February 20, 2008
Consumers Find Greater Satisfaction Online
When it comes to satisfying customers, it appears as though online retailers have the edge, hands down, on brick-and-mortar operations.
The University of Michigan’s (UM) American Customer Satisfaction Index (ACSI) for the fourth quarter of 2007 found that e-tailers scored an 83 on a scale of 100 compared to an overall rating of 71 for store operators.
“Online commerce delivers convenience that is unparalleled in the offline world … and service quality and consistency is better because there is no unknown factor of a sales associate,” Larry Freed, president and CEO of ForeSee Results, told the Detroit Free Press.
Amazon.com topped the list of online retailers in the UM Index with a score of 88 followed by Newegg (87), Netflix (84), eBay (81) and Overstock.com (80). Newegg, Netflix and Overstock.com were included in the ACSI for the first time.
Overall, consumer satisfaction with retail stores was down .3 percent with department and discount stores (- 1.4 percent) taking the biggest hit. Supermarkets were up 1.3 percent, according to the survey’s results.
Among the physical store operators ranked in the UM study were Barnes & Noble (83), Publix (82), Borders (81), Costco (81), Nordstrom (80), Kohl’s (79), Dollar General (78), Walgreen (78), Office Depot (78), Target (77), J.C. Penney (77), CVS (77), Staples (77), Sam’s Club (77), Office Max (76), The Gap (75), Lowe’s (75), Kroger (75), TJX Companies (74), Supervalu (74), Best Buy (74), Rite Aid (73), Whole Foods (73), Sears Holdings including Kmart (72), Safeway (72), Circuit City (71), Winn-Dixie (71), Wal-Mart (68) and Home Depot (67).
Wal-Mart’s and Home Depot’s ranking were the lowest ever for the companies in the ACSI rankings.
The current economic environment makes it all the more important for retailers, regardless of channel, to satisfy consumers, according to Claes Fornell, director, National Quality Research Center, Stephen M. Ross School of Business at the University of Michigan.
Prof. Fornell wrote, “The big question for the U.S. economy and, to a considerable extent, for the world economy, is how consumer spending will be affected by a barrage of problems, including increasing unemployment, plummeting house prices, tightening of credit, high levels of household debt, increasing cost of energy, and now also less customer satisfaction. Consumer spending is the largest component of U.S. GDP and it is particularly sensitive to changes in customer satisfaction and household debt ratios. When customer satisfaction declines, consumers have less enthusiasm for repeating experiences that no longer provide the same gratification. The experiences in question are the matters relating to shopping, buying, and consuming. If satisfaction affects consumers’ willingness to spend, household debt ratios to income affect consumers’ ability to spend.”
Discussion Questions: Why do consumers give higher satisfaction ratings to online merchants than brick-and-mortar retailers? Is there anything stores can borrow from websites to improve the consumer experience?
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I disagree with the sentiment expressed here that online expectations are lower. It’s more that they are simply different.
Yes, as has been noted, removing the uninformed apathetic store clerk from the equation helps, but online shopping is simply a much more efficient experience. People go online to get something specific and to then log off.
The threshold is so low to move from e-tailer to another that it’s often forgotten. So even if a consumer “wastes” three minutes visiting sites that don’t have the desired product, if the third site DOES have it, you have a happy consumer. That’s much of what is behind these results.
I wonder if consumers have lower expectations for their online shopping experience. By nature, the online shopping, without its immediate human interaction, sets the bar lower. Most online shopping entails finding the product you want, buying it quickly and waiting for it to arrive at your house. With fewer opportunities to interact, it’s easier for online retailers to “get it right” the first time.
It’s all about the ability to customize the shopping experience. I have the Amazon.com site customized so that only offers in specific categories are listed, and have similarly customized eBay to reflect my collecting interests (which includes retail memorabilia).
The best corollary is with banking. I have my online banking page set up to help me pay bills and transfer funds all in a few minutes. I very rarely have to stand in line at the branch and only deal with humans when there is a problem, which is very rare. Interestingly, it’s been my observation that the increase in online banking has resulted in improved customer service at bank branches. Must have something to do with banks understanding they may not be able to differentiate themselves from competitors online as they can in the branch. Could be a good lesson for retailers.
No doubt about it…customer service is generally pathetic. And unfortunately, Doron is right; we seem to be happier when humans aren’t overtly involved. I find that rather sad. It’s pushing us to rely on online experiences for pretty well everything: relationships, education, religion, revenue, food, clothing, entertainment–even sex.
That said, all the staff training in the world isn’t going to change the real world shopping experience. This is a much deeper issue than that. We’ve got to look at the programing imprinted into our subconscious because that’s where our behavior comes from. From our first breath we learn that we are here to be served not to serve. As someone said: “Stress is not getting exactly what I want right now.” Any time our expectations are ruffled we sue, or send a letter to the editor or throw a tantrum. Very seldom do you see people taking responsibility for their own circumstances or taking the initiative to change it. We’re caught in the no win world of “You owe me.”
