FREEDyourMind

2011 Holiday Season: Satisfaction Update

Cyber Monday and Green Monday have passed. Free Shipping Friday and the Holidays themselves are in our future. Where do things stand in terms of the customer experience this holiday season?

(Why do we care? Because customer satisfaction, when measured correctly, predicts the future financial success of a company and also predicts future purchases, loyalty and recommendations. So we definitely want to keep on track of what has already happened with revenue reports, but looking at sales tells us what has already happened, whereas looking at satisfaction can actually predict the future.)

Sales tell us it has been a great holiday season so far. Comscore says holiday sales in the U.S. are approaching $25B, up 15% from last year. A record $1.25B was spent on Cyber Monday. We analyzed our customer data in the form of three benchmarks this week in order to look at the holiday season through the eyes of the customer:

1)      Customer satisfaction: satisfaction is rebounding, and on Green Monday, it was nearly as high as it has been throughout the holiday season so far.

2)      True Conversion Rates: “True” conversion rates are also higher than we’ve seen them in months. Retail sites are doing a good job of converting customers online this year.

3)      Social Media Value: social media has limited value as a direct marketing tool but remains a huge influence on shopping habits and decisions.

#1 Customer Satisfaction

Our retail benchmark suggests that online shopper satisfaction is picking up steam. As we reported, satisfaction was less than stellar on Cyber Monday, but satisfaction on Green Monday has rebounded, and was close to its highest point so far this holiday season, following a dip after Thanksgiving.

#2 True Conversion

Virtually all retailers measure conversion: how many people came to your site vs. how many people actually purchased? Typical retail industry conversion rates hover around 2 or 3%, according to Forrester Research. But what does that really tell you about your ability to help people accomplish what they intended to accomplish.

A couple of years ago, we introduced a metric called True Conversion (you can read more about it in Managing Forward). True conversion looks at how many people came to your site intending to buy, and then how many actually did.

So here’s how it shakes out this holiday season.

When we ask visitors to e-commerce websites over the holiday shopping season why they came to the website, 43% came with the intent to purchase, 50% came with the intent to research, and 7% came for some other reason.

Of the 43% who came to purchase, 49% actually did. That metric is a lot more valuable than knowing what your overall conversion rate is. THIS is the number you want to track and move the needle on. If your True Conversion Rate is 49% this holiday, you should be shooting for 50% next season or even 60% or 70%.

 

I should also mention that there is a huge range in True Conversion Rates when you look at individual retailers. On average, the True Conversion Rate was 43%, but in our benchmark, there was one multichannel retailer (let’s call them Site A) who had a True Conversion Rate of 9% while another multichannel retailer (Site B) had a True Conversion Rate of 79%! These are actual examples from the retailer in our benchmark during the 2011 holiday shopping season, and both are stores that should have a heavy component of holiday gift buying on their sites. This means that of the people that came to that website intending to buy from Site A, only 9% actually did. That’s a terrible conversion rate! That means that 91% of the people who came to that site with money burning a hole in their pocket left without spending a dime. But on Site B, 79% of the people who intended to buy actually did. That’s a much more impressive number.

 

Another interesting data point: 50% of visitors to e-retail websites came intending to research, with no plans to buy anything. Yet 9% of those visitors still converted, even though they didn’t plan to. That’s just extra money the retailer was probably not expecting.

I follow these True Conversion benchmarks pretty closely throughout the year (and if you are a client of ours, you can participate in True Conversion at no extra cost; just ask your analyst), and these numbers look great to me. A True Conversion Rate of 49% (on average for all our retail clients in the benchmark) is a great number—about 11% higher than it was just two months ago before the holiday shopping season got into full swing. We would expect True Conversion Rates to be higher at the holidays—there is more impetus to buy and to buy quickly.

The burning questions for retailers 1) Do you know your True Conversion Rate? 2) Are you measuring regular conversion, and what does it really tell you? 3) Do you know which elements of your website you should improve in order to increase True Conversion? 4) Is there anything you can or should do to convert more of those researchers, the people who didn’t plan to buy anything when they came?

