FREEDyourMind

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.

Has Unemployment Bottomed Out?

Have we hit the bottom?    Many people believe we don't start moving forward until we start getting people back to work.

52% of 245 large U.S. employers surveyed in February have already done layoffs and 56% have instituted hiring freezes.  Both of these numbers are up from December's numbers of 39% doing layoffs and 47% with hiring freezes.  This is according to a Watson Wyatt survey. 

Now the good news from the survey.  Only 13% of companies surveyed are expecting to do more layoffs.  This is down from 23% in December.  And only 10% are expecting to institute hiring freezes in the future compared to 18% in December.  So maybe we have hit the bottom and are starting to move things in the right direction  --  or at least, the slide downward is slowing

I am very happy to report that at ForeSee Results we are still growing and still hiring!

Latest ACSI Results From The University Of Michigan

The latest American Customer Satisfaction Index results from the University of Michigan were released yesterday.

In the E-Commerce sector, Newegg comes out on top, wrestling away the top spot historically held by Amazon, although Amazon's results, while down slightly from last year, nevertheless very impressive.  Check out our commentary on the E-Retail, Online Brokerage and Online Travel sites covered by the ACSI Index.

Now we all know we are in a tough economy, so does Customer Satisfaction matter in a tough economy?  Yes - more then ever.  What we have is a hyper-competitive environment where the rising tide that previously lifted all of the e-commerce "boats" is no longer rising.  In other words, the amount of consumer spending (which drives 2/3 of the economy) is shrinking.  Yet we for the most part we have the same number of companies competing for that shrinking consumer spending.  The result, a much more competitive environment where there will be more winners (Amazon, Newegg, etc.) and more losers (Circuit City, etc.).  So, there has never been a more important time to satisfy your customers. The satisfied customer will be the one that spends the most, is the most loyal, recommends you the most and is the last customer to leave you.  The dissatisfied customer will be gone as soon as they can.  And remember, you cannot manage what you cannot measure.

On a broader, economic stage, what do these results tell us?  In order for consumer spending to rebound, two things must happen.  Consumers must get gratification and satisfaction from their spending and consumers must have the means to spend, with cash or credit.  Well, customer satisfaction is holding it's own and now we need consumers to get the means to spend money.  Hopefully the Stimulus plan can have some impact.

Amazon and Netflix Shine - Satisfaction and Revenue

Amazon announced their fourth quarter results yesterday. 

Now, remember back when the holiday season was coming to a close...at ForeSee Results we released our Top 40 Holiday Research and I wrote about it in this post, and guess who came out on top...Amazon and Netflix.  And not only were they on top, but both had a substantial lead over the next closest pack of retailers. 

There have been many reports about how tough this holiday season was; Comscore reported that online holiday sales were down 3% year over year.  But based on our holiday research, we expected that there would be clear winners...and many others that suffered greatly.  Well, Amazon reported that Q4 sales were up 18% from 2007 Q4.  Pretty impressive results in a tough economy.  And Netflix recently reported subscriber growth in Q4 of 26% year over year and revenue was up 19% in Q4 from the prior year.  Also very impressive results...but not surprising based on their high customer satisfaction scores.  In a tough economy the leaders in customer satisfaction lead the way in financial results as well.  (This is of course also true in a good economy but I am guessing we have a while before we have to worry about that scenario.)

But why?  In a tough economy the pool of consumer spending (or corporate spending) is either shrinking or not growing anywhere near the rate that we have come accustomed to.  So what does that mean?  Well, it means increased competition.  And the competition is increased for two reasons.

First, the number of sellers are roughly the same as it has been and they are now competing for a shrinking (or slower growing) pool of customers.  That translates to increased competition. 

Second, switching costs on the Internet are very low, especially when compared to other channels.  For example, if you are shopping in a store, to go and shop at another store brings with it a cost to the consumer.  You have to take the time and effort to switch and you may not find anything better.  But on the web it is a different story.  You can clone yourself by opening up another browser and be in two places at the same time, with almost no effort.  A very low switching cost.  That translates into increased competition.

So with increased competition the winners are going to be the ones that are providing a high level of satisfaction to their consumers.  (Amazon and Netflix)

So how do you win?  Satisfy your customers...and remember you cannot manage what you cannot measure.

Shopper Satisfaction Holding Steady During the Holidays

We released our second weekly holiday benchmark this morning.

Here's the bad news: satisfaction is still down year over year. But there is a real silver lining, and that is that satisfaction is maintaining from Cyber Monday--it has not fallen off in the week after one of the biggest online shopping days of the year. In fact, purchase intent is higher this week than it was at any point during November. If you're looking for good news in a bleak landscape, this is it!

I think all of us watched the good results from Cyber Monday and wondered if that was it. Did people do all their shopping the weekend after Thanksgiving to take advantage of deals? Would we see shopping fall off the rest of December?

I think we have all adjusted expectations--we are not going to see 15%-20% year-over-year increases like we have in years past. But everything I'm seeing tells me it also won't be as bad as some predicted at the beginning of the season.

But perhaps the bigger story than what will happen to e-retail overall is what will happen to individual retailers. Our benchmark covers more than 80 retailers, and we've collected more than 330,000 e-retail surveys over the last 5 weeks (more than 70,000 just in the week after Cyber Monday). When we're looking at that many shoppers of that many online retailers, there is going to be a huge range of satisfaction--some retailers as high as 90 (on our 100-point scale) and some are, well, a LOT lower than that.

I've said it before and I'll say it again: an economic crisis can be a huge opportunity for e-retailers to solidify loyalty and to really differentiate themselves in terms of customer satisfaction. Really, for anyone in any industry to do so. Satisfied customers are the last to leave, no matter how tight their personal finances get.

