Consumers Give Lower Marks for Online Service
While it
is true that online sales have continued to grow while brick and mortar
operations have struggled during the recession, all is not well on the
e-tail side of the business.
The level
of satisfaction that consumers have with the online retail experience dropped
roughly three percent over the past year, according to the Top 100 Online Retail
Satisfaction Index by ForeSee Results.
"Online
retailers picked a bad time to drop the ball, and if they don’t shore up
customer satisfaction, things could get even more bleak," said study
author Larry Freed, president and CEO of ForeSee Results,
in a press release. "Revenue will tell you a lot about
past performance, and by that measure, things don’t look great. But
customer satisfaction will tell us a lot about what’s ahead, and more companies
are losing ground. That’s a real canary in a coal mine for future sales
online and offline, loyalty, retention, and return visits."
Over half
of e-tailers in the Top 100 declined while only 16 improved, according
to the study. Netflix and Amazon captured the
highest scores while Kohls.com
(+6 percent) and Costco (+3 percent) achieved the biggest year-over-year
gains.
Apple (-6
percent), CVS (-8 percent), Neiman-Marcus (-7 percent) and Williams-Sonoma
(-6.4 percent) saw the biggest declines.
Pricing has
become more important as the economy has softened.
"This
doesn’t mean companies should start slashing prices, but it does reflect
the current mood of the consumer," said Mr. Freed. "Online shoppers
are a savvy group, able to compare price and merchandise at the click of
a mouse. In an economy where rising unemployment, plummeting home values,
and tight credit continue to make headlines, consumers are punishing retailers
if they feel prices aren’t fair or competitive."
Discussion Questions:
How would you evaluate the state of customer service in e-tail operations
today versus last year? Is there anything in the research that gives
you pause looking forward?
- Drop in Online Customer
Satisfaction Offers More Bad News for Retailers, According to ForeSee Results – ForeSee Results - Online shopping gets
lower scores from consumers – The Dallas Morning News - Amazon and Netflix Riding
High, But Satisfaction With Many E-Commerce Sites Slipping – Storefront
Backtalk
Customer satisfaction is the linchpin to customer loyalty. And yet retailers are willing to forgo the steps necessary to insure their online success. If you follow the money you will see that companies are placing their bets behind Search Engine Optimization.
They are not as concerned about satisfying the consumer who arrives at their website. If retailers paid attention to what it takes to make their online shoppers happy, they would have better results. Oddly it won’t cost a fortune to do it. I just think they haven’t paid attention to the site, but rather to the search engine strategies to drive visitors.
My website optimization research has uncovered four dynamics which can insure on line customer satisfaction. If the retailer understands these factors with regard to their website, they can insure happy and more loyal customers:
Motivation – why does the visitor go to the site? Is it to buy or to gather information first?
Expectations – what is the visitor’s past experience with web sites, what characterizes the expectations for this site?
Content – how does the site deliver the information needed to close the sale; does the prioritization match the needs of the customers?
Navigation – is the flow of the site intuitive, easy to follow and is the transaction process a slam dunk?
The IT department is not going to examine these criteria for effective web sites. And if marketing and sales abdicate the responsibility, customer satisfaction will continue to go down…and so will sales.
I’ve been talking about this in my blog (www.gocaptus.com/blog) over the last few days. I’m suggesting a different approach to website design and layout.
These statistics seem a little off to me. Are the levels of satisfaction based on transactions from current or new clients? It’s very possible that first time e-customers feel let down because they were hoping for more than what they got.
While some e-retailers may be doing a worse job, perhaps most are just not offering low enough prices or offering a no-hassle return policy.
I would want to dig a little deeper into this before we start finger pointing at retailers.
The economy is bad and consumers are grouchy. This points up the need for intuitive websites and excellent customer service.
The more a consumer has to click to find what he/she wants, the less he/she likes it. Many online retail websites make it difficult to find what one is looking for. If you are an online retailer, how difficult is your checkout process? Is it easy to determine shipping costs without having to complete forms and more towards checkout?
Equally important is customer service. What does a consumer have to do to get an answer to a question or help with a problem?
Online retailers like Amazon and Zappos get this and make it easy for consumers to shop their stores. Sadly, many online retailers make the process too difficult.
Shame on Apple, CVS, Williams-Sonoma and the other etailers which have let their online service languish. This is not a time to rest on past success. Retailers must constantly explore new ways to delight online customers and to enliven their shopping experience.
It is interesting that Netflix and Amazon continue to be leaders in online service. Could it be that they have established virtual communities? That way, the value they deliver becomes far more than price, services and shipping. One would argue that these sites are actually adding to the quality of life of their shoppers.
No doubt the economy has an effect. However, the fact that Amazon and Netflix continue to lead the pack with respectable satisfaction numbers, and that 16 of the Internet providers had positive score increases underscores that this can be done with the right formula. Internet retailers should be benchmarking the two leaders as well as reviewing the efforts of Kohl’s and Costco for insights on how to improve their online shopper experience.