#3 Social Media Value

A third benchmark we’ve been tracking for some time is the Social Media Value Calculation. This is basically a way to calculate the actual tangible value that social media brings to you, beyond just fluffy stats like numbers of followers or fans. The Social Media Value Calculation categorizes people based on the amount of influence your social media initiatives have on their decision to visit the website, store, or call center. You can gain greater insight into how much your social media efforts impact customer acquisition and even spending.

So here’s what we’re seeing in terms of social media value during the holiday season. We consistently see that social media URL’s are responsible for only about 1% of site traffic, and that is the same during the holiday season. However, although only 1% are coming directly from a social media site, social media was a primary influence for 7% of site visitors. And 16% of site visitors reported social media influenced their visit or purchase in one way or another. Moreover, those influenced by social media were more satisfied, more likely to purchase, more likely to recommend and more likely to return. 

So, clearly, social media is making a significant contribution this holiday season.  But this also tells me that social media leave a lot to be desired as a direct marketing tool (only 1% of site visits come referred from social URLs). The true value of social media remains in the arena where it’s still hardest to control—the viral, word-of-mouth nature of real social interactions happening between friends, colleagues, and acquaintances.

These are some of the themes we see emerging from our research, which is ongoing throughout the holiday season. Are there any surprises here for you? Are you measuring satisfaction, True Conversion and Social Media Value? What kinds of insights do these metrics give you during the holidays?

The ForeSee retail benchmark is made up of 159 individual websites, ranging from Fortune 100 retailers to smaller, regional retailers. Among the retail websitesincluded in the benchmark are retailers like Ace Hardware, Bass Pro Shops, Belk, Cabela’s, Chef’s Catalog, Eddie Bauer, eBags, Gamefly, Harry and David, Helzberg Diamonds, Home Depot, LEGO, Musician’s Friend, Panasonic, Samsung, Sears, Sephora, Sony, and StubHub.

ForeSee has been releasing a weekly online satisfaction benchmark during the holiday shopping season for six years. ForeSee collected more than 660.000 satisfaction surveys from people who shopped on retail websites in November and December 2011.

Cyber Monday 2011: Satisfaction Off to a Slow Start, Despite Higher Sales

Our annual analysis of customer satisfaction on Cyber Monday is turning up some interesting finds.

1. Browsers (that's people who shopped online whether or not they bought anything) are less satisfied this year than last year.

2. In general, satisfaction is trending slightly down this year. We'll have to wait and see if that turns around.

3. Buyers are about equally satisfied this year and last year.

4. Apparel & Accessories websites (of all kinds, including shoes) are doing the best job satisfying customers so far this season.

It's very early; too soon to say if the slightly lower satisfaction this year will translate into a slowing down of sales in the coming weeks. Stay tuned!

Top 100: Social Media

Here is more information from our Top 100 Online Retail Satisfaction Index released earlier this month. Today's topic is social media.

Social media is turning out to be a touchpoint with enormous potential for satisfying shoppers and building loyalty and relationships. When we study our own clients using our Social Media Value Calculation, we see that social media has little direct impact on web traffic. In fact, in our most recent Social Media Value Calculation benchmark we saw that only 1% of site visitors came direct from a social media site.  However, 18% of the site visitors indicated that social media was an influence on their visit to the website. When applying this methodology we are able to attribute how much revenue is influenced by social media, helping companies truly understand the return on investment for their social media marketing efforts and also the value that the viral effect of social media is having on their business.   

Back to our Top 100 Online Retail Satisfaction Index.  First, when customers rate their satisfaction with various touchpoints, they are actually more satisfied with their interactions on Facebook and Twitter than many other customer touchpoints, including the website!

 
 

What social sites are most e-retail shoppers using? No surprise here. Facebook.

