FREEDyourMind

2011 Holiday Season: Satisfaction Update

Cyber Monday and Green Monday have passed. Free Shipping Friday and the Holidays themselves are in our future. Where do things stand in terms of the customer experience this holiday season?

(Why do we care? Because customer satisfaction, when measured correctly, predicts the future financial success of a company and also predicts future purchases, loyalty and recommendations. So we definitely want to keep on track of what has already happened with revenue reports, but looking at sales tells us what has already happened, whereas looking at satisfaction can actually predict the future.)

Sales tell us it has been a great holiday season so far. Comscore says holiday sales in the U.S. are approaching $25B, up 15% from last year. A record $1.25B was spent on Cyber Monday. We analyzed our customer data in the form of three benchmarks this week in order to look at the holiday season through the eyes of the customer:

1)      Customer satisfaction: satisfaction is rebounding, and on Green Monday, it was nearly as high as it has been throughout the holiday season so far.

2)      True Conversion Rates: “True” conversion rates are also higher than we’ve seen them in months. Retail sites are doing a good job of converting customers online this year.

3)      Social Media Value: social media has limited value as a direct marketing tool but remains a huge influence on shopping habits and decisions.

#1 Customer Satisfaction

Our retail benchmark suggests that online shopper satisfaction is picking up steam. As we reported, satisfaction was less than stellar on Cyber Monday, but satisfaction on Green Monday has rebounded, and was close to its highest point so far this holiday season, following a dip after Thanksgiving.

#2 True Conversion

Virtually all retailers measure conversion: how many people came to your site vs. how many people actually purchased? Typical retail industry conversion rates hover around 2 or 3%, according to Forrester Research. But what does that really tell you about your ability to help people accomplish what they intended to accomplish.

A couple of years ago, we introduced a metric called True Conversion (you can read more about it in Managing Forward). True conversion looks at how many people came to your site intending to buy, and then how many actually did.

So here’s how it shakes out this holiday season.

When we ask visitors to e-commerce websites over the holiday shopping season why they came to the website, 43% came with the intent to purchase, 50% came with the intent to research, and 7% came for some other reason.

Of the 43% who came to purchase, 49% actually did. That metric is a lot more valuable than knowing what your overall conversion rate is. THIS is the number you want to track and move the needle on. If your True Conversion Rate is 49% this holiday, you should be shooting for 50% next season or even 60% or 70%.

 

I should also mention that there is a huge range in True Conversion Rates when you look at individual retailers. On average, the True Conversion Rate was 43%, but in our benchmark, there was one multichannel retailer (let’s call them Site A) who had a True Conversion Rate of 9% while another multichannel retailer (Site B) had a True Conversion Rate of 79%! These are actual examples from the retailer in our benchmark during the 2011 holiday shopping season, and both are stores that should have a heavy component of holiday gift buying on their sites. This means that of the people that came to that website intending to buy from Site A, only 9% actually did. That’s a terrible conversion rate! That means that 91% of the people who came to that site with money burning a hole in their pocket left without spending a dime. But on Site B, 79% of the people who intended to buy actually did. That’s a much more impressive number.

 

Another interesting data point: 50% of visitors to e-retail websites came intending to research, with no plans to buy anything. Yet 9% of those visitors still converted, even though they didn’t plan to. That’s just extra money the retailer was probably not expecting.

I follow these True Conversion benchmarks pretty closely throughout the year (and if you are a client of ours, you can participate in True Conversion at no extra cost; just ask your analyst), and these numbers look great to me. A True Conversion Rate of 49% (on average for all our retail clients in the benchmark) is a great number—about 11% higher than it was just two months ago before the holiday shopping season got into full swing. We would expect True Conversion Rates to be higher at the holidays—there is more impetus to buy and to buy quickly.

The burning questions for retailers 1) Do you know your True Conversion Rate? 2) Are you measuring regular conversion, and what does it really tell you? 3) Do you know which elements of your website you should improve in order to increase True Conversion? 4) Is there anything you can or should do to convert more of those researchers, the people who didn’t plan to buy anything when they came?

#3 Social Media Value

A third benchmark we’ve been tracking for some time is the Social Media Value Calculation. This is basically a way to calculate the actual tangible value that social media brings to you, beyond just fluffy stats like numbers of followers or fans. The Social Media Value Calculation categorizes people based on the amount of influence your social media initiatives have on their decision to visit the website, store, or call center. You can gain greater insight into how much your social media efforts impact customer acquisition and even spending.