Success does in fact, leave clues. The challenge is to find these success factors, adapt to your situation, and adopt. The most compelling data, apart from the satisfaction scores, is that highly satisfied shoppers when compared to dissatisfied shoppers are 71% more likely to purchase online than the latter, and 72% more likely to recommend the website. These statistics underscore the need to get it right.
Joan, I think you’ve identified a root cause of the symptoms we’re all seeing: Too many companies, for far too long, have thought of their web sites as IT activities and not marketing activities.
Sometimes it even happens when a company’s emerging from small to medium-sized; the IT folks get the ear of management and go so far as to persuade top brass that, now that the site needs more functionality, they should really take over the whole thing. Then, suddenly, we get a few more bells and whistles, but it can get a lot harder to make sure the copy and layout are right–and that users who are not web-savvy can find their way around the sites.
Folks, engineers and programmers are absolutely vital to the process, but let’s not give them veto power over the creative.
There’s a difference between “satisfaction” with the web site and “customer service”–not sure if these retailers declined on web usability or customer service. What elements of customer service declined? Could it be that customer expectations are rising faster than the web can catch up, or beyond what is reasonably expected from the online channel?
I’d be more convinced if I knew the same customers were surveyed as last year, looking at and purchasing from the same retailers. I suspect this is not the case.
What I do notice is retailers often redesign their sites every year or two, or add new functionality that may not be user-tested. Most internet retail conferences have sessions on web design–and they’re always talking about re-design! Redesign is often based on subjective opinion, to impact brand image etc. Rarely does intuition translate into the best performing websites.
On the customer service side, with so many layoffs and cutbacks in these economic times, I’m not surprised if live chat and customer service suffers. Retailers may also cut back on offering free shipping or use rate-shopping to select the cheapest carrier option in real-time, which can also impact customer service. Cheaper is not always better.
I agree with comments focused on uncovering the source of the apparent decline in satisfaction. “Satisfaction” online, as in-store, is really a mash-up of the entire experience, from speed of initial page loading, navigation, content delivery, pricing, check out, and all the other variables which describe the click-path of a consumer. And as others have pointed out, “satisfaction” is actually a relative measure, relative to the expectations of the individual being measured.
Perhaps there is some aspect of inevitability in a decline in consumer satisfaction with online operations. The reality of cost cutting and expense management isn’t limited to brick and mortar operations or marketing. Online is impacted as well. And in the growth phase of the online market, many retailers had to invest in service infrastructure which exceeded in capacity their volume levels at the time (this is almost invariably true).
With the rapid rise in volume, transaction count and transaction complexity, it’s quite possible that this infrastructure has now reached a point where it is no longer graced with excess capacity or service levels.
I agree with most of the comments above. It is a combination of the economy and that IT is in the lead instead of marketing. More retailers need to get back to understanding the core needs of their customers and meeting that need. Loyal customers need service and positive online experiences now more than ever.
I am a hands-on e-tailer, unlike the other commenters here. While sifting through their opinions, please remember that they’re not hands-on e-tail operators. My domestic bidness has declined while doing nothing different. Fortunately, we have customers in over 80 countries, and our offshore bidness has grown significantly compared to U.S. orders. We suspect it’s due to domestic consumer conservatism combined with the sliding value of the dollar compared to foreign currencies.
Non-e-tailers and those with no experience in the field fail to recognize or evaluate the impact of online advertising. Google has crushed Yahoo, and is now the de facto online shopper search engine. As such, they exact extremely restrictive requirements of advertisers along with increased prices (of course). These Google restrictions and price increases are being felt by e-tailers, including the websites of brick ‘n’ mortar retailers. The upshot is retailer cost-cutting in every short-term, quick-result area possible. This includes customer service.
As others have already mentioned, it is difficult to assess the reason(s) for dissatisfaction from this survey. But as I have stated before, more effort has to be spent on technology used for e-commerce sites, which in turn will improve both satisfaction and customer service. Easier ways to shop, learn, interact, pickup or delivery, return, and engage are all becoming more important to the everyday online shopper. Those that have improved the overall online experience are gaining better service results.
There are 3 types of retailer sites: (1) folks who make their sites a major part of their strategic mission (2) folks who want significant e-commerce, but aren’t going to make a full-boat commitment, and (3) folks who see the site as an add-on, making the minimal commitment.
For example, retailers who encourage in-store pickup (45 minutes for Best Buy, 18 minutes for Micro Center) are in group 1. They can fight Amazon because Amazon has no bricks and mortar locations to leverage.
Retailers in group 2 will migrate to group 1 (if they assign capable executives to e-commerce) or group 3 (if they can’t figure out how to make money online). Lots of Group 3 retailers see e-commerce as just another way to increase overhead, a distraction with low profit potential. If they don’t invest wisely, with the most capable folks they can find, they’re right.
And some forms of retailing cannot ever make money via e-commerce. Dollar stores and supermarkets should have sites that advertise, but don’t take orders.