FREEDyourMind

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.

Top 40 E-Retailers & Some Great Holiday Matchups

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?

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.

From Black Friday to Cyber Monday

Last week was Black Friday, the traditionally largest "in-store" shopping days of the year.  How did the e-retail sites do? 

comScore reported that for Black Friday, they reported only a 9% increase in online retail spending from last year.  Thanksgiving day online retail spending was up 28% from last year. This far exceeded the 13% increase they reported for online retail spending from November 1st through November 26th from last year. 

Coremetrics reported an increase of 15.9% online retail spending on Black Friday compared to last year.

Neilsen reported that traffic site traffic increased 10% on Black Friday over last year.

Keynote reported that almost 1/3 of online retail sites suffered significant slowdowns on Black Friday.

ShopperTrak reported traffic in stores on Black Friday increased 2.2% from last year, but sales only increased 0.3%.

A lot of different perspectives but all come to the same conculsion. 

We are on track for a slightly better holiday season than last year with the bulk of the increase will be coming from the online channel.

One of the biggest days for online retail will be this Monday, potentially surprassed by the last "free shipping day" that for most retailers will be Friday, December 17th.  It's pretty disturbing that almost 1/3 of retailers suffered performance problems.  I am pretty sure they knew the holiday season was coming. 

I am eager to see how well the online retail sites did in satisfying consumers during this all important Black Friday to Cyber Monday time period.  We know that satisfying shoppers during this critical time period will not only lead to higher conversion rate during the holiday season but will have a longer lasting impact in winning over those shoppers for the rest of the year. 

Here are some questions to think about ... and I would love to hear your answers!

• Will you do more of your holiday shopping online or in stores this season? Why?
• Will you visit online retail sites to do research during the Black Friday to Cyber Monday timeframe?
• Will you make purchases online during the Black Friday to Cyber Monday timeframe?

Thanksgiving is almost here...and so is holiday shopping!

We are fast approaching Thanksgiving...and while there is a lot to be thankful for...let's talk first about the holiday season. 

CyberMonday has turned into Cyber November for many retailers. The deals started early this year, including discounts and free shipping.  In fact, 61 of the top 100 online retailers were offering free shipping heading into the holiday season. Who won't offer free shipping sometime during the holiday season? While this is good for consumers...how good is it for retailers?  Does it mean that retailers are not all that confident about the upcoming holiday season?  Early discounting is usually a sign of uneasy retailers.

A Mobile Christmas!  After many years waiting for the year of mobile, it finally may be upon us.  What will the role of mobile be this holiday season ... a commerce tool ... a companion/research tool ... a shopping comparison tool?  Amazon has launched a comparison shopping tool as part of their iphone app.

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Think about the power that the consumer will have, walking down the aisle of a retailer with their handy iPhone, using apps like Amazon and RedLaser to check prices.  I have this vision of a holiday shopper walking up to an associate, holding their iphone to their head (as if it was a gun) and saying to the associate, "match this price, or in one click I am going to buy it from Amazon" -- is there an app for that?

Many more sites have gotten their mobile optimized websites and iphone apps ready for the holiday season.  They will have an impact across all three roles of mobile. I expect comparison shopping and companion research tool will be the most used functions of mobile apps/sites this holiday season.

Will you be Social this holiday season?  Social Media keeps getting bigger and bigger.  What role will it play in your holiday shopping?  Will it be good, old-fashioned "viral" social media, where friends give friends ideas - or will it be overrun with marketing using social media trying to get our attention and holiday spending dollars?  My guess is the marketing will be very prevalent.  If at every turn we see retailers marketing to us via social media what does that do to our long term view and usage?  Can marketers ruin social media?  I wouldn't rule out the possibility.   

How will online retailers do this holiday season?  The web will continue to play as important role as a research tool for in-store purchases as it will as a commerce tool.  To evaluate a retailers website contribution only by its commerce is not giving it a fair evaluation.  The better evaluation tool is the retailer's website satisfying it's consumers.  Is it meeting the needs and exceeding the expectations. That being said, I am betting on double digit growth in online commerce, somewhere between 10 and 13%. 

