The news these days can be polarizing. But one thing folks can agree on is that the way they’re receiving news is top notch.

In our most recent E-Business Report, which covers social media, search engines and information sites, and internet news, only the latter industry increases in overall customer satisfaction, climbing 2.7% to an industry-high ACSI score of 77, the sector’s best showing ever.

So why are more Americans happier with the news they receive online? Simple: the industry is doing a lot of things well.

Online news is mastering mobile

Television remains the most popular source of news for Americans. However, at least 90% of adults in the United States get some of their news from digital outlets like mobile.

That’s where the digital news industry is making a name for itself.

The industry earns its highest marks for mobile reliability and quality, both with an ACSI score of 82. Customers find mobile devices easier to use than last year. That benchmark climbs 8% to 80.

FOXNews.com, which tops all individually measured news sites with an overall score of 78, leads the competition in both mobile quality and mobile reliability. Meanwhile, USATODAY.com ranks near the top of the industry in both mobile benchmarks and also experiences the largest jump in customer satisfaction (up 4% to 74).

The digital news industry is embracing mobile and customers are as satisfied as they’ve ever been with this industry.

Sweeping improvements all around

Mobile is just the beginning. The digital news industry shows enhancements across the entire reader experience.

 

Readers enjoy the array of fresh content (up 4% to 81), with FOXNews.com, NYTimes.com, and ABCNews.com leading this category. Overall site performance improves 5% to an ACSI score of 80, with FOXNews.com and NYTimes.com customers once again feeling the most satisfied.

News sites offer better navigation and information variety than last year (both up 3% to 79). They also offer faster and more reliable videos (up 7% to 78), with NYTimes.com besting the other outlets in this industry.

Best of all, readers are more satisfied with the number of ads they’re seeing. This benchmark rises 7% over the past year to an ACSI score of 72.

The future is digital

Digital new sites appear to know what their consumers want, and they’re doing what it takes to fill those needs. The fact is, when your industry raises its game for even the lowest overall benchmark – the amount of ads on the site – you’re clearly doing something right.

Franchises allow entrepreneurs to try their hand at business ownership while gaining the huge advantage of working off a proven brand and operating model. But it’s not always smooth sailing. Sometimes the lines of business are blurred and miscommunication about who is responsible for what can lead to customer satisfaction issues.

Just like individual store locations are part of a bigger corporate entity, franchises are responsible for maintaining their own guidelines while adhering to a certain overarching standard by the franchisor.

In this post, we break down some of the most frequently asked questions and share high-level observations about how you can maintain — and improve — satisfaction in a franchise environment.

Q: In a franchise system, who is responsible for managing customer satisfaction? Is it the responsibility of the franchisee or the franchisor (or both)?

A: It’s both. Ultimately the franchisee needs to be successful, but guidance comes from above. Franchisees must adhere to corporate guidelines that can’t be changed, such as signage and regulations, but can still be thought of as individual storefronts within a larger system. While the franchise model is technically different than a store brand model, the customer satisfaction aspects are no different for a store that isn’t franchised. There’s still a manager for each location, and they’re still responsible for profits, services, employee training, etc.

The model isn’t influencing customer satisfaction — whether you’re in a corporate environment like Home Depot or a franchisee like McDonald’s, it’s the same kind of things that create a satisfying experience.  

Q: Should the franchisor assist franchisees with satisfaction, particularly in local markets? If so, how?  

A: The franchisor should provide standard best practices and procedures required of all franchisees to ensure an enjoyable experience. It’s also recommended that franchisors share guidelines that ensure uniformity in the quality of experiences. For example, Chick-fil-A is really controlling, right down to its waffle fries, which need to look and taste exactly the same to all customers.

While the franchise may be “local,” it still has to adhere to national standards.

Q: How can the franchisor incentivize franchisees to improve satisfaction?

A: Customer satisfaction should be incentive enough. As the ACSI has found across all industries, higher customer satisfaction leads to higher profits. However, there wouldn’t be anything wrong with incentivizing customer satisfaction even more.

Q: Could low satisfaction with individual franchises impact the brand’s reputation or satisfaction, and vice versa?

