Faculty Spotlight - Wolfgang Jank

ISDS Professor Finds Trust Seals Help Business

One of the most frustrating moments for online retailers is when a potential customer has items in his or her virtual cart, but then leaves the site without buying anything.

But what can retailers do to reliably encourage customers to take that leap from shopping to buying? That's the question ISDS Professor Wolfgang Jank sought to answer in his recent research on the effect of trust seals on online shopping. Trust seals, like TRUSTe or VeriSign, appear as a small logo that assures customers they will receive what they expect from a company and not have their data compromised.

"You trust Amazon, you trust," Jank said. "However, if you're going to, how can you be sure that once you submit your payment information you're going to receive something in return?"

Jank started thinking about the issue several years ago. He was approached by a trust seal company that would vet companies and offer a moneyback guarantee to the retailer's customers in exchange for a percentage of the transaction revenue. The company was interested in having research to point to in order to persuade clients that its product was effective in convincing customers to buy, but there was a dearth of research that offered a definitive conclusion. Jank's research on the topic, "The Value of Third-Party Assurance Seals in Online Retailing: An Empirical Investigation," is forthcoming at Information Systems Research.

"The question we were asking is, 'what value does this provide to the merchant?'" Jank said.

Working with an online pharmaceutical company, Jank was able to conduct a rare truly randomized study: half of the company's customers were shown the trust seal, and half were not. Most studies of this type are behavioral studies that compare a company with a trust seal to a different company without a trust seal because companies are reluctant to go without something they believe is effective at bringing in money. However, in these non-randomized studies -- including studies Jank had conducted in the past -- whether or not there is a true cause/effect relationship between the trust seal is inconclusive.

Jank's latest research, on the other hand, found for customers who saw the trust seal, conversion rates (going from having items in the cart to purchasing those items) increased about 84 percent, which translated into an increase in revenue of about 113 percent. With the empirical research, it was evident that the trust seal had caused that increase. Jank's research has real-world implications, both for retail companies looking to partner with trust seals and trust seal companies trying to market themselves.

"What was remarkable was the strong impact the trust seal has," Jank said. "It was remarkable with the background that it's really hard to do business online unless you're a big company."

There's still much information that is left to discover regarding trust seals, Jank said. Future research on the subject could look at the trust seal's impact on conversion rates across varied industries, such as books or toys in addition to prescription drugs.

"With pharmaceuticals, the stakes are higher," Jank said. "People are a little bit more sensitive to the outcome."