It doesn’t seem to cross our minds that “service” involves an exchange between two or more people. It is not a ‘one-way’ experience. Maybe instead of merely complaining about the lack of service every consumer should begin to think of how they could make it happen. Or is that asking too much?
I think we’re missing the point here. Online shopping puts the consumer more fully in charge of the process. They have more control over their shopping experience. There’s no embarrassment about what you are buying, what size it is or if you have to “put it back” because it’s too expensive.
The point that online shopping may–at least today–be more “directed, i.e., the shopper knows what he or she wants and is actually “purchasing” rather than “shopping” is also valid. It’s a sad commentary that purchasing is easier when you remove sales clerks from the shopping equation.
Finally, the issue of in-store service–or the lack of it–is also critical here. Shoppers are tired of poor service and a “no service” model (in terms of primary interaction) is preferable to an unpleasant experience.
I don’t find the study results surprising at all. What they tell us is that the traditional economics of retailing may have to be rethought, and rethought quickly. Paying low wages may not be that smart an idea if it ends up costing you sales.
Now that we are in Phase 2 of online retailing, we are starting to see the results. Online retailers understand that there is competition from both other online retailers and brick & mortar stores.
They have three advantages. First, they are open 24/7 making it as convenient as is possible for consumers. Second, they provide abundant and consistent product information. Consumers are tired of lack of knowledge from sales associates. Third is online retailing offers a significantly larger merchandise assortment than any store can.
Additionally, one can locate and buy that unique item that no store can afford to stock. The only real disadvantage for online retailers is the product delivery. Consumers can not get it now, but must wait to receive their purchase. Online retailers are going to have to get out of the business of charging for shipment if they want to grow.
There’s a lot of truth embedded in this discussion already. Yes, rapid chain expansion pumps up the same-store sales metric but tends to mask customer service shortcomings (kudos, Andrew!). Yes, focus on price competitiveness takes management’s attention away from other experiential issues which may matter much more to shoppers on specific purchase occasions.
Perhaps relevant here is another of my laws of Retailativity(TM): Customer time decomposes into six elements: Operating Time; Access Time; Search Time; Transaction Time; Possession Time; Return Time. Online shopping has an inherent edge in terms of operating time (24/7) and access time (no driving) but loses big time when it comes to possession time (delivery lag) and return time (that extra trip to UPS and wait for credit).
In other words, time convenience holds different meanings for shoppers at different … times. Time is just one facet of the service experience (others include assortment, problem resolution, human interaction, etc.), but it’s clear that customers will discriminate among channels based on their need priorities of the moment.
Agreed. Online shopping is much easier and pleasurable overall, though in all honesty, only a small fraction of my purchases are online.
For me, the key detrimental things about online are out of stocks or shipment delays, though I’ve never experienced any orders taking longer than the usual. Even if something is sold out, just move onto the next site a click away.
For stores, it’s out of stocks, messy shelves, jam-packed aisles, lengthy checkout lines, crowded parking lots, and worst of all, meaningless store workers who often know less about a product than I do. If something is out it’s a pain, since you now have to physically travel to another store.
Even for technical products like electronics, most sites have detailed info. It’s not always correct, but a quick Google check or skimming of the manufacturers web site will verify any inaccuracies. No salesperson hassles, warranty upselling, liars, and I can quickly skim 5 sites for pricing in 10 minutes. And with that knowledge, I can go to a brick and mortar and buy it bypassing any sales rep.
It’s all about expectations. Our expectations for the experience online are different than the in-store experience. As long as a website is easy to navigate, has the product we want, and makes it easy to buy–we’re happy. Most sites do a reasonable job meeting these expectations.
On the other hand, the in-store experience expectations get into an array of sensory issues: temperature, lighting, smells, music, and the social expectations for the humans we are going to interact with. It is much more complicated to meet and exceed customer expectations in a fully sensory environment.
Physical store retailers must pay attention to all these sensory aspects and must ensure they have well-paid, engaged, passionate sales associates ready to exceed the customers’ social expectations.
It’s not only the lack of annoyingly uninformed or untrained salespeople that confers an advantage on online retailers, it is the informed opinions of other shoppers that make the experience better. The two top scorers, Amazon and Newegg, both have extensive consumer review features.
Imagine walking into Wal-Mart and browsing, say, the small appliances aisle. There, stuck to each toaster, are hundreds of Post-It notes from consumers who bought that item. “This one looks slick, but bagels don’t really fit in the slots.” “Great toaster! Nice, even heat all around.” “Can’t remove the crumb tray easily.” And so on.
There was a time when a well-informed salesperson could approximate that kind of helpfulness, but even the best-trained are unlikely to match the kind of real-world feedback you can get online while shopping today. That’s why such a huge percentage of people research online even the items they do buy offline.