 

But where do they want to hear from retailers? 42% don't want to hear from retailers at all on social sites.

 
42% of survey respondents say they don't want to interact with retailers on social sites, but the next question indicates that only 29% aren't actually interacting with any retailers, which mean there are some people who SAY they don't want to interact with retailers on Facebook who are already doing so. That's why it's important to have a methodology that dig a little deeper. In fact, 69% of online shoppers are interacting with at least one retailer on social networks. This is a huge growth area for retail, and as people begin to be able to make purchases on Facebook and other social sites, understanding how this experience is impacting first-time and loyal customers will be critical.

 
 
Most people choose to friend, follow, or like a retailer on a social site to learn about sales, special offers and products. Very few do so for customer support. Understanding what your customers are coming to your site for can help you with the content on your social pages.

We also see that more than half of those who are interacting with a retailer on a social site have made a purchase because of it. Wow! This is a real testament to the power of those offers you're posting on your Facebook pages and Twitter accounts.

 

One final point of data related to the value of social media. We always ask about customer acquisition sources, and there are some major shifts year-over-year.

• Internet advertising and traditional media are both way down as a driver of traffic to websites.
• Social media, along with email marketing, are both way up.
• Company familiarity is also up (and could be due to more exposures/touch points on social media).

This data tells me we need to be doing a better job, as an industry, getting at the real value of social media.

What value does Social Media bring to your business?

This is the question that I hear from CMOs pretty frequently.  While there are some great tools to measure how much activity there is about your company on the social networks, understanding the value is another thing altogether.  There is clearly value of positive buzz that can happen on the networks, but is it driving real business? 

That question is what drove us at ForeSee Results to create the Social Media Value Calculation and we have some interesting data in our benchmark to share.

The Social Media Value Calculation allows us to measure the impact that Social Media has on driving visitors to your website and shoppers into your stores.  Not only understanding the impact of your marketing efforts on social networks but also the impact that the viral aspect of social media can have on your business.  By understanding both the direct referrals to your website and the influence that social media has you can really start to understand the business value it can bring to your business.

In our most recent benchmark we evaluated 188 websites and and over 295,000 responses from individual consumers last month alone.  We found that only 1% of the site visitors came direct from a social media network via a referring url.  Yet 18% of site visitors were influenced by social media. 

For the retailers in the benchmark we find that those influenced by social media had higher average order size than those not influenced to visit by social media. For individual companies that can get down to the actual dollars influenced by social media -- understanding the value tha social media brings to their business.  When we examine the purchase behavior of those driven to the site direct from a social network via a referring url we find that while they are more satisfied than the rest of the visitors and more likely to purchase they generally have a lower average order size than the rest of the purchasers.  That might sound strange at first, but the reality is they are often being driven to the site by a discount or promotion and have a tendency to be more of a discount shopper with smaller number of items purchased.

This approach is helping CMOs truly understand the value that social media can bring to their business.

Amazon in UK tops in satisfying their customers

 
At ForeSee Results we just released our 4th annual UK E-Retail Satisfaction Index, measuring the top 40 UK retailers.  We surveyed nearly 10,000 UK consumers that visited the most successful UK e-retailers during the holiday season. 

Some of the key findings

• After a huge year-on-year increase in online customer satisfaction from 2008 to 2009 (from 67 to 71 on the study’s 100-point scale), satisfaction with the top 40 UK e-retailers not only held onto the gains achieved last year but increased another point in 2010 to 72.

 

• There is a notable 23-point gap between the highest-scoring e-retailer (Amazon.com, 84) and the lowest (RyanAir, 61). In the analysis we see that the largest retailers have the highest satisfaction. In fact, the average satisfaction of the top 10 e-retailers (in terms of traffic) is 77; while the average satisfaction for the rest is a 71, a gap of six points.  The best are getting better, while the rest are falling behind. The good news for the smaller players is that customer experience is something that can be improved. Smaller retailers can easily level the playing field and compete with larger retailers if they focus on improving the things that matter the most to their customers.  
• Amazon held the top two spots.  Yes, you heard me right.  Amazon.com scored 84, followed by Amazon.co.uk at 83.  The only other e-retailer that scored above 80 was Play.com at 81.  Over the years 80 has become the bar for top performing sites to be measured against.  John Lewis and Marks & Spencer round out the top 5 with scores of 78.   

