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ForeSee: Amazon tops holiday customer satisfaction

Market research firm ForeSee Results has released its 2011 Holiday E-Retail Satisfaction Index, with the goal of ranking online retailers by how happy customers are with their experiences. For 2011, the winner was mega-retailer Amazon.com, coming in with a score of 88 out of a possible 100. However, Amazon’s former rival for the top slot—Netflix—saw a sharp decline year-on-year: where last year Netflix scored an 86 out of 100, this year Netflix’s score slipped seven points to 79.

“Netflix totally misread its customer base and is paying the price, damaging its brand among both consumers and investors,” said ForeSee president and CEO Larry Freed, in a statement. “Customer satisfaction is predictive, which means that Netflix’s financial woes may be just beginning.”

Netflix had a terrible 2011 from a public relations point of view. In July, it effectively raised prices for many customers by as much as 60 percent by dividing online streaming and DVD-by-mail into separate services. That cost Netflix a million subscribers, but the company wasn’t done: it then moved to spin off its DVD-by-mail business into a separate operation called Qwikster—Netflix would be a streaming-only company, and folks who wanted DVDs could sign up for Qwikster, but the services wouldn’t be integrated, meaning separate bills along with separate rental queues, recommendations, and ratings. Qwikster went over like a lead balloon and Netflix quickly retracted the plan, but the damage was done. In July 2011 Netflix stock closed at $298.73; yesterday it closed at $70.60, a decline of over 75 percent. Netflix CEO Reed Hastings just had his annual stock-option allowance cut in half to $1.5 million—although his $500,000 salary is unchanged.

Meanwhile, Amazon seems to continue to fire on all cylinders, having successfully transitioned from books to offering essentially any form of merchandise that can be shipped—not to mention the strong success of its Kindle business.

“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,” said Freed. “It’s tough for a smaller retailer to compete with this level of dedication to providing an excellent customer experience.”

In ForeSee’s rankings, a score of 80 or higher is generally regarded as “excellent” customer satisfaction. Overall, the online retail industry has raised its collective score from 74 in 20005 to 79 this year—meaning customers are generally getting happier with online retailers.

The highest-ranking online retailers this year Amazon with an 88, and Avon, JC Penney, QVC, Apple, and Vistaprint.com—all of whom scored an 83. Dell managed to wrangle a four point increase to come out with an 80; mail-order firm TigerDirect also saw the biggest year-to-year point increase, moving its score from a 73 last year to a 79 this year. JC Penney’s score is also notable because it represents the biggest point change since the holiday e-retailer satisfaction survey started: they’ve clawed their way up from a 71 back in 2005 to an 83 today.

However, not all online retailers have been successful at making customers happy: Netflix saw the survey’s biggest decline (dropping from 86 to 79), while the Gap dropped from 78 to 73, and Overstock.com dropped from 76 to 72.

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