As noted in the article, online shopping is devoid of the “human” element. At one time it was seen as unfathomable to have a good customer service experience without any human interaction. However, the combination of well-conceived internet customer service systems and understaffed, undertrained in-store personnel explains the differences noted in customer satisfaction. As bricks and mortar retailers struggle to maintain sales and accompanying margins, the labor part of the equation has become compromised.
It’s ironic that Wal-Mart has struggled so much with customer service, given the late Sam Walton’s penchant for taking invisible costs out of the system. The presence and functioning of in-store customer service representatives are the most visible part of the store experience.
Finally, the customer service differences between online vs. live interactions have been manifested for quite awhile when you review the satisfaction levels of the IRS agent vs. online tax filing. Unlike us humans, the internet never has a bad day.
Improvements in technology have simply made the online experience easier. Imaging, navigation, speed, etc, have all measurably improved over the past few years. Moreover, marketing folks have taken more leadership in online decisions where technology/web architecture folks used to hold sway within companies. Therefore, alignments between in-store, print, and online media have improved to create a better cross-channel experience.
Comparing the ratings of online versus in-store shopping satisfaction is not relevant when you factor in elements such as the store clerk. Are we going to hear that the online environment is more pleasing next? This is like asking someone which price they prefer and then concluding that the economy is headed for a recession because all respondents picked the lowest price.
The important thing to remember about studies like this is that they measure perception of service delivery. A lot can be learned, but the boundaries of interpretation need to respect the methodology. Appropriate comparisons over time can be quite valuable.
Simple convenience.
I can shop 24/7 online. I can not only search for and compare items on price, size, features, etc, at one store, but also at that store’s competitors. I can search for a promotion code to get the lowest price possible. Often I can get free shipping so I don’t have to deal with traffic, parking or public transportation. Sometimes I can avoid paying sales tax. I can shop at any store in the continental USA and even abroad. With larger retailers I can often get questions answered via live chat with a knowledgeable salesperson (try to find anyone other than a cashier in a bricks & mortar store any more) and with other retailers, my questions are usually answered within 24 hours.
True, I cannot see fabric texture very well online, I cannot try on items of clothing and sometimes an item just doesn’t look like the picture. But the conveniences in my first paragraph so outweigh these inconveniences that I now do as much shopping online as possible. In the last two months I have bought a refrigerator from ABT, sheer curtain panels from Linens ‘N Things, a 1960s style light fixture from Rejuvenation, pet food, wee wee pads and accessories from Petco, a Braun replacement blade and cutter foil from Amazon, books from Border’s and Dutch coffee from deReuze Gourmet Market. Each transaction was flawless and only once did I pay for shipping (and the time I did pay for shipping, I did not pay sales tax, 10% here in Chicago).
Don’t underestimate the value of the convenience of online shopping for people with limited or no access to a car, for people who live in more remote areas or people who are pressed for time. Lower expectations have nothing to do with my satisfaction with online shopping. In fact, I expect more from online shopping and it delivers consistently.
And, Jeff, can you imagine what might happen if management got wind that a salesperson was giving that well-informed feedback to customers, and it was persuading them to reject one brand–maybe a high-margin one, or one that had made some other sweet deal with the store’s buying organization–in favor of another, less profitable one?
I’m afraid that what it often comes down to is that the online business has entire disciplines devoted to the user experience–academic programs in universities and consulting firms in business–and online retailers still see the connection between customer satisfaction, sales and profit.
And, actually, we still have copious data over years of research that has drawn a direct line between customer sat and sales growth in the bricks-and-mortar environment. But there’s a problem: to use customer-sat data wisely, a retailer’s management has to be interested in being in the retail business–selling merchandise and serving customers–and not the real estate or finance business.
The late Bill Maritz used to call it “sticking to our knitting.” And it’s easy to use that term to stifle innovation. But if a retail company hangs signs on the wall about serving customers in the store, when the only customers it really cares about are the ones in the boardroom at Goldman Sachs, it will ultimately lose them all.
A few additional points to add to this excellent discussion.
Online customers do not have lower expectations than they do when in store, just different, and generally more exacting!
They do NOT expect out of stocks, figure if the store is online, the store should KNOW if it’s in stock. People in-store expect (don’t like but expect) out of stocks.
Consumers online expect easy to use, intuitive tools. If they do not get them….they leave. People in stores find and expect lines, crowded aisles, and messy merchandise. Again, they don’t like it but they expect it.
Consumers online expect a consistent experience each time, and generally get it. People in store often do NOT get a consistent experience from trip to trip (or even aisle to aisle) and therefore many times anything well done by one employee is thwarted by something awful elsewhere in the store.
At the same time I agree with Dan, one needs to be careful about how we interpret these numbers. The down trends in Home Depot and Wal-Mart are significant and are consistent with more anecdotal observations. Comparing a glob of e-commerce stores which include multiple categories (books, groceries, shoes) and cover both pure e-tail and the e-tail side of the multi-channel guys, to in-store category by category retailers is a tough thing to interpret correctly unless you have history.
