e-Loyalty among millennials: Personal characteristics and social influences

Abstract

This study develops and validates a new, personal characteristics and peer influence based perspective on e-loyalty formation among millennial customers. Deviating from existing models, it examines the indirect influence of personal characteristics like perceived compatibility, innovativeness and peer influence in terms of perceived subjective norms. Data are collected from 380 millennial respondents from India who have made purchases from an e-retailer in the previous 6 months. The PLS-SEM model tests using Warp PLS 5.0 and the multiple mediation tests were done using PROCESS macro for SPSS 23.0. Embedded within the larger context of technology adoption, the findings suggest that personal characteristics and social influence play more crucial role in deciding the e-loyalty intentions of millennials. A better understanding of millennials’ loyalty may help e-tailers in the development and implementation of effective marketing campaigns towards retaining them.

Introduction

The e-retail landscape, though booming, is also a highly competitive sector globally and is populated with multiple players with multiple channel offerings. The most critical problem remains the customer acquisition cost – which is estimated to be significantly higher than in traditional offline contexts (Otero et al., 2014). It, hence, follows that e-loyalty becomes the most crucial factor that decides the profitability of any online business (Malhotra et al., 2017). Identification of factors influencing e-loyalty is of significant interest to online retailers, more so with generational cohorts like millennials, which are technology savvy and very different from their earlier generations. Extant studies on e-loyalty often exclusively focus on the customer perceptions about the technical characteristics of the e-retailers that influences loyalty like website quality and security (e.g., Chen et al., 2015; Cyr et al., 2009; Jeon and Jeong, 2017) or limit their focus on relational factors like trust and satisfaction (e.g. Malhotra et al., 2017; López-Miguens and Vázquez, 2017).

When it comes to Millennials, these technical or relational characteristics may not suffice to explain loyal behaviour. Studies have suggested that in comparison with previous generations, millennials exhibit different values, characteristics, and behaviour (Eastman et al., 2014, Gurău, 2012). Further, as millennials are to technology from very early days, technology has a profound impact on their cognitive, affective, and finally, social outcomes (Immordino-Yang et al., 2012).

Focusing on e-loyalty from the perspective of millennials is very important for both theoretical and online marketing practice. Millennials exceed 25% of the world's total population (Nusair et al., 2013) and have large disposable income (Gurău, 2012, Knittel et al., 2016). A study done by Deloitte on millennials in different countries has shown that they are more connected and have a strong ‘social conscience’.¹ Also referred as an online generation (Mangold and Smith, 2012), they are observed to be more market and technology savvy than their earlier generations (Nowak et al., 2006; Brosdahl and Carpenter, 2011), and digital technologies influence a major share of life activities of millennials - be it socializing, hobbies or shopping (Lissitsa and Kol, 2016). They process website information much faster than the previous generations (Kim and Ammeter, 2008) and tend to involve more on online activities, including online shopping (Lester et al., 2006, Smith, 2011). Hence, their responses to online marketing and e-commerce are also likely to be very different from previous generations (Bilgihan, 2016).

Millennials are quite distinct from other generational cohorts also because they show a higher sense of entitlement and display an inclination to reject the social norms of the previous generations (Lazarevic, 2012). They are also known to exhibit lower loyalty towards any products or services (Gurău, 2012, Myers and Sadaghiani, 2010) and to adapt quickly to the innovative changes in technology, especially with those connected with their lifestyle (Shankar et al., 2010). Further, they are very well-connected to their friends and peers (Smith, 2011) and consider the opinions of friends and fellow consumers as more reliable than any company sources (Smith, 2012). Social media has a strong impact on the lives of millennials, as they always prefer to be connected with their peers (Nusair et al., 2013, Veloutsou and McAlonan, 2012). In other words, the peer group influences reflected as subjective norms are a crucial factor, which influences their behavioural responses, including loyalty (Eastman et al., 2013).

Hence, unlike their previous generations, for millennials, personal characteristics and social influence can have a crucial influence on their online loyalty. Thus, existing models on e-loyalty may have limitations in explaining the loyalty formation process among millennials. However, despite such heightened interests in predicting the behaviour of millennials, and despite the well-acknowledged differences in their attitude towards loyalty, a comprehensive model on e-loyalty of millennials is difficult to be found in the literature (Bilgihan, 2016, Rambocas and Arjoon, 2012, Veloutsou and McAlonan, 2012).

This study, therefore, aims at understanding how millennials form loyal relationships with e-retailers by developing a new e-loyalty model that incorporates the indirect influence of personal characteristics like innovativeness, perceived compatibility and social factor such as peer influence.