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Holiday Season Rings in Less Cheer
Online retail satisfaction goes down, but economy and price aren't the only ones to blame.
Posted Dec 31, 2007
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In its annual release of the "Holiday Top 40 Online Retail Satisfaction Index," Michigan-based online customer satisfaction measurement provider ForeSee Results found that online customer satisfaction fell 1.3 percentage points this holiday season from last year, to a score of 74 on a 100-point scale. Though worth noting, the drop is not too disappointing, says Larry Freed, chief executive officer of ForeSee Results and author of the report. In fact, he adds, results from Internet marketing research firm comScore actually showed that online holiday spending saw a 19 percent gain from last year, with approximately $23.48 billion. However, as holiday shopping gets more and more aggressive, competition will depend on retailers vamping up their holiday spirit and focusing on customer satisfaction. The study was an opt-in survey of approximately 1.6 million consumers nationwide, conducted between November 26 (Cyber Monday) and December 17. "We wanted to make sure we got our data from the 'primary' part of the holiday season...before you get into the last free shipping days," Freed says. Those who shop during the "free shipping days," he explains, are considered to be a whole different audience. But just as the current economic downturn is said to affect consumer shopping habits, perhaps the majority of holiday consumers were waiting for those added discounts. According to the International Council of Shopping Centers (ICSC), only 18 percent of Americans had finished their holiday shopping in mid-December, reports news agency Agence France-Presse (AFP). ForeSee will be conducting a follow-up look using the data from this study to see the impact of offers like free shipping and promotional emails. The four major factors of customer satisfaction included in this survey were:
  • Brand (how well Web site communicated the brand's quality and image);
  • Merchandise (types of products, availability of products);
  • Price (product, reasonableness of shipping); and
  • Overall Web site experience.
One of the unique challenges Internet retailers face, Freed says, is the consumer demand for it to become better and better. In previous years, consumers were presented with high quality features like in-depth product specs and rotate and zoom effects on product images, while in 2006 and into 2007, there was a surge in the use of consumer generated reviews. This year, however, consumers failed to see dramatic new features. Instead, he says, retailers were more focused on marketing this year. While marketing is an important component in retail, Freed predicts that if online channels fail to deliver technological improvements, satisfaction will continue to decrease year over year.
Unfortunately, one of the major issues plaguing retailers is what Freed describes as an "addiction" to price discounts. "It's a vicious cycle," he says, "and it's hard to stop." Consumers have been conditioned to wait for discounts, and price comparison Web sites have become their primary source when conducting product research. Moreover, promotional emails this year proved to be a "very powerful" tool for marketers, as 16 percent of new visitors came to a site because of it, Freed says. In a highly competitive environment, a price-sensitive tactic is understandable; but in Freed's opinion, the discounts are only getting bigger and deeper year after year. The good news is that consumers are resilient. "[They] will tend to spend through hard economic times," Freed says, which means competition is actually dependent on customer service, not price. When scoring customer satisfaction factors, Freed breaks it down into two components: actual score, and impact (i.e., if retailers improve this factor, what's going to be the impact and satisfaction). While consumers always want a lower price, in terms of impact, it scored the lowest. Results showed that retailers will ultimately see a better payback if they improve their site and brand than if they simply lower the price. "We see satisfaction as a long term predictor," Freed says. "Focusing on sales this season is important, but how we meet the individual needs as retailers is even more important." Related articles: Holiday Shopping Brings Customer Service Challenges As the annual shopping season opens, retailers need to allocate resources more effectively. Trends in 2007 Online Retailing Rich shopping is here Market Focus: E-Retail: Buying Into the Customer Experience The retailers that focus on delivering a seamless customer experience have a markedly stronger chance of cultivating customer loyalty. Retailers Are Becoming More E-Savvy The results from this year's holiday shopping are in, with most retailers posting impressive customer satisfaction scores; last year's leaders raise the bar for service. E-commerce Best Practices Make Perfect CRM magazine presents what some of the best minds in the industry have to say. The New Frontier for Retailers It's here to stay and it will grow--now is the time to embrace it. Getting Carded: An Early Holiday Sales Report Gift cards help retailers beat some holiday sales forecasts, with spending up 8.7 percent. Retailers Target Customer Centricity BetterManagement Live hosts a panel that looks at shopper segmentation and predicting consumer needs as drivers of future loyalty gains.
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