Mike Osario has it right here. Expectations are precisely the reason behind the satisfaction survey results. Others have also pointed out that while these satisfaction numbers are high, online shopping still represents a very small fraction of total consumer spending. Why? The answer is expectations.
Consumers do not expect the same type of “experiential” shopping environment online as in-store, nor do they expect personalized customer service, or really, any real form of real-time connection. When they get something outside this paradigm, it registers as unexpected and generates a positive affect. Online chat attendants, computer avatar “help” and other forms of technology enable on-demand customer service are beginning to make inroads. When these appear, and when they work, the consumer receives an unexpectedly positive experience.
There are many more elements which are being added into e-commerce sites which explain the satisfaction ratings, and at the core, has been the focus and effort behind critical functionality. Safety, efficiency, smooth navigation, ease of check out, etc. All of these have reached the point (on good sites) where the consumer experience is extremely good. Rich media, flash slide shows, buying guides, integrated consumer reviews and other features continue to support the overall experience.
However: online shopping is growing up. Inevitably, with the consumer, it is “what have you done for me lately.” Doing the basics right, providing minimal support, and enhancing static visuals will at some point no longer result in high satisfaction ratings. As the new generation ages into the spending demo, we are going to see the true demands of a consumer group raised on the rich, impressive and sensory-enhanced world of video gaming and online video. Beware, online retailers. Today’s sites are not going to meet the expectations of tomorrow’s consumers.
This is a question of the online environment properly aligning the 4 Ps with customer service. In other words giving the consumer what they want, when they want it, for less. Online transactions are driven by the consumer, instead of onground which are frequently business focused (and the consumer is an afterthought). We’ve all had to wait in a checkstand while a checker answers the phone instead of taking care of you, the customer who is standing in front of them. Looking for someone to help, in any retail store is a true test of patience, let alone getting the right (and accurate) product information. Online delivers our products faster, for less money and with full disclosure. It is the complete package, driven by consumer demand, and need!
Max Goldberg and others are correct. Consumer expectations of online shopping are much lower than in a physical store. The survey also chose many more “low service” physical store operations–by looking at companies with a high focus on service such as Nordstrom and others, the experience is much better. For consumables, online shopping certainly does present a simple and efficient solution.
Online retailers often have very high expectations of themselves. With outstanding granularity, their software measures customer service and sales performance. Many bricks-and-mortar retail executives simply don’t have high expectations. They accept high staff turnover as inevitable and won’t spend the same focus measuring every minute aspect of customer service in the same obsessive fashion that online folks do. If you don’t measure it, how can you improve it?
Online success can be attributed to the fact that we have taken humans out of the equation. Retailers have more control over who does and says what when it comes to their online store.
As well, call centers that provide customer service for online stores are better trained at solving customer problems because of the misconception that online shopping is too much of a hassle for customers. What some chains forget is that the physical presence is equally (if not more so) important as the online store is. Chains need to invest more in training and hiring to mirror the quality of the online end.
The rapid physical expansion most retailers were experiencing over the past decade masked a lot of the shortcomings these stores had with service levels. Wall Street analysts and board members have been so consumed with comp store sales that they have ignored more important metrics like customer satisfaction figures.
With the economy softening and cross-channel shopping becoming more of the norm, retailers are going to need to provide a seamless experience whether customers are making purchase in-store, online or through a call center.
Most of this discussion seems to revolve around comparisons between an online shopping experience vs. mid to lower tier brick and mortar retailers. I checked the survey and it did not include results from Lord & Taylor, Nieman-Marcus, Coach, Saks, Ralph Lauren, Burberry, etc. It appears nearly all upscale apparel, specialty, and department store retailers were left out of the survey.
My conclusion is that the online experience may be superior for many consumers when compared to a poor or self-serve in-store experience in a mid to lower tier retailer. But, there is a huge shopper demographic (primarily female) that prefers a physical shopping trip to going online, at least for clothes, accessories, makeup, etc. For these shoppers, the clientelling and personalized shopping experience offers many things the online world can’t such as samples, events, a warm hello, etc.
Let’s not write off the large majority of shopping that is still done in the physical world just yet.
In the online world, great care has been taken to provide customers with the product information they need to make an informed purchase, and navigation that makes the shopping and purchasing experience as easy as possible. Contrast this with the brick ‘n’ mortar world, where all too often the salespeople are ill-informed and even less interested in being helpful.
The great weakness that brick ‘n’ mortar retailers have, which becomes only more pronounced in larger format stores, is the quality of the help, service and product knowledge provided by their people. This is a fundamental failing which originates at the highest levels, where people are thought of as an expense rather than as a critical element of the marketing process, even more critical, in my judgment than any ad, promotion or sale.
With all due respect, the online experience was created to ease time constraints for the increasingly busier lifestyles that exist today. With more and more two income households and the amount of available “shopping” time shrinking, the e-tailer has a much more streamlined approach to life to offer.
