UK Customer Satisfaction Index - JANUARY 2018 The state of customer satisfaction in the UK - Institute of Customer Service
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instituteofcustomerservice.com JANUARY 2018 UK Customer Satisfaction Index The state of customer satisfaction in the UK
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Foreword Joanna Causon Chief Executive Overall, this UKCSI shows a stable picture of customer relevance and impact amidst short term business satisfaction in the UK. Yet beneath the surface there pressures and a complex environment of increasing are a number of worrying signs that point, potentially, political, economic and societal polarisation. to even greater uncertainty and challenges for many organisations. The improvement that we have seen As we enter 2018, there is growing recognition that recently in some of the lower scoring sectors has improving productivity is fundamental to the UK’s stalled. For the first time, the number of organisations economic performance and social well-being. This whose customer satisfaction has dropped by at least will require a sustained and co-ordinated investment two points has overtaken the number of those that in skills and infrastructure. It also suggests the need have improved by two points. Hardly any organisations for a fresh approach to employee engagement and a that featured amongst the most improved for new kind of informal contract between organisations customer satisfaction a year ago have maintained their and employees. Organisations need to be honest with performance. themselves and their people about how they engage and what they expect from employee engagement. The customer experience environment is set to become Organisations have a responsibility not just to provide much more challenging in 2018, with greater pressure decent and fair working conditions, but to listen on incomes, consumer spending and margins, in many with genuine respect and to be clear with employees sectors. Yet there are also opportunities. We continue about what is up for discussion and debate, as well to see evidence that a high proportion of customers as what is not. Increasingly, organisations will need value premium service and experiences. However, it is to offer pathways of career development for all their highly likely that customers will become much more employees. Employees will also need to recognise that demanding of the experiences and value they receive moving from a state of passive to active engagement is from organisations. We have reached the point where ultimately a personal choice and offers the best route concentrating on the hygiene factors of customer to professional and personal fulfilment. Developing experience, crucial as they are, is not enough. this new informal contract of employee engagement, Organisations need to maintain a coherent focus on based on mutual respect and trust, will be one of the integrating customer experience design, technology vital keys to improving customer service, productivity and employee engagement to create experiences that and business performance. build customer engagement and trust. I hope you will find this report insightful and helpful in Consistency is a vital key to success. Our recent tackling the challenges you and your organisation face. research into the relationship between customer As ever, I welcome your thoughts and feedback and satisfaction and financial performance demonstrated look forward to continuing to drive the service agenda that consistently achieving higher levels of satisfaction in 2018. than competitors and peers is linked to stronger turnover growth, profit and employee productivity. Leaders and boards therefore have a particular responsibility in maintaining consistency of purpose, UK Customer Satisfaction Index | January 2018 1
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Contents Executive summary 4 Part 1 Customer satisfaction in the UK: the state of the nation 12 Part 2 The links between customer satisfaction, employee 27 engagement, productivity and business performance Part 3 Customer segments: variations in attitudes and behaviour 36 Part 4 Customer satisfaction demographics 45 Part 5 Implications & opportunities 51 Organisations in the UKCSI 63 About the UKCSI 64 UKCSI sector reports 65 Recent breakthrough research publications 66 UK Customer Satisfaction Index | January 2018 3
Executive Summary
Customer satisfaction in the UK is, overall, broadly stable, but there are signs that the improving trend has stalled. For the first time, the number of organisations whose customer satisfaction has dropped by two points or more compared to last year has overtaken the number who have improved by at least two points. The January 2018 UKCSI score of 78.1 (out of The proportion of customers experiencing a 100) is up 0.3 points compared to a year ago problem fell by 0.4% points, to 12.7%, whereas and slightly lower, by 0.1 points, than in July the number of customers whose experience 2017. The overall Net Promoter (NPS) score rose was right first time has grown by 3% points, to by 1.4 points to 15.3. The level of customer 80.8%. Satisfaction with complaint handling is effort has increased by 0.1 (out of 10) points, to stable. The average level of customers’ trust in 4.9. organisations is unchanged at 7.7. 78.2 78.2 78.1 77.9 77.8 77.4 77.1 77.0 76.3 76.2 76.0 69.4 Jan-08 Jan-13 Jan-18 UK Customer Satisfaction Index | January 2018 5
The improving trend in Transport and Utilities has stalled The Transport sector has seen a one point fall Despite the overall stability of the UKCSI, the in customer satisfaction compared to January number of organisations whose customer 2017 and has replaced Telecommunications & satisfaction has dropped by two points or more Media as the lowest rated sector. Rail operators’ in the last year has overtaken the number who average satisfaction has declined by 1.3 points, have improved by at least two points. to 72.1. Customers in the North of England are on average the most satisfied with rail operators Amazon.co.uk is the highest scoring and customers in London and the South East the organisation. Yorkshire Bank is the most least satisfied. Utilities is flat year on year but has improved organisation having increased by dropped slightly since July 2017. 10 points. Across the UKCSI, 10 organisations feature for the first time. The two Public Services sectors both show higher customer satisfaction compared to a year ago. But Public Services (National) is practically unchanged compared to July 2017 and Public Services (Local) has decreased by 0.4 points. However, the Telecommunications and Media sector is 0.6 points higher than a year ago. 6 UK Customer Satisfaction Index | January 2018
