FREEDyourMind

New Google Search Feature

Internet Retailer had a story earlier this week about a new search feature at Google:

“Google has launched Search Within a Site, a feature that enables searchers to conduct site searches of content, retail and other web sites from a Google results page. A search of “Newegg,” for example, brings up the Newegg.com home page as the first result. Previously, the results page would present listings of links to any number of sites that include references to Newegg. Now, the results page still brings up all those listings, but a search window labeled “Search newegg.com” appears immediately below the first listing, the retailer’s home page, enabling searchers on Google to conduct a new search that focuses not on the web at large but exclusively on Newegg.com.”

It’s controversial because 1) on the Google results page for a site search, a competitor’s ad might show up. 2) it seems unlikely that Google can present a search as thorough as going to the site itself and doing a search from there.

It’s just the next step (one we probably should have been expecting) in building loyalty to Google instead of the retailer/auto dealer/ manufacturer’s site. We’ve done a lot of research on the value of different methods of customer acquisition (promo emails, shopping search engines, referrals, etc) and our research shows that search engines drive people who are substantially less loyal and less likely to buy.

What do you think? Is Google going too far? If you run a site, do you think this will help you or hurt you?

ACSI E-Commerce Results

It’s that time of year again: time for the University of Michigan's American Customer Satisfaction Index (ACSI) report on e-commerce. The e-commerce report includes the e-retail, online travel, and online brokerage industries.

You can download the full report here, but a few things I found most interesting:

• Amazon has the second highest score in the entire ACSI (which includes 200+ companies), behind only Heinz. That is a stunning achievement for a retailer with such a broad mission.
• Online travel aggregators like Expedia, Travelocity, and Orbitz continue to slip and are having significant trouble differentiating themselves from each other.
• Online brokerage does better than expected, given the slowing economy (which usually results in lower satisfaction with any kind of investing). Customer satisfaction with Fidelity.com rises 5%, while Charles Schwab.com and TDAmeritrade.com also report increased satisfaction.
• Of all the sectors measured by the ACSI this quarter, e-commerce was the only one to increase. All other sectors saw customer satisfaction scores fall, and the overall ACSI score for the whole economy fell this quarter. I attribute this to the fact that competition is so fierce in the online world that companies HAVE to excel in order to survive. The best competitive differentiator is customer satisfaction. Still, it’s remarkable that the e-commerce sector now outperforms all other service sectors measured by the ACSI, online and offline.

You can read more in the Detroit Free Press and Network World.

 

Which Retailers Satisfied Their Customers This Holiday Season?

Well Christmas has come and gone and two questions come to mind.

If you have young kids - how do you get all those toys put together?

And for everyone else, what retailers lead the way in satisfying their customers?

Let's address the second question today (you are on your own for the first one).

This year we measured satisfaction with the top 40 online retailers in the U.S. (get the full report here)

 
Overall, satisfaction was a 74 (on a 100 point scale) down 1 point from the 2006 holiday season.  The downward movement is a bit of a concern, but considering the very tough economic climate this holiday season and the disappointing retail sales, not too bad.  Netflix led all retailers with an impressive score of 86 (even with their score last year), followed by Amazon at 82 (down 2 points from last year).  QVC and L.L. Bean rounded out the top performers with scores of 80.

So who cares if customers are satisfied?  Well, not only consumers, but retailers should care too!  Satisfied customers become long term and loyal customers.  Dissatisfied customers become your competitor's customers. 

Comparing the top performers (scores of 80 and higher) to the bottom performers (scores of 70 and lower) we see that the result of higher satisfaction leads to significantly higher  purchase intent (33%), loyalty (23%), and word of mouth recommendations (26%).  That is the payback for satisfying your customers. 

And this year we also measured the top 30 U.K. online retailers.  This is our first time measuring the U.K. group.  Some of retailers performance was brilliant!  You can get the full report here.

 

The Online Holiday Season Is Coming To A Close

The latest online retail sales figure came out earlier today.  comScore is reporting that more than $26 billion has been spent online this holiday season so far, a 19% gain compared to last year.  While not as strong as last years growth rate of 26%, compared to total retails sales growth this year it is a very impressive number.  Early estimates are for a nearly flat year over year performance in retail spending.  A tough economy has put a significant damper on holiday spending.  Considering the dismal retail spending numbers, online retailers should be happy with the 19% year over year gain.

