Great Online Customer Service is Worth USD $17.3 Billion per Year

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STELLAService teams up with Ovum to reveal the value of great customer service; Releases its first list of elite online retailers.

The opportunity for Internet retailers to build their businesses around providing great service is too big to ignore.

According to a new Ovum survey commissioned by STELLAService, the first completely independent customer service ratings agency, the value of great online customer service in 2010 is USD $17.3 billion. “The Value of Great Customer Service” survey derived the dollar impact of great customer service by consumer category (i.e. financial services, healthcare, utilities, brick and mortar retailers, online retailers, etc.). It determined that the total value of great customer service across all consumer categories is USD $268 billion per year. On average, the survey found that Americans are willing to spend approximately 9.7% more for great customer service. The survey, however, paid particular attention to the way in which great service impacts the buying decisions of online consumers. It was concluded that consumers in the online retail category are willing to pay an even higher premium for great service (10.7%) than they would in most other categories. Based on the average amount spent by online consumers each year, the survey found that $17.3 billion of value can be created in 2010 by Internet retailers that offer excellent customer service. Due to the seemingly distant and remote nature of online shopping, it makes sense that consumers would pay a higher premium to have the comfort and peace of mind that they will be taken care of in the case of a serious question, concern or problem.

The survey polled 304 consumers about their spending habits and opinions of customer service. It was conducted by Greenfield Online and developed by Ovum, a part of the Datamonitor Group. “The figures were calculated based on average spend per person per year with each type of company,” said Aphrodite Brinsmead, an Analyst on the Customer Interaction team at Ovum. “Value is the extra percentage that people are willing to spend with various types of companies as a result of great customer service.”

Specific topics covered in the survey included:

  •     The additional amount (the “premium”) consumers are willing to spend on a product or service if they know they will receive great customer service
  •     The customer service factors and considerations that are most important to consumers when purchasing goods or services
  •     Consumer behavior subsequent to receiving great customer service.

For the online retail category, the leading factor or consideration for great customer service is speed of delivery. Helpfulness of customer service representatives and ease of access to information on a company’s Web site also topped the list for important elements of customer service for Internet retailers.

“We’ve always known that consumers value great service, but this study is the first to quantify it in terms that people and businesses understand – in dollars and cents,” said Jordy Leiser, Co-founder and CEO of STELLAService. “It’s no secret why the companies we’ve identified as the Elite online retailers (such as Zappos.com, Diapers.com, Staples.com and LLBean.com) have steam-rolled through this difficult economic environment; they treat their customers like family and friends. Consumers gravitate toward companies that provide exceptional service, especially in the world of e-commerce.”

Leiser went on to say that, “The opportunity for Internet retailers to build their businesses around providing great service is too big to ignore. By improving the basic practices and policies that matter most to online consumers, a business can quickly and dramatically bolster its competitive position, improve its financial profile and increase customer loyalty. It’s a win for businesses, a win for investors, and most importantly a win for consumers.”

STELLA Ratings
In connection with sponsoring this survey, STELLAService released its first customer service rankings for the country’s largest 150 Internet retailers, in which Zappos.com, Diapers.com and BlueNile.com earned the top three spots. After comprehensively evaluating the nation’s largest online stores across 14 online retail categories (i.e. apparel, electronics, etc.), STELLAService was able to identify 11 Internet retailers that qualify as “elite” in the area of online customer service.

This season’s top achiever, Zappos.com, grabbed the highest customer service rating (“STELLA Rating”) by consistently living up to its #1 core value: delivering “wow” through service. From its friendly and knowledgeable customer loyalty team to its fast, free shipping and returns to its intuitive, user-friendly Web interface, Zappos.com makes it abundantly clear that the customer experience is its highest priority. In addition to Diapers.com and Blue Nile.com, the other “elite” online retailers include: Amazon.com, Staples.com, Crutchfield.com, LLBean.com, BestBuy.com, Apple.com, Sears.com and REI.com.

“We’re humbled and honored to be recognized along with these other great businesses,” stated Aaron Magness – Director of Brand Marketing & Business Development, Zappos.com

The STELLA Rating system is the only consistent, uniform and independent measurement of the customer service performance of online retailers. The ratings are rooted in objective data, covering over 300 unique customer service features, metrics and tools, which are appropriately weighted by retail category to give more significance to elements that matter most in each category. The methodology’s weightings incorporate extensive consumer surveys and academic research through which STELLAService has been able to determine the specific service-related criteria that most significantly impact the online customer experience. Each evaluation conducted by STELLAService consists of extensive usability testing, ordering (and returning) several products throughout the United States and engaging in over a dozen interactions with customer service representatives via phone, email and live chat.

“As the largest baby care specialty site in the country, we at Diapers.com pride ourselves on our fast, free shipping and 24-hour customer service - which form the foundation for everything we do to cater to our customers,” said Marc Lore, CEO of Diapers.com. “Being recognized as a STELLAService Elite online retailer further fuels our desire to make life easier for parents nationwide.”

STELLAService Seal
To acknowledge and highlight the extraordinary customer service performance of each of the elite retailers, STELLAService awarded them its coveted STELLAService Seal, the Web’s most reliable sign of truly customer-obsessed companies. You can view the STELLAService Seal by visiting the homepage of Zappos.com, Diapers.com or one of the other distinguished retailers.

About STELLAService
STELLAService is the first and only company dedicated to publishing objective, in-depth ratings on the customer service performance of online businesses. STELLAService adheres to the highest evaluation standards; it does not inform Internet retailers of the timing of its evaluations and pays for all products purchased from - and returned to - each website it evaluates. Retailers cannot pay to be rated nor can they influence the ratings in any way. The invaluable data obtained by STELLAService is used by consumers to make more informed online purchasing decisions and by companies to obtain crucial business and industry intelligence. Formed in April 2009, the company’s Advisory Council and highly trained analysts represent today’s thought-leaders in the area of online customer service. More information can be found at: http://www.stellaservice.com. Press materials are available at: http://stellaservice.presslift.com. For a complete listing of the STELLA Ratings, please visit: http://stellaservice.com/index.php/stella-ratings/view-ratings.html.

About Ovum
Ovum's primary activity is providing value-added advisory services and consulting to retained and project clients. The company acts as a well-respected and trusted source of industry data, knowledge and expertise on the commercial impact of technology, regulatory and market changes. Ovum engages in continuous research and industry analysis to determine market dynamics in its specialist sectors. Ovum has developed long-standing relationships with many of its corporate clients, which include major international blue-chip companies such as Alcatel-Lucent, AT&T, BT, Cable & Wireless, Cisco Systems, Deutsche Telekom, Fujitsu, HP, IBM, Microsoft, Telstra and Vodafone. Ovum is part of the Datamonitor Group. More information can be found at: http://www.ovum.com.

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