Byrne returns to his CEO post after his three-month medical leave of absence.
E-retailers satisfy more consumers, but some still leave money on the table.
How do you measure the success of your retail web site?
Is it based on metrics such as online sales, visitor traffic or conversion? These are important indicators of past performance, but they don't tell you much about tomorrow or how effectively your e-commerce site will impact cross-channel sales next week or next month.
Because of the predictive value of customer satisfaction as a metric for web merchants, Internet Retailer asks us each year to measure satisfaction for the top 100 e-retailers. Ranking the largest Top 500 retailers by revenue, as Internet Retailer does each year, is an invaluable look at what has been accomplished. But customer satisfaction can predict what's to come. In a recovering economy, smart retailers of all sizes are keeping a close eye on this key indicator of present and future success.
This year for the top 100 online retailers we're reporting on three key success indicators that every merchant should track, including one that's brand new:
Satisfaction: In order to see how well an e-commerce site meets the needs of visitors, it is imperative to measure, manage and work to improve online satisfaction. Studies have documented that online satisfaction, when measured correctly, can accurately predict sales across channels, loyalty and even stock prices.
Purchase Intent: Our research indicates that only 39% of visitors to one of the top 100 retail sites included in this study intend to make an online purchase. Nearly one-half—49%—came to research a product, and 12% came for another reason altogether. Therefore, we can't measure the success of a merchant site only by whether people purchase online. The purchase intent score reported for each of the top 100 retailers measures the likelihood that an individual will purchase from any channel as a result of their visit to an e-commerce site. Purchase intent is an outcome of satisfaction.
Multichannel Value: For the first time this year—and exclusive to Internet Retailer—we have calculated a new score for each web site that we call the Multichannel Value Index. The index is based on the relationship between online satisfaction and multichannel purchase intent, and it helps retailers understand and project how well a web site is living up to its potential by either supporting or undermining multichannel sales.
Taken together, these three numbers give any online retail decision-maker a good picture of how an e-commerce site is influencing future business across all channels.
Satisfaction is the most important metric and the driver of the customer behaviors retailers care about most: purchasing, recommendations and loyalty. Satisfaction with the top 100 online retailers was at an all-time low of 73 (on the Index's 100-point scale) in 2009 in large part because of the deep recession. But there is good news for retailers in 2010 and beyond. Overall, the top 100 e-retailers have rebounded from the drop last year to a new, all-time high of 78 in the spring of 2010. Nearly every retailer's score rebounded to at or above previous satisfaction levels.
However, it's important to remember that this study reflects satisfaction only with the top 100 e-retailers. Since higher satisfaction predicts revenue, it makes sense that the retailers in the top 100 would have superior satisfaction levels—providing a better online experience helped them get into the top 100 in the first place. Research we've conducted over the last year indicates that as the recession ends and successful retailers rebound, smaller retailers are suffering, and the satisfaction gap between the best and the worst is widening. While it's good news that the top 100 e-retailers are doing so well, it means everyone else will have to work harder to compete.
Netflix.com Inc. (+2.4% to 87) leads the Top 100 for the fourth year in a row, and Amazon.com Inc. (+2.4% to 86) again comes in a close second. In fact, 28 of the e-retailers measured for this study attained a customer satisfaction score of 80 or higher, generally considered the threshold for excellence in studies using this methodology. That means e-retailers have set the bar higher than ever; only five retailers scored 80 or higher last year.
Of the sites measured in both 2009 and 2010, nearly one-half—40 of 82—saw satisfaction increases of five points or more. This remarkable finding shows that as we emerge from the economic downturn, top retailers are once again investing aggressively in the online customer experience.
On the lower end of the spectrum, not a single e-retailer scored below 70, unprecedented in the six-year history of this research. Just last year, albeit during a recession, 15% of the top 100 retailers scored 69 or lower.
Other findings include:
- Of the 17 retailers classified in the Top 500 Guide as mass merchants, six scored 80 or higher: Amazon.com, QVC Inc., HSN Inc., J.C. Penney Co., Kohl's Corp. and Walmart.com.
- There are 17 apparel and accessories retailers in the top 100, but only two scored 80 or higher: L.L. Bean Inc. (82) and Coldwater Creek Inc. (80). Urban Outfitters Inc. (74), RueLaLa.com (73) and YOOX Group (71) have the lowest scores.
- The computer and electronics category has a 10-point spread, from high scorer Apple Inc. (83) to low scorers PC Mall Inc. and Etronics Inc. (73).
- Williams-Sonoma Inc. takes the top spot in the housewares and home furnishings category with a score of 79.
- Four of 11 retailers in the food and drug category scored an 80 and higher: Keurig, a unit of Green Mountain Coffee Roasters Inc. (82), Drugstore.com Inc. (80), Harry and David Holdings Inc. (80), and Weight Watchers International Inc. (80), while Safeway Inc. and Nutrisystem Inc. trailed, both with 74.
While satisfying customers is important, the true value of understanding satisfaction comes from looking at proven outcomes, such as an online visitor's intent to purchase online or offline as a result of a visit to a retail web site. The purchase intent metric quantifies the likelihood of site visitors buying from a retailer through any channel, including the web, catalog and stores.