So here’s what we’re seeing in terms of social media value during the holiday season. We consistently see that social media URL’s are responsible for only about 1% of site traffic, and that is the same during the holiday season. However, although only 1% are coming directly from a social media site, social media was a primary influence for 7% of site visitors. And 16% of site visitors reported social media influenced their visit or purchase in one way or another. Moreover, those influenced by social media were more satisfied, more likely to purchase, more likely to recommend and more likely to return. 

So, clearly, social media is making a significant contribution this holiday season.  But this also tells me that social media leave a lot to be desired as a direct marketing tool (only 1% of site visits come referred from social URLs). The true value of social media remains in the arena where it’s still hardest to control—the viral, word-of-mouth nature of real social interactions happening between friends, colleagues, and acquaintances.

These are some of the themes we see emerging from our research, which is ongoing throughout the holiday season. Are there any surprises here for you? Are you measuring satisfaction, True Conversion and Social Media Value? What kinds of insights do these metrics give you during the holidays?

The ForeSee retail benchmark is made up of 159 individual websites, ranging from Fortune 100 retailers to smaller, regional retailers. Among the retail websitesincluded in the benchmark are retailers like Ace Hardware, Bass Pro Shops, Belk, Cabela’s, Chef’s Catalog, Eddie Bauer, eBags, Gamefly, Harry and David, Helzberg Diamonds, Home Depot, LEGO, Musician’s Friend, Panasonic, Samsung, Sears, Sephora, Sony, and StubHub.

ForeSee has been releasing a weekly online satisfaction benchmark during the holiday shopping season for six years. ForeSee collected more than 660.000 satisfaction surveys from people who shopped on retail websites in November and December 2011.

Social Media Best Practices for Government

The federal government doesn’t have the same flexibility with implementing social media plans as the private sector. The feds have to deal with archaic public comment laws, bureaucratic approval processes for messaging, and smaller budgets.

However, despite all that red tape, our researchshows that all 15 cabinet-level departments have some presence on the 3 big social networking sites (Facebook, Twitter, and YouTube).

We've been releasing the ACSI E-Government Satisfaction Index since 2003. We're trying to shake things up a bit, and while we still plan to release quarterly updates on citizen satisfaction and citizen ratings of transparency, we're trying to supplement that data with other topics of interest to those who are working in e-government, whether at the federal, state, or local level.

So this quarter, two of our usability auditors (thank you Kamaria Campbell and Kathy Totz) did an exhaustive study of what the 15 cabinet-level departments are doing in terms of social media in order to make suggestions and recommendations to other government departments, agencies, and programs. You can download the full report for free on our website.

In addition to the social media best practices, the report also includes satisfaction scores for 100 federal government agencies and our quarterly Transparency Index, which provides a quantitative measurement of how transparent an agency is perceived by citizens. Rhonda Berg does a great job with the satisfaction and transparency data every quarter.

Here are some highlights of the report:

• All 15 executive departments are participating in the three most popular social platforms (Facebook, Twitter, and YouTube).
• Almost half of the 15 departments have more than one presence on a single social media platform.
• Organizations that have a number of presences on one or more social platforms should create an aggregate social media page that lists all of the options with which citizens can interact with them via social media.
• Citizen satisfaction, at 75 on the study’s 100-point scale or higher since late 2009 (with only one exception in the second quarter of 2010, when satisfaction fell briefly to 74.7), shows no sign of waning and maintains an aggregate score of 75.5 in the third quarter of 2011. 
• The aggregate Q3 2011 online transparency score is 77.3, which has increased from last quarter and is the highest aggregate transparency score measured so far.

What's missing from our list of best practices for government social media activities? Any thoughts? We'd love to hear them. I'd also like to hear it if you have ideas for other topics we can include in future ACSI E-Gov Satisfaction Index reports.  

ACSI Results: Google & Fox Rule, Facebook and HuffPo Flop

Today is the release of the annual American Customer Satisfaction Index (ACSI) E-Business report, which includes measures for social media websites, portals, and search engines. You can download ForeSee's commentary about the scores on our website.

Here's a quick infographic you can use with winners and losers; all scores are listed at the end of the post.

 

Social Media

Let's talk about social media first. Facebook's customer satisfaction score was up a bit, but still very low (66 on the ACSI's 100-point scale). This should be really scaring Facebook right now with the advent of Google+. Studies show that customer satisfaction (as measured by the ACSI) predicts sales, loyalty, and recommendations. If Facebook was sitting pretty with a customer satisfaction score of 80 or higher, I think it would be almost impossible for Google+ to break through that. It's hard to switch a social network--you have to reconnect with everyone, post new pictures, figure out a new interface... if everyone was happy with Facebook, there would be no reason to do it. But a score of 66 is just plain bad...which leaves the door wide open for Google+ to waltz through and steal market share from Facebook.

