Daily Research News Online no. 5028 - Online Satisfaction Drops Despite Growing Sales

Online Satisfaction Drops Despite Growing Sales

January 11 2006

Research from comScore and Performics shows healthy online sales over the holiday season, but studies from ForeSee Results and the Customer Respect Group suggest that e-tailers cannot afford to relax just yet, as customer satisfaction with online retailers is declining.

According to comScore Networks, online non-travel spending during the 2005 holiday season (November 1 to December 31, 2005) totalled $19.6 bn, representing a 25% increase over the $15.7 bn spent during the corresponding period in 2004.

More details are at www.comscore.com

New analysis from Performics also shows a strong holiday season for e-commerce - with Mondays being particularly popular shopping days. Each of the Mondays between Thanksgiving and Christmas generated major sales peaks. December 5th - dubbed 'Cyber Monday 2' - was the biggest day for e-commerce sales.

More details of the analysis are at www.performics.com/our_company_files/holiday_recap_01-10-06.pdf

Less positive is a study from ForeSee Results and FGI Research, which shows a fall in customer satisfaction with most of the top 40 US online retailers over the holiday period - despite increased online revenues.

The study measured visitor satisfaction, using the methodology of the University of Michigan's American Customer Satisfaction Index (ACSI) to determine the scores. All but four of the top 40 sites had lower satisfaction scores during the holidays than when they were measured in the spring. Overall satisfaction fell by 4% in this period (from 76.7 to 73.5 on the Index's 100-point scale).

The highest scoring retailers were Netflix (84), Amazon (82), LLBean (80), and QVC (80), but each saw their score drop. The lowest scorers were CompUSA.com (67), Kmart (68), and Sears (68), and those with the biggest drop in satisfaction were ToysRUs.com (10% drop), OldNavy.com (9%), Sears.com (8%), and JCPenney.com (8%).

Customers were particularly dissatisfied with price despite large discounts on offer, perhaps reflecting high expectations at this time of year. The survey also shows that first-time and infrequent visitors are the least satisfied customers, with satisfaction scores 10% below more frequent visitors.

According to Larry Freed, President and CEO of ForeSee Results: 'There's no one-size-fits-all solution to fixing this. It really depends on what the retailer is hearing from its customers. It may be that if you are satisfying customers better in other areas, price will become less of a factor. It may be that you only need to lower price with certain segments of customers.'

Freed says he does not expect total online sales to fall - but that customers are likely to switch allegiance. 'Every time a top retailer drops in satisfaction, there is a tremendous opportunity for smaller, less well-known e-tailers to make inroads.'

ForeSee Results, which specialises in online customer satisfaction management, is online at www.ForeSeeResults.com FGI Research which operates a range of panels, including the online SmartPanel, is at www.fgiresearch.com

The Customer Respect Group's latest study also shows declining customer satisfaction with some web sites, and evidence that companies are unable to cope with the volume of customers.

The study assigns each web site a customer respect index (CRI) rating - based on interviews with a representative sample of Internet users and analysis of more than 2,000 corporate web sites.

The latest study focused on the hi-tech and computer industry. Overall, the industry scored a CRI rating of 6.4, with no change from six months ago. However, 37% of companies fared worse than six months ago.

The best sector was Internet Services at 7.0, led by eBay with a rating of 8.4. The worst performing sector was Computer and Data Services at 6.1.

Almost half the companies received a Poor rating for Responsiveness. Only 47% of all emails are returned within a day of being sent and almost a third had received no response at all after a month.

According to Terry Golesworthy, President of the Customer Respect Group: 'Websites encourage customers to communicate and ask questions, but this should not be done if questions cannot be handled. Some previously stellar performers showed definite signs of volume overload in this report.'

The Customer Respect Group's own site is at www.customerrespect.com.