UKCSI Latest Results – Customer Satisfaction Pays · Tesco The Co-operative Food Morrisons Waitrose 10 customerINSIGHT Spring/Summer 2013 | UKCSI Small gains make a big difference

UKCSI

9www.customer-insight.co.uk | Spring/Summer 2013 customerINSIGHT

UKCSI Latest Results – Customer Satisfaction PaysThe UKCSI (UK Customer Satisfaction Index) is the national measure of customer satisfaction and loyalty for the UK. Owned and published by the Institute of Customer Service (ICS), more detailed results including reports for all 13 sectors covered by the UKCSI are available from https://www.instituteofcustomerservice.com/10560/UK-CustomerSatisfactionIndexUKCSI.html

Based on web interviews with a nationally represent-ative sample of 26,000 UK adults, the six-monthly surveys are conducted for the ICS by The Lead-ership Factor. This article outlines the latest results and illustrates some of the considerable business benefits of having highly satisfied customers.

Customer satisfaction is going up Customer satisfaction in the UK has continued to trend upwards, rising slightly to 78.2. The increase is driven by small gains in a number of sectors, notably Retail (non-food), which offset small losses in other sectors, such as Public Ser-vices (local).

Overall the message is one of stability, with little change in the relative standing of the sectors. The Retail (non-food) sector continues to excel, with only one scored organisation having a CSI below the national average of 78.2.

Figure 1: UKCSI trend

Figure 2: UKCSI sectors

Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13

75.275.6

76.7

77.3 77.4

78.078.2

UKCSI

UKCSI wave

50 60 70 80 90

UKCSI

Retail (non-food)

Retail (food)

Services

Automotive

Leisure

Tourism

Finance (insurance)

Finance (banks & building societies)

Telecommunications

Public Services (local)

Transport

Public Services (national)

Utilities

78.2

85.2

82.1

82.0

81.3

80.7

80.5

78.8

78.0

74.8

74.3

73.7

72.8

72.4

Jan 2013

July 2012

49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93

CSI - distribution of organisations

50% organisations8276

ASOS 93 Retail (non-food)

John Lewis 92 Retail (non-food)

First Direct 90 Banking

Waitrose 90 Retail (food)

Amazon 90 Retail (non-food)

Skoda 88 Automotive

Iceland 87 Retail (food)

The Co-operative Bank 87 Banking

Volvo 86 Automotive

Debenhams 86 Retail (non-food)

+0.6%

+0.4%

+0.2%

0%

-0.2%

-0.4%

-0.6%

Market share change112 weeks to 22 Jan 2012

vs 12 weeks to 22 Jan 2013

Source: Kantar Worldpanel

CSI

75% 80% 85% 90%

Aldi

Iceland

Asda

Lidl

Sainsbury’s

Tesco

The Co-operative Food

Morrisons

Waitrose

10 customerINSIGHT Spring/Summer 2013 | www.customer-insight.co.uk

UKCSI

Small gains make a big difference Behind the overall average of 78.2, there is a wide spread of satisfaction. The lowest scoring organi-sation has a CSI of 48.6, and the highest 92.7. However, as Figure 3 shows, most score within a few points of the overall average—50% scoring between 76 and 82. In other words, the majority of organisations in the UK are providing a level of satisfaction very close to the national average.

Of the 181 organisations scored, 5 achieved a CSI of 90 or more – ASOS, First Direct, John Lewis, Waitrose and Amazon. 23 scored 85 or over, a CSI of 85.5 or more putting an organisation in the top 10%. This means that being only a few points ahead of the average is enough to give an organi-sation a fantastic reputation for customer service.

The top ten companies on the UKCSI are shown in Figure 4.

Customer satisfaction drives business success As we have seen, relatively small increases in cus-tomer satisfaction have a big impact on companies’ ability to climb the league table and differentiate themselves on customer service. They also have a big impact on the downstream benefits of custom-er satisfaction such as Harvard’s 3Rs – Retention, Related sales and Referrals. As the main compo-nents of Customer Lifetime Value, the 3Rs in turn make a big impact on financial metrics such as sales, market share and profit.

We have seen evidence in previous UKCSI results of how customer satisfaction drives business success and the latest results further reinforce this link.

