DSR Best Practices vs. Naturally Rising DSRs

One of the things that was a major buzz on the seller discussion boards in February 2008 was the concept of adopting Best Practices that would influence DSRs in a positive direction. Since eBay provided an incentive for doing so by means of a discount on Final Value Fees at two tiers: 15% for all 4.8s and above, 5% for all 4.6s and above.

In theory, this is exactly the type of program sellers have been asking to see for years - a true financial reward for investing in the business practices that lead to a positive buyer experience that results in a buyer returning to the site. By creating a system that allows buyers to anonymously grade sellers, so eBay says, an "honest" feedback system was being created that would not be manipulated by sellers who engage in such things as "retaliatory feedback".

Also in theory, sellers who already describe items accurately, provide good communication, ship in a timely manner, and charge reasonable S&H amounts would immediately see a reward, and those who fell beneath one of the two thresholds would have a goalpost to aim their business strategies towards.

So, after reading post after post about what sellers thought would work back in February, I decided that in order to really know what was going to work, and what would not, we needed to establish a baseline. We needed to, in the midst of great change, remain stable in order to see how eBay's announcements themselves would affect or trend our DSR statistics.

Why?

Well, for instance, on a different topic, there was a buyer who immediately after the eBay eCommerce Forum in Washington DC, contacted us about how he heard we could no longer leave negative feedback. So, he decided it was the right time to leave us a negative feedback on an item he had already returned for a full refund, and demand we pay for the return shipping in order to have it removed.

So, because the knowledge of seller discounts now being tied to DSRs, it was only natural that buyers react to that as well. In addition, once sellers began adopting some of their best practices, which included "coaching" buyers on how to leave DSRs, that too would have an effect.

"Coaching" the buyer is something that I heard from several sellers at the eCommerce Forum, and then on discussion boards afterwards. This includes sending a feedback reminder email that encourages satisfied buyers to leave DSRs because at the time only a percentage (varied by category) left feedback, and only a smaller percentage bothered to leave DSR scores. Some also chose to put something in writing in the shipment, again encouraging buyers to leave DSRs.

But, out of those discussions, one thing came up over and over - the fact that a rating of 4 stars is BAD. You go to a 4-star hotel or a 4-star restuarant, and you are stylin. The phrase "4-star" is almost universally accepted as a statement of excellence. Not on eBay. If you have a 4.0 or 4-star rating, you are going to miss out on discounts, and you may get a call from eBay's T&S about your future on eBay.

So, in order to ensure that a satisfied buyer doesn't actually hurt a seller by giving them what they think is a good rating of 4-stars, the buyer needed to be "coached" into leaving ONLY a 5-star rating IF they were satisfied with the seller. It is absurd that sellers would actually have to do this, but it is almost as if the architects of this program at eBay were ignorant of the concept of what a 4-star anything was outside of eBay. That is obviously not the case (unless eBay people don't go to restaurants or hotels, or shop for them online), so I think this is just another case of eBay plowing forward without fully considering residual consequences, or underestimating their effects and amplitude.

Regardless of feelings on this, it is now the reality, and sellers quickly recognized that in order to survive, buyers would have to be taught that only 5s were good, and that 4s were bad.

I took a different position while establishing a baseline - if we did nothing, and everyone else was educating buyers, then we should probably see an overall rise in DSR scores across the board - even if a particular seller did not change a thing. I am pretty sure this is true because of two things - Laurie Norrington's Keynote Speech at the PeSA Summit in New Orleans on April 23, and our April 30-Day DSR report vs. our long-term report.

Laurie said that the 2008 Q1 DSR results showed that a whopping 30% of Power Sellers qualified for the 15% discount. That was twice what they were expecting.

Laurie said: "And while this is going to cost eBay considerably more money than we anticipated, frankly, it is some of the best money we have ever spent.

So what's happening here... it's simple, the buyer experience is getting better. In fact, the average DSRs for "Communication" and "Shipping Charges" have seen the most improvement. This is an indication - again an early one - that sellers are embracing DSRs as a means for tracking their success with buyers and using them as a tool to deliver a better buyer experience."

I disagree with Laurie because I don't believe that a better buyer experience is actually being delivered. I believe that DSR Coaching is actually partially responsible for skewing the numbers higher, and delivering discounts to sellers who may not have actually earned them.

