What drives website registration?


The following post represent a summary of a research article arranged by Ting Li and Paul Pavlou (2015).

Content

registration form

A lot of websites rely on users’ registrations in order to create network value, as increasing number of users lead to positive network externalities. However, it is not desirable for users to register on such websites because they need to disclose their personal information to others. This raises information privacy concerns from negative network externalities as the number of people who have access to user’s personal information increases. Basically, with increasing number of users, both network value and information privacy concerns increase. Researchers were interested which of these two externalities has more effect on user’s website registration behavior. Researchers proposed network value-versus-information privacy concerns dilemma due to the fact that users always have to give up personal information in exchange for network access.

Article’s goal

The following article analyzes the drivers of user’s website registration behavior.

Definitions

In order to understand the essence of this article you should be familiar with two frequently used definitions. Network externality (alt. network effect) is the effect that one user of a good/service has on the value of that good/service to other users. There are two kinds of network externalities: positive and negative. Examples of positive network externalities include Facebook, Twitter, telephones and generally everything that increases in value as the number of users rise (more users -> more value). If only a few people used Facebook, it wouldn’t be valuable and no one would use it. Example of negative network externality is traffic jam, where increasing number of cars on the road reduces the total value of the road due to emergence of car queues and speed reduction of the whole traffic (more users -> less value).

Methodology

In order to tackle the network value-versus-information privacy concerns dilemma, researchers conducted a field experiment. They created a website with phone numbers directory (valuable network) which can only be accessed after user’s registration. Registration required user to share his phone number as well and assume the risk of his phone number misuse (privacy concern). Researchers manipulated website’s value in terms of popularity (number of visitors and registered users) and positive Word-of-Mouth (WoM) opinion (of an expert, user, none) by displaying these parameters on the website. By doing so, they aimed to create trust and reduce information privacy concerns (you are more likely to trust & register on a website which shows 10,000+ registrations & visitors and excellent user feedback, and not trust & not register on a website with 500 visitors, 20 registrations and no feedback). Then, researchers measured the number of user registrations under different scenarios, e.g. displaying “number of visitors” along “expert” WoM opinion, “number of visitors and registered users” along “user” WoM opinion, “number of registered users” along “user” and “expert” WoM opinion, and so on. In the end, researchers aimed to find out whether perceived positive network externalities in terms of website’s popularity and positive WoM opinions will outweigh the user’s perceived negative network externalities in terms of privacy concerns.

Research hypotheses:

Website popularity
H1a) Displaying popularity information on a website (either the number of visitors or the number of registered users) increases a user’s website registration more compared to not displaying any popularity information.
H1b) Displaying the number of registered users on a website increases a user’s website registration more compared to displaying the number of visitors.
H1c) When both popularity information numbers are displayed on a website (i.e., number of visitors and number of registered users), displaying a higher number of registered users relative to the number of visitors positively affects a user’s website registration.
H1d) When both popularity information numbers are displayed (i.e., the number of visitors and the number of registered users), displaying a higher number of visitors negatively affects a user’s website registration.

Word-of-Mouth opinion
H2a) Displaying WoM information (from either an expert or a registered user) increases a user’s website registration more compared to not displaying any WOM information.
H2b) Displaying expert WOM information increases a user’s website registration more compared to displaying WOM information from registered users.

Information privacy concerns
H3a) Information privacy concerns decrease a user’s website registration.
H3b) Displaying popularity information on a website decreases a user’s information privacy concerns compared to not displaying any popularity information.

Trust
H4a) Trust increases a user’s website registration.
H4b) Displaying WoM information on a website increases a user’s trust compared to not displaying any WOM information.

Results

The findings suggest that the positive network externalities from displaying both types of information (popularity and WoM) outweigh the negative effect of information privacy concerns, leading to higher user website registration. Specifically, displayed number of registered users increases the likelihood of a potential user’s registration by 47% (versus when the visitor information is shown). In addition, when both numbers are present, displaying the number of registered users encourages future registration, whereas displaying the number of visitors reduces the number of future registrations. As a possible explanation, people might perceive that a high number of visitors and a low number of registered users implies that people do not trust a certain website (privacy concerns), making the high number of visitors a potentially negative signal. Finally, compared with displaying “user” WoM, displaying “expert” WoM increases the likelihood of registration by 69%. In addition, when only the number of registered users was highlighted along with only “expert” WoM, the website achieved over 7.5% higher registrations among potential audience than without any information being displayed.

Limitations

  • Researchers relied only on website’s popularity and WoM opinion, while ignoring potential extrinsic motivators (e.g. money, benefits, time savings, etc.) that companies may offer to customers in exchange for personal information. In addition, study used only positive WoM opinion to attract users, while prior research found that negative WoM opinion has a greater impact on users’ decision making.
  • While study assumed a “heavier” weight of “expert” WoM opinion on users’ decision making, previous research has showed that users can actually be more influenced by similar users’ opinions.
  • In order to reduce the time and effort needed by the natural (versus paid) visitors to participate in the study, researchers used a short-cut version of the survey, which is a natural limitation.
  • Study relied on large, but not intense website traffic, while previous research shows that displayed numbers (visitors & registration) have more effect on user registrations for traffic-intense websites.

Managerial implications

Article suggests that websites should mitigate user’s information privacy concerns and focus on building trust in order to encourage website registration. In addition, websites should give users control over their privacy information, as well as inform them on how their personal info will be used.
In regard to practical recommendations, website managers should keep in mind the following facts:
1. Displaying user registration number increases the potential user registration likelihood by 47% in comparison to displaying visitors number.
2. Displaying the visitors number generally discourages users’ registration.
3. Displaying positive “expert” Word-of-Mouth opinion in comparison to “user” WoM opinion, increases the likelihood of users’ registration by 69%.
4. It’s better to display “expert” Word-of-Mouth opinion in together with number of registered users in comparison to not displaying any information, as this strategy increases the likelihood of website registration of users by 7.5%.

References
Li, T., and Pavlou, P. 2015. “What Drives Users’ Website Registration”. Working Paper.

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