E-Retailers Grade Their Industry

by Aug 28, 2002, 12:00 AM

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E-retailers give their own industry failing grades, according to a new survey of 273 industry executives.

A scientific analysis of the findings pinpoints what e-retailers see as the highest priorities for improvement of the online shopping experience -- likely an indication of where they will be focusing their energies.

Experts suggest that the insiders' assessment is a good predictor of future consumer expectations, which means that e-retailers have a head start on evolving the online experience before consumers even perceive a problem.

On a 100-point scale, the e-retailers rate their overall satisfaction with online shopping at a mere 58. The study employed the same methodology used by the University of Michigan to compute its American Customer Satisfaction Index (ACSI). The average score for the companies and services rated by the ACSI is 73, and the ACSI brick-and-mortar retail score is 74.8.

Even the IRS scored higher on the ACSI than e-retailers score themselves (62).

"It seems counterintuitive to say so, but this is actually good news and bodes well for the industry," said ForeSee Results CEO and online customer satisfaction expert Larry Freed. "These are the people who know better than anyone how much better things could and should be. They're clearly putting pressure on themselves to set a higher standard. If they follow through, and keep ahead of rising customer expectations, they'll earn strong customer satisfaction and loyalty--and the revenues that brings. But you can't wait until people start complaining. The expert opinion we measured is ahead of the curve--but Internet history tells us that the experts are only slightly ahead so you'd better watch out and take action. Now is the time to start figuring out what's going to most impact customer satisfaction and behavior and get things done before the holiday shopping season arrives."

Among the key findings of the survey: E-retail insiders indicated deep disappointment with what should, by now, be online fundamentals such as site navigation (which scored a 54) and setting up online accounts (55).

Elements that e-retailers think are the closest to being up to snuff are the online ordering process (68), site functionality (66), and content (64), but even these scores are relatively low.

By using the scientific methodology behind the ACSI, the survey determines which features and functions will have the biggest impact on user behaviors such as customer loyalty. Indications are, that as consumers, the e-retailers themselves are most influenced by the image they have of the retailer--how trustworthy and established a company is and what it does online to show it values site visitors.

Also having a significant impact on user behavior is the ability to browse products; however, on many sites, product browsing still tends to be quite limited. Image and product browsing received low marks--and therefore are priority targets for improvement. Although it scored relatively well, improvement in site functionality also needs to be a priority as it has a major impact on user behaviors.

The survey is both good news and bad news for the industry. Compared to how consumers rate major online experiences in the ACSI, e-retailers are being rather hard on themselves. On the other hand, one reason for the strong performance of e-commerce sites in the ACSI is that current customer expectations are relatively low--and so customers are fairly easy to please.

The fact that e-retailers see so much room for improvement suggests that they know they need to make changes in order to stay ahead of rising consumer expectations.

Experts say getting out ahead of consumers on these issues has to start happening now if e-retailers are to have a successful holiday season, and the low marks online retailers give themselves can be considered a leading indicator of where consumer expectations and frustrations will be in 6 months.

"The findings and my conversations with e-retail executives suggest we may be on the verge of moving from good to great in online e-retailing," said Freed. "E-retail is doing well right now; e-retail executives are clearly thinking about how to make the online experience even better and not resting on their laurels. There are a few months before the holiday shopping season, so if the e-retailers start taking action on the things that really drive customer satisfaction they will knock holiday shopper's socks off."

Ironically, despite the low satisfaction scores e-retailers give their industry, 90.8% of those surveyed indicated that customer satisfaction is very important to their organization.

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