 

Why do we care about satisfying our customers?  In today's economy satisfying your customers is more important than ever.  Consumes will go where they are satisfied.  The competition is high and the switching costs for consumers is low.  And the data validates this.  A highly satisfied shopper in the UK says they are 56% more likely to purchase from the retailer the next time they are looking for similar merchandise (a great measurement of loyalty) and 69% more likely to recommend the e-retailer to others. 

 

You can get the full report here.

Next week the US E-Retail Satisfaction Index will be releasead.

 

Happy Holidays!

 

 

 

 

 

 

 

Online Retail Satisfaction Indicates Strong Green Monday

by Rhonda Berg, Researcher

The wave of this year’s holiday shopping season may not yet have crested.  Green Monday, the last Monday that is at least 10 days before Christmas, is often one of the largest online sales days of the holiday season, and it was yesterday, December 13th. 

Satisfaction benchmarks for key online retailer categories (which predict financial success) indicate that yesterday was a strong Green Monday.  The Online Retail benchmark (73.7 on the study's 100-point scale) was notably higher than it was for CyberMonday (73.1).  In addition, the score was higher than last year’s Green Monday (72.5). 

 

Not all categories benefited equally on Green Monday, however.  Apparel and Accessories online retailers appear to be doing especially well, while Computers and Electronics sites may be past their peak holiday sales.  It may be perceived as riskier to make a large-ticket electronic  purchase online this close to Christmas, whereas clothing purchases may continue to occur close to the holiday as perhaps supplemental gifts.

 

What do you think? Any predictions for sales this week?

Weekly Holiday Shopping Benchmark: Satisfaction with Prices is Up

 
We released our second weekly holiday benchmark of shopper satisfaction with online retailers today. In a nutshell: customer satisfaction is down since Cyber Monday (to be expected as Cyber Monday shopping incentives go away), but it is higher than it was a year ago during the post-Thanksgiving week.  That's good news.

 

Also, shoppers are more satisfied with prices this year than at this point last year, but satisfaction with price remains far below pre-recession levels, which may be more of an indication or reflection of how consumers perceive their purchasing power. But the higher customer satisfaction relative to last year shows that retailers are creating the right mix of merchandise and pricing that may drive more purchasing through the online channel.

 

Finally, we're seeing that apparel and accessories retailers are still providing the best online experience among the major subcategories that we're tracking during the holidays.

 

Feel free to snag these charts and use them as you see fit. They're also available on our website in the press release announcing today's results.

Cyber Monday Satisfaction on an Even Keel

We've been watching how satisfaction changes on a weekly basis during the holiday shopping season since 2006. I will admit I am one of the people waiting eagerly for numbers from Comscore, Coremetrics, Neilsen, and others that report on Thanksgiving week, Thanksgiving weekend, and Cyber Monday holiday traffic, the truth is that those numbers tell us what has already happend. Customer satisfaction (when measured using the ACSI), tells us what we can expect to happen next because it is a proven predictor of future financial success and performance. In fact, research done last year showed that one-point increase in online satisfaction for an individual retailer in 2008 predicted an average revenue growth of 9% in 2009.

So what do we see happening this year? Everybody always wants to focus on Cyber Monday, but our numbers show that satisfaction on Cyber Monday was flat this year compared to last year. However, satisfaction during Thanksgiving week, on Black Friday, and on Thanksgiving weekend was just a bit up. This suggests to me that retailers have good reason to be cautiously optimistic about their holiday revenues.

That comes with a big caveat though...

