Create trust in the Internet

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 [email protected].