This really just boils down to the fact that everyday Americans are working longer hours and require an alternative to the 50’s conventional shopping methods that previously existed. For those that still have the time and the patience to get in the car, go to the shopping center, find parking, hike to the mall and then search through multiple stores to find a pair of “red shoes” that has now taken at least 2 hours of your time.
Hop online and the same shoes will be to you within 24 hours if you’re willing to pay the extra shipping charge. If you require immediate gratification then shopping malls are the answer; if you can wait, then online may be a better, less stressful approach. Each customer has their own comfort level is what I see.
I used to work for a higher-end department store chain. Its floor plan was confusing and labyrinthine. The lighting was just a little too bright given all of the gleaming white, reflective surfaces. The music was too loud, and if you happened to be standing in a spot where two demographic segments met, you’d get the cacophony of two different types of music playing at once.
The company even piped in different smells to subliminally influence behavior, and between that and the perfume smells, it was a synthetic smell overload.
Working there full-time made me and a number of other employees exhausted and even literally sick from constant sensory bombardment. I wouldn’t be at all surprised if many people prefer to shop from their comfy chairs, even if they never consciously articulate to themselves or others why they don’t feel motivated to step into a store….
Online shopping is usually quick and can be done in the convenience of one’s home or office, at any time of day or night. The customer can go shopping when THEY want to. The best sites also seem to have perfected the challenge of solving customer problems and answering customer questions immediately.
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I disagree with the sentiment expressed here that online expectations are lower. It’s more that they are simply different.
Yes, as has been noted, removing the uninformed apathetic store clerk from the equation helps, but online shopping is simply a much more efficient experience. People go online to get something specific and to then log off.
The threshold is so low to move from e-tailer to another that it’s often forgotten. So even if a consumer “wastes” three minutes visiting sites that don’t have the desired product, if the third site DOES have it, you have a happy consumer. That’s much of what is behind these results.
I wonder if consumers have lower expectations for their online shopping experience. By nature, the online shopping, without its immediate human interaction, sets the bar lower. Most online shopping entails finding the product you want, buying it quickly and waiting for it to arrive at your house. With fewer opportunities to interact, it’s easier for online retailers to “get it right” the first time.
It’s all about the ability to customize the shopping experience. I have the Amazon.com site customized so that only offers in specific categories are listed, and have similarly customized eBay to reflect my collecting interests (which includes retail memorabilia).
The best corollary is with banking. I have my online banking page set up to help me pay bills and transfer funds all in a few minutes. I very rarely have to stand in line at the branch and only deal with humans when there is a problem, which is very rare. Interestingly, it’s been my observation that the increase in online banking has resulted in improved customer service at bank branches. Must have something to do with banks understanding they may not be able to differentiate themselves from competitors online as they can in the branch. Could be a good lesson for retailers.
No doubt about it…customer service is generally pathetic. And unfortunately, Doron is right; we seem to be happier when humans aren’t overtly involved. I find that rather sad. It’s pushing us to rely on online experiences for pretty well everything: relationships, education, religion, revenue, food, clothing, entertainment–even sex.
That said, all the staff training in the world isn’t going to change the real world shopping experience. This is a much deeper issue than that. We’ve got to look at the programing imprinted into our subconscious because that’s where our behavior comes from. From our first breath we learn that we are here to be served not to serve. As someone said: “Stress is not getting exactly what I want right now.” Any time our expectations are ruffled we sue, or send a letter to the editor or throw a tantrum. Very seldom do you see people taking responsibility for their own circumstances or taking the initiative to change it. We’re caught in the no win world of “You owe me.”
It doesn’t seem to cross our minds that “service” involves an exchange between two or more people. It is not a ‘one-way’ experience. Maybe instead of merely complaining about the lack of service every consumer should begin to think of how they could make it happen. Or is that asking too much?
I think we’re missing the point here. Online shopping puts the consumer more fully in charge of the process. They have more control over their shopping experience. There’s no embarrassment about what you are buying, what size it is or if you have to “put it back” because it’s too expensive.
The point that online shopping may–at least today–be more “directed, i.e., the shopper knows what he or she wants and is actually “purchasing” rather than “shopping” is also valid. It’s a sad commentary that purchasing is easier when you remove sales clerks from the shopping equation.
Finally, the issue of in-store service–or the lack of it–is also critical here. Shoppers are tired of poor service and a “no service” model (in terms of primary interaction) is preferable to an unpleasant experience.
I don’t find the study results surprising at all. What they tell us is that the traditional economics of retailing may have to be rethought, and rethought quickly. Paying low wages may not be that smart an idea if it ends up costing you sales.
Now that we are in Phase 2 of online retailing, we are starting to see the results. Online retailers understand that there is competition from both other online retailers and brick & mortar stores.
They have three advantages. First, they are open 24/7 making it as convenient as is possible for consumers. Second, they provide abundant and consistent product information. Consumers are tired of lack of knowledge from sales associates. Third is online retailing offers a significantly larger merchandise assortment than any store can.