A: It’s likely the reputation of one franchise location would be too small to impact the overall brand. Isolated customer incidents, like food poisoning at one location, most likely won’t impact customer satisfaction on a larger scale — at least in terms of ACSI — because not enough customers would’ve directly experienced the issue.

Individual locations might influence satisfaction if the incident is substantial enough or spans across multiple locations. For example, numerous Chipotle locations served tainted pork that made their customers sick, and we did see this impact satisfaction across the board.

Q: How do franchises ensure uniform and consistent satisfaction? Do they need to cater to certain geographic preferences, or are there other ways to stand out while still ensuring brand standards are in place?

A: It makes business sense for a franchisor to look at the customer satisfaction of their franchisees. Corporate could perform detailed surveying based on objective measurement for every location to identify the top performers and then pull best practices out of that location as a model for all others. The same could be done for the bottom performers to identify harmful practices and share those within the system.

There are differences in customer satisfaction based on geography, so surveys could reveal even more about regional discrepancies and tastes.

Q: Should franchisors have uniform satisfaction measurement tools across locations? How else can they ensure consistency?

A: Franchisors should absolutely set the standard for satisfaction. The key is to establish criteria like courtesy of staff, food quality, cleanliness, accuracy of orders, etc. and then implement the metrics across all franchises. This will help franchisors benchmark, identify best-in-class performers to be emulated, and identify under-performers to target for specific improvement strategies. Measurement should ideally occur monthly, but at the very least quarterly.  

Furthermore, it’s advisable for franchisors to not only measure, but also enforce customer satisfaction best practices. There needs to be a way to ensure consistency of brand standards across all franchisees. One way to ensure consistency might be to revoke a franchise if they aren’t consistent with standards, or at least give them a warning and step in to evaluate what could be improved. There’s also the option to take additional disciplinary action, like a fine, if there are multiple infractions.

Q: Does customer satisfaction among franchises differ across industries? For example, retail franchises vs. restaurant franchises?

A: There are always nuances in satisfaction from industry to industry, but overall there are some key observations that ring true for most organizations. The major franchise industries are hotels and fast food restaurants, so that helps narrow down the demographics a bit.

Q: What’s the number one thing franchises need to keep in mind regarding customer satisfaction?

A: Like any company, franchises need to focus on employee satisfaction. Customers will have the same expectations at each franchise location, so franchisees need to be prepared to satisfy them — and employees are on the front lines, so they need to be adequately trained and supported. Happier employees tend to result in happier customers, which means better bottom lines.

Q: Can you give an example of a franchise system and how customer satisfaction is impacted across multiple locations?

A: Take Papa Johns, for example. One thing to consider is that any challenges with corporate or the brand don’t necessarily impact customer satisfaction ratings; that doesn’t change the pizza quality, and that’s what matters more to customers.

Ultimately, customers aren’t aware of whether they’re being served by a franchise or a corporate branch, nor do they really care. It’s important for any business to create a uniform, pleasing experience to meet the customer’s expectations.

 

Every location and person representing the brand — whether at the franchisor or the franchisee level — is responsible for maintaining a certain set of standards to ensure customers are happy with the service.

If you’re a franchise interested in understanding more about these satisfaction nuances or how you can improve customer service among your franchised locations, please reach out to Tina Dettloff at tdettloff(at)theacsi(dot)org.

For the first time, as we noted in our inaugural Wireless Service and Cellular Telephone report, we posed the following question to consumers: “How much do you spend, on average, each month for your wireless service?”

A simple question, really. However, when analyzed alongside customer satisfaction and customer retention data, we gain an entirely new perspective on just how much customer satisfaction can impact wireless carrier revenue. This new Customer Segment Value (CSV) model speaks volumes.

Our study breaks consumer spending on wireless phone services into nine different segments:

• $1-$25
• $26-$50
• $51-$75
• $76-$100
• $101-$150
• $151-$200
• $201-$250
• $251-$500
• $501 and above

The model used to analyze this data enables us to differentiate customer groups based on how much each spends on wireless services, as well as the differences in customer satisfaction and customer loyalty. This information, plus sample proportions for each group, gives carriers insight into which customer segments will likely generate (or save) the most revenue with increased customer satisfaction, and where service improvements will most move the needle for those customers.

