FREEDyourMind

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?

Social Media Strategy for Retailers

Get a Facebook page!

Okay, so that's not so much a strategy, really more of a tactic. But research we released today clearly shows the value of a Facebook page to retailers. Among our key findings:

• Facebook is, by far, the best place to reach shoppers—both because it’s where they already are, and it’s where they want to hear from retailers.
• 56% of shoppers to top e-retail websites who interact with social media websites have elected to "friend" or "follow" or "subscribe" to a retailer on a social networking site like Facebook, Twitter, and YouTube
• Customers mainly interact with retailers on social media sites to learn about products and promotions (rather than for help or technical support)—a marketer’s dream come true.
• Half of the top 100 retailers have a lackluster or nonexistent social media presence. If you can't find a retailer's Facebook page by going to Facebook and searching for their name, or if they are a top 100 retailer and have fewer than 10,000 fans... they aren't maximizing the value of this marketing opportunity.

Your customers want to interact with you! Make sure you're giving them what they want and that they can find you. And make sure you understand the needs of YOUR customers rather than industry trends (you know, like the one we're reporting in this research), because we see huge differences in preference and satisfaction from one retailer to the next.

Satisfaction with Top UK E-Retailers Surges

We've just completed and released our analysis of satisfaction with the Top 40 e-retailers in the UK, and it's great news: satisfaction increases across the board. Since satisfaction calculated using the scientific methodology used in this study predicts sales, loyalty, and even stock prices, this is great news for many top UK e-retailers. Get the full report and full list of 40 measured companies on our website or read about it in V3.

• Aggregate satisfaction with top UK e-retailers is 71 on the study’s 100-point scale, up 4 points and an incredible 6% from last year’s aggregate score of 67). This increase is made all the more notable by the fact that it occurred during a global recession. 
• Amazon continues to lead the Index with a score of 83, the only e-retailer in the UK to score above 80. Play.com (79) and QVC.com (78) rounded out the top three performers in the UK.
• Websites for Debenhams, M&M Direct, John Lewis, and WH Smith have seen the greatest increases in satisfaction since last year; all four registering year-on-year increases of 13% or more.
• 15 of the 40 measured UK e-retailers registered scores of 69 or lower, generally considered to be bottom performers who are risking erosion of market share and sales if improvements are not made. Ticketmaster UK and B&Q had the lowest scores in the Index (both at 65). Dixons, Currys, Freemans, and Littlewoods did only slight better but still fall to the back of the pack. (all at 66)

The report goes into my theories for why the increases are happening, but its clear that both the industry and UK shoppers have made leaps and bounds this year, and I expect it will be a very merry Christmas for many on this list.

Two caveats 1) we've seen in both the UK and the US that the best are getting better while most of the rest are getting worse. This theory/prediction is confirmed by our data, Comscore data and other post-mortem analysis of the holiday season.

We're releasing our US Index tomorrow with scores for the top 40 US retailers...keep an eye out.

What Drives the Best Quality Website Traffic?

Our new VP of Retail Strategy, Kevin Ertell (well, I guess he's not so new anymore) has a white paper out today about what kinds of customer acquisition sources drive the best traffic to retail websites. He did this analysis based on our Top 100 research, where we survey about 23,000 visitors to the top 100 retail websites (by sales volume).

The short answer? There is no short answer! You have to look at what drives the most traffic and what drives the best traffic. In the chart below (and in the white paper, available on our website as part of our Top 100 research), you can see which customer acquisition sources drove the MOST traffic (familiarity with the brand, promotional emails, advertising, word of mouth) and which drove the BEST traffic, meaning that it drove visitors who are more likely to buy (online or offline), recommend, and return to the site.

What most influenced your decision to visit the site?	% of respondents	Satisfaction	Likelihood to Return	Likelihood to Purchase Offline	Likelihood to Purchase Online	Likelihood to Recommend
Brand
Familiarity with site/company/brand	32%	77	84	66	76	79
Email Marketing
Promotional e-mail(s) from the company	13%	75	83	61	74	77
Advertising
Advertising: internet	12%	72	74	60	70	72
Advertising: TV, radio, newspaper, magazine	9%	72	75	65	69	73
Advertising: social networks	1%	66	67	63	67	67
Word of Mouth
Word of mouth: recommendations from someone I know	8%	74	79	58	73	77
Word of mouth: recommendations from a social networking site	3%	74	77	61	72	76
Word of mouth: product review website(s)	2%	71	74	65	70	72
Word of mouth: blogs or online forums	1%	67	72	52	67	69
Search
Search: search engine results	9%	69	71	55	66	70
Search: Link from a shopping comparison site	2%	67	70	55	66	68
Other
Couldn't find what I was looking for in one of its stores or catalogs	4%	68	73	67	66	69
Had a gift card I wanted to redeem	2%	70	75	60	71	71
Mobile phone text messages or alerts	0.3%	63	64	62	68	65

Kevin explores the value of social media customer acquisition sources and comes to the conclusion that while there is a lot of potential, they are still not the end-all-be-all you might think they are based on how much we talk about them.

The chart above represents aggregate data from the top 100 e-retailers. Tell me in the comments how you evaluate the quality of different acquisition sources? Have you integrated clickstream and satisfaction data so that you can compare and contrast traffic from specific sources? Tell us what surprised you most.

It's True: Satisfaction with Online Financial Services is Up

Incredibly, customer satisfaction with online banking is up. Customer satisfaction with online investment services is up. Customer satisfaction with online credit cards is up.

