Survey: Netflix's Customer Satisfaction Ratings Drop

Amazon improves, Netflix declines in ForeSee's annual holiday survey

By George Winslow -- Broadcasting & Cable, 12/28/2011 5:10:22 PM

Some well-publicized blunders in 2011 helped cause an 8% drop in Netflix's consumer satisfaction ratings in ForeSee's annual E-Retail Satisfaction Index.

After years of jockeying with Amazon for first place in the industry, Netflix saw its rating plunge seven points to a 79, which amounts to a 8% decline, in the survey, which ranks electronic retail websites on an index of 1 to 100.

Meanwhile, Amazon, which has been bulking up its streaming video offerings over the last year, saw its rating increase by two points to 88, according to the ForeSee survey.

As a result of the decline, Netflix now scored the same as the industry average, which rose by one point to 79 in 2011.

ForeSee reported that Netflix's scores dropped in every single element of the website that the firm measures, 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," said Larry Freed, president and CEO of ForeSee in a statement announcing the results of the survey. "Raising prices by 60% and splitting the baby into separate DVD and streaming services totally undermines Netflix's cost and convenience advantages. Customer satisfaction is predictive, which means that Netflix's financial woes may be just beginning."

"Meanwhile, Amazon may have started as an online bookstore, but it now competes in almost every significant retail category and it is setting the bar very high for any company selling online," continued Freed. "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. It's tough for a smaller retailer to compete with this level of dedication to providing an excellent customer experience."

Since 2005, the average customer satisfaction score for the Index has increased from 74 to 79.

The research company also noted that most of the sites that were among the top 40 for revenues also had very high satisfaction scores.

The survey was based on more than 8,500 responses from visitors of the top 40 e-retail websites according to sales revenue as reported by Internet Retailer's Top 500 Guide.