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Increasing customer satisfaction is one of the most powerful things a retailer can do to lift sales, increase loyalty and drive positive word of mouth recommendations. It’s a truism that holds fast, regardless of channel. And the latest E-Retail Satisfaction Index from ForeSee drives home that message with eye-opening clarity.

Late last month ForeSee, an Ann Arbor, Mich.-based firm that specializes in customer experience analytics, released the results of their 7th annual holiday online satisfaction report. The findings, based on more than 8,500 responses from visitors to the top 40 e-retail websites, found that Amazon ranked highest on the list with a score of 88 out of a possible 100. The next five websites on the list --,,,, and -- all achieved a ranking of 83.

The most compelling story to emerge from this year’s Index was the slide of Netflix. After years of being separated by a point or two in past years, Amazon climbed two points to score 88 while Netflix’s missteps caused its customer satisfaction to plummet by seven points and 8 percent to 79. Larry Freed, president and CEO of ForeSee, speculates that the nine-point satisfaction gap which now separates the two “may be too wide for Netflix to overcome any time soon. Netflix’s scores dropped in multiple categories including site content, site functionality, merchandise and prices.

“Netflix totally misread its customer base and is paying the price, damaging its brand among both consumers and investors,” says Freed. “Raising prices by 60 percent and splitting the baby into separate DVD and streaming services totally undermines Netflix’s cost and convenience advantages.”

Since 2005, the average customer satisfaction score for the Index has increased from 74 to 79. A score of 80 has always been the standard for excellence. Any retailer scoring below average risks losing loyalty, recommendations, sales and market share to competitors who score higher. If satisfaction drops significantly, past experience indicates that a revenue drop is likely to follow.

The report includes individual satisfaction scores for the 40 top e-retailers for the past seven years, allowing for comparisons over time and between companies. Next to Netflix, both (down 6 percent to 73) and (down 5 percent to 72) have the largest declines in satisfaction, leaving them with scores at the bottom of the Index. On the opposite end of the spectrum, the largest gains in satisfaction go to (up 8 percent to 79) and J.C. Penney (up 6 percent to 83).