Here’s what we discovered.

Which wireless customers are more satisfied and more loyal?

Data from the different CSV groups shouldn’t be expected to perfectly reflect actual spend segment proportions for a company, but it does give us a better understanding of what customers in this sample look like from a spending standpoint.

We discovered that, at the industry level, more than 25% of customers fall in the $26-$50 spend range and 55% spend between $1 and $75 on their wireless bill each month. However, under 10% of respondents spend between $201 and $500 monthly, and just 1% spend more than $500 per month (thereby limiting our ability to analyze this data completely).

The data also identifies the leaders and laggards in ACSI and retention across the CSV groups. The “lower spend” segments – $1 to $75 – are more satisfied, more loyal, and have lower churn rates than almost all other groups, with only the very highest spending customers – the tiny proportion of those spending more than $500 each month – experiencing higher churn. For customers spending more than $76 per month but less than $500, ACSI scores and retention rates drop considerably.

The most valuable wireless customers

We then multiply the monthly annual per-customer spend by the number of customers in each CSV group to find the revenue and relative contribution to total revenue for each segment in the sample. If you’re familiar with the 80-20 rule, you won’t be surprised by the results.

The $1-$25 group accounts for nearly 15% of the total customers, yet only contribute 2% to overall revenue. Meanwhile, the $251-$500 group consists of under 5% of the respondents but contributes more than 17% to total revenue. Based on both its sample size and mean customer spend, the $101-$150 segment, which accounts for a little less than 14% of the total customers, contributes the most to the total annual revenue at a little under 19%.

The customer segment responsible for the biggest revenue losses

We then use our churn rate estimate and the per-customer spend estimate for each segment to estimate how much potential revenue carriers lose each year.

Due to its high spend, low ACSI score, and high churn rate, over 20% of potential revenue is being lost from the $251-$500 segment. The $101-$150 group is also losing almost 19% of potential revenue.

As it were, close to 70% of the total revenue lost each year is among customers spending $101 or more per month.

Targeting the top to save 25% of revenue

According to this study, companies can “save” the most revenue lost due to customer defection each year with a five-point improvement to ACSI for the $251-$500 segment – close to 25%. One idea to increase satisfaction: Carriers could provide these customers with a wider variety of plan options, something that’s clearly lacking based on our data.

The same five-point improvement for the $101-$150 spend segment would provide just under 23% in revenue saved, the second largest in annual savings.

There’s more where that came from…

This study focuses on the wireless industry as a whole. However, the CSV model can be used more specifically, and can provide the data for more complex types of Customer Lifetime Value (CLV) modeling.

With this information on spending, companies can better target not only which groups are more or less satisfied and loyal, but also understand which groups are most important to focus on to improve satisfaction and loyalty in a way that will most likely yield the biggest economic return.

Airlines are ascending.

Following a 2.7% drop in 2018, airlines rebounded in passenger satisfaction this year, climbing 1.4% to an ACSI score of 74 (out of 100), per our latest Travel Report.

Several airlines experienced improvements in customer satisfaction. Most notably, the newly minted leader, Alaska, up 1% to an ACSI score of 80. Delta, which finished first among legacy airlines, also climbed 1% to 75.

A majority of experience benchmarks remained unchanged and in good standing. Customers found solace in the check-in process (82), the ease of making reservations (81), the timeliness of arrival (80), and website satisfaction (80).

Customers were even more impressed with mobile apps, which debuted on the list at 82 for both quality and reliability.

Given these scores, you might think airlines would be much higher on the customer satisfaction scale. Unfortunately, the industry left much to be desired in arguably the most important part of travel: the flight itself.

The in-flight experience is a problem

This year, four new metrics were used to track some of the most problematic aspects of travel. The results were revealing.

The availability and size of overhead storage earned an ACSI score of 73, as did both the quality of complimentary and premium (purchased) food and beverage. The quality of in-flight entertainment received an even lower mark at 71.

Seat comfort – or lack thereof – remained the worst part of flying, with an ACSI score of 69.

It’s clear that passengers are yearning for a better flying experience. They don’t have much overhead space, their seats are cramped, and the food and entertainment could be better. Fortunately, some airlines are listening.

