Assurance Seals, On-Line Customer Satisfaction, and Repurchase Intention

This study explores how third-party assurance seals, a privacy service provided by vendors to mitigate customers’ fears, has an impact on on-line customer satisfaction and repeat-purchase intention. It asks the following research questions: Do assurance seals influence on-line service experience? If so, how do they affect consumers’ satisfaction and repeat-purchase intention? The study shows, first, that seals provide a frame such that a consumer‘s overall satisfaction and repeat-purchase intention would be higher when vendors provide assurance seals than when they do not. Second, applying the concept of diminishing sensitivity, it shows that consumers would be subjectively less sensitive to service performance of vendors who provide seals than vendors who do not provide seals. The hypotheses are tested on data obtained from Bizrate.com. The empirical analysis supports the hypotheses. Key woRDS AnD phRASeS: Assurance seals, framing effect, privacy, privacy services, satisfaction, service experience, service science. In traditional markets, consumers’ service experience is regarded as an important indicator for estimating their satisfaction and repeat-purchase intention [1, 4, 6, 19]. Like consumers in off-line markets, consumers in on-line markets constantly experience services provided by retailers throughout the purchasing products/services processes. As in the case of off-line consumers, consumers’ experiences of provided services are a key factor in forming their satisfaction and repeat-purchase intention in on-line marketplaces [47, 49]. However, unlike off-line consumers, on-line consumers need to consider additional trust or privacy issues when evaluating their satisfaction/repeat-purchase intention [43]. This is because consumers in on-line markets perceive high levels of risk (fraud, information abuse, etc.) during their purchases. According to past research, concerns about security, trust, authentication, fraud, and risk of loss are the most significant barriers to the growth of e-commerce [15]. For instance, according to the Associated Press, 61 percent of adult Americans said they were very or extremely concerned about the privacy of personal information when buying on-line, an increase from 47 percent in 2006 (www.itfacts.biz/57-of-americans-still-very-concerned-with-credit-card-safetyonline/9542). Such concerns arise during the purchase process because private information can be easily collected, processed, and exploited by various parties not directly linked to the transaction. The spatial separation between consumers and vendors further increases consumers’ fears regarding opportunism by sellers [3]. Consumers concerned about privacy risks are more likely to patronize stores that have features that guarantee their privacy. Although most on-line The authors thank the guest editors and the referees for their encouragement. Their critiques have greatly improved the lucidity of this article. The research was supported by the National Science Foundation under grant #0916612. The usual disclaimer applies. 12 PARk, BHAtnAgAR, And RAo vendors detail the steps they take to protect the privacy of their customers in their privacy policy, asymmetries of information make it impossible for consumers to know whether an on-line vendor would actually adhere to its policy. One way to address the fears and concerns of on-line consumers is to establish a level of trust between consumers and on-line businesses. A remedy that could alleviate concerns and establish trust is a privacy service provided by vendors, that is, third-party assurance seals [38]. Through such seals, on-line vendors can reassure their customers regarding their commitment to protecting customers’ privacy [25]. Third-party assurance seals are provided by the vendors through a third party (after an independent audit and investigation) and serve to guarantee the privacy policy of the on-line vendors. Such seals are an IT-enabled service provided by vendors to mitigate the fears of customers regarding privacy and can be viewed as privacy signals that serve to differentiate privacy-respecting sites from their competitors [53]. Despite the potential impact of assurance seals on consumer satisfaction and loyalty, little research has been conducted on this topic. To better understand the effect of third-party assurance seals on on-line consumer satisfaction and repeat-purchase intention using vendor services, this study asks the following questions: (1) Do assurance seals influence on-line service experience? If so, (2) how do assurance seals affect consumers’ satisfaction and repeat-purchase intention? Specifically, important issues are: Will the inclusion of assurance seals provide a frame for consumers’ expectations for service performance so that service performance differently affects overall satisfaction/repeat-purchase intention among on-line vendors? How is the effect of service performance changed by assurance seals in terms of influencing overall satisfaction and repeat-purchase intention? These research questions may be critical for on-line retailers in order to understand whether assurance seals efficiently generate satisfaction and repeat-purchase intentions, as well as in deciding whether assurance seals are more profitable than other strategies, such as service guarantees. By focusing on the psychological effect of assurance seals, this study articulates that assurance seals not only provide a psychological mechanism that frames the evaluation of consumer satisfaction, but also influence the relationship between the main constructs: consumer satisfaction/repeat-purchase intention and service performance. Unlike much research, which focuses on students’ responses, this paper utilizes actual buyers of on-line goods, a more generalized subject pool. The study increases our understanding of the impact of IT-enabled and IT-driven service on individuals’ overall satisfaction and repeat-purchase intention and also of the impact of assurance seals on the relationship between vendor’s service performance and consumers’ overall satisfaction/repeat-purchase intention.