Survey: Amazon Rises, Netflix Falls In Customer Satisfaction

When it comes to doing business online, consumers increasingly prefer Amazon.com's customer service, while they're rapidly falling out of love with Netflix.

Those are some of the conclusions in the latest Holiday E-Retail Satisfaction Index, compiled by customer-experience analytics firm ForeSee.

Amazon climbed two points to score 88 on the study’s 100-point scale, registering the highest score from any retailer in 14 consecutive studies. At the same time, Netflix’s well-publicized blunders over the summer caused its customer satisfaction to plummet by seven points and eight percent to 79.

A ConsumerAffairs.com analysis of roughly 10 million consumer comments on social media sites finds Amazon with a positive net sentiment hovering around 60% for the year while Netflix, also with about 10 million comments, has tumbled from around 60% to 45% at year's end.

After years of being separated by a point or two in the ForeSee rankings, Amazon and Netflix, which are increasingly in direct competition as Amazon expands into streaming video and rentals, are now separated by nine points in terms of satisfaction, a gulf that may be too wide for Netflix to overcome anytime soon, the company said.

Paying the price

“Netflix totally misread its customer base and is paying the price, damaging its brand among both consumers and investors,” said Larry Freed, president and CEO of ForeSee. “Raising prices by 60% and splitting the baby into separate DVD and streaming services totally undermines Netflix’s cost and convenience advantages. Customer satisfaction is predictive, which means that Netflix’s financial woes may be just beginning.”

ForeSee says its report provides the first scientific quantification of customers’ experience with Netflix since its missteps earlier this year.

With its satisfaction decline, Netflix has gone from satisfaction superstar to merely average, matching the Index’s aggregate score of 79, up one point from 78 in the 2010 holiday shopping season. Netflix saw scores drop in every single element of the website that ForeSee measures, including site content, site functionality, merchandise, and prices.

“Meanwhile, Amazon may have started as an online bookstore, but it now competes in almost every significant retail category and it is setting the bar very high for any company selling online,” Freed said. “E-retailers have consistently upped their game since we first started measuring holiday satisfaction in 2005, but Amazon is still the 800-pound gorilla of retail, and it just keeps getting better. It’s tough for a smaller retailer to compete with this level of dedication to providing an excellent customer experience.”

Gap and Overstock also lose ground

Next to Netflix, both Gap.com and Overstock.com had the largest declines in satisfaction, leaving them with scores at the bottom of the Index. On the other end of the spectrum, the largest gains in satisfaction go to TigerDirect.com and JC Penney, which named Ron Johnson, former head of Apple’s retail operations, as CEO this year.

In one interesting note, ForeSee said American consumers were less price sensitive during the 2011 holiday shopping season than they were last year. Nearly 20 years of research coming from both academia and the private sector indicates that increasing customer satisfaction is one of the most powerful things a retailer can do in any channel to increase sales, loyalty, and positive word-of-mouth recommendations. The report quantifies the impact of satisfaction on these desirable customer behaviors.

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