Food retail: market share gains for top companies

Food retailers with the highest customer satis-faction have grown sales most and gained the most market share. Those with customer sat-isfaction above the sector mean grew sales by 9% and market share by 0.02% on average compared with 4% sales growth and declining market share of 0.05% for companies with below average satisfaction. The beneficial link between higher satisfaction and business performance is particularly striking with Waitrose, Iceland and Aldi who also have the highest customer satis-faction scores.

Figure 3: Distribution of UKCSI scores

Figure 4: Top performing companies

Figure 5: Food retail - Customer satisfaction and market share


UKCSI

Automotive: more revenue from satisfied customers

There is also a strong link between cus-tomer satisfaction and sales in the car industry, as shown in Figure 6. There is also a very strong relationship between satisfaction and recommendation, with every 1% point increase in customer sat-isfaction resulting in 2.2% more customers who have actually recommended the brand – a much stronger measure than mere willingness to recommend.

Completing the picture on the 3Rs is the finding that satisfaction is very strongly linked to related sales in the car market. The top five car brands on customer satisfaction all have more than half their customers choosing to get their servic-ing done at their branded dealership, with Volvo’s related sales as high as 70%. By contrast, the two manufacturers with low-est satisfaction see little more than 30% of their customers returning for a service.Related sales form a particularly impor-tant component of Customer Lifetime Value and hence profitability across many sectors. Volvo is an interesting case in point. Figure 6 suggests that they are not translating their high level of customer satisfaction into sales as successfully as some competitors but they are the most successful at translating it into servicing. In many industries subsequent servicing is more profitable than the original equipment sale and is much more strongly influenced by the quality customers’ all round experi-ence with the brand.

Recommendation is also a big component of Customer Lifetime Value. In the auto-motive sector it generates more revenue from new vehicle sales and servicing and it reduces customer acquisition costs. In some industries companies delivering a great experience can acquire almost all their new customers through referrals – a very profitable business model. Apart from a couple of slight outliers (Fiat and Land Rover), Figure 8 shows a very strong link between customer satisfaction and advocacy.

65%

70%

75%

60%

55%

50%

45%

% serviced atbranded dealership

Customer satisfaction

Mazda

VW

Land Rover

Hyundai

Toyota

Nissan

FordPeugeot

Fiat

Renault

40%

35%

30%70 75 80 85 90

Volvo

Audi

Skoda

Mercedes-Benz

BMW/MiniKia

Honda

VauxhallCitroën

% Haverecommended


Nissan

55%

60%

65%

50%

45%

40%

35%

30%

25%

20%72 77 82 87

Renault

Mazda

Audi

SkodaMercedes-Benz

VW

Peugeot

Fiat

BMW/Mini

Hyundai

Kia

Land Rover

Honda

VauxhallCitroën

Ford

Volvo

Toyota

25%

15%

5%

-5%

-15%

% change in annualRegistrations


Mazda

Volvo

Mercedes-Benz

SkodaKia

VW

Honda

Land Rover

ToyotaNissan

CitroënFordPeugeot

Fiat

Renault

-25%

-35%

-45%72% 72% 76% 78% 80% 82% 84% 86% 88% 90%

Audi

Hyundai

BMW

Vauxhall

Figure 6: Customer satisfaction drives car sales

Figure 7: More service revenue from satisfied customers

Figure 8: More recommendation from satisfied customers

13www.customer-insight.co.uk | Spring/Summer 2013 customerINSIGHT

UKCSI

Banks and building societies: more recommendation Again on the stronger measure of actual recommendation rather than mere willing-ness to recommend, customers who are more satisfied with their bank or build-ing society are more likely to recommend them. On average, improving customer satisfaction by 1% point means that an extra 1.6% of customers will have recom-mended a bank.

This difference is most striking at the extremes—the worst performer in the sector has 17% of customers who are advocates, whereas First Direct has 51%—but the pattern holds at every level of customer satisfaction.

Insurance: the 3Rs in action In the insurance sector we can really see Harvard’s 3Rs working well. Customer satisfaction again shows a strong link to recommendation. Insurance companies who improve customer satisfaction by 1% add 1.1% of additional advocates. Related sales are a particularly important element of profitability in the insurance sector, and as Figure 10 shows, there is a strong link between customer satisfaction and holding multiple policies with the same provider. On average a 1% increase in customer satis-faction results in 1.4% more customers with two or more policies.

The insurance industry has a reputation of being price driven, with customers shopping around at renewal time and switching to the cheapest quote. But it’s not true. Some customers don’t just switch less than others they also shop around less and are more likely to accept their current supplier’s initial quote. Clearly, having more of these cus-tomers would be of huge financial benefit to an insurance company. As demonstrated by UKCSI data there is a clear route to that business goal. As well as being more likely to use the same insurer for more than one policy, satisfied customers are less likely to shop around when it comes to renewal time. As shown in Figure 11, brands with high levels of satisfaction are more likely to see customers trusting them to offer fair value, and less likely to shop around.

% Haverecommended


First Direct

The co-operative bank

Nationwide

HSBC

RBSBarclays

NatwestTesco

Lloyds TSB

Alliance &Leicester

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

65 70 75 80 85 90 95

HalifaxBank of Scotland

Santander / Abbey

Virgin Money

Sheila’s Wheels

Admiral

Tesco

Sainsbury’s

Hastingsesure

M&S

Churchill

Direct LineSAGA

LV=AXAZurich AA

Aviva / Norwich Union

5%

10%

15%

20%

25%

30%

35%

74 76 78 80 82 84 86Customer satisfaction

% Multiple policies More Th>n

Legal and General

SAGA

M&S

Direct Line

Hastings


Likelihood ofshopping around

6.4

6.6

6.8

7.0

7.2

7.4

7.6

7.8

8.0

74 76 78 80 82 84 86

LV=

AXA

Zurich Aviva / Norwich UnionChurchill

esureAdmiral

Sheila’s Wheels

Tesco

Sainsbury’sVirgin Money

More Th>n

Legal and General

AA

Figure 9: Satisfied customers recommend banks more

Figure 10: Increase satisfaction and sell more policies to existing customers

Figure 11: Satisfied insurance customers shop around less


UKCSI

Although 62% of highly satisfied customers are still likely to shop around at renewal time, this is the nature of the market, and it’s a lot less than the 82% of dissatisfied customers who will shop around. When you have a very large customer base like most insurance companies, 20% fewer of them shopping around at renewal time is worth a lot of money. And it’s money that goes straight to the bottom line.

Telecommunications Another highly competitive market, telecommunica-tions companies rely heavily on customer retention as a driver of profitability. On this indicator, Tesco Mobile shows the benefit of building a satisfied and loyal customer base. Its high level of customer satisfaction (85.5) is matched by a high level of intention to remain a customer. Figure 12 shows an almost perfect linear relationship between custom-er satisfaction and intention to renew in this sector.

In many industries cost of servicing customers is a very important component of Customer Life-time Value and profitability. This particularly applies where margins are thin and customer service is delivered mainly through call centres. Poor custom-er service can hugely increase call centre costs and can be the single element that makes the difference between profitable and unprofitable customers. Harvard’s Service-Profit Chain research has shown that for some companies 30% of their customer base is losing them money. Think about the large customer base that most of these companies have, look at Figure 13 and imagine the increased costs incurred if almost 25% of your customers have had a reason to complain compared with only 7%.

SkyEE (Everything Everywhere)

3

Talk Talk

BT

Intention to stay


6.5

65 70 75 80 85 90

7.0

7.5

8.0

8.5

9.0

Virgin Media

Vodafone

T-Mobile

Gi�ga�

Tesco mobile

O2

SkyEE (Everything Everywhere)

3

Talk Talk

BT

% reason tocomplain


65

5%

7%

9%

11%

13%

15%

17%

19%

21%

23%

25%

70 75 80 85 90

Virgin Media

Vodafone

T-Mobile

Gi�ga�Tesco mobile

O2

Figure 12: Keep customers by improving satisfaction

Figure 13: Poor service increases costs

More information about benchmarking your organisation with UKCSI There are a number of options for organisations wanting to get more insight into how customers rate them in the UKCSI. 13 sector reports, available for purchase from the Institute of Customer Service, contain information about how individual organisations in each sector compare on a range of customer satisfaction measures. Organisations can also undertake a survey through the Institute of Customer Service’s UK Business Benchmarking tool, which will benchmark performance with the rest of the sector. For more information contact the Institute at [email protected] Authors

Jo CausonChief Executive

Institute of Customer Service

Tel: 0207 260 2620

Email: [email protected]

CI

Nigel HillChairman

The Leadership Factor

Tel: 01484 517575

Email: [email protected]

Documents

UKCSI Latest Results – Customer Satisfaction Pays · Tesco The Co-operative Food Morrisons Waitrose 10 customerINSIGHT Spring/Summer 2013 | UKCSI Small gains make a big difference