My focus is normally on how people build trust over the course of virtual relationships, but the fact of the matter is that millions of transactions occur online every day between complete strangers, initiated through sites like craigslist, Elance, and dozens of other online auctions, classifieds, social networking sites, and so on. It’s one thing to do business with a well-established brand like Amazon or Best Buy, but how do people create “transactional trust” in these person-to-person situations, when they have so little to go on?
I was recently commissioned by Rapleaf, creators of a portable reputation system that allows you to develop and show your reputation across multiple sites, to conduct a survey to answer exactly that question. The following is a press release going out today that highlights some of the findings of the survey:
Survey Shows Ratings Are the #1 Way Classified and Auction Buyers Determine Trust (When Available)
In an independent survey of users of online classifieds, auctions and social networking sites commissioned by Rapleaf, buyers said that posted ratings are the most important factor in determining their level of trust in sellers.
I like to see seller ratings and reviews, said one buyer. The social proof is very valuable.
Among buyers, 67% selected ratings of the seller as very important, with an additional 25% labeling it somewhat important. The reputation of the site itself, rather than of the individual seller, was also an important factor for determining trust, with 63% rating it as very important. The payment method being used was a close third. Other factors considered included the quality of the ad, an e-mail or phone call with the seller, endorsements and testimonials, web research of the seller, and intuition/prayer/gut reaction.
For sellers, the payment method being used was the most important factor, with 81% rating it as somewhat or very important. Posted ratings of the buyer was a close second at 77%.
Trust is definitely a challenge for these sites. Over 70% of buyers reported not doing business with a seller because they didnt get a good sense of trust. 50% of buyers reported an experience in which the product wasnt accurately pictured or described. Rudeness, defective goods and non-delivery of goods were each cited by more than 20% of buyers.
Credibility is key, wrote one respondent, and I think it’s difficult to establish in a classified ad. How can you develop trust in you, your product, your service, in just a few lines?
For some, the trust issues prevent their participation entirely:
I have never done it because I am afraid, said one respondent. Not only do I worry that I will lose my money, but I am not sure of the quality of the product or that I will even get the product delivered. Anything that will remove fear, ensure quality, build trust into the transaction would help!
Sellers also frequently experience problems with buyers. Almost 50% of sellers reported having an experience with flakey buyers. Other top problems sellers cited included rudeness (38%), refusal to pay previously negotiated price (32%), and harassment (19%).
Several respondents expressed a desire to have ratings be available across sites. In response to the question, What one or two things do you feel could be done to best increase the trust between buyers and sellers, replies included:
I like eBay’s feedback concept, although I wish there was a centralized version of this, so I could see how their feedback looks from other places (craigslist sales, Barnes and Nobles used book sales, etc.) and so people could take their feedback scores with them.
Reputations systems are important, and being able to understand a person’s reputation across multiple sites would be a boon (in other words, to blend, say, MySpace ratings and eBay ratings).
Some sort of due diligence, much like eBay’s rating system. I think also that it would be good to have some sort of overall trusted vendor rating for use on the entire internet.
People want to build trust with those that they buy, sell, and barter with, said Auren Hoffman, CEO of Rapleaf. Ratings are a proven way of doing that. We rate books on Amazon, electronics on shopping.com, and restaurants on Yelp. As more and more business is done between individuals on the Internet, rather than just with large e-tailers, rating people is the natural next step.
Rapleaf is a free portable reputation system for e-commerce that allows buyers and sellers to rate one another. Getting rated and getting a Rapleaf score can help facilitate a greater level of trust among other buyers and sellers.
For the complete results of the survey or more information on Rapleaf, contact:
UPDATE 7/21/2006: The full report of the survey has now been published:
Transactional Trust in Social Commerce