Retail web sites now have a significant impact on customer satisfaction and brand loyalty, while traditional channels are relatively weak on both counts, according to a US-based study of multi-channel shopping behaviour from online satisfaction firm ForeSee Results in conjunction with FGI Research.
In addition, the study found that the actual value of a retail web site to the multi-channel retailer's bottom line is much greater than just the online purchases being generated. A surprisingly large proportion of multi-channel shoppers (86% of those surveyed) said they prefer to make purchases offline - although this greatly understates the influence of the web channel.
Web for research
Nearly 40% of multi-channel shoppers said they prefer to use the web for browsing and researching. Of this group (who would typically be viewed as unconverted browsers or 'shopping cart abandoners') seven out of ten (71%) said they completed their purchases in the bricks-and-mortar store. Shoppers also said they are consistently less satisfied with the store experience than with the web sites of the same multi-channel retailers, suggesting that positive perceptions generated online are being undermined at the point of sale.
"Up to this point, multi-channel retailers had to take a leap of faith that good online experiences fuel offline sales," explained multi-channel retail expert and CEO for ForeSee Results, Larry Freed. "Now the impact of the online shopping experience on in-store sales can be quantified more clearly using customer satisfaction metrics that gauge the role of each channel in providing a more satisfying overall customer experience."
Stores not helping
The survey found that the satisfaction level of multi-channel shoppers who both browse and buy online is significantly greater than that of those who browse and buy in the same retailer's store. The web-only experience produces an average satisfaction level of 79 (on a 100-point scale), and appears more likely to encourage people to become repeat-buyers and recommenders. By contrast, when people research products online and then buy offline, the average satisfaction score is 74. Those who both browse and buy in a multi-channel retailer's store registered a score of only 73.
Web's the winner
On every key measure of driving satisfaction, retailers' websites were found to be better at producing satisfied customers than traditional stores. People who both shop and buy online registered a satisfaction score of 85 with regard to how they view a store's brand, compared with 79 for those who prefer the store channel to shop and purchase. The web is also much better at making a positive first impression and making people feel valued as customers: First-time buyers who purchased online rated their satisfaction nearly 8% higher (at 70) while the score for those who bought in the store was 65.
"Multi-channel retailers have clearly been able to generate greater customer satisfaction and achieve more brand appreciation on the web than they've been able to in the offline world," noted Freed. "But the gap between online and offline satisfaction is alarming, especially since we see such a large proportion of people moving from one channel to another when making a purchase. It's a difficult balancing act, since goodwill generated online can easily dissipate with the offline experience."
Don't force channels
But Freed warns that this does not mean retailers should necessarily try to lure people to their web sites instead. In fact, trying to drive people to a channel they don't already prefer can also undermine their satisfaction. While an offer of free delivery might lure a customer online, it could be a negative if they actually prefer going to a store. Freed's research found that such promotions can help generate one-time sales but generally do not lead to repeat business.
Consequently, the survey's findings have some far-reaching implications for retailers planning multi-channel strategies. "There's a danger of forcing the sale in a channel other than that which an individual prefers, but there's also a major challenge in making sure that you don't lose the sale on the trip from the computer to the store," said Freed. "The situation demands a better integrated experience, and may call for changes in how retailers treat channel-jumpers in their stores."
A category-level analysis revealed that brand image and the store experience are high impact drivers of satisfaction for all categories surveyed, which included department stores, apparel and accessories, electronics and computers, gifts, and toys/books/games.
In many cases, the highest scoring elements had relatively small impact on overall satisfaction and behaviour. For example, in the electronics and computers category, price received the highest element score (81) but is the driver with the lowest impact on overall satisfaction and on future purchases and loyalty.
Results & analysis
The survey's full results and analysis are detailed in a report entitled 'Customer Satisfaction, Loyalty and Buying Behaviour in the Evolving Multi-channel Retail World', which has been made available without charge from ForeSee Results.
The study surveyed more than 4,000 customers of sixteen top US retailers that have a significant presence both online and offline, using a random sample of consumers from the FGI Research online SmartPanel. Customers surveyed were pre-qualified as having had recent experience with sixteen specific companies that are major players both online and offline, including Wal-Mart, Sears, Williams-Sonoma, Pottery Barn, Gap, Banana Republic, Barnes & Noble, Borders, Best Buy, and Circuit City.