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Retailers pay the price for poor online customer satisfaction

Latest report finds that a one-point increase in satisfaction is likely to lead to a 10.6% increase in revenues generated on the web.

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Retailers pay the price for poor online customer satisfaction

Latest report finds that a one-point increase in satisfaction is likely to lead to a 10.6% increase in revenues generated on the web.

Customer experience analytics provider ForeSee has measured customer experience across the UK’s top 40 online retailers.

Its annual ForeSee Experience Index: 2013 UK Retail Edition indicates a slight, but meaningful, decrease in aggregate satisfaction from Christmas 2012 to Christmas 2013 (from 74 to 73 on the study’s 100-point scale) – the first time since the survey was launched in 2007 that there has been a fall in online customer satisfaction after five years of stability and growth.

Whilst a one-point drop is considered a small decrease, the direct effect that satisfaction has on revenues and profitability means that even this slight reversal of fortune has the potential for significant negative impact. Indeed, research conducted across the top 100 US retailers shows that, for an individual company, a one-point increase in satisfaction is likely to lead to a 10.6% increase in revenues generated on the web, suggesting a potentially major loss of value for UK online retailers should this decline persist.

The revealing data is the result of almost 10,000 customer surveys collected each year during the prime Christmas shopping period (in November and December) and affords year-on-year comparisons of not only aggregate e-retail satisfaction, but also of satisfaction with individual retailers. The Index measures four high-level factors that affect overall customer satisfaction: site functionality, price, merchandise and content.

The Leaders: With a score of 80 or above generally considered the threshold of excellence, Amazon continues to dominate the top of the leaderboard. However, neither its US or UK site has shown any improvement in score (amazon.com maintained its 2012 score of 84) and amazon.co.uk actually fell by two points on last year’s score (of 86) to equal its US counterpart’s score. Dropping out of the group of retailers that surpass the excellent threshold of 80, John Lewis fell by a point to 79, but managed to hold on to its third place position in the Index. Apple (with 78 points), Marks & Spencer (with 77) and ASDA Direct and Ikea (both with 76) also appear at the top of the Index.

The Fallers: Ryanair continues to bottom out the Index and by a significant margin – it rests a full eight points behind the three next-worst performers. With a score of 60 (down one point from 2012) the airline is clearly continuing to frustrate its customers and this will continue to impact its bottom line into 2014.

The Most Improved: This year’s largest increases went to Netflix (up three points to 71) and Ikea (also up three points - to a score of 76). Given that, on average, a one-point satisfaction increase has been shown to lead to a 10.6% increase in revenues generated on the web, these increases could translate to significant business value for these companies. Retailers are leaving money on the table by not improving the customer experience.

Larry Freed, chief executive at ForeSee, said: “With a proven, quantifiable relationship between a positive customer experience online and increased loyalty, sales and recommendations, many of the online retailers in the UK Top 40 clearly need to pay more attention to satisfying their UK customers. This is especially true of the 19 retailers listed with an average or lower score, which are risking loyalty, recommendations, sales and market share.”

The satisfaction scores in this specific report reflect data collected from November 18th to December 5th from a sample of nearly 10,000 shoppers who had visited any of the top 40 retail websites this Christmas season.

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