Airlines attempting to make flights more comfortable

Delta customers appreciate the in-flight amenities they receive on the bulk of mainline aircrafts. The airlines offer seatback screens, USB ports, and Wi-Fi. But Delta isn’t alone.

Although United, like American, is in the process of transitioning away from seatback screens, it’s making changes to accommodate its passengers in the short term.

In the past, only domestic business class passengers on United flights could access DirecTV for free. Economy passengers had to pay a small fee, but that’s no longer the case. As of January 30, 2019, all passengers will have free access to the service.

United is also looking to improve the in-flight experience through a new partnership with skincare brand Sunday Riley, as three cabin-specific amenity kits will be made available to United passengers.

“Sunday and her team really took the time to understand how travel and the aircraft environment affects our customers and formulated an in-flight remedy that complements their journey with United from beginning to end,” said Mark Krolick, United’s vice president of marketing, per the Airline Passenger Experience Association (APEX).

In an attempt to improve in-flight entertainment, American Airlines is making it easier for passengers to listen to their Apple Music. Those with subscriptions can now use complimentary Wi-Fi on all American Airlines domestic flights to access their music.

Passengers might be part of the problem

It’s true that flights have become less comfortable over the years. However, airlines aren’t the only ones to blame. Consumers are also at fault to an extent.

According to an MSN poll, 51% of Americans noted price of the ticket as their top priority when selecting which airline to fly. Only 6% of the 209,000 people polled listed comfort as their No. 1 priority.

“The reality is that people have proven to the U.S. airline industry time and time again that, at volume, they prefer the lower advertised price regardless of how many add-ons they have to pay for,” said Vinay Bhaskara, a senior business analyst with industry publication Airway.

If customers are going to purchase tickets based on the price, they’re essentially saying they’re willing to forego comfort for cost-cutting. That’s part of the problem.

Voice your concerns

If passengers are looking for improvements to airlines’ in-flight experience, they have to speak up. Some customers do that more frequently than others, and it’s paying off.

Nearly a third of business travelers have filed a complaint with an airline as opposed to only 11% of leisure passengers. Yet, business travelers who complain are still far more satisfied than the average leisure traveler with a complaint, posting an ACSI score of 78 compared to 73.

You might be surprised by these numbers, but it makes sense.

Business travelers travel more frequently. They have more experience and a better level of expectations. They know the lay of the land, and they have a greater sense of how things are supposed to operate (which is while they’ll likely speak up if things are off).

Leisure travelers, on the other hand, may fly once a year and not be as comfortable with the process. They have different expectations, and while they might get frustrated when things don’t go according to plan, they’re less likely to voice a concern.

If customers really want more, they have to give airlines a greater reason to change. Given the current consumer spending habits, however, this trend will likely continue.

You might have an idea about customer satisfaction, but do you really know what goes into satisfying customers? Do you understand the difference between customer satisfaction, customer experience, and customer service? What about the correlation between employee satisfaction and customer satisfaction?

If you’re hesitant about any of the above answers or have a thirst for knowledge, have no fear: We’re going to answer all of the above and more in this blog post, including some commonly asked questions about our data. We are, after all, the American Customer Satisfaction Index (ACSI).

What’s the difference between customer satisfaction, customer service, and customer experience?

Customer service is an element of the customer experience, and both can contribute to overall customer satisfaction.

To break it down, let’s say you’re a customer shopping in a grocery store. An employee helps you locate chips in aisle three, then a cashier helps you during the checkout process. Both interactions are customer service elements of the customer experience, but the overall satisfaction is more than that: It includes the cleanliness of the store, the price you paid for those chips, etc.

Sometimes, customer service doesn’t factor into customer satisfaction or customers provide their own services. For example, shoppers may use the self check-out option instead of speaking directly with a cashier.

Customer satisfaction can also occur with a specific product. For example, how did those chips you bought taste? Were there enough in the bag to justify the cost?

While nuanced and somewhat intertwined, satisfaction, service, and experience play different roles.

Does employee satisfaction impact customer satisfaction?

The correlation between employee and customer satisfaction is closer than you think. Both are part of the value chain. For companies, customer satisfaction starts with the company’s products or services. Drilling down further, there’s the quality of the employee’s service or quality of the manufacturing. And all of that flows back up to investors; good products/services mean more customers and more money.

