerce website. Therefore, several original SERVQUAL items were modified to focus on e-commerce website. The definition of an empathy dimension was extended to include personalization or customization, which is the concept of web gurus as they believe the emotional connection between customer and web business (Peppers et al. 1999). The overall appearance and structure of e-commerce website shows its tangibility. The performance of promised services and adequacy of information explains the reliability of an e-commerce website. Responsiveness is the ability of e-commerce system to help and provide prompt response to the website user. The individualized attention and customized service provided by the e-commerce system to an individual customer is described as empathy. Security is the trust on an e-commerce system in protecting personal and financial information (D. HORN, R. FEINBERG and G. SALVENDY, 2005). The major factors that impact the customer attitude are the five main attributes of e-commerce system. The model in Figure 1 describes how these attributes of e-commerce system work together to achieve customer satisfaction. The satisfaction/dissatisfaction of customer is defined as an emotional response to a specific consumption experience (Swan and Oliver 1989). It is determined by to what extent a consumer perceives that the service fulfills his/her needs, wants or desires. Satisfaction is a â€Å"state† inconsistent in that a consumer can be â€Å"very dissatisfi