Customer Satisfaction Up Online

American Demographics, April 1, 2004 by Susan Posnock

Byline: SUSAN POSNOCK

Clicks mostly trounce bricks-and-mortar when it comes to customer satisfaction, but online travel sites and other Internet services are lagging compared with e-retail. This according to the American Customer Satisfaction Index annual report on e-commerce, released in February.

In ACSI's 100-point scale, e-retail earned an aggregate 84 for 2003, up 1.2 percent from 2002, compared with the online auction category with a 78 (up 1.3 percent from 77), travel with a 77, (same as 2002), and brokerages at 76, (up 4.1 percent from 73). Overall, e-commerce had healthy growth over 2002, up 4.1 percent to 80.8. This bested the national average of all industries measured by the index, which was 74 in the fourth quarter of 2003.

While travel sites like Expedia (down 2.5 percent to 78), Orbitz (up 1.3 percent to 77) and Travelocity (76 both years) all scored above the national average, the tight competition and new players such as the re-focused Priceline.com, make the sites vulnerable, says Larry Freed, president and CEO of ForeSee Results, an online customer satisfaction measurement company that partnered with the University of Michigan for the ACSI online measurements. "What we have is a very competitive space where none of the organizations are standing out," he says.

The key to moving ahead of the pack is customer loyalty, a component Freed says the online sites haven't figured out - at least on the consumer side. "Many have had efforts in corporate travel and they need to translate that to the consumer side," he says. "I often hear that people can't remember if they've used Expedia or Travelocity to book their travel, so they've got to figure out ways to get loyalty to build a barrier from switching brands."

E-retail companies have done a better job of differentiating themselves with the highest customer service, he adds. Amazon.com stands above the rest with a score of 88. While the company didn't see improvement over 2002, Freed says maintaining that level while also expanding the amounts and kinds of products offered by the site was an impressive feat. "The interesting thing is that Amazon is reporting they'll be profitable for 2003 and the buzz around the industry is that they've become fairly cost conscious to get there while maintaining high customer service levels," he says.

For primarily offline companies, Freed says the critical issue is multi-channel integration as e-commerce revenues continue to grow. "What was once nice and cute and fun is now an integral part of the business," he says. While traditional companies continue to score well in terms of product quality, they lag about 10 points behind e-commerce in service. "It should be seamless for the consumer, regardless of what channel they are using," he says. So, for example, if an on-sight sales rep can't give the customer what they want, retailers need to be able to offer other solutions - the Web site perhaps the most important in its ability to provide 24/7 access.

As for the growth of e-commerce going forward, he says customer satisfaction will continue to play a key role and that the bar will continue to rise. "The expectations are very high and continue to rise, they need to innovate and improve because we expect more than we did last year," Freed says.

SCORES FOR SATISFACTION

E-retail sets the standards for online customer satisfaction, which makes it tough for digital players such as travel sites, where customers have a decidedly less favorable experience.

AMERICAN CUSTOMER SATISFACTION INDEX YEAR-TO-YEAR COMPARISON