The happier your employees are, the better service they’ll provide, which means you’ll have happier customers. If customers are happy, they’re more likely to be repeat shoppers and generate more revenue for the company. This leads to higher stock prices, bigger returns on investment, and happier shareholders. And (the smart companies) can turn that capital around to give employees bigger benefits, which in turn makes them, and their customers, even happier.

Basically, satisfied employees equal satisfied customers, which equals satisfied investors.

However, the opposite happens, too. If employees aren’t as happy, then they may not treat each other or customers as well (compared to competitors). Quality of products and services may go down, causing stock value to drop, then there’s less cash to utilize.

It’s the circle of life.

What are a few things any company can do to improve customer satisfaction?

The secret is: There’s no secret. Because every company and situation is different, there’s no “one thing” companies can do to improve customer satisfaction. However employee satisfaction is the keystone of any positive customer experience, as explained above.

A common denominator among companies with low customer satisfaction scores is they typically have unsatisfied employees. Mismanagement is another theme. If products or services were performing well and then changes to business strategy impacted the performance, that can influence customer satisfaction.

Greed is another pitfall. Specifically, profit-taking during mergers and acquisitions. Often the first step to please shareholders is to cut costs, which typically starts with labor costs and downsizing. That means there may not be enough employees to help, which means service can suffer. Even if staff provide high-quality service, there may not be enough bodies to handle requests, which then causes satisfaction to dive.

That’s the exact opposite of what should be done. Investing in employees can create happier customers, which means they’ll stick around and keep their money in your pockets.

Bottom line: Consider your employees as you consider your customers, and satisfaction is likely to follow.

Is customer satisfaction a bigger priority or focus for companies now?

In 25 years since the ACSI was founded there have been shifts in customer satisfaction; however, there haven’t been many changes in the last decade or so.

Customer experiences have a greater portion of businesses’ attention, particularly on the end-to-end experience. We’re starting to see a growing interest around metrics, which help companies determine where best to allocate resources to improve their operations or products. But just because a business collects customer satisfaction data, doesn’t mean they will make good decisions based on it.

What are some major changes in customer experience?

We’re living in a digital world. Now, companies need to be concerned about their online presence, creating mobile-friendly options, and the power of the internet. Companies need a good website and the ability to do business online, whatever that business may be. For retail, that means having clothing for sale; for travel, that means booking flight reservations efficiently; for banking, that means setting up automatic bill pay options.

Finding that balance between digital and brick and mortar is the latest obsession in satisfying customers. Companies can set themselves apart by customizing the experience to meet individual needs. That may mean having store pickup or a great website. Offering different incentives to keep customers coming back can help improve the overall experience.

The digital experience is the heart and soul of transformation: Companies need to understand different customers’ needs and interests and develop a range of options to accommodate.

While customers are more self-sufficient in this digital world and that tends to increase customer satisfaction — more service required, the lower the customer satisfaction — there is a caveat: If there’s a problem, all of this goes out the window.

If customers run into a snag on the website or have trouble getting answers in a live chat, it can negatively impact overall customer experience. In fact, call center satisfaction tends to rate at the bottom of most industry benchmarks.

What goes into the ACSI’s measurement and methodology?

 The ACSI’s process has been extensively tested for over 25 years. While we can’t reveal all the details, we use an econometric model developed at the University of Michigan’s Ross School of Business. It factors in customer expectations, perceived quality, perceived value, complaints, loyalty, retention, and more criteria.

There are also specific benchmarks relevant to each industry’s products and services, whether that’s website satisfaction, battery life for cell phones, seat comfort for airlines, or speed of service for restaurants.

For more on the science that goes into measuring customer satisfaction, check out this chart on our website.

 How are companies selected for the ACSI’s reports?

The ACSI conducts its syndicated research independent of any of the companies measured. Inclusion is based solely on market share, meaning the companies included are of sufficient size to meet sample size thresholds that create statistically reliable data.

No company is included or excluded based on the company’s request, though companies can hire the ACSI to do an in-depth customer satisfaction analysis.

What’s the sample size collected in your studies?

