Some Retailers Still Far Outclassing Others on the Web
As consumers increasingly shift their spending to the Internet, retailers' focus on improving their online presence is paying off.
According to a new survey by research firm ForeSee Results, satisfaction among the top 100 online retailers shifted to an all-time high 78 out of 100—a five-point increase over this time last year.
Perhaps more telling, for the first time in the six years of the survey, no retailer earned a score lower than 70—the bar for classifying a dissatisfied customer.
"The state of the economy really forced e-retail to step up their game," said Larry Freed, president and CEO of ForeSee. "Since so much of the financial downturn was out of their control, companies turned to those things they could improve, and now they are reaping the benefits."
Even a slight improvement in sales can translate into big bucks for retailers, Freed said. According to the study, which was based on responses from more than 23,000 visitors to the 100 biggest retail Web sites, a one-point increase in online customer satisfaction translates on average to roughly $89 million in increased sales.
"The paycheck for satisfying your customers is not only for revenue today, but more loyalty and more recommendations in the future," Freed said.
Online sales have become even more important in the aftermath of the recession.
Critics of the retail sector's recovery have downplayed a recent improvement in same-store sales—citing historically weak comparisons—but online retailers this year have been making better than 10-percent sales gains over a positive 2009, according to Nicholas Colas, ConvergEx Group chief market strategist.
That growth is likely the result of retailers investing more in their Web sites. According to a study by Forrester Research, Web sites' spending on 15 of 18 technology categories related to online customer experience is expected to rise this year.
So Who Topped the List?
ForeSee gauged its ratings based on three factors:
- Drivers of satisfaction, which include merchandise, functionality and content;
- Overall satisfaction, which brings into play a person's individual expectations, and
- Future behaviors, such as how likely a shopper is to return to the site.
Although the study doesn't directly measure the influence of social media initiatives such as those on Twitter and Facebook—an area in which retailers from Staples to Best Buy have improved recently—Freed said it's undeniable that these sites help drive traffic and interest to the companies.
Pure online companies once again led traditional retailers this year, as brick-and-mortar stores shifted their focus to things like inventory management and product-pricing when the recession hit. But as the economy slowly improves, those retailers will again focus more resources toward Web-based improvements. They already had been gaining in that area before the recession, Freed said.
Following are some key takeaways from the study:
- Members-only movie-rental company Netflix topped the satisfaction list for the fourth year in row with 87 points, and online retailer Amazon.com again followed in second, with 86.
- Apple's eight-point jump to 83 was one of the most significant improvements, Freed said. The company's rating dipped five points in 2009, which was likely the result of an increase in new visitors to the company's site driven by the iPhone. Now that the company has a larger following, customers are likely rating the site higher because of their familiarity with how it works, he said.
- Online satisfaction was a bright spot for Abercrombie & Fitch , which gained 9 percentage points to 79. The teen retailer has been slammed by analysts for the lack of originality in its designs, and missed analysts' expectations when it posted a 5 percent same-store sales increase in March, despite easy year-over-year comparisons.
- Along with Netflix, Amazon and Apple, the top 10 e-tailers were Avon Products , Barnes and Noble , Keurig, LLBean, QVC, Vitacost and BassPro.
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