Report: E-tailers Winning Customer Service War

Online retailers are providing better customer service than theirbrick-and-mortar counterparts,according to the third quarter American Consumer Satisfaction Index (ACSI)released Monday.

Overall, e-commerce scored 73.2 on the index, though there weresignificant variances among the different sectors. While online retail stores scored 78 on the 100-point scale, portals scored a 63.

“It is probably fair to suggest that many companies in the e-business have focused more on customer acquisition than on customer retention,” said professor Claes Fornell of the University of Michigan Business School, which helped compile the research.

“However, this is rapidly changing,” Fornell added. “The key to success is obviously to attract and keep customers. To accomplish one without the other does not help. More attention is now shifting to the challenge of customer retention.”

Trumping Brick-and-Mortars

According to the ACSI, e-tail is outperforming traditional retail, which scored a ranking of 73.3 when the sector was last measured in the fourth quarter of 1999. Brick-and-mortar department and discount stores scored 72, and supermarkets scored 74. The national ACSI for all industries is 72.9.

Within the online retailing segment, Amazon stood out with a score of 84, which was higher than the 82 posted by Publix supermarket, the highest ranked brick-and-mortar. Buy.com was next among e-tailers at 78, with Barnesandnoble.comat 77.

Portals Struggle

Although consumers were fairly happy with the performance of online retailers, online portals did not fare so well in the customer satisfaction game. As a group, portals scored lower than telecommunications (72), the postal service (72), hospitals (69), the federal government (69), fast food (69) and banks (68). The only industry with a comparable score to portals was the airline industry, which also scored 63.

The worst of the worst, as far as customer satisfaction scores among portals, was America Online (AOL), which scored 56. Yahoo! did the best with a score of 74, and MSN came in at 71. The aggregate score for other portals was 67.

Notably, although consumer expectations were virtually identical for both AOL and Yahoo!, AOL had many more customer complaints and much weaker consumer loyalty.

“It is possible that there is some negative ‘spillover’ for AOL’s portal service, since it is also an Internet Service Provider (ISP),” Fornell said. “On the other hand, MSN is also an ISP and its score is 27 percent higher than AOL’s. These results suggest that MSN will pose a significant threat to AOL. In addition, both MSN’s and Yahoo’s home pages are considered superior to that of AOL’s by the respective customers.”

eBay Satisfies

In the auction/reverse auction category, eBay topped all others with a score of 80. Priceline was at the bottom of the heap with a score of 66, and uBid came in at 67. The aggregate score for other companies was 73.

Among online brokerages, Charles Schwab topped all others with a score of 76, while E*Trade came in at 66. The aggregate score for other companies was 70.

The ACSI is compiled quarterly by the National Quality Research Center at the University of Michigan Business School (Ann Arbor), in partnership with the Ann Arbor-based CFI Group and the Milwaukee, Wisconsin-based American Society for Quality.

Measurements are done on a rolling basis, with two economic sectors measured each quarter. Thirteen e-commerce companies were selected for the ACSI based on their 1999 revenue.

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