Case in point: Our own DSRs. Again, we did nothing during Q1 any differently that we have for years. That would be the same descriptions (literally), communication practices, shipping times (we have always shipped same or next day), and shipping costs. Full disclosure, we charge handling, and feel strongly that we have the right to charge for a service that has legitimate costs.

Our long term DSRs are 4.9, 4.8, 4.8, 4.6. We get dinged on the last one because we charge handling, primarily, but also because we sell to International buyers.

When our 30-Day numbers for April were released, it was no surprise that the efforts of all other sellers to DSR Coach would have a positive effect on us.


So, while we changed nothing, we went up by 0.1 almost across the board for that period narrowly missing being one of those 30% Laurie was referring to who surprised eBay by qualifying. I suspect that people at eBay are trying to figure out why, and am not sure whether they really believe that buyers are now getting a better experience, or whether they know they have a problem with sellers gaming yet another absurd eBay system.

I think what eBay misses over and over is that many sellers are barely profitable beyond their ability to support themselves. Most, like us, work long hours, and frankly don't have the time for an extra task. So, when eBay comes in every year with some huge major change, sellers like us have developed an attitude about whether we will or won't react in the way they expected.

In this particular case, we are not motivated to chase the 15% discount with any major effort. Even by eBay's new DSR standards, we are basically doing everything right. The only DSR where we are lacking is S&H cost. I believe there are only three ways to manipulate that DSR: Coaching, reducing the handling amount charged, or by using the gimmick of "free shipping".

We already know from this short experience that DSR Coaching works, and that the effects by even a few benefit the entire selling community. We will probably adopt the best practice of putting coaching statements in our automated emails, particularly the feedback reminder email. And, we will include something in our packages as well, but probably not until we create a new integrated packing list with shipping label later in 2008.

I am certain this will help raise our averages overall, and may even help us qualify for the 15% discount. Probably right about the time eBay zig-zags and changes the threshold, or does something else that causes us not to qualify.

Reducing the handling amount seems somewhat obvious, but at the same time we have heard of several reports of sellers who use free shipping on all of their listings getting a 4.8. So, we know that in some cases, the low numbers are really a rating of the rising carrier rates, which are directly tied to fuel price increases.

But when we simply analyze the mathematics of reducing handling, it makes no sense to chase the discount. In our case, the 15% discount represents about $260 above the 5% discount. Well, since the handling we charge amounts to several thousand dollars per month, giving back even 10% of our handling amount collected would be more than the value of the discount. Simply put, the carrot is not big enough.

Similarly, if we went to an all free-shipping model, the increase in our fees would exceed the discount, besides the fact that we would lose sales because Best Match still doesn't really reward that behavior sufficiently.

Therefore, we see very little value in spending additional funds, giving back earned handling, or in any way spending our valuable time on chasing the S&H DSR. And, since we already qualify on the others, there is really little to motivate us to change much at all.

I would agree that since we already have evidence of doing what eBay wants (our 100% feedback rating on over 55,000 feedbacks) was not earned by slacking. We have to be doing something right. But, the point of DSRs was to change eBay as a whole in a way to better compete with sites like Amazon. Here is where we can start discussing total failure of the program.

DSR Coaching is leading to Naturally Rising DSRs, and in turn is leading to an environment where sellers who are already getting most of the discounts are not given incentives to change much in their business. I can't see how a buyer's experience is changed by this.

Real Change or Same Old, Same Old?

We were one of about 225 sellers invited to eBay's eCommerce Forum in January 2008 in Washington DC when the changes to Feedback and DSRs were announced. It was both an emotional event, as many of the announcements caused something between concern to outright anger from most participants.

While the initial session where the changes were announced were not well-received (I witnessed one seller screaming at the top of his lungs at John Donahoe outside the conference room with animated arms), over the 2 days, it was plain to see that eBay had finally gotten the message that had been preached for years by organizations such as the Professional eBay Sellers Alliance (full disclosure, we are members) - that eBay needed to revisit old policies and mantras that were allowing competitors like Amazon to move millions of dollars of business off the site.

I came to appreciate the new executive lineup, and their approach to these issues. When viewed comprehensively, the logic of their approach is apparent. However, it is so detailed and complex that when a seller considers just one aspect with blinders on, it creates an emotional response.

Perfect example: Sellers can no longer leave negative feedbacks for buyers after May 2008. At first glance, this just seems ridiculous. The idea that eBay is "just a venue", and that the transaction and contract is between a buyer and seller who both have the right to evaluate each other after the transaction just flew out the window.