The key differences in satisfaction between the highest scoring organisation in each sector and the rest, are complaint handling, over the phone experiences, openness, trust and transparency Key differentiators between the top quartile and remaining organisations, in each sector Complaint handling (on a scale of 1 - 10) Over the phone (on a scale of 1 - 10) Top quartile Remaining Top quartile Remaining organisations organisations organisations organisations Speed of resolving your complaint 6.8 5.2 The ease of getting through (phone) 8.2 7.2 The handling of the complaint 6.8 5.3 Helpfulness of staff (phone) 8.4 7.6 Staff doing what they say they will do 7.0 5.6 Competence of staff (phone) 8.4 7.5 Staff understanding the issue 7.0 5.6 The attitude of staff 7.1 5.7 Reputation and trust (on a scale of 1 - 10) The outcome of the complaint 6.9 5.6 Reputation of the organisation 8.2 7.5 % of problems and right first time experiences 9.0% 13.8% Trust 8.3 7.6 % problems % experiences that Open and 87.1% 79.1% transparent 8.2 7.5 are right first time In the Services, Telecommunications & Media, Tourism and Transport sectors, a number of measures are especially salient differentiators between the upper quartile of organisations and the rest (see page 26). These differences underline the fundamental importance of consistently getting the basics right in achieving superior customer service performance. UK Customer Satisfaction Index | January 2018 7
Consistently achieving levels of customer satisfaction higher than the sector average is linked to better turnover growth, profit and employee productivity An analysis of organisations’ customer satisfaction and financial performance between 2008 and 2016 across nine sectors shows the value of consistency in customer service performance. Organisations that maintain higher customer satisfaction than their sector average, have achieved stronger turnover growth, profit and employee productivity than those whose customer satisfaction is below the sector average. Most recent year 3 year perspective 5 - 8 year perspective At least 1 point At least 1 point At least 1 point At least 1 point At least 1 point At least 1 point Organisations' average level higher than below sector higher than below sector higher than below sector of customer satisfaction sector average average sector average average sector average average Turnover growth % 9.1 0.4 5.3 2.5 4.7 3.5 Ebitda % 14.2 15.0 15.1 12.0 24.7 14.5 Gross Margin % 39.5 28.5 35.5 37.3 37.0 32.1 Average revenue 548,166 264,288 549,147 267,749 552,409 257,614 per employee (£) Human capital value add (£) 70,889 62,763 64,484 55,738 59,847 40,863 Organisations with higher levels of employee engagement tend to also achieve superior customer satisfaction Customer Satisfaction 1 0.41 1 point increase 0.41 increase in employee in customer engagement satisfaction Employee Engagement 22 organisations either shared their employee engagement index results with us, in confidence, or have published them in annual reports and financial statements. 8 UK Customer Satisfaction Index | January 2018
Superior customer satisfaction is linked to higher levels of reputation, trust and recommendation The UKCSI continues to show that achieving the highest levels of customer satisfaction - a 9 or 10 out of 10 - appears to give a notable extra boost to levels of reputation, trust, recommendation and willingness to remain an organisation’s customer. Customers who score Customers who score an organisation 9 or 10 out of 10 an organisation 8 - 8.9 out of 10 for customer satisfaction for customer satisfaction Loyalty % of customers scoring an organisation 9 or 10 96% 66% on intention to remain a customer Recommendation % of customers scoring an organisation 92% 47% 9 or 10 on likelihood to recommend Trust % of customers who give an organisation a 9 or 10 96% 49% trust rating Reputation % of customers who give an organisation a 9 or 10 when asked 86% 38% “how would you rate the reputation of this organisation” UK Customer Satisfaction Index | January 2018 9
Despite economic pressures, the number of customers who prefer premium service, 27.6%, has remained consistent Prefer “no frills” and lowest price Prefer excellent service even if it costs more 27.7% 27.4% 27.6% 14.6% 14.2% 14.2% Jul-16 Jul-17 Jan-18 Customers are more likely to express a Compared to July 2016, there has been an preference for premium service in the increase in the number of customers in the Automotive, Leisure, Retail (non food) and Automotive and Telecommunications and Media Tourism sectors and less likely in the Banks and sectors who would pay more for excellent Building Societies, Telecommunications & Media, service, but fewer in Transport and Services. Transport and Utilities sectors. 10 UK Customer Satisfaction Index | January 2018
When customers interact Implications and with organisations while opportunities they are at work, their satisfaction is much lower than average 44.9% of all customer experiences take place at High performing organisations tend to be home and 8.6% at work. Customers are most characterised by proactive investment in their likely to have an experience with an organisation employees, technology, customer experience when they are at work in the Banks & Building design and processes and the ability to integrate Societies, Insurance and Tourism sectors. these elements to deliver strategic clarity and Satisfaction with experiences that take place coherent operational outcomes. when customers are at home are, on average, higher than for those when they are at work. We have identified key areas for potential The difference is especially apparent in the Retail, investment as well as eight enablers to securing Tourism and Insurance sectors. These differences effective return on that investment. suggest that when organisations are dealing with customers who are at work, there is a need to Key enablers of effective investment be especially responsive, efficient and to identify ways of reducing customer effort. 1 Leadership Across all levels of household income, 2 Employee engagement younger customers are the most likely to say they 3 Insight favour premium service Customer experience 4 design and processes The most affluent customers aged 18 – 44 show a particularly strong preference for premium service compared both to similarly aged people 5 Consistency with lower incomes, as well as older affluent customers. Amongst customers aged 45 – 79 Relentless focus on there is much less variation by income level in 6 problems, complaints, getting the basics right the willingness to pay more for premium service, than there is for younger people. 7 Effective measurement Innovation and business 8 improvement UK Customer Satisfaction Index | January 2018 11
1 Customer satisfaction in the UK The state of the nation