Additionally, one can locate and buy that unique item that no store can afford to stock. The only real disadvantage for online retailers is the product delivery. Consumers can not get it now, but must wait to receive their purchase. Online retailers are going to have to get out of the business of charging for shipment if they want to grow.
There’s a lot of truth embedded in this discussion already. Yes, rapid chain expansion pumps up the same-store sales metric but tends to mask customer service shortcomings (kudos, Andrew!). Yes, focus on price competitiveness takes management’s attention away from other experiential issues which may matter much more to shoppers on specific purchase occasions.
Perhaps relevant here is another of my laws of Retailativity(TM): Customer time decomposes into six elements: Operating Time; Access Time; Search Time; Transaction Time; Possession Time; Return Time. Online shopping has an inherent edge in terms of operating time (24/7) and access time (no driving) but loses big time when it comes to possession time (delivery lag) and return time (that extra trip to UPS and wait for credit).
In other words, time convenience holds different meanings for shoppers at different … times. Time is just one facet of the service experience (others include assortment, problem resolution, human interaction, etc.), but it’s clear that customers will discriminate among channels based on their need priorities of the moment.
Agreed. Online shopping is much easier and pleasurable overall, though in all honesty, only a small fraction of my purchases are online.
For me, the key detrimental things about online are out of stocks or shipment delays, though I’ve never experienced any orders taking longer than the usual. Even if something is sold out, just move onto the next site a click away.
For stores, it’s out of stocks, messy shelves, jam-packed aisles, lengthy checkout lines, crowded parking lots, and worst of all, meaningless store workers who often know less about a product than I do. If something is out it’s a pain, since you now have to physically travel to another store.
Even for technical products like electronics, most sites have detailed info. It’s not always correct, but a quick Google check or skimming of the manufacturers web site will verify any inaccuracies. No salesperson hassles, warranty upselling, liars, and I can quickly skim 5 sites for pricing in 10 minutes. And with that knowledge, I can go to a brick and mortar and buy it bypassing any sales rep.
It’s all about expectations. Our expectations for the experience online are different than the in-store experience. As long as a website is easy to navigate, has the product we want, and makes it easy to buy–we’re happy. Most sites do a reasonable job meeting these expectations.
On the other hand, the in-store experience expectations get into an array of sensory issues: temperature, lighting, smells, music, and the social expectations for the humans we are going to interact with. It is much more complicated to meet and exceed customer expectations in a fully sensory environment.
Physical store retailers must pay attention to all these sensory aspects and must ensure they have well-paid, engaged, passionate sales associates ready to exceed the customers’ social expectations.
It’s not only the lack of annoyingly uninformed or untrained salespeople that confers an advantage on online retailers, it is the informed opinions of other shoppers that make the experience better. The two top scorers, Amazon and Newegg, both have extensive consumer review features.
Imagine walking into Wal-Mart and browsing, say, the small appliances aisle. There, stuck to each toaster, are hundreds of Post-It notes from consumers who bought that item. “This one looks slick, but bagels don’t really fit in the slots.” “Great toaster! Nice, even heat all around.” “Can’t remove the crumb tray easily.” And so on.
There was a time when a well-informed salesperson could approximate that kind of helpfulness, but even the best-trained are unlikely to match the kind of real-world feedback you can get online while shopping today. That’s why such a huge percentage of people research online even the items they do buy offline.
As noted in the article, online shopping is devoid of the “human” element. At one time it was seen as unfathomable to have a good customer service experience without any human interaction. However, the combination of well-conceived internet customer service systems and understaffed, undertrained in-store personnel explains the differences noted in customer satisfaction. As bricks and mortar retailers struggle to maintain sales and accompanying margins, the labor part of the equation has become compromised.
It’s ironic that Wal-Mart has struggled so much with customer service, given the late Sam Walton’s penchant for taking invisible costs out of the system. The presence and functioning of in-store customer service representatives are the most visible part of the store experience.
Finally, the customer service differences between online vs. live interactions have been manifested for quite awhile when you review the satisfaction levels of the IRS agent vs. online tax filing. Unlike us humans, the internet never has a bad day.
Improvements in technology have simply made the online experience easier. Imaging, navigation, speed, etc, have all measurably improved over the past few years. Moreover, marketing folks have taken more leadership in online decisions where technology/web architecture folks used to hold sway within companies. Therefore, alignments between in-store, print, and online media have improved to create a better cross-channel experience.
Comparing the ratings of online versus in-store shopping satisfaction is not relevant when you factor in elements such as the store clerk. Are we going to hear that the online environment is more pleasing next? This is like asking someone which price they prefer and then concluding that the economy is headed for a recession because all respondents picked the lowest price.
The important thing to remember about studies like this is that they measure perception of service delivery. A lot can be learned, but the boundaries of interpretation need to respect the methodology. Appropriate comparisons over time can be quite valuable.
