Most e-retailers know customer satisfaction is important, but very few can quantify the contribution their web site is making to their overall financial success. Fewer still know what browsers-as opposed to buyers-think of their sites.
That’s why a partnership of ForeSee Results and FGI Research, using the American Customer Satisfaction Index methodology, conducted a study of web site browsers at the 40 largest retailing web sites. Results are based on a preliminary ranking of the Top 40. Between the preliminary ranking and final ranking, two retailers dropped out of the Top 40-Harry & David and FTD.com-and two moved in-PCMall and Office Max. Thus Harry & David and FTD are included in this satisfaction analysis.
A key metric
Customer satisfaction is an important web site performance metric and a reliable economic indicator of a retailer’s overall future revenues. An understanding of online customer satisfaction dynamics measures not only how satisfied site browsers are today, but also what will increase their satisfaction and ultimately influence their behavior in the future so that they buy again, return to the site, and recommend it to others. Knowing such information is crucial in today’s hyper-fast world of e-commerce, where customers can choose to shop at alternate retailers with very little effort.
Many studies and research reports focus on customers, or those who have successfully completed a purchase. Customer satisfaction is a critical performance metric because of its direct influence on customer loyalty and customer retention. But this Index looks at browsers, or those who are in the pre-purchase stages of the shopping experience.
Browsers include existing customers, first-time site visitors, competitors’ customers who may be cross-shopping and others spending time on a retail web site. They often shop on a variety of web sites and other channels before making a purchase. With industry-wide conversion rates at 3-5% on average, the 95 – 97% of browsers who do not convert into purchasers on a given visit present a great opportunity for increased revenues. By determining what drives browser satisfaction and what drives their likelihood to complete a purchase (in whichever channel), retailers can find the key to significant financial gains.
Our research indicates that browser satisfaction tends to be lower than purchaser satisfaction for a simple reason: Those who have already completed a purchase have done so because a certain level of satisfaction has already been met, compelling them to complete the purchase.
Getting inside the minds of browsers and assessing their satisfaction provides a critical perspective on how to maximize the contribution of the web site to drive overall sales, customer satisfaction and loyalty.
Of the top 40 online retail sites that we measured, five scored 82 or higher on the ACSI’s 100-point scale, which is considered superior in terms of satisfaction: Netflix.com (85), Amazon.com (84), QVC.com (84), Newegg.com (82) and LLBean.com (82).
There is a pronounced difference in performance between the satisfaction scores of the top five and the bottom four retailers. Four retailers emerged at the bottom end of those sites measured with scores of 71 or under, a full 6 or more points below the average score of 77 for all the sites measured as part of this index: Kmart.com (69), Costco.com (70), CompUSA.com (71) and Buy.com (71). The laggards trail the leaders by 19%, a significant gap.
Among the highlights of our research:
l Half of the 10 largest online retailers do not do as good a job in satisfying their visitors as the average of the top 40.
l While Netflix is in for some serious competition, not only from competitors but also from emerging technology, it does a fabulous job of exceeding customers’ expectations. While it is difficult to control your competitors and fight emerging technology, Netflix is taking care of what it controls, providing a great experience to its visitors.
l Amazon’s purchaser satisfaction as measured by the ACSI Q4 Report took a significant drop. Amazon’s high score for site visitors is partially a reflection of becoming the “Google” of the retail world, that is, a leading source for information and research. As Amazon’s business model continues to drift from direct merchant to aggregator, the challenge is not only to catalog all retail products sold through the Amazon shopping cart, but also to convert and retain those customers.
The overall browser satisfaction scores by company show who the strongest performers are, but some of the most important insights are in the analysis behind the numbers. Using the ACSI methodology, we not only find how satisfied people are with their online experience, but also which aspects of the experience really matter in terms of buying behaviors. The key elements that drive satisfaction with the web site experience include
l Site experience composed of content, functionality, look and feel, navigation, search, product information and site performance.
There is considerable difference in performance between the retailers accomplishing the highest levels of satisfaction and those that lag.
When evaluating the outcomes of the experience we see an even greater disparity between the top performing sites and those trailing the leaders. When comparing the top 10% to the trailing 10%, we see a 35% difference in likelihood to purchase online from the retailer in the future and a 13% difference in the likelihood to purchase from the retailer the next time a similar product is purchased. These are great measures of customer loyalty and demonstrate how satisfaction strongly drives customer loyalty.
The likelihood of a site browser to recommend the site to others is also a great measure of customer loyalty, and we see a 17% difference between the top performing sites and the lowest performing sites-evidence that satisfaction is significantly driving customer loyalty.
Multi-channel retailers are well-represented in the Top 40 online retail web sites as measured by sales volume. While online sales may in some cases be a small fraction of the retailers’ total sales, the role of the web site experience among browsers should never be underestimated. In a study during the 2004 holiday shopping season by ForeSee Results and FGI Research to explore multi-channel shopping behavior, 38% of respondents used the web as a primary research tool, although 71% of shoppers eventually purchased in a store.