The UKCSI is a national measure of customer The January 2018 UKCSI score of 78.1 (out of satisfaction which The Institute has published 100) is up 0.3 points compared to a year ago twice a year since 2008. This UKCSI is based and slightly lower, 0.1 points, than in July 2017. on 46,500 responses from an online panel This broadly stable picture is reflected in the which is geographically and demographically smallest year on year movement in customer representative of the UK population. Customers satisfaction since July 2015. are asked to rate their experiences of dealing with an organisation on over 30 customer The overall Net Promoter (NPS) score2 rose by experience metrics using a scale of 1 – 10. 1.4 points to 15.3. Most other key measures are The customer satisfaction index score for an stable. The level of customer effort3 increased by organisation is based on an average of all its 0.1 points, to 4.9. The proportion of customers customers’ responses and is expressed as a score experiencing a problem fell by 0.4% points, to out of 100. The sector score is the mean average 12.7%, whereas the number of customers whose of all responses for that sector. The overall UKCSI experience was right first time grew by 3% points is based on the mean average of each sector’s to 80.8%. The improving trend in complaint score. handling, highlighted in the July 2017 UKCSI, has stalled. The average level of customers’ trust in organisations is unchanged at 7.7. 78.2 78.2 78.0 78.1 77.9 77.8 77.3 77.4 77.4 77.1 77.0 76.7 76.3 76.2 76.0 75.6 75.2 74.1 72.0 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 1 To find out more about the UKCSI methodology, see About the UKCSI (p.64) 2 Net Promoter Score (NPS) is based on customers’ responses to “how likely would you be to recommend xx to friends or relatives.” NPS is calculated by subtracting the % of detractors - respondents scoring 0 – 6 (out of 10) - from the % of advocates, who scored 9 – 10. 3 Customer effort is based on responses to the question "how much effort did you have to make to complete your transaction, enquiry or request?" UK Customer Satisfaction Index | January 2018 13
The biggest year on year improvements are for the number of experiences rated as right first time. Otherwise, most measures are broadly flat year on year. Year on year changes: selected measures YOY Jan 2018 Jan 2017 change UK Customer Satisfaction Index (UKCSI) 78.1 77.8 +0.3 Net Promoter Score (NPS) 15.3 13.9 +1.4 Customer effort 4.9 4.8 +0.1 Trust 7.7 7.7 - % of experiences right first time 80.8% 77.8% +3.0% % of customers experiencing a problem 12.7% 13.1% -0.4% Satisfaction with complaint handling 5.6 5.6 - 14 UK Customer Satisfaction Index | January 2018
The improving trend in Transport and Utilities has stalled In recent UKCSI surveys, improvements in many The two Public Services sectors both show of the lower scoring sectors such as Public higher customer satisfaction compared to a year Services, Telecommunications & Media, Transport ago but Public Services (National) is practically and Utilities have contributed to a steady growth unchanged compared to July 2017 and Public in overall satisfaction. However, in this UKCSI, Services (Local) has decreased by 0.4 points. there are signs that the improving customer However, the Telecommunications & Media satisfaction in some of these lower ranked sector has improved by 0.6 points. sectors may have stalled. Retail (Non-food) remains the highest scoring The Transport sector has seen a one point fall in sector but has fallen by 0.5 points. Insurance customer satisfaction compared to January 2017 is 0.7 points lower than in January 2017. The and has replaced Telecommunications & Media Automotive, Banks & Building Societies, Leisure as the lowest rated sector. Utilities is flat year on and Services sectors have all improved, but by less year but has dropped slightly since July 2017. than one point. Customer satisfaction in the Retail (Food) sector is the same as in January 2017. Changes in sector customer satisfaction in the last 12 months Change from Change from UKCSI score UKCSI score UKCSI score Sector Jan-17 to Jul-17 to Jan-18 Jul-17 Jan-17 Jan-18 Jan-18 Retail (Non-food) 82.0 82.2 82.5 -0.5 q -0.2 q Retail (Food) 81.3 81.5 81.3 0.0 = -0.2 q Tourism 80.7 80.7 80.2 0.5 p 0.0 = Leisure 80.0 80.3 79.6 0.4 p -0.3 q Banks & Building Societies 79.8 79.7 79.5 0.3 p 0.1 p Automotive 79.5 79.4 78.8 0.7 p 0.1 p Insurance 78.7 78.9 79.4 -0.7 q -0.2 q Services 78.7 78.5 78.2 0.5 p 0.2 p Public Services (National) 76.1 76.0 74.5 1.6 p 0.1 p Public Services (Local) 75.0 75.4 74.4 0.6 p -0.4 q Utilities 74.4 75.1 74.4 0.0 = -0.7 q Telecommunications & Media 74.2 74.0 73.6 0.6 p 0.2 p Transport 73.7 74.5 74.7 -1.0 q -0.8 q p Increase in UKCSI score of less than one point q Fall in UKCSI score p Increase in UKCSI score of one point or more UK Customer Satisfaction Index | January 2018 15
Lower customer satisfaction in Transport can be attributed to airlines and rail operators Average satisfaction for airlines is higher than for Rail operators’ average satisfaction has declined by coach or rail operators but it has fallen by 2.2 points 1.3 points, to 72.1. There is, however, a mixed picture compared to the same time last year. Six of the eight in the rail sector; seven of the 16 rail operators in airlines included in the UKCSI suffered a decrease in the UKCSI fell by at least one point whereas four customer satisfaction of at least one point, with the improved by the same amount. This contrasting biggest drops for Ryanair (- 4.7 points) and Virgin performance was most apparent in London and the Atlantic (- 4.6 points). South of England. Southeastern was one of the most improved organisations in the UKCSI (up 8 points), By contrast, coach/bus operators’ average customer whilst Southern Railway fell by 7.0 points and is the satisfaction increased by 1.1 points, although it lowest scoring organisation in the Transport sector. remains lower than that for both airlines and rail operators. Customer satisfaction by mode of Transport 76.4 72.1 70.9 Rail/Train Air Coach/Bus UKCSI (out of 100) 16 UK Customer Satisfaction Index | January 2018
Customers in the North of England are on average the most satisfied with rail operators and customers in London and the South East the least satisfied. The biggest gaps in customer satisfaction between these two regions are focused around experiences with employees (speed of service, helpfulness and competence); the number of experiences that are “right first time”; the number of problems; price; reputation; openness and transparency. UKCSI average score for rail operators by country and region Further information about the customer service 73.3 performance of each sector, and organisations within each sector, on the range of customer experience 76.6 metrics is available in 13 sector reports4. 73.9 73.7 72.4 68.9 4 Sector reports are available as a member benefit to Institute organisational members; benefits vary by membership level. The reports can be purchased by non-members at www.instituteofcustomerservice.com UK Customer Satisfaction Index | January 2018 17
