Executive Education

Create trust in the Internet

By Marcia Passos Duffy

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Brian Ratchford, Ph.D.
Professor of Marketing
UT Dallas School of Management

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Online sales are growing at a rate of about 25 percent per year. This figure, while impressive, still only accounts for about 3 percent of total retail sales. While many consumers increasingly browse the Internet for information on products and services, linking that information to an actual online sale can be tough.

“Internet users still hesitate to take their credit cards out and actually buy a product,” says Brian Ratchford, Ph.D., who teaches marketing at the UT Dallas School of Management. “But there are ways to increase that trust — and sales.”

Smart Business spoke with Ratchford about the challenges to marketing a product or service online and how to overcome the obstacles of selling in cyberspace.

What is the biggest challenge in marketing — and selling — online versus offline?

There are two major obstacles: The biggest obstacle is that the customer can’t inspect or try a product or service firsthand online. Certain products — cars and initial purchases of cosmetics and fragrances, for instance — are very difficult to sell online for this reason.

Some companies have made strides in trying to overcome this stumbling block. For example, many car companies now offer virtual test drives. But no matter how advanced the technology, this still cannot replace a live test drive.

The second major challenge is the fear factor. Despite the healthy increase in online sales, the fact remains that many people are still afraid to conduct transactions online. They may be uncertain about the security of the site and the reliability of the vendor, and they may be concerned about identity theft.

How can businesses overcome these obstacles to create a successful e-commerce site?

Trust is the foundation to creating a successful e-commerce site. There are several steps you can take to accomplish this.

First, your business must have an easy-to-navigate site. Just because a site may be beautiful to look at doesn’t mean that it is easy to get around. It must not contain any dead ends or be frustrating in any way for the user. It is too easy for the user to give up and click somewhere else. If the learning curve to navigate a site is too steep, visitors won’t bother to get beyond the home page. Having a site that is easy to navigate is the first step to creating trust. Don’t scrimp on this step.

Next, build a strong reputation online. EBay — which, by the way, constitutes one-third of all online sales — strengthens its own reputation with seller ratings. Those sellers with poor ratings are quickly weeded out, since no one will buy from them. Another way to reassure visitors that you sell a quality product or service is to add testimonials from your customers and clients on your site — with full attribution. By the way, businesses with good reputations in brick-and-mortar have an easier time selling online since their good name follows them online.

Are there any other strategies businesses can use to reassure visitors and convert these visitors to customers?

An e-mail newsletter is a good way to establish trust and establish a relationship with potential customers. The best prospects in e-commerce — like in traditional commerce — are repeat customers. These are the people who already trust you.

Marketing trends happen quickly online — how does a business keep up?

Companies need to test what works and doesn’t work — and this kind of marketing experimentation can be done more inexpensively online that it can be offline. There are also many tools that can be used to track visitors to a site, which is invaluable in helping you understand where your visitors or subscribers live and who they are. One company, for example, used its database of e-mail subscribers to research where to open up a new retail location.

Businesses also need to remember that the Internet serves two functions: information and transaction. While e-commerce is still quite a small percentage of the overall buying patterns of consumers, information is the driving force behind the Internet.

BRIAN RATCHFORD, Ph.D., is a Charles and Nancy Davidson Distinguished Professor of Marketing at the UT Dallas School of Management (www.UTDallas.edu). Reach him at (972) 883-5975 or brian.ratchford@utdallas.edu.