Based on our advanced Partial Least Squares (PLS) structural equation modeling methodology, the ACSI can achieve statistically reliable results from a range of 100 to 250 respondents per company each quarter. Sample sizes at the industry and company level are not defined arbitrarily; using a historical database of nearly 3 million interviews and a Bayesian statistical procedure, sample sizes are adjusted based on prior information about data variance and stability.

How do I obtain access to specific company scores?

Full confidential data sets for a particular company or industry are only available to ACSI clients. For more information on how to subscribe and what that entails, please contact Tina Dettloff.

I don’t see my company among the list of measured companies; can I get an ACSI score to compare among the industry and my competitors?

The ACSI offers proprietary solutions that allow any organization to obtain data via the same survey methodology the ACSI utilizes across all industries. Companies will be provided with metrics calculated for the corresponding industry with apples-to-apples benchmarking opportunities. That’s the beauty of our national, cross-industry measurement! For more details contact Tina.

 

If you have any other questions, leave a comment below and we’ll be sure to get back to you — and possibly include it in another FAQ post.

There’s a first time for everything.

In our most recent Retail and Consumer Shipping Report – where customer satisfaction dipped 0.9 percent to an ACSI score of 77.4 (out of 100) – one of those firsts was the inclusion of Costco, Etsy, Wayfair, and other major internet retailers to the list. But it didn’t stop there.

For the first time since 2010, Amazon lost its grip on the e-commerce space. The new king of internet retail? Costco, with an ACSI score of 83.

One other first stood out, an element within internet retail that we officially measured for the first time: mobile app satisfaction.

The highs and lows of the mobile experience

If you consider e-commerce a hot market, then the use of mobile in retail is like walking on the sun. Unfortunately, while some companies know how to walk the walk, others, not so much.

The HP Store earned the highest ACSI score for mobile reliability with an 88, however it also came in with the lowest mobile quality score at 72.

Staples struggled in both categories, scoring 76 in mobile reliability and 78 in mobile quality. Sears had the same marks but reversed, with 78 in reliability and 76 in quality.

On the flip side, Amazon, which scored an 87 in both mobile reliability and mobile quality, and Etsy, which also scored an 87 in reliability and recorded a category-best 88 in quality, appear to have cracked the code.

“There’s an app for that” is a cliché for a reason. Every company recognizes the importance of creating a footprint in the mobile market. The real question is, what can companies do to differentiate their application from the competition?

Amazon’s staying power

Consumers don’t just download Amazon’s app; they keep it. Some 76 percent of millennials have Amazon’s mobile app on their phone.

Lincoln Merrihew, senior vice president of client services at Millward Brown Digital, Boston, sees a correlation between the success of Amazon’s app and the success of its overall business model. Merrihew told Retail Dive he sees Amazon as a “combination of a transaction environment and a search engine,” and this works out in its favor.

Amazon offers “one-click ordering and fast shipping options” and has the highest penetration rate among shoppers at 76 percent.

Its app is easy to navigate, easy to use, and offers “special app-only functions.” On top of that, Amazon gives consumers a consistent experience across all of its mobile platforms.

Amazon is truly a “one-stop shop for consumers,” noted Claudia Hoffner, vice president of global marketing for Feedvisor, based on a recent study conducted by the company. It knows what its customers want, where they’re going, and how they’re behaving.

Now that more people are turning to mobile shopping, Amazon continues to make it a priority to adhere to its customers’ needs, thus helping the company maintain customer loyalty.

Etsy listens to its customers

Meanwhile, Etsy pays considerable attention to consistently improving customer experiences. Which is why it redesigned the homepage of its mobile app by including “recommendations.”

“We designed and built the new home screen to give shoppers a better and more inspiring experience on Etsy’s mobile apps,” said Bowen Slate-Green, product manager at Etsy, New York, to Retail Dive. “By providing shoppers with an improved experience, they can better find items and shops that intrigue them.”

By implementing a feature that helps personalize the user experience, Etsy is creating a simpler shopping experience for its customers. Users no longer need to spend time searching for products, Etsy has already done that for them. This streamlines the process, and puts the items shoppers find appealing – based on previous searches and purchases – right in front of them. Consumers are likely already on Etsy because they want to shop. Now there’s less hurdles involved.