What's going on?

Every year, we partner with Forbes.com to do a survey of people who visit online financial services websites. This year, despite the economy and the near-daily bad news, customers are more satisfied than ever with the three online industries we surveyed.

On our study's 100-point scale, satisfaction with online banking is up to 83, making it one of the very few service industries to pass the threshold of 80, generally considered an excellent score. Online credit cards is also up, to a score of 80 and even online investing (which was hammered in the February ACSI report) is up to 78 as the markets have started to settle.

I wish I could tell you there was some magic bullet or miracle app that has saved the day, but the truth is, it's basic blocking and tackling. Each of the three industries improved in basic online elements that directly impacted satisfaction. This should be good news for banks, credit card companies and investment firms. You don't need to reinvent the wheel during an economic crisis.

Even better news: your website can have a huge impact on overall operations and could be a huge corporate advantage when times are tough. Highly satisfied online customers are significantly more likely than less satisfied customers to purchase more services, open more accounts, use the website as a primary channel, and recommend both the company and the website. Therefore, improving the online experience leads to increased revenue (because customers purchase additional services and recommend their friends and colleagues to do the same), as well as cost savings (because these customers use the website as their first source for information and transactions rather than more costly alternative channels).

Read the whole report for more details on the findings.

A lot of interesting things came out of the study though. First of all, only 1/5 of online bankers remembers seeing communication about their bank's financial stability on the website. That either means it wasn't there or that they didn't see it. Either way, it is absolutely essential that banks, given what we know about the ability of the web to build loyalty, use their websites to reassure and inform customers and prospective customers.

Second of all, only 13% of online bankers with mobile phones use them to access their bank's website, and only 3% of online bankers overall use mobile apps. Those that do tend to be more satisfied.

So what do you think--are you surprised that online satisfaction increased for an industry in so much turmoil?

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.

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?

The Impact of Gas Prices on Online Shopping

One of the things we asked as part of our Top 100 Online Retail Satisfaction Index was whether people planned to spend more or less online or offline next year, and why.

34% of our survey respondents planned to spend more online. When we asked what were the major factors influencing their online spending projections, 26% said personal finances, 16% said gas prices, 16% said online prices (probably better than offline prices), 14% said economic outlook. So gas prices were not the major influencer in projected online spend, but they were up there.

However, the data supports the idea that the weakening economy will benefit e-business in general, since nearly 34% plan to spend more online this year, and only 16% plan to spend more offline. Only 13% of respondents plan to spend less this year online, while 26% plan to spend less offline. Overall, this probably means the online channel holds considerably greater opportunity to capture sales in a tight economy.

Netflix Retains Top E-Retailer Title

We've been measuring satisfaction with the top e-retailers for four years now (as defined by Internet Retailer's top 500 Guide). We did the top 40 for two years, and due to popular demand, we increased that to the Top 100 last year.

So, just in case we weren't busy enough hosting our annual user conference this week, we thought it would be fun to also release the Top 100 today (actually, it was timed to be in conjunction with the release of Internet Retailer's Top 500).

Satisfaction with e-retail overall is up 1.4% to 75 (we used the ACSI methodology and its 100-point scale to do the research, as always). 45 of the 100 sites have higher scores this year (many with huge year-over-year increases) and 17 had lower scores.

Other interesting findings:

• Netflix (86), QVC.com (84), and Amazon (83) hold the top three spots for the fourth year in a row. Netflix has been #1 for four years in a row, and QVC and Amazon have traded back and forth between the #2 and #3 spots. But the consistency of these top sites is amazing-they are setting the standards and expectations for sites across industries.

• Online satisfaction (as measured by ACSI) drives loyalty and sales: highly satisfied online shoppers are 69% more likely to purchase from the retailer next time they're in the market for similar merchandise, 75% more likely to purchase online, 42% more likely purchase offline, and 75% more likely to recommend the retailer. How's that for proof to management that customer satisfaction is a key indicator of online success?

Download the report (for free!) to see who comes out on top in individual head-to-head matchups: Apple vs. HP vs. Gateway; Best Buy vs. Circuit City; Home Depot vs, Lowe's; Nordstrom vs. Neiman Marcus vs. Saks; LLBean vs. Coldwater Creek vs. JCrew; Drugstore.com vs. CVS vs. Walgreens; Netflix vs. Blockbuster; etc. There are 100 of them rated, after all. Almost all of the major e-retailer categories are represented. So check it out if your company is on the list or if you want to benchmark against these top-selling e-retailers. You can also read about it in Computerworld, ClickZ, and Network World, among other places. We have free reports available on the Top 100 overall, along with special reports on apparel/accessories e-retailers and computers/electronics e-retailers.

Online Banking Outperforms Other Financial Services Industries

Our latest research with Forbes.com shows that online banking is vastly outperforming other online financial services industries. Banks scores an 82 on the ACSI's 100-point scale (up 12% or 9 points from the 2003 score of 73), while investing and credit card websites were both at 75. The online banks are clearly setting a high bar. A score of 82 makes online banking the bright spot in the industry overall (offline banking scored a 78 when measured by the ACSI in late 2007).

Most notably, we found that highly satisfied online banking customers are 31 percent more likely to buy additional services from the bank and 54 percent more likely to recommend the bank to others.

You can read more about the study in BusinessWeek or download the full report here.