E-tailers Earn High Satisfaction Scores

E-tailers are becoming the online success model, according to the annual American Customer Satisfaction Index (ACSI) report, which is produced by the University of Michigan in partnership with the American Society for Quality and the CFI Group, along with ForeSee Results, and Market Strategies Inc.

Using a 100-point scale that quantifies customer satisfaction, the report found that e-commerce continues to rate higher than other industries, while also outpacing the national average of all the measured groups. The e-commerce aggregate for the fourth quarter of 2003 was 80.8 – 4.1 percent higher than Q4 2002. The national aggregate was indexed at 74, trailing behind the financial/insurance aggregate (74.7), and the retail aggregate (75).

The ACSI included e-retail, e-brokerage, auctions/reverse auctions, and e-travel in the e-commerce category, finding that online retailers scored considerably higher than their counterparts. E-brokerage, which scored the lowest index in the category, exhibited the most improvement from 2002 to 2003.

Larry Freed, president and CEO of ForeSee Results, said that it was noteworthy that online brokerages didn’t score better, considering their reasonable degree of innovation and the pure convenience of their services. “This is a case in which companies have not quite figured out how to understand and deliver on customer expectations. Adding features and functions only matter if and when these are things that customers care about and contribute to creating the total experience they want and expect.”

ACSI E-Commerce Scores by Category
	2000	2001	2002	2003	Change
E-Retail	78	77	83	84	1.2%
E-Brokerage	72	69	73	76	4.1%
Auctions/Reverse Auctions	72	74	77	78	1.3%
E-Travel	NA	NA	77	77	0%
Source: American Customer Satisfaction Index (ACSI)

“In the latest ACSI findings, expectations continued to climb but at a somewhat slower pace than in previous years so a shifting focus of demands may emerge as an equal or greater challenge than purely rising expectations; continually addressing the total experience becomes the imperative. E-commerce companies have generally been good at rounding out the customer experience so that as one aspect of the experience meets expectations they move on to the next thing. Of course it isn’t simply sequential, and e-commerce companies, like any company, must keep a lot of balls in the air,” said Freed.

E-Retail
Amazon.com’s 88 earned the company the highest rank among the e-tailers included in the category, however, their score remains unchanged from 2002 and 2003. Barnesandnoble.com dropped 1.1 percent, from 87 in 2002 to 86 in 2003; 1-800-flowers.com’s rating decreased by 2.6 percent to 76; and Buy.com maintained a score of 80 for both 2003 and 2003.

E-commerce’s success isn’t likely to create unmet expectations, according to Freed, and the industry’s ability to stay on top of customer demands is likely to continue. “Meeting high expectations profitably also means knowing the degree of impact and the point of diminishing returns. What’s remarkable about some of the best performers is their ability to stay a step ahead of expectations and set the right investment priorities.”

E-Brokerage
Online brokerages earned an aggregate score of 76, a marked 4.1 percent improvement over 2002, with the Charles Schwab Corporation scoring 75, and E*Trade Financial scoring 71.

“The brokerages have some work to do in this regard, though, to be fair, Schwab performs above the national weighted average of all companies/industries measured by the ACSI though well below the average of the e-commerce category,” commented Freed.

Auctions/Reverse Auctions
eBay outscored uBid, Inc. and Priceline.com, with an index of 84, compared to 73 and 71, respectively. uBid gained 4.3 percent over the year, while Priceline.com remained flat. eBay has maintained the lead in the category since 2000.

E-Travel
The three big travel sites – Expedia, Orbitz, and Travelocity – all hovered in the 76 to 78 range, with Expedia losing 2.5 percent over the year. “It’s also interesting, though maybe not surprising, that all of the major travel sites score roughly equally; consumers don’t make much distinction among the sites,” said Freed.

Freed suggests that companies identify the things that customers care about the most, and address those things, and he identifies search as an issue where companies could focus their efforts.

“As other aspects of e-commerce have improved, many companies find that customers are happy with most features and functions and that makes weak search engines stand out as a problem more to customers than might have been the case when expectations, in general, were lower. The trick is to identify and act on the right things; staying on top of expectations is difficult for those who rely too much on guesswork and trial and error.”