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Yahoo’s Customer Satisfaction Takes a Hit

Yahoo’s customer satisfaction rating dropped 5 percent from last year, according to the American Customer Satisfaction Index annual e-business report.

Released by the University of Michigan’s Stephen M. Ross School of Business, www.bus.umich.edu, Ann Arbor, MI, the national survey is part of a study of 70,000 customers who rank their experiences with more than 200 companies in 45 industries. It is updated quarterly.

The e-business report covers search engines, portals and online news and information sites. This category continues to outpace the ACSI as a whole, although customer satisfaction with e-business lags the e-commerce category.

Part of the problem is that the redesign of the Yahoo site “is not hitting a chord with consumers like it should,” said Larry Freed, president/CEO, at ForeSee Results, www.foreseeresults.com, Ann Arbor, MI, which co-sponsored the report. If you make a change, consumer expectations are going to rise, so the change has to be for the better, he said. Instead, Yahoo appears to be trying to be everything to everyone.

Yahoo still maintains second place with regard to market share for search engines according to comScore. However, since 2005 its ACSI customer satisfaction score has dropped four points to 76 on the ACSI’s 100-point scale, the largest drop of all individually measured e-business companies. In contrast, a year ago it was perceived to be closing in on Google for supremacy on the Internet.

“The search engines and the portals are coming together at a very fast pace,” Mr. Freed said. “Both are providing the same functionality — getting you around the Internet. In that sense, they are competing for mindshare of the consumer.”

Overall customer satisfaction with e-businesses such as Google and AOL increased for the 5th year in a row, although at a slower pace than in the previous years, according to the report.

Satisfaction with the e-business category has improved every year since 2000, up a cumulative 21.4 percent. From 2005 to 2006, the overall category score inched up 0.8 percent to 76.5. In the previous year, the rate of increase was 4.7 percent.

“Consumers standards continue to rise,” Mr. Freed said. “Every year, if we do the same as we did last year, consumers are going to see us as not fulfilling their needs.”

Google dropped one point this year from 82 to 81 but maintains the highest score in the category. This is true despite the fact that the site has expanded its range of services. However, its primary focus remains search, reflected in a home page that is basically a stark white screen with a search box. By showing only a few services on its home page, the brand displays its dedication to the customer experience.

While Google owns a significant market share of all searches in the United States, it doesn’t have industry leadership with any of its added functionality and tools. It also faces a challenge maintaining customer satisfaction as it continues to monetize its free services, according to Mr. Freed.

AOL experienced the largest jump in customer satisfaction — 4 percent from a score of 71 to 74. Its cumulative rise since 2000 is 32 percent.

One reason is that AOL has changed its business model and continues to do so. The latest change is the recently announced move from an ISP membership service to a site that is free for broadband users and that makes money solely on advertising revenues and selective paid content.

With its redesigned home page that makes search a focal point, Ask, formerly Ask Jeeves, is more of a direct competitor to Google than sites like MSN, Yahoo and AOL. While it’s not a market share leader, “it has a really nice blend of the simplicity of Google but with a little extra added in terms of the tools [on the right hand side of the home page],” Mr. Freed said.

The brand’s customer satisfaction has remained relatively flat since 2004 and this year dropped one point to 71. However, this could be a result of users needing to get used to the new design.

MSN offers nothing that sets it apart from the rest of the field. This year, its score dropped 1 point to a 74.

With regard to news and information sites, many have expanded over time to offer search capabilities as well as new ways of delivering information through video, podcasts and RSS feeds. However, none really stands apart from the others and their scores have remained in the “mediocre” range of 70 and 74 over the past few years.

CNN.com and USAToday.com both had score increases of two points since last year, up 2.8 percent from scores of 72 to 74. MSNBC.com and ABCNews.com both saw their scores dip one point, or 1.4 percent, since last year, while NYTimes.com stayed flat at 72.

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