The top 50 organisations Change Jan-18 Jan-18 Jan-17 Jan-17 in score Organisation Sector Rank Score Score Rank Jan-17 to Jan-18 1 Amazon.co.uk Retail (Non-food) 86.6 87.3 1 -0.7 2 first direct Banks & Building Societies 86.1 84.4 6 1.7 3 Yorkshire Bank Banks & Building Societies 85.3 75.3 184 10.0 4 Superdrug Retail (Non-food) 85.1 82.2 29 2.9 5= John Lewis Retail (Non-food) 85.0 85.4 3 -0.4 5= Wilko Retail (Non-food) 85.0 83.6 13 1.4 7= M & S (Bank) Banks & Building Societies 84.7 81.7 37 3.0 7= Nationwide Banks & Building Societies 84.7 84.4 6 0.3 9= Jet2holidays.com Tourism 84.2 NO DATA NO DATA NO DATA 9= Tesco mobile Telecommunications & Media 84.2 83.3 19 0.9 9= Waitrose Retail (Food) 84.2 84.6 5 -0.4 12 Greggs Leisure 84.0 84.4 6 -0.4 13 = Aldi Retail (Food) 83.9 83.0 20 0.9 13 = Next Retail (Non-food) 83.9 83.4 16 0.5 13 = Pets at Home Retail (Non-food) 83.9 NO DATA NO DATA NO DATA 16 = M & S (Food) Retail (Food) 83.8 85.0 4 -1.2 16 = Premier Inn Tourism 83.8 82.8 23 1.0 18 The Trainline.com Transport 83.7 81.2 49 2.5 19 Nationwide Insurance Insurance 83.6 81.1 51 2.5 20 P&O Ferries Transport 83.5 83.4 16 0.1 21 Brittany Ferries Transport 83.4 NO DATA NO DATA NO DATA 22 = Ebay Retail (Non-food) 82.9 81.7 37 1.2 22 = Halfords autocentre Services 82.9 79.1 106 3.8 24 Netflix Leisure 82.8 80.8 56 2.0 25 = Ikea Retail (Non-food) 82.7 79.2 105 3.5 18 UK Customer Satisfaction Index | January 2018
Change Jan-18 Jan-18 Jan-17 Jan-17 in score Organisation Sector Rank Score Score Rank Jan-17 to Jan-18 25 = SAGA Insurance Insurance 82.7 80.5 73 2.2 25 = Škoda UK Automotive 82.7 81.1 51 1.6 25 = Subway Leisure 82.7 83.5 15 -0.8 29 = Jet2 Transport 82.6 83.0 20 -0.4 29 = Mercedes-Benz Automotive 82.6 81.7 37 0.9 31 = Haven Holidays Tourism 82.4 80.8 56 1.6 31 = Specsavers Retail (Non-food) 82.4 81.5 44 0.9 33 = Honda Automotive 82.2 77.0 157 5.2 33 = M&S Retail (Non-food) 82.2 84.3 9 -2.1 33 = RAC Services 82.2 79.7 91 2.5 36 = booking.com Tourism 82.1 81.7 37 0.4 36 = Caffe Nero Leisure 82.1 79.6 95 2.5 36 = Iceland Retail (Food) 82.1 84.3 9 -2.2 39 = P&O Cruises Tourism 82.0 83.6 13 -1.6 39 = Sainsbury's Retail (Food) 82.0 80.8 56 1.2 41 Lidl Retail (Food) 81.9 80.7 65 1.2 42 LV= Insurance 81.7 83.4 16 -1.7 43 giffgaff Telecommunications & Media 81.6 84.3 9 -2.7 44 = OVO Energy Utilities 81.5 82.5 26 -1.0 44 = Suzuki Automotive 81.5 81.7 37 -0.2 46 = Argos Retail (Non-food) 81.4 82.5 26 -1.1 46 = HM Passport Office Public Services (National) 81.4 78.9 112 2.5 46 = Prudential Insurance 81.4 NO DATA NO DATA NO DATA 49 = Debenhams Retail (Non-food) 81.3 80.1 79 1.2 49 Hilton Tourism 81.3 80.7 65 0.6 UK Customer Satisfaction Index | January 2018 19
The sector profile of the top 50 organisations has remained stable The Retail sectors are strongly represented in the top 50 but it also includes organisations from all 11 commercial sectors in the UKCSI as well as from Public Services (National). Seven of the top 50 organisations are from the three lowest ranked sectors, Utilities, Telecommunications & Media and Transport. This shows that it is possible for organisations in any sector to achieve high levels of customer satisfaction. Profile of the top 50 organisations 12 6 6 4 Retail Retail Tourism (Non-food) (Food) Leisure Automotive Banks & Building Societies Insurance Transport 13 of the top 50 organisations grew their customer satisfaction by at least two points compared to January 2017, with the largest increase, of 10 points, for Yorkshire Bank. Three organisations - M & S (Non-food), Iceland and giffgaff - fell by more than two points, although they remain amongst the highest rated organisations in their sector. 20 organisations did not appear in the UKCSI top 50 in January 2017. Brittany Ferries makes its debut in the UKCSI. Jet2holidays.com and Pets at Home were part of the top 50 organisations in the July 2017 UKCSI but did not have sufficient responses to be included a year ago. Prudential is amongst the top 50 UKCSI organisations for the first time. 20 UK Customer Satisfaction Index | January 2018
Across the UKCSI as a whole there are 10 new entrants: · Frankie and Bennys (Leisure) · Clarks (Retail Non-food) · Prezzo (Leisure) · British Gas (Services) · Spotify (Leisure) · Brittany Ferries (Transport) ·D isclosure and Barring Service · Thameslink (Transport) (formerly Criminal Records Bureau, · Bristol Water (Utilities) CRB) (Public Services National) · Essex and Suffolk Water (Utilities) Despite the overall stability of the UKCSI, fewer organisations have grown their customer satisfaction by at least two points compared to January 2017 253 44 Organisations and Organisations have 49 Organisations have organisation improved their score dropped by at types in the UKCSI by at least two points least two points UK Customer Satisfaction Index | January 2018 21
The number of organisations whose customer satisfaction has declined by at least two points has now overtaken the number that have improved by the same margin There has been a drop in the number of In each sector where customer satisfaction has organisations whose customer satisfaction has dropped, the gap between the highest and lowest improved by at least 2 points compared to the performing organisations has increased. previous year and an increase in the number whose customer satisfaction has fallen by two points or more. This trend of more organisations seeing a fall rather than an increase in customer satisfaction of at least two points is most marked in the Insurance, Retail, Utilities and Transport sectors. The number of organisations whose customer satisfaction improved or dropped by at least 2 points 100 Number of organisations that have improved their UKCSI by at least 2 points Number of organisations whose UKCSI has dropped by at least 2 points 80 Number of organisations 60 49 44 40 20 0 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 22 UK Customer Satisfaction Index | January 2018
Most improved The 20 most improved organisations organisations have achieved the strongest gains in getting things right first time and dealing with problems and complaints UKCSI score UKCSI score 20 most improved organisations over one year Change Sector January 2018 January 2017 Yorkshire Bank 85.3 75.3 10.0 Banks & Building Societies T-Mobile 79.5 70.7 8.8 Telecommunications & Media Southeastern (train operating company) 65.0 57.0 8.0 Transport United Utilities (water) 77.3 69.9 7.4 Utilities HMRC (Inland Revenue) 65.0 58.4 6.6 Public Services (National) Pizza Hut 80.2 74.9 5.3 Leisure Honda 82.2 77.0 5.2 Automotive Yodel 74.3 69.3 5.0 Services The Co-operative Energy 74.8 70.0 4.8 Utilities DVLA 80.0 75.7 4.3 Public Services (National) TransPennine Express 75.5 71.5 4.0 Transport Halfords autocentre 82.9 79.1 3.8 Services Renault 79.4 75.7 3.7 Automotive Ikea 82.7 79.2 3.5 Retail (Non-food) Nissan 80.1 76.6 3.5 Automotive BT 69.9 66.8 3.1 Telecommunications & Media M&S (Bank) 84.7 81.7 3.0 Banks & Building Societies Harvester 78.4 75.5 2.9 Leisure Superdrug 85.1 82.2 2.9 Retail (Non-food) Scottish Water 76.9 74.1 2.8 Utilities Toby Carvery 79.1 76.3 2.8 Leisure Yorkshire Bank is the most improved organisation BT is at its highest point since July 2013, in the UKCSI compared to a year ago. Its 10 although it remains below the average for the point increase makes it the third highest rated Telecommunications & Media sector. organisation in the UKCSI. Two Public Services (National) organisations, DVLA and HMRC, are amongst the most improved in the UKCSI. UK Customer Satisfaction Index | January 2018 23
