Customer experience: UK’s best and worst online retailers

20/12/2013

ForeSee has measured the UK’s top 40 online retailers to determine how well they perform in terms of usability, with Amazon coming out on top and Ryanair trailing behind.

The report indicates a slight, but meaningful, decrease in aggregate satisfaction from Christmas 2012 to Christmas 2013 (from 74 to 73 on the study’s 100-point scale) – the first time since the survey was launched in 2007 that there has been a fall in online customer satisfaction after five years of stability and growth.

Whilst a one-point drop is considered a small decrease, the direct effect that satisfaction has on revenues and profitability means that even this slight reversal of fortune has the potential for significant negative impact. Indeed, research conducted across the top 100 US retailers shows that, for an individual company, a one-point increase in satisfaction is likely to lead to a 10.6 percent increase in revenues generated on the web, suggesting a potentially major loss of value for UK online retailers should this decline persist.

This is the seventh year that ForeSee has conducted an analysis of customers’ shopping experience with the UK’s top 40 online retailers. The revealing data is the result of almost 10,000 customer surveys collected each year during the prime Christmas shopping period (in November and December) and affords year-on-year comparisons of not only aggregate e-retail satisfaction, but also of satisfaction with individual retailers. The Index measures four high-level factors that affect overall customer satisfaction: site functionality, price, merchandise and content.

Key findings:

• The Leaders: With a score of 80 or above generally considered the threshold of excellence, Amazon continues to dominate the top of the leaderboard. However, neither its US or UK site has shown any improvement in score (amazon.com maintained its 2012 score of 84) and amazon.co.uk actually fell by two points on last year’s score (of 86) to equal its US counterpart’s score. Dropping out of the group of retailers that surpass the excellent threshold of 80, John Lewis fell by a point to 79, but managed to hold on to its third place position in the Index. Apple (with 78 points), Marks & Spencer (with 77) and ASDA Direct and Ikea (both with 76) also appear at the top of the Index.

• The Fallers: Ryanair continues to bottom out the Index and by a significant margin – it rests a full eight points behind the three next-worst performers. With a score of 60 (down one point from 2012) the airline is clearly continuing to frustrate its customers and this will continue to impact its bottom line into 2014.

• The Most Improved: This year’s largest increases went to Netflix (up three points to 71) and Ikea (also up three points - to a score of 76). Given that, on average, a one-point satisfaction increase has been shown to lead to a 10.6 percent increase in revenues generated on the web, these increases could translate to significant business value for these companies. Retailers are leaving money on the table by not improving the customer experience.

• Mind the ‘Satisfaction’ Gap: Currently, there is a notable 24-point gap between the highest-scoring e-retailer (Amazon UK 84) and the lowest (Ryanair, 60), a broad range for a seemingly sophisticated industry. Moreover, with average satisfaction for the top 40 e-retailers slipping from 74 to 73 and just 21 of the measured companies surpassing that average, it appears that a lot of work needs doing in 2014 to satisfy customers more effectively.

• Customer Satisfaction Matters. Highly satisfied online shoppers in the UK are 61 percent more likely to commit to the brand, 61 percent more likely to purchase next time, 70 percent more likely to recommend and 52 percent more likely to return to the website than less satisfied site visitors.

• Comparison to Direct Competitors: All retailers in the Index are classified according to product category, which allows individual companies to check their own performance against those of companies selling the same products or services.

o Mass Merchants – For the 13 online retailers in this classification, the aggregate score was 76 this year — up one point on 2012’s score. In general, any mass merchant scoring under 77 is in danger of losing business to competitors scoring 77 or higher, though those with average scores should also be concerned. Top-scoring mass merchants include Amazon (84) (in both .co.uk and .com forms), John Lewis (79) and Marks & Spencer (77). Very.co.uk was bottom out of this group with a score of 72.

o Travel and Tourism – The 11 websites included in this category recorded an average score of 71 – the same as in 2012. British Airways, Thomson and Travel Republic topped the list with scores of 74 each, whilst perennial low scorer Ryanair (with 60) came in last. Even the top scorers in this category underperform the average for mass merchants, which shows how much satisfaction can vary from category to category.

o All other categories – of the 16 online retailers which fall into this group, Apple comes out on top with 78 points – two points clear of second-placed Ikea. At the other end of the scale, Ticketmaster and B&Q (DIY.com) tie for last place with just 68 points.

• Satisfaction Across Channels:

o The aggregate score for “Pure Play” retailers has dropped by a single point to 73 this year, which signifies that there’s work to be done. In contrast “Bricks-and-Mortar” shops (e.g. retail chains) have slightly increased their aggregate score by one point to 74.

Larry Freed, CEO at ForeSee, commented: “After witnessing the aggregate customer satisfaction score increasing every year we’ve reported on the top 40 UK retailers’ Christmas performance, it’s disappointing to see a drop this year. It may be a fall of only one point, but this represents significant fallout for many – especially those which have seen larger drops.

With a proven, quantifiable relationship between a positive customer experience online and increased loyalty, sales and recommendations, many of the online retailers in the UK Top 40 clearly need to pay more attention to satisfying their UK customers. This is especially true of the 19 retailers listed with an average or lower score, which are risking loyalty, recommendations, sales and market share.”

Freed continued: “A drop in scores for any site is a result of either retailers not meeting the consumers’ rising expectations, or changes to the sites that turned out to be changes that didn’t improve the customer experience. The good news for those with disappointing scores is that they can do something about it! By taking a closer look at customers’ needs and expectations and by using analytics to measure what works and doesn’t, they can take control of their sites and make them work even harder for their businesses into 2014 and beyond.”

View the full table below:

2013 Customer Satisfaction for the Top 40 UK Online Retailers – full list of year on year scores (in descending order)

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* The composition of companies included in the Index changes considerably over the years. In 2007 and 2008, ForeSee measured only the top 30 retailers; in 2009, 2010, 2011, and 2012, the company measured the top 40. The list of top retailers has also changed over time as companies have slipped into and out of the top 40, and in 2010, ForeSee synchronised the list selection with the IMRG Experian Hitwise Hot 100 Retailer list, which is a ranking of UK e-retailers based on site traffic.

www.ForeSee.com

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