Retailers shift their ad spending from TV, radio and print ads to digital ads.
Today's super-consumers are tough customers, but Top 100 e-retailers mostly keep them happy.
There's no denying the significant impact the web has had in the retail industry and on how customers shop today. Although retailers have come a long way in understanding consumer behavior, the truth is that they are still figuring out how to deal with the 21st-century shopper. Gone are the days when a customer drove to a store location during business hours, viewed the merchandise in person and, on a good day, asked a sales representative a few questions about the different products sitting on the shelf before making an educated purchase.
Today, consumers wield unprecedented power. They can shop anywhere at any time and they have a multitude of resources at their fingertips—web, mobile, tablets, social media. They have the ability to clone themselves by shopping in five stores at once through the use of a multi-tabbed web browser. With the use of a smartphone, they can walk down an aisle of one store and ÒteleportÓ a sales representative from a competing store, or several representatives from several stores, to assist them in finding the best products at the best prices.
In a single bound
Consumers nowadays also speak with incredibly loud voices, posting their shopping experiences—good or bad—to Facebook and Twitter. Their hearing is acute and refined; they listen to the millions of voices expressing opinions and recommendations about products and companies through social media. Their knowledge is practically limitless. Thanks to the available customer-generated product reviews and detailed product specifications, many shoppers know as much or even more than store employees by the time they are ready to make a purchase. More impressively, these super-consumers can perform all these feats in a single bound. In other words, they can do it all at once.
Technology continues to move at lightning speed, and that means shoppers are only going to get smarter, faster and more powerful. That's why it's imperative for retailers to understand today's super-consumer, how they shop and—maybe most importantly—what makes them happy.
Sure, technology will continue to change as will the way consumers use it to research, shop and purchase. However, the one constant that will always remain pertinent in the retail world is customer satisfaction. Research shows again and again that satisfied customers are more likely to make future purchases and to make recommendations, urging friends, family and anyone connected to the web to shop where they had the best experiences.
One problem that retailers face in this new era of shopping is deciding which metrics will give them the most actionable insights. Companies have long used behavioral metrics to determine their success or failure. This isn't wrong—it's good information to have at the ready. But looking at only behavioral data is like constantly looking in the rearview mirror. If a company really wants a sense of where they are going, they need to continuously monitor and improve the customer experience before super-consumers go up, up, and away from their web sites (and possibly also their stores and catalogs).
Satisfaction predicts success
ForeSee monitors the customer experience. Our technology is founded on a scientific methodology created at the University of Michigan that has proven the strong relationship between customer satisfaction and a company's financial future. In essence, high customer satisfaction, when measured scientifically, predicts success.
Each year, ForeSee measures customer satisfaction for the top 100 retailers in Internet Retailer's Top 500 Guide. Along with measuring Satisfaction, we also track Purchase Intent and Multichannel Value. Here's why each of those metrics is so important:
- Satisfaction: In order to determine how well a web site is meeting the needs of site visitors, it is imperative to measure, manage and work to improve online satisfaction. Academic studies have repeatedly shown that satisfaction, when measured correctly, predicts sales (across all channels), loyalty, and drives word-of-mouth marketing, and even stock prices.
- Purchase intent: The purchase intent score reported for each of the top 100 online retailers measures the likelihood that an individual will purchase from any channel as a result of their web site visit. Purchase intent is an outcome of satisfaction. To increase purchase intent, retailers need to increase satisfaction.
- Multichannel value: Because of the super-consumer's rise and the many tools he has at his disposal, we calculate the Multichannel Value Index exclusively for Internet Retailer. This score is based on the relationship between online satisfaction and multichannel purchase intent, and it helps us understand and project how well a web site is living up to its potential by either supporting or undermining multichannel sales.
These key success indicators give company executives and managers excellent metrics for their web sites that go beyond just sales. These measures quantify how a web site is influencing future business across all channels.
Site visitors and satisfaction
Satisfaction is the most important metric we measure and is the driver of all the customer and visitor behaviors that retailers care most about, including purchases, recommendations, loyalty and more.
This year we compared less satisfied web site visitors (with satisfaction scores of 69 or less) to highly satisfied web site visitors (with satisfaction scores of 80 or higher). Based on likelihood scores, compared to dissatisfied site visitors, satisfied visitors say they are 72% more likely to purchase from that retailer online, 56% more likely to purchase from that retailer offline, 67% more likely to purchase from that retailer next time they're in the market for a similar product, and 69% more likely to recommend the retailer to someone else.
Overall, satisfaction scores have reached a plateau over the last three years and remain at 78 again this year. In 2010, we saw an increase in consumer satisfaction from 2009 when scores jumped from 73—its lowest point—to a record high 78 as e-retailers rebounded from the sluggish economy.
While satisfaction appears stagnant, the good news is that we haven't seen it drop to 2009 levels again. We do have to keep in mind this is a measure of the Top 100 retailers—they are financially successful because they already provide a satisfying experience for their customers and continue to innovate and improve upon it.