Holiday 2010: Online Winners in Customer Satisfaction
Amazon and Netflix are the top scorers in terms on online customer satisfaction, according to the sixth annual ForeSee Results E-Retail Satisfaction Index (U.S. Holiday Edition). Both had a score of 86 on the study’s 100-point scale, with 80 generally considered the threshold for excellence. Here are the study’s top performers:
- Amazon (86)
- Netflix (86)
- QVC (84)*Avon (83)
- L.L. Bean (83)
- Newegg (82)
- Apple (82)
- eBay (80)
- Musician’s Friend (80)
- VistaPrint (80)
- Walmart (80)
- Williams-Sonoma (80)
While many e-retailers had a holiday to celebrate, customer satisfaction with the Top 40 online retailers overall slipped 1% to 78 in 2010 compared with the 2009 holiday season, but is still significantly higher than previous years. The overall decline can largely be attributed to declining scores for some computer and electronics retailers and mass merchants.
"In a recovering economy, a lot of us assume that declining satisfaction is a result of frustration with prices,” said Larry Freed, president and CEO of ForeSee Results, Ann Arbor, Mich. “Our research shows that is not always the case, and that it varies drastically from company to company. Retailers are slashing prices this time of year to attract customers, and not all of them need to be doing that."
The report examined a few notable head-to-head match-ups, including:
Amazon versus Walmart.com: E-retail giant Amazon (86) and retail behemoth Wal-Mart (80) both have superior online satisfaction scores, but Amazon still holds a significant six-point advantage. Amazon beats Walmart.com in three measured drivers, or elements, of website satisfaction: content, functionality, and merchandise, and they are tied on consumers’ perceptions of their prices.
Staples versus Office Depot versus OfficeMax: The three major office suppliers compete closely in terms of satisfaction, with Staples leading at 78, Office Depot at 76, and OfficeMax at 75. The difference-maker in the office supply category is price, and Staples scores better than its rivals for the price element of the retail website experience.
Netflix versus Blockbuster: While video rental is not typically associated with holiday retail, Blockbuster and Netflix are still two of the highest revenue e-retail websites on the Internet. Netflix is online only. Blockbuster has the potential advantage of being an integrated multi-channel retailer, but Netflix (86) beats Blockbuster (76) in two very important categories: price and website functionality. In this case, improving functionality is more important than price if Blockbuster is going to make any strides toward closing the satisfaction gap with Netflix.
How Retailers Can Meet the Demands of the ‘New’ Shopper
As retailers gather in New York City for the National Retail Federation’s Annual Convention and EXPO The new, post-recession American shopper is high maintenance, promiscuous and demands an innovative and engaging experience in-store and online. That’s the takeaway from a study released by Leo Burnett’s marketing services arm, Arc Worldwide .
“The recession has forever changed people’s mindset about shopping,” said Alan Treadgold, head of retail strategy at Leo Burnett Worldwide. “People have developed new rules for retailers. As a result, retailers must understand the changed role they play in people’s lives and meet their expectations to maintain customer loyalty.”
The study, “Re-Imagining The Retail Store,” identified five key considerations retailers should keep in mind when implementing new strategies:
DON’T LET TECHNOLOGY UNDERMINE THE SHOPPING EXPERIENCE. Retailers tend to view in-store technologies as a better way to connect with their customers, but customers don’t agree. Yes, people want to experience a seamless transition between the physical and virtual store by using technology, but they also want educated and friendly service when visiting the physical store. Technology is not a suitable substitute and this practice can damage an already fragile relationship.
SHOPPERS ARE PROMISCUOUS. They shop around and their loyalty is hard earned. The recession has taken a toll on consumer confidence and people’s perceptions of retail business. Customer loyalty has to be earned by understanding in detail the expectations of the shopper and delivering every time.
PRICE GETS YOU AN INVITE TO THE PARTY, BUT NOT A VIP PASS. Consumers will not accept a trade-off — low price versus quality experience and merchandise. Today, people are more than happy not to spend if they feel that retailers do not give them a sufficient reason to purchase.
BREAK THE RULES. If you’re not winning by following the rules, break them. There are two clear ways to win in store-based retailing — excel within your store archetype or take a radical path to greatness and create a new store format that breaks out of category conventions and delivers a unique experience.
THE BASICS ARE STILL SEXY. It may not be exciting, but there is work to do and profit to be made from making the basics better. Retailers are struggling to get the basics right and people are visibly frustrated. Taking a page from “Retail 101” will help to improve customer appeal, retention and ultimately, profitability.
“The retail landscape continues to evolve and move further away from being just a place to purchase a product,” Treadgold said. “It’s an experience. As retailers listen to their customers and understand their behaviors, they can create an experience that people come back to time and time again.”
Online Holiday Recap
U.S. consumers spent an estimated $36.4 billion in online purchases during the period Oct. 31 to Dec. 24, according to MasterCard Advisors’ SpendingPulse, registering a 15.4% year-over-year increase over the 2009 holiday season.
SpendingPulse reports on national retail and services sales and is based on aggregate sales activity in the MasterCard payments network, coupled with survey-based estimates for all other payment forms, including cash and check.
Online sales registered double-digit growth for six out of seven weeks, and the apparel category led the growth, according to Michael McNamara, VP, MasterCard Advisors SpendingPulse.
"In terms of sub-categories, apparel was the clear leader, helping increase the channel’s overall lift,” he said. “In terms of share, online apparel sales during the holiday season accounted for 18.8% of total sales in that category, compared with 16.9% in 2009.”
As for some of the other sub-sectors, online electronics also recorded significant gains, while jewelry, although still in positive territory, lagged behind, McNamara noted
There were six days in the 2010 season that surpassed $1 billion in sales compared with three days in 2009. Top days included Tuesday, Nov. 30, which registered $1.16 billion in sales, and Wednesday, Dec. 1, registering $1.13 billion. The Monday after Thanksgiving generated $999.3 million in sales, a 25.3% increase compared with the Monday after Thanksgiving in 2009.