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Date Created: 12/21/15
Long-term competitive advantage of jkg school online payment Building great online experiences is costly. The millions of dollars spent on Web strategies in the last several years is evidence of this fact. And, it’s unclear if firms ever see a return on their investment. Recently, Stanford Business School’s Mohan Venkatachalam, and Shivaram Rajgopal and Sureth Katha of the University of Washington examined the relationship between marketing strategies and financial ones at ecommerce firms. In their study they used jkg school online payment quality evaluations of Web sites generated by a rating service to identify forty-seven Web sites that deliver a superior online consumer experience. The service rated aspects of the customer experience such as the ease of navigation, customer confidence, product selection, virtual-community building, and price leadership and used those ratings to produce quality scores for Web sites. The measurement of shareholder value was based on price-to-sales ratio, a common measurement tool of ecommerce firms. The researchers discovered that, on average, for every 1 percent increase in the customer experience quality; there was a 1.66 percent increase in traffic to the site and a 0.84 percent increase in revenues. All of this speaks well for enhancing the online experience to better serve customers, yet it illustrates how building a great experience is a costly venture. Looking at profits, the researchers found that a 1 percent increase in the quality score was associated with almost the same increase in operating expenses and a 2 percent decrease in net income. They determined that the short-term benefits were dubious, and it was only those aspects of the user experience that drove customer relationship building that actually produced the potential for any long-term competitive advantage. Competitive advantages, such as ease of use or price, are quickly imitated by competitors. In the results of the research, investors showed no confidence that building a superior online experience provided a long-term competitive advantage of jkg school. It is true that designing good user experiences is costly, but optimizing costs is only part of the equation. In the long run, developing a good user experience is a wise investment for a firm because it impacts critical components of building successful customer relationships the ultimate basis of long-term shareholder value. Yet it takes time to see these long-term results, so companies must therefore define both short- and long- term ROI goals for the user experience and design incrementally by continually testing and making refinements and enhancements. “Firms should not be measuring the benefits and the cost incurred in the same period,” says experience strategist Deborah Frieze, former chief experience officer and co-founder of Zefer Corporation, “because the benefits are going to come out two or three quarters down the road.” Customers are still going to demand good experiences, but they don’t need the “blockbuster” experiences that firms had been building throughout the dot-com mania. They were too expensive to ever deliver a return. To satisfy short-term needs, firms should develop user experiences that are “good enough” to deliver on short-term business goals and satisfy customers (as measured against specific dollar benefits) with an experience framework in place that will enable “experience evolutions” toward continually enhancing relationships.
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