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August 16, 2005

Yahoo! Gaining On Google In Customer Satisfaction

Courtesy of TechWeb News

Customer satisfaction among Yahoo! users is rising, narrowing an edge held by Google, according to a survey released Tuesday.

"It's right on the cusp of being statistically significant," said Larry Freed, President and CEO of ForeSee Results. "It's a very, very close battle for the top position."

Yahoo! satisfaction climbed from 78 to 80 on a 100-point scale from 2004 to the first quarter of 2005. Google's score remained at 82, according to the University of Michigan's American Customer Satisfaction Index (ASCI). MSN, Ask Jeeves and AOL trailed behind with 75, 72 and 71, respectively.

The results come as the two top-scoring e-businesses vie for more market share and tout the size of their databases. By the end of June, Google held the largest portion of the market share at 36.9 percent, while Yahoo! held 30.4 percent, according to The Associated Press.

Yahoo! recently boasted of passing Google's search capabilities with access to more than 19.2 billion documents, 1.6 billion images and more than 50 million audio and video files. Google states that it searches over 8 billion Web pages. Experts point out that, while size does matter, it's not the sole factor in determining the effectiveness or popularity of a search.

"It's important for these portals and search engines to find ways to create stickiness for customers so they won't switch to something else," said Joe Wilcox, an analyst with Jupiter Research.

Freed said the companies have taken very different approaches in the way they have been delivering services and adding to their strengths. Google focuses on searches, builds customer loyalty, and presents a simple interface that has been a key element of its success. Yahoo!, on the other hand, takes a department store approach, offering as many services as possible. The portal's homepage is easy to navigate, offering news, sports and music downloads, e-retail and instant messaging. Yahoo! has recently added mobile searches, mapping and

Both companies have entered the desktop with software that lets users search their local hard drives and toolbars for accessing services quickly from the browser.

"Many people can't differentiate between the Internet and the desktop anymore," Freed said. "That's a huge challenge for Microsoft."

Though Microsoft has a monopoly in its desktop operating system, the company is still struggling to leverage its strength in promoting MSN, building traffic and grabbing more of the market share held by Google and Yahoo!

AOL is faring better this year, with significant since 2000 when it scored only 56 for customer service satisfaction.

"There was nowhere to go but up," Freed said.

Since then, the company moved a lot of the services in its proprietary portal to its free web portal, which is heavily focused on video to attract visitors. The company is also building a broad set of services, like its rivals.

"They're still way off the lead, though," Freed said. "The next step is going to have to be a big step. If they can execute well, they can compete."

AOL hasn't yet been able to leverage its ties with Time Warner to attract more traffic with exclusive content.

The key to drawing more users to Ask Jeeves also rests with its ability to leverage the resources of its parent company, IAC Corporation, with major brands like Ticketmaster and HSN.

The University of Michigan's survey ranked overall e-business customer satisfaction at 75.9 percent. Freed said customer satisfaction is directly tied to financial success.

"The research shows that those that provide the highest levels of customer satisfaction will prosper the most financially," he said.

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