Simple convenience.
I can shop 24/7 online. I can not only search for and compare items on price, size, features, etc, at one store, but also at that store’s competitors. I can search for a promotion code to get the lowest price possible. Often I can get free shipping so I don’t have to deal with traffic, parking or public transportation. Sometimes I can avoid paying sales tax. I can shop at any store in the continental USA and even abroad. With larger retailers I can often get questions answered via live chat with a knowledgeable salesperson (try to find anyone other than a cashier in a bricks & mortar store any more) and with other retailers, my questions are usually answered within 24 hours.
True, I cannot see fabric texture very well online, I cannot try on items of clothing and sometimes an item just doesn’t look like the picture. But the conveniences in my first paragraph so outweigh these inconveniences that I now do as much shopping online as possible. In the last two months I have bought a refrigerator from ABT, sheer curtain panels from Linens ‘N Things, a 1960s style light fixture from Rejuvenation, pet food, wee wee pads and accessories from Petco, a Braun replacement blade and cutter foil from Amazon, books from Border’s and Dutch coffee from deReuze Gourmet Market. Each transaction was flawless and only once did I pay for shipping (and the time I did pay for shipping, I did not pay sales tax, 10% here in Chicago).
Don’t underestimate the value of the convenience of online shopping for people with limited or no access to a car, for people who live in more remote areas or people who are pressed for time. Lower expectations have nothing to do with my satisfaction with online shopping. In fact, I expect more from online shopping and it delivers consistently.
And, Jeff, can you imagine what might happen if management got wind that a salesperson was giving that well-informed feedback to customers, and it was persuading them to reject one brand–maybe a high-margin one, or one that had made some other sweet deal with the store’s buying organization–in favor of another, less profitable one?
I’m afraid that what it often comes down to is that the online business has entire disciplines devoted to the user experience–academic programs in universities and consulting firms in business–and online retailers still see the connection between customer satisfaction, sales and profit.
And, actually, we still have copious data over years of research that has drawn a direct line between customer sat and sales growth in the bricks-and-mortar environment. But there’s a problem: to use customer-sat data wisely, a retailer’s management has to be interested in being in the retail business–selling merchandise and serving customers–and not the real estate or finance business.
The late Bill Maritz used to call it “sticking to our knitting.” And it’s easy to use that term to stifle innovation. But if a retail company hangs signs on the wall about serving customers in the store, when the only customers it really cares about are the ones in the boardroom at Goldman Sachs, it will ultimately lose them all.
A few additional points to add to this excellent discussion.
Online customers do not have lower expectations than they do when in store, just different, and generally more exacting!
They do NOT expect out of stocks, figure if the store is online, the store should KNOW if it’s in stock. People in-store expect (don’t like but expect) out of stocks.
Consumers online expect easy to use, intuitive tools. If they do not get them….they leave. People in stores find and expect lines, crowded aisles, and messy merchandise. Again, they don’t like it but they expect it.
Consumers online expect a consistent experience each time, and generally get it. People in store often do NOT get a consistent experience from trip to trip (or even aisle to aisle) and therefore many times anything well done by one employee is thwarted by something awful elsewhere in the store.
At the same time I agree with Dan, one needs to be careful about how we interpret these numbers. The down trends in Home Depot and Wal-Mart are significant and are consistent with more anecdotal observations. Comparing a glob of e-commerce stores which include multiple categories (books, groceries, shoes) and cover both pure e-tail and the e-tail side of the multi-channel guys, to in-store category by category retailers is a tough thing to interpret correctly unless you have history.
Mike Osario has it right here. Expectations are precisely the reason behind the satisfaction survey results. Others have also pointed out that while these satisfaction numbers are high, online shopping still represents a very small fraction of total consumer spending. Why? The answer is expectations.
Consumers do not expect the same type of “experiential” shopping environment online as in-store, nor do they expect personalized customer service, or really, any real form of real-time connection. When they get something outside this paradigm, it registers as unexpected and generates a positive affect. Online chat attendants, computer avatar “help” and other forms of technology enable on-demand customer service are beginning to make inroads. When these appear, and when they work, the consumer receives an unexpectedly positive experience.
There are many more elements which are being added into e-commerce sites which explain the satisfaction ratings, and at the core, has been the focus and effort behind critical functionality. Safety, efficiency, smooth navigation, ease of check out, etc. All of these have reached the point (on good sites) where the consumer experience is extremely good. Rich media, flash slide shows, buying guides, integrated consumer reviews and other features continue to support the overall experience.
However: online shopping is growing up. Inevitably, with the consumer, it is “what have you done for me lately.” Doing the basics right, providing minimal support, and enhancing static visuals will at some point no longer result in high satisfaction ratings. As the new generation ages into the spending demo, we are going to see the true demands of a consumer group raised on the rich, impressive and sensory-enhanced world of video gaming and online video. Beware, online retailers. Today’s sites are not going to meet the expectations of tomorrow’s consumers.
