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Appeared on: Tuesday, May 12, 2009
Drop in Online Customer Satisfaction Offers More Bad News for Retailers

Amid conjecture that the worst days of the recession may be behind us, a new report released today from ForeSee Results finds that customer satisfaction with many of the largest online retailers is taking a dive.

The decline threatens to smother an online retail recovery just as the rest of the economy shows signs of recovery. The annual Top 100 Online Retail Satisfaction Index from ForeSee Results and FGI Research falls 3 percent since last year to an aggregate score of 73 on the study?s 100-point scale.

The research, which employs the methodology of the University of Michigan?s American Customer Satisfaction Index (ACSI), is based on surveys of over 22,000 visitors to the top 100 e-retail websites by sales volume, as reported in the 2009 Internet Retailer Top 500 Guide.

"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. "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."

Online retail stalwarts Netflix (85) and Amazon (84) lead all e-retailers for a fifth year in a row, showing that it is possible to succeed despite tough times. The largest improvements go to Kohls.com (+6% year-over-year to 76), Costco (+3% since last year, and +6% since 2005), and eight other companies improved 3%. A full list of scores follows this release.

Only 16 of the top 100 e-retailers improved, while over half declined. Even Apple.com got knocked from its throne, sliding nearly 6% to 75 and now trailing Dell.com and HPShopping.com. Apple?s expansion into cell phones has been a boon for the company, but it may be having trouble serving a different customer base on its website. Other notable declines include CVS.com (-8% to 71, trailing Walgreens and Drugstore.com); NeimanMarcus.com (-7% to 70) and Willams-Sonoma.com (-6.4% to 73). An analysis of the factors that impact customer satisfaction shows that consumers are more price-sensitive than in previous years. Preceding reports of the Top 100 Online Retail Satisfaction Index have shown that despite being a perpetually low-scoring element, price has had a relatively low impact on overall satisfaction. However, the 2009 study reveals that although shoppers aren?t more dissatisfied than in previous years, price now matters more.

"This doesn?t mean companies should start slashing prices, but it does reflect the current mood of the consumer," said 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."

The report compares desirable future behaviors of highly satisfied shoppers to dissatisfied shoppers and finds that the former group is 71% more likely to purchase online than the latter, and 72% more likely to recommend the website. But satisfaction with the website has an impact with a shopper?s brand experience and translates into a greater likelihood (44% more likely) to make a purchase offline.

The Top 100 Online Retail Satisfaction Index report, including a score chart for the top 100 websites, is available for free at www.ForeSeeResults.com.


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