The other big news in the social space is that MySpace.com dropped out of the Index this year because we couldn't even get enough surveys to get a statistically significant sample, underscoring the widespread talk of MySpace's declining market share.

Search and Portals

I feel good about Google's chance to come in and possibly even own the social space with Google+, but in portals and search, Bing is making some serious inroads. I said before that if you are satisfying customers, you don't need to worry about people leaving, and that's true. Google search has a customer satisfaction score of 83, an excellent ACSI score by any standard. But Bing made huge improvements this year, and jumped from 77 to 82, just one point behind Google. Bing has built-in market share because it is the search engine on all Microsoft properties and partner properties. And while people are unlikely to go looking for a competitor if Google is meeting their needs (which it appears to be doing), they will undoubtedly run in to Bing and it seems to be basically as good after just a year in the market.

Online News

Foxnews.com has only been in the Index for two years and has topped the news category--by a lot--both years. This year we added HuffingtonPost.com for the first time, and it came in at the very bottom of the ACSI with a score of 69, the second-lowest score in the e-business category, behind only Facebook. When asked what people liked and didn't like about the site, the most frequent complaint was related to layout and navigation.

What's interesting to me is that in the news category, you have two sites that are basically designed for and frequented by "true believers" and they are at the top and bottom of the Index, although you could definitely argue that MSNBC.com is intentionally trying to be the anti-Fox for the left, and they are right in the middle. These news outlets and websites are clearly meeting user needs and expectations with a pretty wide variety of success. 

Here are all the scores reported today, and you can get much more complete analysis here.

 
We have a lot more data we haven't shared yet--the truth is that the turnaround time is pretty tight and so we analyze the basic ACSI numbers first and then go back and look at some of the other data we collected. Eric Feinberg, a director at ForeSee who has a ton of experience and knowledge about content, media, and entertainment sites like these will be guest blogging in the coming weeks about some of the other findings. We have some interesting data on how customers perceive ads that I'm looking forward to digging into a bit more.

Top 100: Social Media

Here is more information from our Top 100 Online Retail Satisfaction Index released earlier this month. Today's topic is social media.

Social media is turning out to be a touchpoint with enormous potential for satisfying shoppers and building loyalty and relationships. When we study our own clients using our Social Media Value Calculation, we see that social media has little direct impact on web traffic. In fact, in our most recent Social Media Value Calculation benchmark we saw that only 1% of site visitors came direct from a social media site.  However, 18% of the site visitors indicated that social media was an influence on their visit to the website. When applying this methodology we are able to attribute how much revenue is influenced by social media, helping companies truly understand the return on investment for their social media marketing efforts and also the value that the viral effect of social media is having on their business.   

Back to our Top 100 Online Retail Satisfaction Index.  First, when customers rate their satisfaction with various touchpoints, they are actually more satisfied with their interactions on Facebook and Twitter than many other customer touchpoints, including the website!

 
 

What social sites are most e-retail shoppers using? No surprise here. Facebook.

 

But where do they want to hear from retailers? 42% don't want to hear from retailers at all on social sites.

 
42% of survey respondents say they don't want to interact with retailers on social sites, but the next question indicates that only 29% aren't actually interacting with any retailers, which mean there are some people who SAY they don't want to interact with retailers on Facebook who are already doing so. That's why it's important to have a methodology that dig a little deeper. In fact, 69% of online shoppers are interacting with at least one retailer on social networks. This is a huge growth area for retail, and as people begin to be able to make purchases on Facebook and other social sites, understanding how this experience is impacting first-time and loyal customers will be critical.

 
 
Most people choose to friend, follow, or like a retailer on a social site to learn about sales, special offers and products. Very few do so for customer support. Understanding what your customers are coming to your site for can help you with the content on your social pages.

We also see that more than half of those who are interacting with a retailer on a social site have made a purchase because of it. Wow! This is a real testament to the power of those offers you're posting on your Facebook pages and Twitter accounts.

 

One final point of data related to the value of social media. We always ask about customer acquisition sources, and there are some major shifts year-over-year.

• Internet advertising and traditional media are both way down as a driver of traffic to websites.
• Social media, along with email marketing, are both way up.
• Company familiarity is also up (and could be due to more exposures/touch points on social media).

This data tells me we need to be doing a better job, as an industry, getting at the real value of social media.

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.