The performance of the most improved organisations is welcome but is reported with a note of caution The evidence suggests that many organisations In the previous two UKCSI surveys, rail operators that have previously featured amongst the most have featured prominently amongst the most improved have been unable to sustain their improved organisations. However, in January customer satisfaction performance. 12 of the 20 2018, only two of the most improved organisa- most improved organisations in January 2017 tions were rail operators, TransPennine Express have dropped by at least one point compared to a and Southeastern, further underlining the over- year ago; another six are broadly unchanged. The all downturn in customer satisfaction in the rail exceptions are Yodel and M & S (Bank), who have sector. continued to improve, by five and three points respectively. The key differences in satisfaction between the highest scoring organisation in each sector and the rest are for complaint handling, over the phone experiences, openness, trust and transparency In this UKCSI we have compared the over the phone experiences and perceptions of performance of the top quartile organisations openness and transparency. This underlines the and other organisations in each sector on the fundamental importance of consistently getting range of customer experience metrics. This the basics right in achieving superior customer analysis provides insights into both consistent service performance. As we will show in chapter differentiators across the sample of over 250 2, organisations that maintain higher levels of organisations in the UKCSI and the dynamics of satisfaction than their sector average have also particular sectors. tended to show the strongest levels of turnover growth, profit and employee productivity. The most significant differences between the highest performing organisations and the rest are focused around the number of problems and complaints, how complaints are handled, 24 UK Customer Satisfaction Index | January 2018
Key differentiators between the top quartile and remaining organisations, in each sector Complaint handling (on a scale of 1 - 10) Over the phone (on a scale of 1 - 10) Top quartile Remaining Top quartile Remaining organisations organisations organisations organisations Speed of resolving your complaint 6.8 5.2 The ease of getting through (phone) 8.2 7.2 The handling of the complaint 6.8 5.3 Helpfulness of staff (phone) 8.4 7.6 Staff doing what they say they will do 7.0 5.6 Competence of staff (phone) 8.4 7.5 Staff understanding the issue 7.0 5.6 The attitude of staff 7.1 5.7 Reputation and trust (on a scale of 1 - 10) The outcome of the complaint 6.9 5.6 Reputation of the organisation 8.2 7.5 % of problems and right first time experiences 9.0% 13.8% Trust 8.3 7.6 % problems % experiences that Open and 87.1% 79.1% transparent 8.2 7.5 are right first time UK Customer Satisfaction Index | January 2018 25
In certain sectors, there appear to be especially salient differentiators between the highest scoring quartile of organisations and the rest Differentiators between upper quartile and the rest which are Sector particularly important in this sector Differences are less marked in this sector but may be influenced by type of experience. A relatively high proportion of customer Insurance experiences with top quartile organisations are concerned with policy renewals. • Openness and transparency • Reputation Services • An organisation caring about its customers • Over the phone experiences • E ase of getting through (phone) •C ompetence of staff (phone) Tourism • Reputation •C ustomer effort •% of customers experiencing a problem • % experiences that are right first time •P rice / cost Telecommunications •B eing kept informed & Media •O penness and transparency •C ustomer effort • Trust • % of customers experiencing a problem • % experiences that are right first time • Price / cost Transport • Being kept informed • Openness and transparency • Product / service reliability • Trust 26 UK Customer Satisfaction Index | January 2018
2 The links between customer satisfaction, employee engagement, productivity and business performance UK Customer Satisfaction Index | January 2018 27
Demonstrating the return on investment in customer experience This section examines the critical set of In November 2017, The Institute published The relationships between employee engagement, Customer Service Dividend: how organisations customer satisfaction, productivity and business have achieved ROI and greater productivity5. performance. It draws on The Institute’s latest Using data from the UKCSI and organisations’ research into the short and long term links financial reporting, the research explores the between customer satisfaction and financial links between customer satisfaction and key metrics; a comparison of customer satisfaction financial metrics such as turnover, ebitda and and current account net gains and losses in gross margin as well as measures of employee the banking sector; the relationship between productivity, revenue per employee and human organisations’ employee engagement and capital value add. customer satisfaction results; and persistent evidence that superior customer satisfaction is The research covers 124 organisations allied to strong levels of trust, reputation and in nine sectors (Insurance, Leisure, Retail recommendation. (Food), Retail (Non-food), Services, Tourism, Telecommunications & Media, Transport and Demonstrating the financial return on investment Utilities). It draws on UKCSI and financial is an essential concern for leaders, investors and reporting data between 2008 and 2017, all who are involved in designing and delivering enabling both a short and longer term customer experience. Yet the range of factors perspective on the relationship between levels of influencing financial results – acquisitions, customer satisfaction and business performance. divestments, competitive pressure, regulatory action, organisational transformation – can make it problematic to identify the role of customer satisfaction in driving and sustaining business performance. The increased number of organisations whose customer satisfaction has fallen, and the stalled improvement in a number of sectors revealed by this UKCSI, reaffirms the need to show compelling evidence of the impact of customer service on business performance. 5 The Customer Service Dividend: How organisations have achieved ROI and greater productivity is available as a membership benefit to The Institute’s organisational members. It can be purchased by non members at www.instituteofcustomerservice.com 28 UK Customer Satisfaction Index | January 2018
