A Study on the HBR article
E-Loyalty “Your Secret Weapon on the Web” by Frederick F. Reichheld & Phil Schefter
Introduction
This study is about the Harvard Business Review article “E-loyalty - Your Secret Weapon on the Web” written by Frederick F. Reichheld & Phil Schefter.
In the first section, an overview and summary of the article are presented. The overview includes the main points and examples that are considered important.

1. Overview
1.1. Importance of Loyalty in Internet:

Reichheld and Schefter has been analyzing the Internet companies, their websites and applications for some time and they have concluded that , contrary to the common belief, today’s Internet users in both business-to-consumer and business-to-business worlds show high loyalty and they do not easily leave the companies that they have tried and trusted.

According to the studies of the authors, acquiring a customer in e-commerce world is 20-40% costly than traditional retail channels. Therefore the losses in the early stages of a customer are bigger. But in the following years, the companies earn more from a loyal customer in e-commerce than that they do from their physical retail channels. Therefore the opportunity is bigger, but the risk also seems higher. If the companies end up with low retention rates, than they can face with bigger losses in e-commerce.

It is also observed that loyal customers in the real world tend to be more profitable when they switch to web purchases. The idea behind is that web customers tend to consolidate their purchases in a single supplier that they have built a trust with. An example given by the authors is W.W. Grainger’s case. Grainger is the largest industry supply company in the US. They observed that their loyal customers with steady purchase levels increased their volume of sales when they switched to e-commerce sites for their purchases.