We released our latest Top 40 E-Retail Satisfaction Index for the holiday season. Download a free copy on our website.
Early reports coming in are that e-retail had a pretty good holiday, financially speaking. Online sales rose 15% and several other reports say that offline sales had a good year too. This is great news for the retailers who are satisfying their customers and who managed to build loyalty for the coming year by treating new and returning customers well during the holiday season, when retailers see the biggest influx of new customers and often make or break their annual numbers in just a month.
In this Wall Street Journal article Todd Slater with Lazard Capital Markets says "some retailers' better traffic and sales this holiday season may have been won at a price . . . {some retailers} are traffic winners but margin losers."
The methodology we use to measure customer satisfaction is able to actually quantify what kinds of things (price, navigation, merchandise selection, website functionality, etc) have the biggest impact on customers' satisfaction with a website. It's not the same for every retailer. For example, when we look at the three computer manufacturers included in the top 40 (Apple, HP, and Dell), Apple scores the lowest on price, meaning people's perceptions of Apple's prices are lower than their perceptions of HP and Dell's prices. Yet Apple still has the highest customer satisfaction of the group because the methodology indicates that price is not their highest priority. In the office supply wars (Staples vs. Office Depot vs. Office Max), price is a much bigger factor influencing customer satisfaction than it is for computers.
In other words...not only is Todd Slater right that some retailers are traffic winners but margin losers, some of them didn't even need to slash prices like they did. Some did need to do it that didn't do it. We find that the prescription for success varies so much from retailer to retailer, depending on their current strengths and weaknesses, their customer base, their customer expectations, and a lot of other things. Not all these things are under a retailer's control, which makes it that much more important to influence the things that are.
Okay, that was a little side diversion on price. What you're really interested in is probably the customer satisfaction ratings for the top retailers.
You can get all 40 in the report, but here are some highlights.
The Leaders:The clear winners this year are perennial top scorers Amazon and Netflix, both with a score of 86. Twelve other retail websites registered scores at or above 80, which is generally considered the threshold for excellence.
- Amazon (down one point to 86 and the only retailer in the top 10 to decline at all)
- Netflix (86, tied with Amazon for the top spot)
- QVC (up three points to 84)
- Avon (up two points to 83)
- L.L. Bean (up three points to 83)
- Newegg (82)
- Apple (82)
- eBay (80)
- Musician’s Friend (80)
- VistaPrint (80)
- Walmart (80)
- Williams-Sonoma (80)
The Most Improved: Only two sites experienced notable increases this year:
- L.L. Bean (up three points to 83)
- HSN (up three points to 79)
- Twelve companies win the award for most improved since they first entered the index: Costco (up 10 points since they were first measured, to 79), Avon (up eight points to 83), Toys R Us (up eight points to 77), Walmart (up seven points to 80), JC Penney (up seven points to 78), Staples (up seven points to 78), Target (up seven points to 77), SonyStyle (up seven points to 76), OfficeMax (up seven points to 75), Apple (up six points to 82), Home Depot (up six points to 75), and Sears (up six points to 74). These are all significant gains for these companies, given that even a one-point increase in satisfaction can have a significant impact on future purchases, loyalty, and recommendations
Highly-satisfied visitors to retail websites say they are 60% more committed to the brand overall, 61% more likely to purchase from the retailer online, 35% more likely to purchase from the retailer offline, and 64% more likely to recommend the retailer than are dissatisfied visitors. Nearly 20 years of research coming from both academia and the private sector shows us that increasing customer satisfaction (in the right way!) is one of the most powerful things a retailer can do in any channel to increase sales, loyalty, and positive word-of-mouth recommendations. Seriously: what else can a retailer do between now and next November to make customers 61% more likely to purchase, or even 10 or 20% more likely?
The last thing I'll mention before wrapping up is that the report has some interesting match-ups between direct competitors, showing why one company is besting another in terms of customer satisfaction.
- Amazon vs. 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 6-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. When it comes to priorities for improvement, neither retailer registers price as a top priority for improvement, which indicates the two may not need to be doing the price slashing we’ve seen in the last week before Christmas.
- Staples vs. Office Depot vs. 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 vs. 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.
- Apple.com vs. Dell.com vs. HP.com: In the battle of PC manufacturer websites, Apple (82) continues to dominate Dell (76) and HP (78). Apple defies conventional wisdom because it achieves the highest customer satisfaction despite scoring below its rivals on perceptions of prices. However, Apple scores much higher than the others in website functionality, which is the most important driver of customer satisfaction for all three websites.
The press release is on our website, as is the full report. We'll be doing follow up reports in the coming weeks about mobile commerce, social media, and the multichannel impact of a good or bad website experience. Anything else in particular you'd like to see us cover?