Study: DMers Lead Online Loyalty

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Companies versed in direct marketing in the offline world are outperforming retail giants such as Sears, Target and Kmart in terms of online loyalty, according to Digital Idea's Dialscore results released yesterday.

Digital Idea, which surveyed 16,000 online consumers in August, found that 24 percent of consumers in the general retail category consider themselves loyal to the site. In the clothing and shoes category, 22 percent of Victoria's Secret consumers said they were loyal to the site, while Chadwick's, Lands' End and L.L. Bean each had 21 percent of customers say they were loyal to those sites.

Considering that Sears registered only 5 percent loyalty among consumers and Target and Kmart each had 9 percent in the general retail category, the study indicates that direct marketers may be doing something right.

"It's not surprising," said Steve Hamlin, vice president of operations at iQVC, West Chester, PA. "We've been an e-commerce company for 14 years in that we sell directly to the home through the TV. This was an evolution vs. a revolution for us."

Since the Internet is a direct selling medium, the transition online has been easier for the QVCs of the world, according to Hamlin. "If you're going to have retention, it's really about customer service and knowing how to ship to the home," he said. "The catalogers and people like QVC know how to do that. That's why the satisfaction is higher. It's not about selling on a retail floor. It's getting it to them at the home, and that's a very different thing."

Peter Mackey, president of Digital Ideas, Westport, CT, agreed. "These are companies that have always had, at their center, the ability to manage customer relationships in an interactive fashion," he said. "They took that expertise and brought it online."

The Internet pure plays also have derived substantial loyalty from their consumers compared with traditional retailers. Amazon has drawn a 34 percent loyalty rating from Dialscore. AOL Shopping scored 16 percent, and Yahoo Shopping drew 13 percent.

The reason behind this phenomenon is that the traditional companies have not reacted quickly enough, Mackey said. "The bricks-and-mortar guys have yet to transfer their equity online in an effective manner. They are not delivering on some of the drivers that we see as important," he said. "For example, the second most important driver was the ability to customize or personalize. [Many of these traditional retailers' sites] aren't doing this, something that's inherent in a Web experience."

Digital Ideas, an e-business consultancy, unveiled Dialscore in June as an online consumer-rating tool. The company releases its reports, which cover 215 sites in 16 industry categories, quarterly. These findings were part of the company's second report. Digital Ideas expects to expand the study to 24 categories by year's end.

The findings were based on a 40-minute survey in which consumers were asked to dissect two sites with which they were familiar. The Dialscore loyalty rating is derived from six questions: how unique the consumer considers the site; whether it is better than its competitors; the likelihood that the consumer would recommend it to others; whether he believes he can build a relationship with the site; his satisfaction level; and whether the site exceeds expectations. In addition to these attitudinal questions, consumers are asked 30 or 40 experience-related questions.

Using the results, Digital Ideas also acts as a consulting firm by recommending to companies a course of action for creating more loyal consumers. The company also has partnered with Nielsen//NetRatings, an Internet media and market research provider, to provide audience measurement data as part of its service.

A report card for a Web site and the other businesses in the category, a general overview of the category and a day's worth of consulting cost $50,000. Each additional category is $10,000.

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