Retail/E-Commerce Trends with Citi Investment Research Group

I had the honor of speaking on a conference call hosted by Citi Investment Research (Mark Mahaney, James Samford and Deborah Weinswig) on Monday. You can see the full note they wrote from the call here.

While every holiday season gets watched closely by many people, this holiday season is the most important one I ever remember (except maybe when I was 8 and got a new bicycle).   And the Citi Investment Research group is a great group to keep an eye on for their opinions and observations.

Trends in Online Shopping: 2008

We are preparing to do our annual Top 40 Online Retail Satisfaction Index. Here's the way it works in broad strokes: we use the methodology of the University of Michigan's American Customer Satisfaction Index (ACSI) to assess browser satisfaction with the top 40 retail websites (as determined by Internet Retailer's annual Top 500 Guide) during the holiday shopping season. Each of the 40 retailers is given a score on the ACSI's 100-point scale so you can see which retailers are doing a better or worse job satisfying web browsers during the holiday shopping season. We also do a similar study in the UK with the top 30 UK e-retailers. Since customer satisfaction has a proven link to future financial performance, loyalty, and even stock prices, it turns up some interesting stuff.

But beyond just the horse race of who's doing well and who isn't, it's an opportunity to look at broader trends in holiday e-retailing. We've looked at the impact of free shipping offers on likelihood to purchase and the impact of customer reviews on loyalty. We've evaluated how gas prices are affecting people's likelihood to shop online vs. offline. It's almost 10,000 surveys that can give us insights into the mind of the online shopper.

We're finalizing the survey now and we'll definitely be adding questions about the impact of the economy, the election, and the financial crisis. We're also looking at asking about usage of mobile apps and the impact of social networks on shopping decisions. We've talked to a few journalists and opinion leaders about what they're interested in, but what's on YOUR mind as we approach the busiest time of the year for online retailing? What would you most like to know about online shopper behaviors and attitudes?

More Good News For Website Analytics

More evidence from Jim Sterne's eMetrics Marketing Optimization Summit that the down economy isn't negatively impacting members' online marketing budgets or interest and attention to web analytics.

65% of respondents said the state of the economy has no negative impact on their overall online marketing budgets. And while just over a third said it was negatively impacting budgets, only 15% plan to actually cut budgets.

More than 80% of respondents have seen increased interest in analytics from senior management within their companies. The report notes that this is usually a pain point for eMetrics attendees, and we certainly see it with out clients: getting management attention and buy-in is always a challenge.

But even more important that increased management attention: twice as many are increasing rather than decreasing their analytics budgets.

This is a powerful statement to the power of web analytics. As the report notes:

Web analytics helps us maximize the effectiveness of our shrinking marketing dollars by pointing out our strengths and weaknesses and providing an actionable roadmap to our most impactful ROI channels online. Tough times really do call for tough measures.

In a strong economy, anyone can succeed. When times are tight and competition is up, only the strong will survive.

What To Do Now (part 2).

About a month ago I shared some thoughts about what a VP of E-Commerce should be doing in these tough economic times.  In case you missed that post, the 5 items I listed were:

1. Be aggressive...and smart.
2. Focus on what matters most...your customers.
3. Measure what matters most...because you cannot manage what you cannot measure.
4. Accuracy, precision, reliability and validity of your measurements is critical to success.
5. Resist the urge to be penny wise and pound foolish.

Since then the markets have dropped over 20%, we have seen a huge number of companies announcing layoffs and losses.  So. lets continue the list.

6. Rely on metrics, not only on your expert opinions, your instincts and loud complainers.  In any times, but especially in tough times with limited budgets and resources, we need to make sure we are focused on improving the things that will have the most impact on our business.  Not on the things that have the loudest complainer or are an expert's favorite.

7. Make sure your metrics are valid.  They need to measure what is important.  Often measurements like conversion rate can be very misleading.  We need to understand what we are measuring and why it is important.

8. Make sure your metrics are sensitive.  They must be able to detect change.  Simple scales (such as 5 point scales) are often not sensitive enough to detect change.

9. Make sure your metrics are precise.  They must be exact.  When we are fighting for every visitor, every customer and every dollar, we need precision in our measurements.

10. Make sure your measurements are accurate.  Our measurements need to be correct.  Garbage in leads to garbage out.  Measurements that are not accurate can lead us down the wrong path with a false sense of security.

Oh, and I almost forgot.  Don't look at your 401k statement - it will make you sad.

On My Way To eMetrics

I am excited about participating in this year's eMetrics Marketing Optimization summit in DC (Alexandria to be more precise). There is a great list of speakers: Jim Sterne (Chairman of the Web Analytics Association), Eric Peterson (Web Analytics Demystified and the founder of Web Analytics Wednesdays), Jason Burby (ZAAZ), Alex Langshur (PublicInsite) and many other industry leaders. And there is a great representation of companies presenting including The New York Times, Hewlett Packard, Ameriprise, Home Depot, McAfee, Yahoo! and Nokia, just to name a few. It is an honor to share the podium with such a great list of presenters.

It will be interesting to see the mood of the web analytics industry in these turbulent economic times.How has the economic crisis impacted the mood and initiatives of this group?

While budgets are getting tight and earnings are disappointing, there is no more important time to make sure you have the right metrics -- and use them the right way! One of my favorite sayings is "You cannot manage what you cannot measure." Not too long ago you could be successful on the web by just showing up. Not anymore. Only the strong will survive.

Check back in the next day or so for some updates from the conference!