So...

While not a bad holiday season for online retailers, they cannot stand pat.  There has not been much innovation from 2006 to 2007.  Consumers expectations for online retail continue to go up.  Online retailers need to keep pushing the envelope.  What will be the improvements in 2008?  Here are a few ideas.

• Moving from mulit-channel to merged channel.  Whatever channel a consumer purchases from the experience should be the same.  They should be able to seamlessly move between channels.
• Is it time for free shipping all the time, with no restrictions?  I would challenge multi-channel retailers to determine the true cost when selling an item online vs. offline.  I would be willing to bet that in almost every case it is far less costly online, even if you provide free shipping.  When you factor in the increased inventory carrying costs, increased labor costs, increased facilities/real estate costs, it appears to be a no-brainer to offer free shipping all the time. This will eliminate price as a reason a consumer leaves your website to buy in a store.  This is good for consumers and good for retailers.  As a retailer are you willing to risk an intended customer to be distracted by other's advertisements and on their way to your store they buy from a competitor?  All because they didn't want to pay the shipping charges.
• Real time inventory that crosses channels.  If you truly want to provide that merged channel experience, you better let your consumers know if they are going to go to the store that the product is in stock. I can think of no more frustrating experience then after selecting the item to purchase you go to the store to purchase and they are out of stock.
• Better expectation management by online retailers.  Retailers can better manage consumer expectations by making sure they know when items are out of stock, making sure they know the return policies, etc.  Satisfaction, in simple terms, can be defined as a combination of what you get and what you expect. 

While some retailers are already providing these capabilities, they need to be come the norm for all retailers.  These are only a few things to think about. At the end of the day online retailers must continue to strive for improving the online experience and improving customer satisfaction. Improved customer satisfaction will lead to better financial results.

The ForeSee Results Top 40 Online Retail Satisfaction Index will be coming out in the next day or so.  This is a satisfaction measurement of the top 40 U.S. online retailers during the holiday season using the American Customer Satisfaction Index methodology.  It will be followed by a measurement of the Top 30 U.K. Online Retailer Satisfaction Index.  Check back in the next couple of days for details.

By the way, I was on Bloomberg TV last week, you can see the clip here...Bloomberg clip

 

Online doing OK in Tough Holiday Season

According to the latest holiday shopping data, the retail sector is having a tough time, with the lone bright spot being the online retail space.

U.S. retail sales declined 4.4 percent in the week that ended Dec. 1 as fewer shoppers visited stores than a year ago, Chicago-based ShopperTrak RCT Corp. reported. A tough economy, with deep discounting early in the holiday season and no "super-hot" product this holiday season has contributed to a tough holiday season for retailers.

Yet, according to Comscore, Online spending during the week through Dec. 2nd increased 17 percent.  Now that is trailing last year's 26 percent pace, but still respective growth, and pretty consistent with the numbers we have seen online during this holiday season.  For the week ending November 30th we saw online spending increase 18% over last year.

So, while 17% year over year growth doesn't seem like a stellar year, we need to keep it in perspective compared to the broader retail sales struggles.  What would those online sales be if retail sales were even with last year, or even up 3%?   Would we surpass last years online growth?

So far online holiday shoppers have been more satisfied with the online holiday experience then last year.  Our latest results for online holiday shoppers satisfaction for the week end Dec 2nd should be out tomorrow.  Check back for the latest.

Holiday Week 1 is behind us

Well, the Online Retailers got through the first week of our holiday season in pretty good shape.  A few reported performance issues made the news, but no major meltdowns.  How did the first week end up?  From a sales perspective, good but not great.  Comscore is reporting sales $4.06 Billion in online sales for the week ending November 30th.  For the month of November, $13.43 Billion.  So, Cyber Monday, at $733 Million in online sales represents about 18% of the week and about 6% of the month.  Impressive, but not overwheliming. In fact, they are reporting the 3 days following Cyber Monday all resulting in online sales over $700 million.

We reported on Cyber Monday Customer Satisfaction last week, and within the next day or two we will give you an update on satisfaction for the week.  It will be interesting to see if satisfaction continues its trend of outperforming 2006 results.

Online sales were up year over year, 18% for the month of November, 18% for the week following Thanksgiving and 21% for Cyber Monday.  Again, good but not great. 