Customer satisfaction and financial performance: key findings • Organisations with higher customer satisfaction than their sector average have achieved better • turnover growth than their peers, from a year on year, 3 year and longer term perspective • Organisations that have improved their satisfaction to at least the level of the sector average • achieved the highest average turnover growth; those whose satisfaction has fallen and is below • the sector average saw the weakest turnover growth • Organisations with higher customer satisfaction have demonstrated better employee productivity • in terms of revenue per employee and human capital value added • On average, organisations with higher customer satisfaction than others in their sector have • achieved better ebitda and profit margins over 5 – 8 years • Many high performing organisations have explicitly referenced investment in customer experience • as an essential enabler of their business strategy • Performing consistently better than the sector average for customer satisfaction is key to • sustainable financial growth. Customer satisfaction and financial performance: a short, medium and long-term perspective Most recent year 3 year perspective 5 - 8 year perspective At least 1 point At least 1 point At least 1 point At least 1 point At least 1 point At least 1 point Organisations' average level higher than below sector higher than below sector higher than below sector of customer satisfaction sector average average sector average average sector average average Turnover growth % 9.1 0.4 5.3 2.5 4.7 3.5 Ebitda % 14.2 15.0 15.1 12.0 24.7 14.5 Gross Margin % 39.5 28.5 35.5 37.3 37.0 32.1 Average revenue 548,166 264,288 549,147 267,749 552,409 257,614 per employee (£) Human capital value add (£) 70,889 62,763 64,484 55,738 59,847 40,863 UK Customer Satisfaction Index | January 2018 29
The consistency imperative A central finding of our research into customer satisfaction and financial performance is the importance of maintaining consistently high levels of customer satisfaction, especially compared to direct competitors and peers. This UKCSI shows examples of organisations that have achieved significant improvement in customer satisfaction but not managed to sustain it. One of the key factors to achieving sustained business performance, especially in relation to ebitda and gross margin, appears to be the ability to maintain superior levels of customer satisfaction. Business change and transformation are crucial factors and potential risks influencing organisations’ short-term financial performance. Evidence from our review of company reports reveals examples of organisations whose revenue and profit fell because of costs associated with business transformation. Often, organisations subsequently recovered and grew their numbers but in some cases the turnaround took longer than anticipated. Customer experience is therefore seen by many organisations as a key enabler of business performance. Where organisations are undergoing significant transformation, customer experience can also act as a valuable asset in retaining customers and maintaining consistency and reputation. Given the many challenges and constant change that organisations face, there is a key role for leaders in supporting and reinforcing a long-term commitment to customer service. 30 UK Customer Satisfaction Index | January 2018
Customer satisfaction, sales growth and market share in Retail (Food) Retail (Food) is one of the most congested Customer experiences recorded in the UKCSI for sectors in the UKCSI with a gap of just 6.3 this sector remain predominantly “in person”, points between the highest scoring organisation accounting for almost 80% of all customer (Waitrose) and the lowest (Co-op). All experiences. However, the growth of Ocado and organisations have grown sales compared to evidence of growth in Morrison’s ecommerce last year except the Co-op. However, only Aldi, sales6 suggests that online sales will become an Lidl and Ocado increased their market share increasingly significant feature of grocery shopping. (Iceland’s share was unchanged). Retail (Food): Customer satisfaction and yoy sales growth6 Retail Food Jan-18 UKCSI: 81.3 20% Annual sales growth for the 12 weeks ending 8 October 2017 Lidl 15% Aldi Source: Kantar Worldpanel 10% Ocado 5% Morrisons Average Iceland Waitrose 3.1% sales Tesco growth ASDA Sainsbury's 0% Co-op Food -5% 77 78 79 80 81 82 83 84 85 UKCSI Jan-18 Retail (Food): Customer satisfaction and yoy market share change6 Food retailers with Food retailers with Food retailers with UKCSI at least UKCSI within UKCSI at least 1 point below sector average + / - 1 point of 1 point above average sector average -0.2% 0.1% 0.3% 6 Source: Kantar Worldpanel for the 12 weeks ending 8 October 2017 UK Customer Satisfaction Index | January 2018 31
Over the longer term, our analysis of customer satisfaction and financial performance in the Retail (Food) sector 7 shows that organisations whose customer satisfaction is consistently higher than the sector average have also tended to achieve stronger turnover growth. Average customer satisfaction and turnover growth (2008 - 16): Retail (Food) 10 Organisations' average customer satisfaction 8.6% Organisations at least one point 8 above the sector average % in organisations' average turnover change Organisations at least one point below the sector average 6 4.7% 3.8% 4 2 1.3% 0 -2 -2.7% -3.3% -4 Most recent 3 year Longer term year on year change compound growth compound growth (5 - 8 years) In a climate of tight margins, especially for The UKCSI continues to show that employee retailers with high investment in physical stores, skills, behaviours and competence are the it will be increasingly important to invest in aspects of customer experience which show technology to improve back-office and frontline some of the biggest differences between the productivity, whilst enhancing in-store experience highest performing organisations for customer through the quality and range of products and the satisfaction and the rest. quality of employee interactions with customers. 7 Analysis of customer satisfaction and financial performance 2008 – 2016 in The Customer Service Dividend: How organisations have achieved ROI and greater productivity, Institute of Customer Service, 2017 32 UK Customer Satisfaction Index | January 2018