This is a question of the online environment properly aligning the 4 Ps with customer service. In other words giving the consumer what they want, when they want it, for less. Online transactions are driven by the consumer, instead of onground which are frequently business focused (and the consumer is an afterthought). We’ve all had to wait in a checkstand while a checker answers the phone instead of taking care of you, the customer who is standing in front of them. Looking for someone to help, in any retail store is a true test of patience, let alone getting the right (and accurate) product information. Online delivers our products faster, for less money and with full disclosure. It is the complete package, driven by consumer demand, and need!
Max Goldberg and others are correct. Consumer expectations of online shopping are much lower than in a physical store. The survey also chose many more “low service” physical store operations–by looking at companies with a high focus on service such as Nordstrom and others, the experience is much better. For consumables, online shopping certainly does present a simple and efficient solution.
Online retailers often have very high expectations of themselves. With outstanding granularity, their software measures customer service and sales performance. Many bricks-and-mortar retail executives simply don’t have high expectations. They accept high staff turnover as inevitable and won’t spend the same focus measuring every minute aspect of customer service in the same obsessive fashion that online folks do. If you don’t measure it, how can you improve it?
Online success can be attributed to the fact that we have taken humans out of the equation. Retailers have more control over who does and says what when it comes to their online store.
As well, call centers that provide customer service for online stores are better trained at solving customer problems because of the misconception that online shopping is too much of a hassle for customers. What some chains forget is that the physical presence is equally (if not more so) important as the online store is. Chains need to invest more in training and hiring to mirror the quality of the online end.
The rapid physical expansion most retailers were experiencing over the past decade masked a lot of the shortcomings these stores had with service levels. Wall Street analysts and board members have been so consumed with comp store sales that they have ignored more important metrics like customer satisfaction figures.
With the economy softening and cross-channel shopping becoming more of the norm, retailers are going to need to provide a seamless experience whether customers are making purchase in-store, online or through a call center.
Most of this discussion seems to revolve around comparisons between an online shopping experience vs. mid to lower tier brick and mortar retailers. I checked the survey and it did not include results from Lord & Taylor, Nieman-Marcus, Coach, Saks, Ralph Lauren, Burberry, etc. It appears nearly all upscale apparel, specialty, and department store retailers were left out of the survey.
My conclusion is that the online experience may be superior for many consumers when compared to a poor or self-serve in-store experience in a mid to lower tier retailer. But, there is a huge shopper demographic (primarily female) that prefers a physical shopping trip to going online, at least for clothes, accessories, makeup, etc. For these shoppers, the clientelling and personalized shopping experience offers many things the online world can’t such as samples, events, a warm hello, etc.
Let’s not write off the large majority of shopping that is still done in the physical world just yet.
In the online world, great care has been taken to provide customers with the product information they need to make an informed purchase, and navigation that makes the shopping and purchasing experience as easy as possible. Contrast this with the brick ‘n’ mortar world, where all too often the salespeople are ill-informed and even less interested in being helpful.
The great weakness that brick ‘n’ mortar retailers have, which becomes only more pronounced in larger format stores, is the quality of the help, service and product knowledge provided by their people. This is a fundamental failing which originates at the highest levels, where people are thought of as an expense rather than as a critical element of the marketing process, even more critical, in my judgment than any ad, promotion or sale.
With all due respect, the online experience was created to ease time constraints for the increasingly busier lifestyles that exist today. With more and more two income households and the amount of available “shopping” time shrinking, the e-tailer has a much more streamlined approach to life to offer.
This really just boils down to the fact that everyday Americans are working longer hours and require an alternative to the 50’s conventional shopping methods that previously existed. For those that still have the time and the patience to get in the car, go to the shopping center, find parking, hike to the mall and then search through multiple stores to find a pair of “red shoes” that has now taken at least 2 hours of your time.
Hop online and the same shoes will be to you within 24 hours if you’re willing to pay the extra shipping charge. If you require immediate gratification then shopping malls are the answer; if you can wait, then online may be a better, less stressful approach. Each customer has their own comfort level is what I see.
I used to work for a higher-end department store chain. Its floor plan was confusing and labyrinthine. The lighting was just a little too bright given all of the gleaming white, reflective surfaces. The music was too loud, and if you happened to be standing in a spot where two demographic segments met, you’d get the cacophony of two different types of music playing at once.
The company even piped in different smells to subliminally influence behavior, and between that and the perfume smells, it was a synthetic smell overload.
Working there full-time made me and a number of other employees exhausted and even literally sick from constant sensory bombardment. I wouldn’t be at all surprised if many people prefer to shop from their comfy chairs, even if they never consciously articulate to themselves or others why they don’t feel motivated to step into a store….
Online shopping is usually quick and can be done in the convenience of one’s home or office, at any time of day or night. The customer can go shopping when THEY want to. The best sites also seem to have perfected the challenge of solving customer problems and answering customer questions immediately.