E-commerce: Lessons Learned From Cyber Monday

Cyber Monday is considered to be the kickoff of the holiday season for all retailers with a Web presence, from catalog players to brick and mortar shops and Internet pure-plays. After a weekend of holiday festivities, people are back at their desks and in their offices, and in the spirit of the holidays, they’re shopping.

This season, we conducted a study of more than 36,000 retail Web site visitors over the 2006 Thanksgiving weekend and found that shopper satisfaction dropped significantly on Cyber Monday from previously high levels over the holiday weekend. This research offers a couple of lessons you can implement so you can maximize profitability and revenues during the busiest season of the year.

1. Manage your customers’ expectations or meet them. Cyber Monday got a lot of attention from consumers this year — through both media coverage and advertisements — and most of the buzz centered around the “fabulous” online-only discounts and deals shoppers could expect.

Analysis of our data shows that decreased shopper satisfaction on Cyber Monday resulted at least in part from customers who were disappointed when they didn’t get the free shipping and price discounts they expected. It’s a classic case of higher expectations leading to lower satisfaction.

It may be time for all multichannel retailers, including catalogers, to offer free shipping to their online customers to get in line with consumers’ expectations. Our research indicates that transactional costs, not product costs, are the source of dissatisfaction. Many retailers find (through analysis) that they can raise prices, give away free shipping, and still increase revenues while maintaining the same profit margin. Catalogers usually have lower overhead costs than their brick and mortar competition and they might consider lower discounts to offset free shipping. Although some catalogers resist free shipping, from a customer satisfaction point of view it may be better to charge more for the product and offer free shipping anyway.

2. Understand the impact of your Web site on multichannel operations. It’s imperative that catalog merchants get a better understanding of their Web sites’ impact on overall brand and profitability during the holiday shopping season. Retailers need to understand the impact of their Web site on overall sales. A Web site isn’t just an additional sales channel anymore. It’s also a channel for research, branding, comparison shopping and offline influence.

It’s not that complicated. Satisfied customers buy more, and customer satisfaction has been scientifically linked to future financial performance. By understanding what satisfies your customers, you’ll start to understand how to influence their behavior and brighten your holiday season.

Larry Freed is president/CEO of ForeSee Results, an online customer satisfaction measurement and management company, which uses the methodology of the American Customer Satisfaction Index (ACSI). He can be reached at Larry.Freed@ForeSeeResults.com.