I had heard rumors that this was coming, so it was not completely surprising. But, I made sure that Matt Halprin from eBay knew that this was not going to stop us from leaving "retaliatory POSITIVES" for buyers who abuse the feedback system for personal gain. Feedback Extortion has been an ongoing problem on eBay since it's inception, and I, for one, have turned in many persons who attempt to use negative feedback (or the threat of negative feedback) to leverage discounts or free items that they do not deserve. eBay has NEVER to my knowledge EVER penalized a buyer for this infraction.

So, with hundreds in the audience, I put this issue in front of Matt, and he responded appropriately. He said that eBay acknowledges poor responses to sellers on this issue in the past, and that in order to earn seller's trust and to avoid sellers just posting negatively written comments that get a green rating (aka retaliatory positives), eBay needed to actually start holding buyers who abuse the system accountable.

Frankly, if that were true, it would alleviate my concerns. Therefore, while for years and years we have been begging eBay to do something about Feedback Extortion (like actually hold a buyer accountable), the new change in leadership seems to be open to making these types of changes.

That was an example of the positivity I took away from the conference.

But, it was only a week later that we had our first new incident of Feedback Extortion. Someone that had already returned an item and who had already received a full refund (including S&H) was now demanding we pay him $26 for his RETURN shipping in order to remove a negative feedback he left for us (a full month after his full refund).

We turned this case in to eBay, and were told that eBay could not pursue Feedback Extortion because, get this, THE ITEM HAD ALREADY BEEN SHIPPED. After a few days of writing back and forth, someone from eBay eventually apologized for the response, and said they could not explain why a T&S representative would make such a claim. But, despite that, as far as we can tell, there has been no consequence for the buyer.

Therefore, while it is possible to see positivity in the changes eBay is proposing and enacting, actions speak louder than those words. And, in some cases, it is just more of the same time-wasting runarounds from eBay people, leaving sellers in the lurch with significant issues remaining unaddressed.

I am not saying that this is the case on all issues, but just like it only takes one retaliatory negative to drive a buyer from the site, it only takes one horrendous negative entanglement with eBay to drive a seller from the site too. And, I am referring to good & honest sellers who just want to run their business - not ones that try to be a thorn in their side. And, unfortunately, all that is left on eBay are sellers who have endured NUMEROUS negative experiences with eBay's T&S, VeRO, Account Management, and Executives - and for some reason still don't leave. Maybe it is hope, maybe it is a feeling of being trapped.

But, I can tell you from interactions with hundreds of sellers, "dealing with eBay" is not a positive experience for the vast majority, and they are not willing to be open an honest because eBay holds nearly infinite power to destroy these people. When they see their peers get thrown off eBay for nothing, and then get back on when eBay admits they were wrong, but does not get an apology or (gasp) compensation, it makes the rest of the herd wonder when the cowboy is inevitably coming to take them to slaughter.

I personally feel it is worth my time to continue to contribute my time and energy to make eBay better. Plain and simple. But, while sending private emails, or participating in closed discussions (like eBay Voices or eCommerce Forums) offers access to managers and executives has been favored by eBay, I personally believe it is time to have these discussions out in the open, off eBay discussion boards where they can be deleted (or eBay can sanction an account) because of one thing: FEAR.

eBay made it clear that the Feedback system was broken. They cited the specific example of a buyer getting a single negative feedback that drives them from the site forever. So, they created DSRs to provide an anonymous means of a buyer evaluating a seller - as if anonymity itself would solve the problem.

Well, eBay's means of receiving feedback about themselves is broken too. I know literally hundreds of sellers who are AFRAID to tell eBay what they really think for fear of RETALIATION. And, you know what, they are right to live in that fear. eBay has made sure that getting honest feedback that may be 180-degrees from their opinion is only given by those who have effectively already left. People that are no longer on the site have valid opinions, to be sure. But, it is most important to get them from people that still have a vested interest in the SUCCESS of the site. Some off the site for good are only interested in damaging or destroying eBay.

My purpose of this blog is to give real-time opinions on our experience, not only to help other sellers adopt best practices that will enable them to survive these changes, but to simultaneously give eBay unvarnished information that will help them adapt as well. And sometimes, that means being critical.

I promise to be fair and honest, and therefore when I see good, it gets reported just the same as when I see bad. It doesn't make me or my opinions negative, but may appear that way IF YOU TAKE SIDES. That message is important for eBay to get, as they have dodged touchy issues for years by simply calling the message or the messenger "negative" to avoid the issue entirely.