Banks & Building Societies: customer satisfaction and current account net gains and losses A comparison of the Current Account Switching Organisations whose customer satisfaction Service’s data on current account net gains and was higher than the sector average recorded losses in Q1 20178 and the corresponding UKCSI an average 5,492 current account net gains provides evidence that in this sector too, higher compared to an average net loss of 3,407 customer satisfaction helps organisations achieve accounts for banks with lower satisfaction. better business results. Customer satisfaction and current account switching Banks & Building Societies Jan-17 UKCSI: 79.5 40,000 Nationwide 30,000 Current Account Net Gains / Losses 20,000 TSB 10,000 HSBC Bank of Scotland Halifax Tesco 0 Santander RBS -10,000 The Co-operative Bank Lloyds NatWest Barclays -20,000 74 76 78 80 82 84 86 UKCSI Jan-17 Organisations with lower than Organisations with higher than sector average customer satisfaction sector average customer satisfaction -3,407 5,492 Net current account gains Net current account losses 8 Current Account Switching Service Dashboard Issue 16. 12 of the 17 banks in the Dashboard also appeared in the January 2017 UKCSI. UK Customer Satisfaction Index | January 2018 33
Customer satisfaction, employee engagement and productivity The Institute’s research into employee 22 organisations either shared their employee engagement9 highlighted the specific ways that engagement index results with us, in confidence, engaged employees positively affect customer or have published them in annual reports and satisfaction, through discretionary effort, personal financial statements. This analysis shows that empathy, ideas for business improvement and a organisations with the highest levels of employee focus on quality and consistency. engagement tend also to achieve superior customer satisfaction. It may also be the case The high levels of revenue per employee and that organisations with a reputation for service human capital value add achieved by organisations are better able to attract and retain engaged with higher customer satisfaction than their sector employees. Our analysis suggests that a one average (see page 29) suggests that there is a link point improvement in employee engagement is between employee engagement, productivity and linked to 0.41 uplift in customer satisfaction. customer satisfaction. For this UKCSI, we have updated an analysis of the correlation between organisations’ levels of customer satisfaction and employee engagement. Customer Satisfaction 1 0.41 1 point increase 0.41 increase in employee in customer engagement satisfaction Employee Engagement The growing prominence of the debate about how to address the UK economy’s productivity challenge has highlighted the need for a sustained focus on skills, training and infrastructure investment. Evidence from our research suggests that a consistent focus on employee engagement and customer satisfaction must also be recognised as essential to unlocking the UK’s productivity potential. 9 The Customer Knows: how employee engagement leads to greater customer satisfaction and loyalty, Institute of Customer Service 2016 34 UK Customer Satisfaction Index | January 2018
Reputation, trust and recommendation The UKCSI has consistently shown that achieving the highest levels of customer satisfaction - a 9 or 10 out of 10 - appears to give a notable extra boost to levels of reputation, trust, recommendation and willingness to remain an organisation’s customer. Customers who score Customers who score an organisation 9 or 10 out of 10 an organisation 8 - 8.9 out of 10 for customer satisfaction for customer satisfaction Loyalty % of customers scoring an organisation 9 or 10 96% 66% on intention to remain a customer Recommendation % of customers scoring an organisation 92% 47% 9 or 10 on likelihood to recommend Trust % of customers who give an organisation a 9 or 10 96% 49% trust rating Reputation % of customers who give an organisation a 9 or 10 when asked 86% 38% “how would you rate the reputation of this organisation” UK Customer Satisfaction Index | January 2018 35
3 Customer segments: variations in attitudes and behaviour In our preview of customer service trends for 2018, we highlighted that a combination of rising prices and stagnant incomes is likely to make many customers even more demanding of the experiences and value they receive from organisations. This section examines the extent to which customers’ preferences for premium or “no frills”, lowest cost service have evolved and how preferences vary by sector, age group and household income. We also look at differences in customer experience depending on whether customers interact with an organisation when they are at work, at home or on the move. 36 UK Customer Satisfaction Index | January 2018
The number of customers who prefer either premium or “no frills” service has remained consistent In July 2016, July 2017 and now for January 2018 paying more. 27.6% of customers preferred we asked customers to prioritise the relative premium service, with 14.2% indicating a strong importance of service and price on a scale of 1 – preference for “no frills” service. The remaining 10. A score of 1 to 3 implies a preference for the customers, 58.2%, favour a balance of price lowest price, “no frills” service. A score of 8 – 10 and quality of service. The relative number of expresses a preference for “premium” service – customers with each type of preference has an excellent standard of service, even if it means remained consistent since July 2016. Service preferences: premium or no frills? Prefer “no frills” and lowest price 30 Prefer excellent service even if it costs more 27.7% 27.4% 27.6% 25 20 15 14.2% 14.6% 14.2% 10 5 0 Jul-16 Jul-17 Jan-18 % of customers UK Customer Satisfaction Index | January 2018 37
Customers are more likely to express a Compared to July 2016, there has been an preference for premium service in the increase in the number of customers in the Automotive, Leisure, Retail (Non-food) and Automotive and Telecommunications & Media Tourism sectors and less likely in the Banks & sectors who favour premium service but the Building Societies, Telecommunications & Media, number has declined in the Transport and Transport and Utilities sectors. Services sectors. Changes in preference for premium service 27.6% UK all-sector average 27.7% 34.2% Automotive 32.2% 25.9% Banks & Building Societies 25.8% 27.2% Insurance 26.3% 28.1% Leisure 27.1% 26.9% Retail (Food) 26.5% 28.7% Retail (Non-food) 29.5% 27.9% Services 31.7% 25.6% Telecommunications & Media 23.5% 31.6% Tourism 33.3% 24.6% Transport 26.7% 23.4% January 2018 Utilities 22.4% July 2016 5 15 25 35 % of customers 38 UK Customer Satisfaction Index | January 2018