So why good and not great?  A couple of possible reasons. 

• No super hot product to drive sales early in the holiday season (although Amazon seemed to try to make the Kindle the hot product, but it would appear without major success - I personally know of nobody that has bought one -- and most of the people I know do read).
• Aggressive discounting and free shipping offers.  This will drive sales, but at lower dollars.
• Some major retailers still had performance problems - it might drive you to another site or it might drive you to the store.

We will keep a close eye on satisfaction scores and online sales over the remaining weeks of the holiday season.

Cyber Monday Satisfaction Up From Last Year

Well, we crunched our data (from more than 38,000 satisfaction surveys completed by holiday shoppers on Cyber Monday and over the previous holiday weekend), and we found that online shoppers were actually more satisfied with their experience on Cyber Monday 2007 than they were in 2006. Satisfaction rose a point over last year, a statistically significant amount given the numbers we’re dealing with. I think this is in large part because retailers were better prepared for volume (we saw higher scores for elements like site performance and functionality than we have in previous years on Cyber Monday) and because retailers are being a lot more consistent with free shipping offers, 2-day sales, and other attractive promotions.

The other really interesting thing, in my opinion, was that we saw future behavior scores for likelihood to buy online and likelihood to buy offline BOTH increased this year. This means that the online channel is actually doing a good job driving both online and offline sales, where as in previous years, we’ve seen it primarily driving one or the other, but not both. This is a great indication to me that retailers are finally starting to figure out the multichannel (or merged channel) implications of the increased traffic they see during the holidays.

Because satisfaction as measured by the ACSI (which is the methodology we used for this and all surveys) is predictive of future success, financial results, sales, and word of mouth, these higher Cyber Monday scores indicate to me that online retailers have a nice year ahead of them!

You can read more about the findings in the press release.

New Record

 Wow—I just heard from my Director of Technology that we served more than 500,000 online customer satisfaction surveys yesterday—a new record for us.  Half a million surveys in just one day!

It’s no coincidence that yesterday was Cyber Monday and people were shopping online in record numbers this year (just checked both Comscore and Hitwise to see if there are any early estimates for traffic volume, but I don't see any yet).

We’ve been taking satisfaction readings through the month of November and on Cyber Monday for a few years in a row now, so hopefully tomorrow, we’ll be releasing our take on how satisfied shoppers were this Cyber Monday compared to previous years and other times of the year. It should tell us something about how well all the free shipping promos and other early deals and discounts are working this year. Also, since customer satisfaction as measured by the ACSI is predictive, it should give us an idea of what we can expect to see in the next three weeks or so as the online holiday shopping season gets in full swing.

Let the games begin!

Last-Minute Holiday Prep

Cyber Monday is less than a week away, but it’s not too late to evaluate your holiday strategy! Here’s my take on 5 things you still have time to look at before the biggest crush of holiday visitors hits your site. Are there other last-minute things you’re shoring up? 

 

Holiday Post #4: Customer Reviews

Customer reviews. Are you doing them?

As part of our holiday research in 2006, we surveyed over 10,000 online visitors to one or more of the top 40 online retailers. We found that almost half of the online shoppers that recalled seeing customer product reviews cited them as the primary factor in their holiday purchase decision-making. 

A few key points:

• Customer product reviews drive satisfaction and loyalty and provide a competitive advantage for sites that offer them;

• Customer product reviews are a powerful influencer of the purchase decision for the critical group of first-time buyers;

• Internet pure plays lead adoption of customer product reviews, providing a competitive advantage online over multi-channel merchants;

• Shoppers on sites with customer product reviews were 5% more likely to buy online, 5% more likely to buy from the retailer the next holiday season, and 4% more likely to purchase from the retailer the next time they are in the  market for similar merchandise.

It can be a tough decision for those of you who are afraid that consumers will be brutally honest and slam a product. This is more of a risk for manufacturer sites than it is for retailers that offer many manufacturers of the same product. But in my opinion, it’s gotten to the point where companies that want to sell online have to offer customer product reviews to be competitive because if you don’t have them, your customers will just go somewhere else to see them.

Just remember, customer reviews are not a product development or a product management tool, they’re a marketing tool. Understand their value to your customers, don’t overestimate their value to you, and they can and should be a great addition to any retail website.