Trust and Word of Mouse - Your secret weapons towards customer loyalty on the web

Abstract: With the explosion of social media platforms in the interactive digital media realm and companies increased comprehension of the importance of having loyal customers, the question of social media usage in developing customer loyalty has become more and more prominent. Since social media allows firms to engage directly with the end‐consumer at a relatively low cost and with a higher level of efficiency, it is particularly important for small online branded retailers with limited marketing and PR budgets. The purpose of this study is to research how the use of social media can enhance customer loyalty on the Internet. A both qualitative and quantitative approach to data collection and interpretation form the methodological basis of the study. An in‐depth interview was conducted with small online branded retailer L’Homme Rouge to get an understanding of the brands current social media usage as well as future goals and aspirations. An online survey was conducted with L’Homme Rouge’s customers to examine their opinion concerning brands and social media as well as L’Homme Rouge’s social media usage. A total of 82 questionnaires were collected from customers in the age 20‐30 years. The findings indicate that small online branded retailer L’Homme Rouge has a good understanding of what their customers want to see on their social media platforms. This provide them with the possibility to post and upload content that the consumers value. However, the retailer to a certain extent lack knowledge of which factors are important for customers to be loyal and consequently how social media can be used to enhance customer loyalty. The study has found that gaining trust as well as getting customers to recommend a brand, are two important factors in terms of establishing customer loyalty on the Internet. Due to its interactive nature, which is useful for establishing relationships as well as sharing content, the study further provides compelling evidence that social media is an effective tool when it comes to trust and recommendations. The study concludes by presenting various suggestions that small online branded retailers can use to develop and maintain customer loyalty on the Internet. The fact that only one small online branded retailer was examined means that the exploratory findings need to be investigated more rigorously. A larger sample, including more online branded retailers, would permit a more detailed exploration of customer loyalty and social media and further strengthen and extend the results.