Online retailers are best at satisfying their customers
April 27, 2015 03:01 AM
What makes for a good customer experience? A business is effective at meeting a customer’s needs, it’s easy to do business with and it leaves the customer feeling good about the interaction, says Forrester Research Inc. By such measures, online retailers are very good at it, Forrester says.
Retailers that sell online and do not operate stores earned top marks in Forrester’s customer experience survey of 18 industries released recently. Retailers had held the top spot in the Forrester report since the research firm started ranking brands on customer experience in 2007, but this year Forrester separated online retailers that don’t operate stores from traditional retailers that do. The digital retailers took the top spot, while the store-based retailers finished twelfth.
Megan Burns, lead author of the report, “The US Customer Experience Index, Q1 2015,” says she is still digging into the data to find explanations for why online retailers scored so high in the study, which is based on an online survey in November and December 2014 of 46,482 consumers in the United States and 31,313 in Canada. One example that emerged from the survey, she says, is that shoppers like how easy it is to order from Zappos.com, the shoe site that is owned by Amazon.com Inc., and the e-retailer’s returns policy that covers the cost of shipping an item back.
More generally, Burns says, “I suspect that some of the high score stems from the fact that operations are simpler with fewer touch points, that is, no stores. Most of these brands are also younger than the traditional retail stores and therefore have less legacy process and technology to impose constraints on what they can do and how quickly they can respond to changing expectations.”
The survey covered 299 companies in 18 industries. Of the 15 companies with the highest marks, six were online retailers, all of them in the top 25 of the Internet Retailer 2015 Top 500. QVC Inc. ranked third in the Forrester study, Amazon was tied for fourth, Newegg Inc. and Zappos were among four companies tied for ninth, and Etsy Inc. and HSN Inc. were two of the six companies tied for thirteenth place. QVC is No. 15 in the newly released Internet Retailer 2015 Top 500, Amazon No. 1, Newegg No. 17, Etsy No. 24 and HSN No. 25.
The e-retailer with the lowest score was Rakuten.com, No. 51 in the Top 500, which is owned by Japan’s Rakuten Inc. Forrester says all the online retailers studied scored “OK” or “Good” in customer experience, with none rated “Excellent,” “Poor” or “Very Poor.”
Taking the top spot in the survey was financial services firm USAA.
Forrester says companies derive tangible benefits from serving customers well. The report quotes a study by Watermark Consulting that shows leaders in Forrester’s customer experience survey outperformed laggards by 80 percentage points in terms of stock price growth, and exceeded growth in the S&P 500 Index by 26 percentage points.
The survey shows that good customer experience accounts for anywhere from 47% of the variation in consumer loyalty to 76% depending on industry, Forrester says. For online retailers, Burns says, the figure is 66%.
It also shows that how a consumer feels about her interactions with the company influences loyalty more than effectiveness in meeting her needs and how easy it is to do business with a company. “Emotion is the biggest lever you have to pull,” the report says.
Amazon leaves many shoppers happy, the report suggests, as the survey found that consumers reported 64 positive experiences with the No. 1 e-retailer for every negative experience. The ratio for the other five top-ranked retailers was: HSN 36:1, Zappos 31:1, QVC 29:1, Newegg 19:1 and Etsy 14:1.