Just in Time for Spring, E-Retail Blossoms

Poetic title, right?

We've been doing our Top 100 E-Retail Satisfaction Report for six years now. And the latest installment was released today.  

Overall satisfaction with the top 100 e-retailers rebounded from last year's dip to an all-time high of 78, up nearly 5 points from 2009. That's a lot, especially since not a single one of the top 100 e-retailers scored 69 or lower, which we generally consider the threshold for being a bottom performer. Looks like we may need to come up with a new threshold.

 Since customer satisfaction is predictive of future financial success and even stock prices, this is great news for e-retail. In fact, this study showed that a one point increase in online customer satisfaction predicts a revenue increase of $89 million, on average.

The report is available on our website and has individual scores for all Top 100 e-retailers across a half dozen categories.

I'm still at eMetrics in San Jose today, so stop by and say hello if you haven't already. 

Does anything surprise you about this report? Has your own experience with e-commerce improved over the last year?

American Customer Satisfaction Index (ACSI) Q4 Results Released Today

The American Customer Satisfaction Index (ACSI) Q4 results were released today.  The ACSI was founded at The University of Michigan in 1994 and is the leading measurement of Customer Satisfaction in the world.  And while others may make up acronyms and new gimmicks to try to measure consumer satisfaction, the ACSI is the only measurement that has the financial evidence behind it that proves its accuracy, reliability and precision.  And the only methodology that stands up to peer review and has the respect of Economists and Researchers around the world.

Fourth Quarter ACSI Results:  The fourth quarter results cover some very important sectors: Retail, Finance and E-Commerce.  Overall, the ACSI dipped by 0.1% to a 75.9, just 0.2 off its all time high and 0.2 above the Q4 2008 results.  Very impressive results considering the still difficult economy.  These results do not hurt the economic outlook and give us confidence that the economic recovery has a very good chance of continuing on its current pace. 

E-Commerce Key Findings (for the full report check out www.ForeSeeResults.com )

• Satisfaction with e-commerce is up nearly 2% since last year to 81.4.
• The increase in the overall e-commerce sector score is clearly driven by the rebounding online brokerage industry, up 5.4% to 78, with Fidelity and Charles Schwab sharing the top spot with a score of 79.
• The e-retail industry, always the strongest within the e-commerce sector, gains one point to a score of 82 and Netflix takes the top spot.
• The online travel industry ties its all time high aggregate score of 77, not seen since 2005.  Expedia holds the top spot.

Retail Sector: Customer Satisfaction with the retail sector, which includes department and discount stores, specialty retail stores, supermarkets, health and personal care stores and gas stations rose 1.3% to a score of 76.2.  Department and discount stores climbed 1.4% to an ACSI score of 75.  Some notable results include Target up 4% to a score of 80.  Specialty retailers rose 1.3% to a score of 77, with Barnes & Noble leading the way with a score of 84. Supermarkets remained unchanged with Publix continuing to lead the way with score of 86, up 5%.

Finance & Insurance:  This sector improved 1.4% to a score of 77.1, with Banks coming in with a score of 75 and Credit Unions registering 84.  Life Insurance rose 1.3% to 79, Health Insurance went up 2.7% to 75 and Property & Casualty Insurance dropped 1.2% to a score of 80.

You can find out more about the American Customer Satisfaction Index at www.ForeSeeResults.com and TheACSI.org

Summary

So, why is Customer Satisfaction important?  Well, as a leading economic index, the ACSI is unmatched.  And for individual companies an accurate measurement of customer satisfaction can give you the intelligence you need to make the right decisions to optimize your investments.  Consumers go where they are satisfied, so to win in the ultra competitive environment we live in today, companies must satisfy their customers or they face the risk of not surviving.