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How the Top 100 e-retailers rate on two key performance metrics
It’s always easy to see where you’ve been and what you’ve done, and e-retail is no exception. Behavioral metrics like site traffic, conversion rates and sales provide a valuable way to assess what your online customers did last week or last month or last year. Predicting the future, however, is not always so easy.
Two key attitudinal performance metrics provide an important complement to essential behavioral measures. Customer satisfaction, when measured using the methodology of the University of Michigan’s American Customer Satisfaction Index, shows much more than just whether the site meets the needs and expectations of online visitors. The ACSI methodology not only measures customer satisfaction, but behavior intent as well, including purchase, recommendation, likelihood to return to the site and other behaviors associated with loyalty.
The new ForeSee Results/Internet Retailer Purchase Intent Index is a measure of the likelihood of web site visitors to purchase in the future from the retailer, either online or offline. Looking at both online customer satisfaction and purchase intent of online visitors provides much-needed insight into the effectiveness of the web site at driving sales through all channels and supporting a retailer’s overall strategy. When purchase intent and customer satisfaction are both high, the retailer is providing a satisfying web experience that maximizes sales, regardless of channel.
ForeSee Results has been studying customer satisfaction with the top 40 e-retailers for several years, and this is the fifth study. We measure customer satisfaction in June in conjunction with the publication of the Internet Retailer Top 500 Guide and each holiday season as a point of comparison.
We’ve made some important changes this year. First, we expanded from the top 40 e-retailers to the top 100 to provide a more comprehensive picture of the state of online retail. Secondly, we’ve added The ForeSee Results/Internet Retailer Purchase Intent Index to this year’s study to answer an important question: How likely are site visitors to actually make a purchase? A retailer can have no more crucial measure of future success.
As in the past, the Top 100 Online Retail Satisfaction Index measures the satisfaction of browsers, defined as shoppers who visited a web site but didn’t necessarily complete a purchase. Converting browsers to customers represents enormous revenue potential for e-retailers.
Overall, aggregate satisfaction of the top 100 online retailers was 74 on the ACSI’s 100-point scale. This is 2.7% lower than last spring’s aggregate score of 76, although the group of retailers expanded significantly from 2006, which explains most of the decline. The aggregate score for the sites that were measured last spring declined 0.5%. The spring 2007 aggregate purchase intent score of 78 outpaces the aggregate customer satisfaction score of 74 by quite a bit, indicating the strength of the retail brands.
With scores of 85, Netflix.com and QVC.com lead the top 100 retailers in terms of customer satisfaction. Amazon.com (83), Barnes & Noble’s BN.com (82) and DrsFosterandSmith.com (81) round out the list of the five sites with scores above 80. It’s notable that the most satisfying sites are almost evenly divided between Internet-only and multi-channel retailers, as Internet-only merchants sometimes have the edge on online satisfaction because they can devote all of their resources to the web channel.
Barnes & Noble had the greatest increase in customer satisfaction from last spring: 5.1%. Of the 36 sites measured both this spring and last, 14 saw their scores increase in 2007. An equal number have lower satisfaction scores this year, while eight sites’ scores remained flat. With a decline of 9.2%, NeimanMarcus.com suffered the largest loss in customer satisfaction since spring 2006.
With strong scores of 88, Amazon.com and QVC.com have the highest purchase intent, indicating that shoppers who visit their web sites are highly likely to buy from these retailers. Nine sites, all multi-channel retailers, have strong purchase intent scores of 85 or higher, with the list including: BN.com (87), AAFES.com (Army and Air Force Exchange Service) (86), Costco.com (86), MarketDay.com (86), Target.com (86), LLBean.com (85), and Walmart.com (85).
Online retailers can obtain valuable insights through analysis of the link between online satisfaction and purchase intent. For example:
l Two of the three companies with the highest customer satisfaction scores, QVC.com (85) and Amazon.com (83), are also among the top three companies in terms of purchase intent. Both Amazon.com and QVC.com have purchase intent scores of 88. These e-retailers are accomplishing their objective-satisfying consumers and driving sales.
l Five retailers have online customer satisfaction scores that are more than 10 points lower than their purchase intent scores: Costco.com (satisfaction 14 points lower than purchase intent); HomeDepot.com (13 points), Lowes.com (13 points), CVS.com (12 points) and AAFES.com (11 points). For these e-retailers their online sites are not keeping pace with consumers’ expectations; however their strong brand and offline presence still result in strong purchase intent.
l BlueNile.com is the only retailer whose satisfaction score (70) is more than 10 points higher than its purchase intent score (58). BlueNile.com has been given much of the credit for enabling fine jewelry to be purchased online, but the low purchase intent score implies that while consumers are more open to purchasing jewelry online than in the past, there is still a long way to go before they fully utilize the online channel. In addition, it’s likely that consumers are using Blue Nile as an educational resource, then making their purchases offline at another retailer.
While the Top 100 Online Retail Satisfaction Index measures individual company performance, we also looked at categories by both product type and sales channel to see how they compared in terms of delivering a satisfying online experience. The category of Books/CDs/DVDs has the highest satisfaction score of 77. Computers/Electronics and Apparel & Accessories had the lowest category scores of 73.
Among sales channel categories, Internet-only retailers, typically the leader in online satisfaction, do not have the highest customer satisfaction score in this spring’s study. The sales channel category with the highest online satisfaction score of 76 was Catalogers and Direct TV merchants.
Additional highlights from the study include: