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Netflix Customer Satisfaction Tanked In 2011, ForSee Survey Finds

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By Alistair Barr

(Reuters) - Netflix Inc and Gap Inc were among the worst performers in customer satisfaction among the largest online retailers this holiday season, according to a survey released on Wednesday.

Overstock.com Inc came last out of the 40 largest online retailers, with a rating of 72 out of 100, down 4 points from last year, the survey by ForeSee found.

Gap.com, Gap's main website, was second last with 73 points, down 5 from a year ago. Other laggards included buy.com and websites run by Sony and Toys R Us, ForeSee said.

Customer satisfaction is important for retailers because it can lead to higher sales, more loyalty and increased word-of-mouth recommendation, ForeSee said.

Netflix saw the biggest decline in customer satisfaction in ForeSee's most-recent survey after the company tried to raise prices and split its DVD and video-streaming services. The plan was scrapped after customers defected.

"Netflix totally misread its customer base and is paying the price, damaging its brand among both consumers and investors," Larry Freed, chief executive officer of ForeSee, said.

Netflix shares lost more than half their value this year, with most of the damage coming after the company unveiled its intention to split its services.

Netflix had come close to customer-satisfaction leader Amazon.com in previous ForeSee surveys. But in the latest poll, it dropped 7 points to 79, the largest decline of any retailer in the survey.

Amazon climbed 2 points to 88 to lead ForeSee's survey for 14th consecutive time. ForeSee runs the poll about every six months.

The biggest gainer was TigerDirect.com, a tech gadget and parts website owned by Systemax Inc, which climbed 6 points to 79.

Another big gainer was JCP.com, JC Penney's website, which rose 5 points to 83. That put the retailer in a tie for third place with QVC.com, Apple's online store and VistaPrint.com.

(This story corrects the spelling of ForeSee throughout.)

(Reporting by Alistair Barr)

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