When consumers visit a retail Web site, how do they know that the information describing the products or services they want to buy is accurate and unbiased? When they order and pay for a product online, how do they know that their financial records will be protected, that the product will be delivered on time, or that they can return something that is damaged or fails to meet their expectations? The answer is they often don’t know.
Consumers must make these and many other online research and purchasing decisions almost solely on the basis of trust. Yet most Web sites provide consumers with scanty information on which to base their trust. Some Web retailers are start-ups with little or no track record of fulfillment. Some may be on shaky financial footing and unable to meet their service and delivery guarantees. Some secretly collect data about each customer’s Web activity and then sell this information to third-party marketing firms. Even well-regarded companies like AOL have suffered embarrassing security breaches, while auction sites such as eBay have been scrutinized for their failure to effectively police self-serving “customer reviews” posted by the sellers and their friends. It’s no exaggeration to say that as consumers become more sophisticated about the Internet, Web-site trust is going to become a key differentiator that will determine the success or failure of many retail Web companies.
Trust has always been a key element in successful marketing.1 In industrial marketing, the 20% of the sales force that sells 80% of the volume owes much of its success to building trust-based relationships with clients. To preserve trust and confidence in the relationship, a smart salesperson will even recommend a competitor’s product if it better serves the customer’s needs. In consumer marketing, brands such as Coca-Cola, Tide and Disney act as trust marks, signaling consumers that they will get the quality they expect. For financial and insurance services, successful selling is heavily based on trust perceptions. Consider the recent Saint Paul Companies advertisements that show a girl on the Serengeti touching the horn of a rhinoceros. The ad copy reads: “Trust is not being afraid even if you are vulnerable.”
In recent years, the Internet has established itself as a new medium for marketing consumer and industrial goods and services.
1. P.M. Doney and J.P. Cannon, “An Examination of the Nature of Trust in Buyer-Seller Relationships,” Journal of Marketing 61 (April 1997): 35–52;
S. Ganesan, “Determinants of Long-term Orientation in Buyer-Seller Relationships” Journal of Marketing 58 (April 1994): 1–19;
C. Moorman, R. Deshpande and G. Zaltman, “Factors Affecting Trust in Market Research Relationships,” Journal of Marketing 15 (January 1993): 81–101;
Morgan, Robert M. and Shelby D. Hunt, “The Commitment-Trust Theory of Relationship Marketing”, Journal of Marketing 58 (July 1994): 20–39; and
R.E. Spekman, “Strategic Supplier Selection: Understanding Long-Term Buyer Relationships,” Business Horizons 31 (July–August 1988): 75–81.
2. D. Hoffman, T. Novak and M. Peralta, “Building Consumer Trust in Online Environments: The Case for Information Privacy” (Project 2000) (Owen Graduate School of Management, Vanderbilt University, February 1998; http://www2000.ogsm.vanderbilt.edu/); and
T.P. Novak, D.L. Hoffman and Y. Yung, “Measuring the Customer Experience in Online Environments: A Structural Modeling Approach,” Management Science 19 (winter 2000): 22–42.
3. P. Kollock, “The Production of Trust in Online Markets,” Advances in Group Processes 16 (1999): 99–123.
4. J.M. de Figueiredo, “Finding Sustainable Profitability in Electronic Commerce,” MIT Sloan Management Review 41 (summer 2000): 41–52.
5. G.L. Urban, J.R. Hauser, W.J. Qualls, B.D.Weinberg, J.D. Bohlmann and R.A. Chicos, “Information Acceleration: Validation and Lessons From the Field,” Journal of Marketing Research 34 (February 1997): 143–153; and
G.L. Urban, B.D. Weinberg, J.R. Hauser, “Premarket Forecasting of Really-New Products,” Journal of Marketing 60 (January 1996): 47–60.
6. For the technical-advisor algorithms and statistics for the concept of the virtual advisor described in this article, see:
G.L. Urban, F. Sultan and W. Qualls, “Design and Evaluation of a Trust-Based Advisor on the Internet” (Cambridge, Massachusetts: MIT Sloan School of Management working paper, December 1999; http://ebusiness.mit.edu/research/papers/forum/).
8. J.G. Lynch and D. Ariely, “Wine On Line: Search Costs Affect Competition on Price, Quality, and Distribution,” Management Science 19 (winter 2000): 83–103; and
G. Haubl and V. Trifts, “Consumer Decision Making in On Line Shopping Environments: The Effects of Interactive Decision Aids,” Management Science 19 (winter 2000): 4–21.
9. R. J. Lewicki, D.J. McAllister and R.J. Bies, “Trust and Distrust: New Relationships and Realities,” Academy of Management Review 23 (July 1998): 438–458.