Westport, CT, June 12, 2000 — Customer loyalty for e-businesses is extremely low, according to a new service that has extensively researched the Internet-user experience of 10,000 online consumers. Created by Internet consulting firm Digital Idea, utilizing the proprietary Internet-user panel of their strategic partner Greenfield Online, Inc., Dialscore provides a standardized customer loyalty metric that enables e-businesses to benchmark themselves against their competitors. With Dialscore, Digital Idea is able to determine the causes of low loyalty and make specific recommendations to e-businesses to increase revenue and profitability. This new tool (patent pending) is unlike anything else currently available to e-businesses. It is the first to assess and track e-customer loyalty and link it to the specific industry loyalty drivers.

The initial Dialscore study collected data on 346 e-businesses across seven industry categories, and will publish detailed information on 112 of them. The seven categories included in the first wave are: Automotive, Books/Music/Videos, Finance, Healthcare Information, PCs/Software/ Hardware, Travel, and Search Sites/Portals. Additional industries to be covered in wave two will include: Consumer Electronics, Pharmaceutical/Health Products, Toys, Apparel, Flowers, Concert/Theater/Event Tickets, Cosmetics/Personal Care, Pet Products, and Sporting Goods with the opportunity to add categories as demand dictates. Also available in wave two, companies will be able to purchase a customized version of Dialscore that will include their e-business (if not already covered) as well as competitors’ sites of their choosing.

"In the first year alone, we will have collected data from over 75,000 individuals resulting in roughly 125,000 evaluations of more than 1,000 e-businesses," said Peter Mackey, president of Digital Idea. "We are also working on plans to add b-to-b and international representation in year two."

To provide additional context to the Dialscore findings, Digital Idea is partnering with NetRatings, Inc. a global leader in Internet media and market research. The two companies will collaborate to provide subscribers with an analytical tool that directly ties Dialscore metrics to Nielsen//NetRatings Web audience measurement data. Changes in audience size, shape, and visit patterns are key indicators of loyalty," said Tim Meadows, executive vice president, products and services for NetRatings. "We’re excited to deliver Nielsen//NetRatings information as a valuable dimension to the Dialscore ratings," added Meadows. 

Average loyalty rating – only 15 percent

The first wave of Dialscore data, which will be updated quarterly for subscribing companies, showed average loyalty ratings of only 15 percent or less across all categories measured. "Most e-businesses have been focusing their resources on customer acquisition," said Mackey. "Yet it can be far more profitable to concentrate on building loyalty and retention. It costs $250 to attract a customer to the average e-commerce site. But as revealed in the Dialscore study, the average purchaser in the Books/Music/Videos category spent only $56 over the last three months. That means it will take over a year to recoup those acquisition costs. The problem is, many sites are finding that a good portion of their customer base isn’t always returning. Take Tower Records.com as an example. Dialscore showed that 37% of their customers had not been back to the site in the previous three-month period."

However, some sites are beating the average. The top Dialscore-rated sites on the Internet are as follows: 

A Dialscore rating is derived from an aggregation of six individual components of loyalty that contribute to the intensity of positive feelings toward a particular site such as relative uniqueness, likelihood to recommend, and ability to build a relationship. Customers who are deemed loyal must pass through this "filter", using Digital Idea’s proprietary algorithm, and are identified as a percentage of that site’s total customer base.

Dialscore findings also identified the specific drivers of loyalty within each of the seven vertical industries monitored. Dialscore customers will be able to evaluate their sites’ effectiveness against these drivers and isolate the areas that require improvement. "For the first time, e-businesses will gain an understanding of how to manipulate the drivers that directly impact their e-marketplace success," explained Mackey.

Problem Resolution – A Problem

One of the most important drivers of customer loyalty, according to Digital Idea, is how companies handle problems. Dialscore uncovered a wide range of consumer-reported problems with online services such as slow navigation, unavailability of information, lack of customer service, and inability to purchase a desired product or service. But more importantly, percentages for problem resolution are exceedingly low across all measured industry categories as follows:

"How businesses deal with problems has a huge impact on customer loyalty," said Mackey. "In the online world, much needs to be done to reduce the frequency of problems, but more importantly to improve the business response when problems inevitably arise," he added.

For example, within the Books/Music/Videos category the Dialscore rating among people who had experienced a problem was extremely low at six percent. Customers who had not experienced problems indicated a customer loyalty rating of 19 percent – a little above the category norm of 15 percent. But even more interesting is the loyalty rating among customers who had experienced problems but were satisfied with the way the problems were handled. This group showed a loyalty rating of 21 percent – six percent above the category norm.

Search Sites/Portals Score Lowest in Customer Loyalty

Search Sites/Portals are among the lowest in fostering customer loyalty across all sites that were measured. On average, only 11% of search users considered themselves loyal to a specific site. Within the search category, Yahoo definitely dominates, but surprisingly lesser-known names like iWon, Ask Jeeves, Dogpile, and Google were hot on their heels as opposed to other better-known names in the category.

Dialscore data reports, including analysis from Digital Idea, are available quarterly to marketers as a Web-based or CD-ROM service. Additionally, charter Dialscore customers will also receive a complimentary annual subscription to Digital Idea Quarterly™, an exhaustive analysis of Web customer attitudes and behavior. An annual subscription to Digital Idea Quarterly is also available separately.

The Dialscore study was conducted through Digital Idea’s strategic partner, Greenfield Online, Inc., via their proprietary Internet-user panel.