Though the AVERAGE satisfaction for the 130+ retailers in our benchmark was in the range of 73 over the last week, the individual scores of individual retailers that make up that average spans a huge range. Within that average, we saw individual scores range from 42 to 88, a HUGE range of performance in terms of the customer experience.

We generally say that any customer satisfaction score over 80 is excellent, and one-third of the retailers in our benchmark got scores over 80. That's good news for them. But for the retailers under 70 and especially those in the 40's and 50's...not such good news.

There's more data and downloadable graphics on our website. We'll do another benchmark next Tuesday to report on how things have changed in the week since Cyber Monday, so stay tuned.

Social Security Website Better Than Amazon, Google and Netflix!

Wow, what a headline.  And it's true.  At least from user's perspective.  We released the Q4 American Customer Satisfaction Index (ACSI) E-Government Satisfaction Index this week and the results were very good. 

Across over 100 Federal Government websites and over 250,000 visitors surveys, satisfaction with Federal Government websites registered a score of 75.2 on a scale of 0-100.  Equaling the highest score ever registered by the ACSI E-Gov Index last quarter.

But more impressive then that was 27% of the sites measured scored 80 or higher with the Social Security Retirement Estimator (www.ssa.gov/estimator) and Social Security iClaim online benefits application(www.socialsecurity.gov/applyonline) both scored 90.  To put that in perspective, in the last published ACSI results covering the e-business and e-commerce sectors included Amazon at 86, Google at 86 and Netflix at 85.

You can download the full report here or email me and I will send you a copy.

So does that mean the Social Security site is better than Amazon's, easier to use than Google's, has more functionality then Netflix?  Not necessarily.  But more importantly it means that visitors to the site are having a better experience and are more satisfied with the experience on the Social Security site.  The site is doing a better job compared to their expectations.

Now, I hear other self proclaimed experts go on and on about what sites are the best based on their personal opinion.  Not to say their opinion is worthless, but it is worth no more than any other site visitor.  In fact, most "experts" are not "normal" visitors.  Listen to your site visitors, measure their satisfaction and know their expectations.

Congratulations to the folks at the Social Security Administration and the rest of the sites that scored 80 and above, the threshold for a great performing site.

Latest American Customer Satisfaction Index Results Released Today

Today the American Customer Satisfaction Index (ACSI) released its latest results on customer satisfaction.  You can read the full commentary here.   Covered in this quarter's results are some of my favorites - Beer and Chocolate.  The categories covered in the Manufacturing Nondurable Goods Sector include Apparel, Athletics shoes, Breweries, Cigarettes, Food Manufacturing, Personal Care & Cleaning Products, Pet Food and Soft Drinks.

If you follow the American Customer Satisfaction Index or ForeSee Results, you know that Customer Satisfaction as measured by the ACSI at a macro level is a leading indicator for economy (Consumer Spending, GDP Growth, etc.) and at an individual company level is a leading indicator for financial success.  The ACSI was founded at the University of Michigan.

So, what does the future hold?

Overall, the National ACSI score dipped ever so slightly from 76.1 (the all time high) last quarter to 76.0 this quarter, a very minor 0.1%.  And it is up a significant 1.3% from Q3 2008 when it had a score of 75.0.  The Q2 ACSI results predictive model pointed to an increase of consumer spending of 3.25% , much higher then most others were projecting and actual Q3 consumer spending growth turned out to be 3.35%.  With a flattening of the score this quarter it is projecting consumer spending to be between 2% and 3% in Q4.

Some of the companies that really excelled in these results include Levi Strauss rising 6.4% to a score of 83, Anheuser-Busch rising 3.7% to 85, Mars, Hershey and Nestle all seeing increases between 1.2% and 2.4% with scores between 85 and 87.  So, America is going back to basics - "non-designer" Jeans, Anheuser-Busch and Chocolate!  Not a total surprise, when the economy is tough we tend to gravitate back to what is familiar and what gives us simple pleasures.