Cyber Monday and Green Monday have passed. Free Shipping Friday and the Holidays themselves are in our future. Where do things stand in terms of the customer experience this holiday season?
(Why do we care? Because customer satisfaction, when measured correctly, predicts the future financial success of a company and also predicts future purchases, loyalty and recommendations. So we definitely want to keep on track of what has already happened with revenue reports, but looking at sales tells us what has already happened, whereas looking at satisfaction can actually predict the future.)
Sales tell us it has been a great holiday season so far. Comscore says holiday sales in the U.S. are approaching $25B, up 15% from last year. A record $1.25B was spent on Cyber Monday. We analyzed our customer data in the form of three benchmarks this week in order to look at the holiday season through the eyes of the customer:
1) Customer satisfaction: satisfaction is rebounding, and on Green Monday, it was nearly as high as it has been throughout the holiday season so far.
2) True Conversion Rates: “True” conversion rates are also higher than we’ve seen them in months. Retail sites are doing a good job of converting customers online this year.
3) Social Media Value: social media has limited value as a direct marketing tool but remains a huge influence on shopping habits and decisions.
#1 Customer Satisfaction
Our retail benchmark suggests that online shopper satisfaction is picking up steam. As we reported, satisfaction was less than stellar on Cyber Monday, but satisfaction on Green Monday has rebounded, and was close to its highest point so far this holiday season, following a dip after Thanksgiving.
#2 True Conversion
Virtually all retailers measure conversion: how many people came to your site vs. how many people actually purchased? Typical retail industry conversion rates hover around 2 or 3%, according to Forrester Research. But what does that really tell you about your ability to help people accomplish what they intended to accomplish.
A couple of years ago, we introduced a metric called True Conversion (you can read more about it in Managing Forward). True conversion looks at how many people came to your site intending to buy, and then how many actually did.
So here’s how it shakes out this holiday season.
When we ask visitors to e-commerce websites over the holiday shopping season why they came to the website, 43% came with the intent to purchase, 50% came with the intent to research, and 7% came for some other reason.
Of the 43% who came to purchase, 49% actually did. That metric is a lot more valuable than knowing what your overall conversion rate is. THIS is the number you want to track and move the needle on. If your True Conversion Rate is 49% this holiday, you should be shooting for 50% next season or even 60% or 70%.
I should also mention that there is a huge range in True Conversion Rates when you look at individual retailers. On average, the True Conversion Rate was 43%, but in our benchmark, there was one multichannel retailer (let’s call them Site A) who had a True Conversion Rate of 9% while another multichannel retailer (Site B) had a True Conversion Rate of 79%! These are actual examples from the retailer in our benchmark during the 2011 holiday shopping season, and both are stores that should have a heavy component of holiday gift buying on their sites. This means that of the people that came to that website intending to buy from Site A, only 9% actually did. That’s a terrible conversion rate! That means that 91% of the people who came to that site with money burning a hole in their pocket left without spending a dime. But on Site B, 79% of the people who intended to buy actually did. That’s a much more impressive number.
Another interesting data point: 50% of visitors to e-retail websites came intending to research, with no plans to buy anything. Yet 9% of those visitors still converted, even though they didn’t plan to. That’s just extra money the retailer was probably not expecting.
I follow these True Conversion benchmarks pretty closely throughout the year (and if you are a client of ours, you can participate in True Conversion at no extra cost; just ask your analyst), and these numbers look great to me. A True Conversion Rate of 49% (on average for all our retail clients in the benchmark) is a great number—about 11% higher than it was just two months ago before the holiday shopping season got into full swing. We would expect True Conversion Rates to be higher at the holidays—there is more impetus to buy and to buy quickly.
The burning questions for retailers 1) Do you know your True Conversion Rate? 2) Are you measuring regular conversion, and what does it really tell you? 3) Do you know which elements of your website you should improve in order to increase True Conversion? 4) Is there anything you can or should do to convert more of those researchers, the people who didn’t plan to buy anything when they came?
#3 Social Media Value
A third benchmark we’ve been tracking for some time is the Social Media Value Calculation. This is basically a way to calculate the actual tangible value that social media brings to you, beyond just fluffy stats like numbers of followers or fans. The Social Media Value Calculation categorizes people based on the amount of influence your social media initiatives have on their decision to visit the website, store, or call center. You can gain greater insight into how much your social media efforts impact customer acquisition and even spending.
So here’s what we’re seeing in terms of social media value during the holiday season. We consistently see that social media URL’s are responsible for only about 1% of site traffic, and that is the same during the holiday season. However, although only 1% are coming directly from a social media site, social media was a primary influence for 7% of site visitors. And 16% of site visitors reported social media influenced their visit or purchase in one way or another. Moreover, those influenced by social media were more satisfied, more likely to purchase, more likely to recommend and more likely to return.
So, clearly, social media is making a significant contribution this holiday season. But this also tells me that social media leave a lot to be desired as a direct marketing tool (only 1% of site visits come referred from social URLs). The true value of social media remains in the arena where it’s still hardest to control—the viral, word-of-mouth nature of real social interactions happening between friends, colleagues, and acquaintances.
These are some of the themes we see emerging from our research, which is ongoing throughout the holiday season. Are there any surprises here for you? Are you measuring satisfaction, True Conversion and Social Media Value? What kinds of insights do these metrics give you during the holidays?
The ForeSee retail benchmark is made up of 159 individual websites, ranging from Fortune 100 retailers to smaller, regional retailers. Among the retail websitesincluded in the benchmark are retailers like Ace Hardware, Bass Pro Shops, Belk, Cabela’s, Chef’s Catalog, Eddie Bauer, eBags, Gamefly, Harry and David, Helzberg Diamonds, Home Depot, LEGO, Musician’s Friend, Panasonic, Samsung, Sears, Sephora, Sony, and StubHub.
ForeSee has been releasing a weekly online satisfaction benchmark during the holiday shopping season for six years. ForeSee collected more than 660.000 satisfaction surveys from people who shopped on retail websites in November and December 2011.