Said Slate-Green: “Mobile is a priority for us and the new home screen in the Etsy apps is the latest of our enhanced mobile offerings. Going forward, we will continue to develop and roll out new features that improve the overall experience for our mobile-focused community of shoppers and creative entrepreneurs.”

If Etsy continues catering to its individual customers by making its app more personal and embracing the power of technological advancements, it will likely remain among the leaders in mobile customer satisfaction.

Companies must continue to focus on mobile

This was the first year we looked at customer satisfaction with mobile apps within retail, but it certainly won’t be the last.

As we’ve noted before, consumers are becoming increasingly reliant on their mobile devices. They use their phones to do everything from browse the web and watch their favorite movies and TV shows to shop, shop, and shop some more.

Smart companies are recognizing this growing trend and are taking the steps needed to ensure their customers have the smoothest possible mobile experience.

Amazon and Etsy are off to a hot start. But the race has only just begun.

Amazon’s reign is officially over – for at least one year, anyway.

After leading customer satisfaction in the e-commerce space since 2010, Amazon dropped 4 percent to an ACSI score of 82 (out of 100), according to our latest Retail and Consumer Shipping Report. The new leader? Costco.

In its first year in the internet retail category, Costco posted an ACSI score of 83, matching its in-store mark for both the department/discount and supermarket categories.

Costco wasn’t the only newcomer to score high in its first year in the internet retail category. Among the 21 new companies, Etsy, Kohl’s, Nike, and Nordstrom each debuted with an ACSI score of 81. Apple, HP Store, Macy’s, Target, and Wayfair also made strong impressions, scoring 80 a piece.

The expansion of this category makes Costco’s top-ranking performance all the more impressive. Costco has historically succeeded in categories linked to the in-store experience – especially when you consider the popularity of its pizza – so when you factor in the e-commerce experience, the results seem almost inevitable.

Costco’s recipe for success

Membership-based warehouse stores were the real winners in the retail trade sector in 2018, and none shined quite like Costco. According to CNN Business, Costco’s strategy to accomplish this was to “perfect what’s been working for four decades.”

Brick-and-mortar stores are the company’s bread and butter; that’s unlikely to change. Customers enjoy the experience of shopping at Costco, they remain unwaveringly loyal – 90 percent of Costco members renew their subscriptions – and perhaps most importantly, they appreciate the value they receive.

Costco offers cheaper products without sacrificing the quality. Look no further than its signature Kirkland brand, which offers less expensive alternatives and is considered by analysts to be “one of the most popular white labels across retail.”

How does all of this tie into Costco’s success in online retail? Perhaps it’s best to look at why Costco decided to go online in the first place.

What’s driving Costco online?

Costco had been reluctant to venture into online retail for two reasons. First, its winning formula has always been based around giving customers a great in-person experience, and second, it’s pricey to ship bulk items.

Costco may have been dubbed “Amazon-proof,” but there’s no guarantee the label lasts forever. One way Costco has staved off the competition is by cornering the food market. Per CNN, 93 percent of Costco members turn to the warehouse store for their groceries. But for how long?

Costco can’t afford to get complacent when other online retailers want a piece of the pie. The only way to defend itself against would-be assailants is to embrace internet retail.

And it has. Costco now offers same-day fresh delivery through Instacart and also launched CostcoGrocery.

With CostcoGrocery, members receive two-day delivery when they order “shelf-stable” products on the website. They also get free shipping if the purchase exceeds $75, according to The Wall Street Journal.

How Costco is reshaping the e-commerce and retail landscape

Costco’s biggest selling point is its in-store experience. It’s made a killing in that respect. But it also recognizes the importance of creating a presence in the e-commerce space.

Costco offers 10,000 products on its website and app. It lets you buy expensive items online, including furniture not previously sold in stores, and gives you the option to pick up your online purchases in the store. The result of Costco’s expanded online offerings has been a 21 percent increase in online sales since July 2018.

In a world where most customers are choosing to shop online, Costco has managed to keep its customers coming back to the warehouse. And yet, that hasn’t prevented it from dabbling in the e-commerce space. From the looks of it, Costco is clearly succeeding there as well.