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E-Biz Satisfaction Improves, Lags

  |  August 24, 2004   |  Comments

Propelled by search's high score, the annual American Customer Satisfaction Index showed a slight swell in the e-business category.

Consumers are a little more satisfied with search engines, portals, and news and information sites than they were a year ago, but the American Consumer Satisfaction Index (ACSI) shows the category, which it calls e-business, still lags behind the national average.

The e-business category also falls behind its more successful sister – e-commerce. Comprising e-retail, e-brokerage, auctions/reverse auctions, the e-commerce aggregate for its measurement period was more than eight points higher than the recent e-business score.

Using a 100-point scale, the ACSI measures seven economic sectors, 39 industries, and more than 200 companies and federal or local government agencies. In the second quarter of each year, the ACSI measures customer satisfaction with leading e-business companies, focusing on search engines, portals, and news and information sites.

ACSI Comparative Scores
2002 2003 2004
ACSI National Average 73.0 73.8 74.4
ACSI E-Business Score 68.7 71.4 72.5
ACSI E-Commerce Score 74.3 77.6 80.8
Source: the American Customer Satisfaction Index

The ACSI declared search the satisfaction standard-setter in the e-business category, with an overall rating that rivaled the entire e-commerce category.

ACSI Search Engine Scores
2002 2003 2004
Search Engine Average 68 78 80
Google 80 82 82
All Others N/A 74 75
Ask Jeeves 62 69 71
Alta Vista 61 63 66
Source: the American Customer Satisfaction Index

Highly ranked Google displayed vulnerability, as the search engine's index has remained virtually unchanged since 2002. "Google's cultural popularity (fueled to even higher levels as a result of their IPO) can for a period keep it in the leadership position. This is often referred to as 'the halo effect.' Over time, the halo effect will wear off if they do not continue to provide a great level of satisfaction," said Larry Freed, president and CEO of ForeSee Results.

"Google's biggest challenges are still in front of them," Freed continued. "Their competition is getting broader in a few different ways. MSN and Yahoo are very focused on providing 'better' search. Amazon has their A9 project to compete with Google. And AskJeeves is closing the gap and is very focused on search."

Google's recent developments reach beyond search. For example, "Their Froogle initiative competes with Amazon and shopping.com. Their news services compete with the portals and the news and information sites. And adding Gmail to the mix puts them head on competitors in the portal category," said Freed.

Google's search competitors, Yahoo and MSN, were relegated to the portal category in the ACSI, where they both scored above the portal average, while AOL remained last.

ACSI Portal Scores
2002 2003 2004
Portal Average 68 70 71
Yahoo 76 78 78
All Others 72 79 78
MSN 72 74 75
AOL 59 65 67
Source: the American Customer Satisfaction Index

AOL's dominant market share position as an early industry leader has dwindled, which Freed attributes to "their inability to satisfy their customers to the level of their competition."

"Often when companies hold a dominant lead in market share they have a tendency not to focus on satisfying the customers, because the customers have few other choices. A few years back, AOL was in that situation. Their service was aimed at the novice user and was extremely effective in getting millions of users online," said Freed.

AOL's services didn't parallel users' growing Internet sophistication, opening up a niche for competition.

"Others such as Yahoo and MSN took advantage of these openings and moved ahead of AOL in the portal category by providing a much higher level of service that resulted in significant higher levels of customer satisfaction. This propelled Yahoo and MSN's growth and was the cause for AOL losing their dominant advantage," Freed said.

"The bottom line is that customer satisfaction is a great predictor of the future success of an organization. In the portal category this shows through very clearly," commented Freed.

News and information sites scored significantly better than portals, earning a 75 in the overall category. Only three points separate the high and low scores, narrowing the gap from 2003 but widening from 2002. The scores of the individual sites were nearly flat, with only two points as the largest gain.

ACSI News and Information Site Scores
2002 2003 2004
News and Information Site Average 73 74 75
All Others 73 75 75
MSNBC 73 74 74
ABCNEWS.com 74 74 74
CNN.com 72 72 74
USAToday.com 71 72 72
NYTimes.com 71 70 72
Source: the American Customer Satisfaction Index

The ACSI report cites "personality" as the missing satisfaction component, as consumers find little differentiation among the sites. Freed suggests that news and information sites create experiences that drive loyalty, such as customization and personalization, while combining local, industry-focused and general news in ways that would make them the first choice for consumers.

"Having success in taking the unique personality that each of these sites has in their other channels and translating it to the Web has a higher probability of being a sustainable advantage," said Freed.

The ACSI is produced by the University of Michigan Business School, in partnership with the American Society for Quality and CFI Group, and supported in part by ForeSee Results and Market Strategies Inc.

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