Netflix, QVC Rated E-Tail Customer Service Champs

Video rental purveyor Netflix (Nasdaq: NFLX) and TV shopping channel QVC led a customer satisfaction index of the top 100 online retailers released Friday by ForeSee Results, of Ann Arbor, Mich.

The index, calculated twice a year by the firm, ranked the Web sites of Netflix and QVC, with scores of 85, as the kings of customer satisfaction among Internet retail's top 100 revenue makers.

Those enterprises were closely followed by booksellers Amazon (Nasdaq: AMZN), with a score of 83, and Barnes & Noble (NYSE: BKS) (82), and leading pet supply retailer Drs. Foster and Smith (81).

The diversity of the leading firms on the index indicates one thing, maintained ForeSee President and CEO Larry Freed.

"We're seeing the best of the best rising to the top without regard to business model or product category," he told CRM Buyer. "It comes down to knowing what consumers want when they come to your site and allowing them to accomplish it quickly and efficiently."

Prices Overrated

One surprising aspect of the spring version of the index was the role pricing played in customers' satisfaction with a retailer's Web site, according to Freed.

The index -- which uses the University of Michigan's American Customer Satisfaction Index and is based on 20,000 surveys of consumers visiting the e-tailers -- focuses on four broad areas of customer satisfaction: price, merchandise, site experience and brand.

Among the four areas, price is typically where a site receives its lowest scores, Freed continued. Yet tinkering with prices doesn't have the kind of bang one would expect it to have.

"While consumers are not happy with pricing, improving pricing is not going to have a significant impact on their overall satisfaction and their overall intent to purchase more in the future," Freed said.

Value Proposition

Foster and Smith's Web strategy encompasses more than pricing, according to Matt Stelter, marketing director for the Rhinelander, Wis., company.

"Our prices are very competitive," he told CRM Buyer. "Are we the low-cost leader? I don't think so.

"We try to provide a real value proposition for the customer." That proposition includes easy navigation, low-friction checkout, world class customer service, wide product selection and lightening fast order fulfillment, Stelter said.

"Depending on the shipping method that they choose, more often than not our customers are very surprised just how quickly their order shows up at the door," he added.

Electronics Laggards

At the bottom of the ForeSee Index were computer electronics vendors PCMall, with a score of 67, PCConnection (67) and Etronics (68), as well as some well-known names with scores of 69 -- Home Depot, ShopNBC, Nieman Marcus and Macy's.

The average score on the Index was 74.

"In most cases, these sites aren't getting worse," ForeSee's Freed observed. "It's a case of they're not keeping pace with the expectations of consumers in the online space."

In the real world, an apparel store competes with other apparel stores, but on the Internet, an apparel Web site competes with all other Web sites, he explained.

"Chadwick's or 1-800-Flowers may not consider Amazon a competitor, but the reality is, if I'm going to Amazon, no matter what other site I go to, I have a higher expectation because of my experience at that site.

"That's what's unique about the online space," Freed added. "The expectations of consumers are increasing from year to year and they're being set by the channel, not by an individual company."

Free Shipping

Free shipping's impact on customer satisfaction with a Web site remains debatable, according to Freed.

"Sometimes it absolutely drives the purchase," he noted. Among clothing, shoes and accessory shoppers, 17 percent of buyers said free shipping was the reason they purchased an item.

On the other hand, Freed added, 14 percent of the shoppers who visited those sites said their decision not to buy anything there wasn't influenced by free shipping.

"There's no doubt that if you're looking to encourage an order, there's nothing better than to offer free shipping," Foster and Smith's Stelter observed.

"However," he continued, "if you're looking to build value in your brand and customer loyalty, the person responding to that kind of offer is almost guaranteed not to have a very high lifetime value because the next time around they're going to go for the next best deal."

However, Web commerce, Freed argued, is reaching the stage when free shipping needs to become the norm.

"In my opinion, there is enough margin for there to be free shipping in almost all product categories," he asserted.