By Larry Freed, President & CEO, ForeSee Results Computers, electronics and related items have long been at the forefront of Internet commerce. In 2006, Americans spent $17.2 billion on computer hardware and software, according to The State of Retailing Online 2007, a Shop.org study conducted by Forrester Research. Even though computers were eclipsed by apparel sales for the first time ever in 2006, according to the same study, this product category lends itself well to online retail. Unlike with clothing, shoes and other merchandise, consumers don’t usually have a need to “try on” a computer or electronic product. The fact that products are more standard also makes them easier to buy online. Knowing that consumers often buy computers and electronics online, the question becomes: What causes people to choose one online retailer over another? The answer often comes down to one thing: customer satisfaction. As part of the ForeSee Results Top 100 Online Retail Satisfaction Index, we analyzed customer satisfaction with16 computer/electronics retailers whose online sales volumes ranked them in the Top 100 online retailers according to Internet Retailer’s 2007 Top 500 Guide. The Index is produced by ForeSee Results using the methodology of the University of Michigan’s American Customer Satisfaction Index (ACSI). FGI Research provided their SmartPanel™ for collecting the survey responses from people who had visited the retail website in the prior 14 days. Research was conducted with browsers – visitors to a website that didn’t necessarily complete a purchase, although some did. Browsers represent the biggest potential to convert to customers, who purchase online or through an offline channel. Apple and Tiger Direct Lead the Computers and Electronics Category With scores of 79, Apple.com and TigerDirect.com share the lead for the highest customer satisfaction score in the Computer/Electronics category of the Top 100 Online Retail Satisfaction Index. Twelve points separate these two category leaders from laggards PCConnection.com and PCMall.com, whose scores of 67 put them at the bottom of the computer and electronics category and of the entire Index. Key findings from our analysis of customer satisfaction in the Computer/Electronics industry include: • Different types of companies can deliver a satisfying web experience: There isn’t one type of computer/electronics company that best satisfies its online customers, as shown by the four top-scoring organizations. While Apple.com and Dell.com are multi-channel retailers that sell their own products, TigerDirect.com and Newegg.com are retailers that sell multiple brands. • Satisfaction with the web improves satisfaction with the company and the brand: Visitors to the two-highest scoring sites, Apple.com and TigerDirect.com, are most satisfied with the retailer overall and most committed to the brand. • Satisfaction leads to future purchase and loyalty. As a proxy for loyalty, we asked online shoppers about their likelihood to buy from a particular retailer the next time they needed similar merchandise. Led by Apple.com, the companies that scored the highest for this key future behavior were also the satisfaction leaders. • People are considerably less satisfied with online retailers of computers and electronics. People are least satisfied with computers and electronics of any of the six categories of online retailers that we studied (tied with the apparel and accessories category). Year-over-Year Comparisons Because the Top 100 expanded this spring from the Top 40, six of the retailers in the Computer/Electronics category are new to the Index. Shopping.hp.com achieved the greatest increase in its satisfaction score since last year (2.7%). Six of the 10 sites measured last spring have higher customer satisfaction scores this year. Computers and Electronics Category Lags in Satisfying Online Customers Along with the category of apparel and accessories, the computer/electronics category lags the other product categories with five or more measured sites in the Top 100. The aggregate score for this category is 73. What accounts for lower satisfaction with this category? Lower scores for the elements that drive satisfaction with the online experience: brand, price, site experience and merchandise. Compared to the two highest-scoring categories, Books/CDs/DVDs and Specialty/Non-Apparel, the Computer/Electronics category’s element scores are all at least two to three points lower. Mass merchants, many of whom also sell electronics and some computer products, outperform the Computer/Electronics category by significant margins in site experience and price in terms of customer satisfaction. Computers and electronics shoppers must wade through numerous choices among products that are quite complex. The constantly changing technology in this industry coupled with many choices among products with similar characteristics makes it extremely difficult to navigate across a wide array of products. Improvements to brand image and site experience will have the greatest impact on boosting customer satisfaction scores among the computers and electronics websites. Web Purchases Drive Satisfaction Site visitors to the Top 100 Computer/Electronics websites were surveyed about their research and purchase channel preferences. Sixty-two percent of respondents in the computer/electronics category (compared to 58% for the whole Top 100 Index) preferred online purchase with product delivery, compared to 58% for the whole Top 100 Index. The second most popular option, chosen by 22% of computers and electronics online shoppers, was to purchase and pick up the item in the store. Multi-channel retailers would benefit from convincing even more of its online audience to buy online. People who bought from the computer/electronics retailers’ websites in the past were more satisfied than those who hadn’t: satisfaction rose from 70 for people who had never bought from the company online to 81 for people who had bought from the company using the web channel four to five times in the past year. It is interesting that previous offline purchases with the retailer do not necessarily lead to higher levels of website satisfaction. People who had bought from the company’s store or catalog four to five times in the past year had a customer satisfaction score of 75, just one point about the score of 74 for people who had never bought via a non-web channel. Yet, within the online channel, those who purchased four or five times in the past year had website satisfaction score of 81, 15% higher than those who had never purchased online from the retailer. This illustrates a key difference among channels for computers and electronics retailers. The rewards of increasing the frequency of purchase online far exceed those in the offline channel. No doubt this is driven by the high level of online sales penetration in this industry segment – over 40%. Consumer Product Reviews Drive Satisfaction Consumer product reviews have been available on computer/electronics sites for quite some time. In our research, 37% of visitors to computer/electronics sites recalled seeing reviews, compared to 25% of respondents as a whole. Shoppers who saw reviews were 10% more satisfied than those who didn’t, with scores of 77 vs. 70. More significant is the increase in satisfaction for people who cite consumer product reviews as the primary reason they purchased a computer or electronics product. While only 10% of respondents fell into this category, their satisfaction score was 91, a full 13 points (17%) higher than the score of 78 for people who didn’t factor reviews at all into their purchase decision. Likelihood to purchase next time is 28% higher (91 vs. 71), purchase online is 26% higher (92 vs. 73), recommend is 22% higher (93 vs. 76). Considering that many computer and electronics items are big-ticket purchases, retailers in this category may be wise to add consumer product reviews if they don’t already have them on their sites. Customer reviews appear to close the gap between the online and offline shopping experiences. Accessing other consumer opinions online can be far more powerful than talking to a sales associate in a store. The Benefits of Satisfying Online Customers Satisfaction as measured by the ACSI has been scientifically linked to positive word of mouth, loyalty, ROI, future firm financial performance, and even stock prices. Our research shows that satisfaction is just as important for computer and electronics retailers as for any other business. In order to show the value of a satisfied customer, we compared key future behaviors and attitudes among visitors to the top-performing vs. bottom-performing sites (defined as the top and bottom 20% in terms of customer satisfaction). The results truly speak to the importance of satisfying online shoppers, as shown by the table below. Computer/electronics sites that excel at online customer satisfaction engender customers who are significantly more satisfied with the retailer overall (across channels), driving greater brand commitment, likelihood to purchase, recommend and be loyal to the retailer.