Online customer satisfaction levels surpass traditional retail

[February 26th 2002]

E-commerce companies are showing remarkable and unexpected strength despite the many reports of the death of dot-coms, according to a new report out today. On key components of customer satisfaction, such as perceived quality and value, e-commerce is registering very strong scores, according to a detailed report not released elsewhere comparing key satisfaction factors between e-commerce and traditional retail.

"These numbers bode well for a new era of profitability for the Internet," says Web satisfaction expert Larry Freed of ForeSee Results, "driven by an increasing sophistication about the link between customer satisfaction and profitability. We're past the days of just trying a bunch of cool ideas, and moving into a more bottom-line era of getting an understanding of what customers actually care about, and what will produce both satisfaction and profitability."

Overall satisfaction with online retail is higher than traditional retail. Online satisfaction earned a score of 77 vs. traditional retail's score of 74.8. All scores are on a 100-point scale.

The report rated e-commerce overall as well as individual companies in four key online categories--portals, financial services, and auctions, in addition to retail. The report includes a sampling of a dozen top e-commerce companies with specific ratings for each, as well as a broader sample of the individual categories and e-commerce as a whole.

The report is part of the quarterly American Customer Satisfaction Index (ACSI), which reported results today for traditional retail, as well, allowing comparison between online and offline shopping experiences.

In e-commerce companies, Amazon.com posted the highest score (84), with BarnesandNoble.com (82) and eBay (82) not far behind. The biggest improvement was made by 800/Flowers.com, which jumped 10 percent from 69 to 76 (The ACSI measured e-commerce companies for the first time last year).

While the numbers provide cause for optimism for e-commerce and the economy at large, Freed says that the competition is going to get tougher.

Unlike e-tail, portals did not fare so well in the eyes of customers. Despite a 4-percent increase, America Online once again posted the lowest mark (58) among e-commerce companies. Freed notes, "AOL's score is representative of a common struggle among portal companies---not quite knowing what to give customers who still do not know exactly what they want from portals."

E-Commerce and Retail Ratings (on a scale of 100)

----------------------------------------------------------------------
                Customer       Perceived  Product   Service  Perceived
                Expectations   Overall    Quality   Quality  Value    
                               Quality            
----------------------------------------------------------------------
E-Commerce      77.7           80.7       85.4      83.9     78.3 
----------------------------------------------------------------------
Retail          76.2           78.7       78.7      74.0     79.0 
----------------------------------------------------------------------
National 
 ACSI Average          
 (all           77.3           78.4       Not       Not      72.5
 industries)                              rated     rated  
----------------------------------------------------------------------



E-Commerce and Retail Ratings (on a scale of 100)

----------------------------------------------------------------------
                Customer      Total       Customer   Customer    Home-
                Satisfaction  Complaints  Loyalty    Retention   page
                (ACSI)
----------------------------------------------------------------------
E-Commerce      72.9          10.4%       74.9       75.7%      71.0
----------------------------------------------------------------------
Retail          74.8          10.0%       78.8       80.4%      Not
                                                                rated
----------------------------------------------------------------------
National 
 ACSI Average   
 (all           72.6          15.2%       71.5       71.6%      Not 
 industries)                                                    rated
----------------------------------------------------------------------



ACSI Results by Industry 
(Scores are out of 100)

----------------------------------------------------------------------
     Industry                             2001 ACSI       2000 ACSI 
                                           Customer         Score
                                         Satisfaction 
                                            Score
----------------------------------------------------------------------

Portals                                       65              63
----------------------------------------------------------------------
  Yahoo, Inc.                                 73              74
----------------------------------------------------------------------
  All Others                                  72              67
----------------------------------------------------------------------
  MSN (Microsoft Corporation)(1)              67              71
----------------------------------------------------------------------
  America Online, Inc.                        58              56
----------------------------------------------------------------------

Retail                                        77              78
----------------------------------------------------------------------
  Amazon.com, Inc.                            84              84
----------------------------------------------------------------------
  Barnes&Noble.com, Inc.(2)                   82              77
----------------------------------------------------------------------
  Buy.com, Inc.                               78              78
----------------------------------------------------------------------
  1-800-Flowers.com, Inc.(2)                  76              69
----------------------------------------------------------------------
  All Others                                  75              77
----------------------------------------------------------------------

Auction/Reverse Auction                       74              72
----------------------------------------------------------------------
  e-Bay, Inc.                                 82              80
----------------------------------------------------------------------
  All Others                                  75              73
----------------------------------------------------------------------
  Priceline.com, Inc.(2)                      69              66
----------------------------------------------------------------------
  UBid, Inc.                                  69              67
----------------------------------------------------------------------

Brokerage                                     69              72
----------------------------------------------------------------------
  Charles Schwab & Co., Inc.(1)               72              76
----------------------------------------------------------------------
  E*Trade Securities, Inc.                    66              66
----------------------------------------------------------------------
  All Others                                  65              70
----------------------------------------------------------------------


(1) Company showed a statistically significant decline.

(2) Company showed a statistically significant improvement.    

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