By Steve Rowen, Partner
6/17/2008
Though I wasn’t able to attend the Internet Retailer show last week, a few of my colleagues were, and were kind enough to bring me back a weighty amount of collateral (forget about the notion of wasting trees, how exactly did you ladies manage to carry all of this stuff?). Within, the show organizers provided some telling statistics.
First, Jack Love, the publisher of Internet Retailer, offered up stats summarizing the 2007 online market. Twenty-one percent growth for e-retailing amid total retail growth of 3.8% (after last year’s holiday price wars, it would have been difficult to believe we would be pining for such numbers come 12 months later). By segment, jewelry took the crown at 36% up, while books/cds/video enjoyed 32% growth online and mass merchants/ department stores jumped 31%.
Directly thereafter, Larry Freed, President at ForeSee Results shared the findings from the just-completed Top 100 Online Retail Satisfaction Index, Spring 2008. The study is conducted annually, rating customer satisfaction with online shopping during the post holiday period, and in this year’s case, drew upon 24,448 respondents from an FCG Research SmartPanel who visited the retail site within the previous 14 days. Using an ACSI-based model measuring such satisfaction drivers as “merchandise,” “brand,” “price,” and “site experience,” ForeSee then aggregates how the experience consequently breeds such behaviors as brand commitment, likelihood to recommend, likelihood to purchase online, likelihood to purchase offline, and likelihood to purchase next holiday season.
On average, the group found that customer satisfaction score to be up one point (1.4%) from last spring. Considering the previous projections of online growth, this is hardly a win for retailers.
Further, the results showed a typical customer satisfaction rating of 75/100. Where are the most logical places to improve this score? The answer does not lie with pricing.
The findings reveal that making improvements to price has the lowest possible effect on customer satisfaction. Price improvements only elevate the average score by .8 of a point, whereas an improvement to merchandise elevates the satisfaction index by .9. A more enjoyable site experience brings a 1.6 bump, and improvements to brand yield the highest benefit: a lift of 2.3 points on average.
From our recent “Finding the Integrated Multi-channel Retailer” Benchmark Report, this news does not come as a surprise. Within, Brian teases out that “Large retailers (those generating the equivalent of $5B or more in annual revenue) differ from all others in that they manage gross margin percent closer to equivalency between channels, suggesting that they view the e-channel more as an extension of their store operations, than as an outlet for excess or different merchandise. The inference is clear: larger retailers (who not coincidentally have operated multi-channel offerings longer than other retailers) are more focused on using alternate channels as ‘lead generation engines’ for their total offering, whereas under-performers think of the e-channel as a virtual ‘Bargain Alley.’
But we want to know more about where the e-channel is headed. Which is why, just last week, we’ve launched our first-ever foray into the pure eCommerce world. “Playing Well with Others: eCommerce’s Evolving Role in the Customer Experience,” seeks to benchmark the practitioners. We’re grateful for the fine work conducted surrounding customer satisfaction, but we want to know what retailers, Winning Retailer in particular, are doing right now to obtain higher ratings next year via online improvements to their merchandise, site experience, brand – even price.
We certainly hope you could help us by taking a few minutes from your busy day to take the survey. After all, there’s a great deal of money out there on the table: The customer is waiting. Your insight is greatly appreciated.
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