Variations in satisfaction by household income are not uniform across age groups People with either the highest (more than £75,000) or lowest (£30,000) annual household incomes have higher customer satisfaction than those with incomes that are £30,000 - £75,000. Customer satisfaction by household income and age group UKCSI Household income 18 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 79 average £0 to £30,000 78.7 74.7 74.9 76.2 79.0 80.2 83.1 £30,001 to £50,000 76.4 74.0 72.4 76.1 77.8 78.8 81.3 £50,001 to £75,000 76.6 71.8 76.3 76.4 76.1 80.2 77.0 More than £75,000 79.4 77.1 83.2 79.9 76.6 78.0 72.3 Biggest gap between income 3.0 5.3 10.8 3.8 2.9 2.2 10.8 groups in each age cohort At least 1 point higher than the average for this income group At least 1 point lower than the average for this income group Amongst 18 – 44 year olds, people with high By contrast, customers aged over 45 with middle incomes have the highest levels of customer or relatively low incomes are more satisfied with satisfaction; this is especially the case for 25 – 35 organisations than those on higher incomes. year olds. These younger affluent customers tend This is especially the case amongst customers to be more satisfied in particular for complaint aged 65 – 79. Older customers on low or middle handling and over the phone experiences. incomes express higher satisfaction than their Variations in customer satisfaction by income more affluent peers in particular for measures amongst younger people are less pronounced for of trust, reputation, openness and transparency online experiences. and an organisation caring about its customers. A relatively high proportion of older affluent customers’ experiences are online, whereas customers with low or middle incomes have more experiences with organisations in person. UK Customer Satisfaction Index | January 2018 39
Across all levels of household income, younger customers are the most likely to say they favour premium service The most affluent customers aged 18 – 44 show a particularly strong preference for premium service compared both to similarly aged people with lower incomes, as well as older affluent customers. Amongst customers aged 45 – 79 there is much less variation by income level in the number of customers who prefer premium service, than there is amongst younger people. Preference for premium service by age group and household income All income groups £0 to £30,000 £30,001 to £50,000 £50,001 to £75,000 More than £75,000 18 to 24 30.3% 28.8% 31.8% 28.4% 42.4% 25 to 34 36.6% 29.5% 35.1% 42.4% 65.3% 35 to 44 31.3% 26.8% 31.2% 32.1% 51.6% 45 to 54 24.8% 25.1% 23.6% 26.1% 33.2% 55 to 64 21.9% 21.0% 23.2% 25.0% 20.3% 65 to 79 20.9% 20.7% 23.3% 18.4% 26.9% At least 3% points higher than the UK average At least 3% points lower than the UK average The evidence in this UKCSI suggests that This evidence suggests that organisations consistent numbers of customers have distinct need to understand their customers' range preferences for either premium or no frills of preferences and consider ways of tailoring service. The preference for premium service is propositions to meet the needs of key customer most marked in the Automotive, Leisure, Retail segments. (Non-food) and Tourism sectors and amongst younger, affluent customers. 40 UK Customer Satisfaction Index | January 2018
44.9% of all customer experiences take place at home, 8.6% at work We asked customers aged 25 – 64 to specify where they were when they interacted with the organisation they reported on in the UKCSI. Almost half of customer experiences, 44.9%, took place when customers were at home. 8.6% of all customer experiences occurred when customers were at work and 2.7% when customers were on the move. The remainder were generally "in person" experiences in a shop, office or branch or other public space. Where were you when you interacted with an organisation? At home Other, e.g. “In person” (office/store/branch) 44.9% 43.8% 2.7% 8.6% On the move At work UK Customer Satisfaction Index | January 2018 41
Customers are most likely to have an experience In the Insurance sector, almost all customer with an organisation when they are at work, experiences occur either when customers are in the Banks & Building Societies, Insurance at home (70.3%) or at work (13.4%), reflecting and Tourism sectors. By contrast, over 80% of the relatively low proportion of "in person" experiences with Utilities and more than 70% experiences in this sector. with Telecommunications & Media companies took place at home. % of all customer experiences that take place at home or at work 35.5% At home Automotive At work 9.0% 44.5% Banks & Building Societies 10.7% 70.3% Insurance 13.4% 19.5% Leisure 6.3% 30.6% Public Services (Local) 8.1% 30.0% Public Services (National) 9.2% 13.9% Retail (Food) 6.3% 41.1% Retail (Non-food) 7.1% 39.1% Services 6.8% 72.3% Telecommunications & Media 8.7% 62.2% Tourism 10.0% 43.4% Transport 8.6% 82.6% Utilities 7.0% 0 20 40 60 80 100 42 UK Customer Satisfaction Index | January 2018
When customers interact with organisations while they are at work, their satisfaction is much lower than average Customer satisfaction is highest when customers interact with organisations in person and tends to be particularly low when they interact with an organisation while at work. Satisfaction with experiences that take place when customers are at home are, on average, higher than for those when they are at work. Customer satisfaction when interacting with an organisation at home, at work or on the move 80 79 78 77 76.4 76 75 74 73 72.4 72 71 70.7 70 At home At work On the move Average UKCSI (out of 100) UK Customer Satisfaction Index | January 2018 43
The difference in satisfaction between customer Customers are much more likely to be making an experiences at home and at work is especially enquiry or a regular appointment / check when apparent in Retail, Tourism and Insurance. they are at work and less likely to be making a It occurs in all sectors except Public Services purchase or checking a bill or account statement. (Local), where satisfaction is higher when a customer contacts an organisation when they These variations in experience suggest that when are at work rather than at home. organisations review customer journeys they need to consider the context and environment Satisfaction when customers interact with in which experiences are taking place. For organisations while at work tends to be lower customers who are at work when they contact than those at home for all types of experience organisations, there is a need to be especially except complaints, where satisfaction is slightly responsive, efficient and identify ways to reduce higher when customers contact an organisation customer effort. from their workplace. Customer satisfaction for experiences at home and at work 76.4 Overall 70.7 78.2 Automotive 74.1 78.7 Banks & Building Societies 72.9 78.9 Insurance 71.9 76.7 Leisure 70.4 65.6 Public Services (Local) 67.9 70.5 Public Services (National) 68.8 82.2 Retail (Food) 68.7 83.1 Retail (Non-food) 72.4 75.2 Services 68.7 72.8 Telecommunications & Media 68.8 82.1 Tourism 72.5 74.5 Transport 69.1 73.9 At home Utilities 70.8 At work 0 20 40 60 80 100 44 UK Customer Satisfaction Index | January 2018
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