March 5, 2004, 12:00 AM

E-shopping = e-satisfaction = booming sales

Customer satisfaction with online retailing, based on the American Customer Satisfaction Index, scored an 84 on a scale of 100, 1 point higher than last year and ahead of customer satisfaction with other online consumer services.

In Larry Freed’s opinion, there’s a good reason online sales continue to outperform offline sales: Customers like the online shopping experience.

Freed’s company, ForeSee Results Inc., last month released the latest report on customer satisfaction with online shopping and, as it has since ForeSee began measuring satisfaction, online retailing shone. Customer satisfaction with online retailing, based on the American Customer Satisfaction Index, scored an 84 on a scale of 100, 1 point higher than last year and ahead of customer satisfaction with other online consumer services. The national average for all companies in the American Customer Satisfaction Index is 74.

“When we see increasing customer satisfaction, we expect to see—and we do see—increasing profitability,” Freed says. “Customer satisfaction drives sales, loyalty and profitability.”

Customer satisfaction with the four categories of e-commerce that ForeSee measures—retailing, brokerages, travel and auctions—registered 80.8, up 4.1% from 77.6 a year ago. After e-retail, the auction category is the next highest-rated, at 78, followed by travel, 77 and brokerages, 76. “E-retail is clearly the standard-setter and the other categories don’t quite measure up,” Freed says.

Stand-outs in the e-retail category are Amazon.com and BarnesandNoble.com, which scored 88 and 86 respectively. EBay also is strong, with an 84. “Amazon’s score shows they are remarkably close to delivering customers’ ideal,” Freed says.  “Maintaining strength while evolving the business model is even more impressive.

Freed notes that there is a closer relationship between customer satisfaction and increased sales and profits online than there is offline. A bad store experience requires the customer to leave the store and find a new place to buy the product, so the customer has to invest some time and effort into making the switch. Not so online. “You can click away from a store and be in three or four other stores right away,” he says. “It’s immediate.”

ForeSee creates its measurements through a formula based on surveys of users of the products and services being measured. The ACSI is produced quarterly and covers a wide range of goods and services used by Americans. It is produced at the University of Michigan in partnership with the American Society for Quality and the CFI Group. ForeSee Results co-sponsors the e-commerce portion of the ACSI, as well as the annual e-business report included in the ACSI each August.

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