Price Can't Always Buy Customer Satisfaction

Despite the attention paid bargain shopping in the holiday season, consumers still demand more from retailers than a good price.

This is true across the spectrum of retail. Trader Joe's for example, has won customers based on the low prices it offers for fashionable food. Evolving on the West Coast, it developed in regions that were well served by quality traditional and alternative supermarkets from Ralphs to Gelson's and came up with its own way of doing business, consistently introducing new, often exotic products shoppers couldn't find elsewhere. Over the years, Trader Joe's became increasingly focused on affordable, private label gourmet, natural and organic food. The company established a unique yet more consistent product selection over time, but it still cycled products in and out of store assortments following what retailers call the treasure hunt strategy, one that uses the regular exhibition of new and seasonal products to make shopping more of an adventure. In some of the newer markets Trader Joe's has entered, however, the frequency of product change can be a cause for complaint. If you visit Trader Joe's consistently, you hear lots of compliments but you also hear shoppers grousing to each other and to store personnel when a favorite product disappears, even if temporarily.

As it enters new markets, Trader Joe's will confront more consumers who want it to behave as a full-line alternative to other supermarkets, not an extraordinary supplement. For example, someone attracted to Trader Joe's by its low-priced organics won't be satisfied if it discontinues organic blueberries, even temporarily, and only has a non-organic blueberries as an alternative. In markets such as the Northeast, where low-priced organics can be hard to find, this is a particular problem.

The challenge is all the greater for online retailers faced with what must feel like an infinite array of competitors all a few computer machinations away from imitating anything they do.

Price certainly is a prime consideration in online shopping, becoming more pronounced since price engines gave consumers a quick way to figure which sites can provide any given product at the lowest cost. But the availability, appeal and variety of merchandise on a site is more important to customer satisfaction than price, according to a study of the top 40 online retailers conducted by ForeSee Results. Price registered as the third most important element in satisfying online consumers after merchandise and web site functionality or the features that help shoppers get around the online store. The three factors are very close in importance, with content coming in a distant fourth.

High prices may well keep consumers from shopping the site at all. Still, once they are on the site, consumers want more than just bargains.

That's important, ForeSee insisted, because consumers who are highly satisfied with an online shopping experience are 73% more likely to purchase something on a web site. For retailers who have both Internet and store shopping available, consumers who visit a site and rate themselves highly satisfied are 38% more likely to purchase at the associated store. Satisfied customers also are 65% more likely to buy from the same retailer next time they shop for similar merchandise. Amazon and Netflix won the highest satisfaction ratings in the ForeSee study. They were the only companies to score an 80 or better on the researcher's ratings scale. Wal-Mart, HP and Staples were most improved. Amazon passed Netflix for first place and distanced itself further from the next tier of competitors this year when compared to 2007. Yet, study participants said Amazon still could do a little better on price and Netflix could improve content.

The ForeSee results are more evidence that what retailers offer â€" online or in the real world â€" is still important to customers despite the difficult economy, and that even the best should take time to figure out where the have room for improvement.