UKCSI July 2014 | The state of customer satisfaction in the UK UKCSI Customer Satisfaction Index The state of customer satisfaction in the UK July 2014 instituteofcustomerservice.com Institute of Customer Service A UKCSI July 2014 | The state of customer satisfaction in the UK foreword The July 2014 UKCSI shows a third consecutive We are now in a genuine relationship economy in fall in customer satisfaction. Almost half the which organisations’ success will increasingly be organisations included in the index have seen a determined by the quality of their relationships drop in their customer satisfaction by at least one – with customers, suppliers, partners and inside point compared to a year ago, including companies organisations. These UKCSI results confirm that who have consistently been amongst the highest the bar for customer satisfaction has risen and in rated by customers. At a time when the economy is an era of falling customer satisfaction there will be beginning to grow, this should be a major concern winners and losers. for organisations. So how should organisations respond to this There are a number of factors which may account changed environment? It will be important to for the falling trend in customer satisfaction. invest in customer insight and apply it with Customer expectations are continuing to rise greater speed and agility as customer needs and their needs are evolving more rapidly, with and preferences evolve. Ease of doing business convenience, ease of doing business and speed and convenience have a growing resonance seen as particularly important. For the first time, and need to be embedded in the experiences this UKCSI report shows the levels of satisfaction organisations offer their customers. Customer by age group; the fact that younger people are service skills, capabilities and standards need to on average less satisfied than older age groups be reviewed continuously to ensure that they are suggests that customer expectations will continue current and relevant in a context of heightened to rise in future. As demand and confidence customer expectations. Above all, there needs grow, organisations may be tempted to shift their to be a strategic leadership commitment to priority away from retaining customers through customer service and a focus on the whole focusing on customer experiences, towards customer experience, especially in sectors where more emphatically increasing customer numbers multiple partners and entities are involved in and market share. However, evidence from the providing service to customers. Now is a time for UKCSI continues to point to clear and consistent organisations to hold their nerve and maintain linkages between high levels of customer focus on the customer experience. Those that satisfaction and trust, loyalty, likelihood to do so will be best positioned to benefit from the remain a customer, and in the Retail food sector in sustainable and tangible business benefit of particular, higher sales growth. customer service. Joanna Causon CEO Institute of Customer Service 1 UKCSI July 2014 | The state of customer satisfaction in the UK contents Key findings 3 Customer satisfaction: the state of the nation 4 Why is customer satisfaction falling? 12 Why customer satisfaction matters: the business impact 20 UKCSI key facts 27 Organisations included in the July 2014 survey 28 About UKCSI 29 Also available 30 Other Institute research 31 Institute of Customer Service 32 2 Institute of Customer Service UKCSI July 2014 | The state of customer satisfaction in the UK key findings UKCSI July 2014 Customer satisfaction falls - again Most customers want a balance of cost The July 2014 UKCSI results confirm the downward and service, with at least a minimum trend in customer satisfaction at the national level. The threshold level of customer service index registered its third consecutive decline and at When faced with the choice, 60% of consumers favour 76.3 (out of 100) is now 1.9 points below the January a balance of price and service and will not accept 2013 peak of 78.2. low service levels in exchange for a cheap deal. A substantial minority of consumers – 24% – seek Satisfaction drops for most sectors excellent service and are prepared to pay for it. Customers’ satisfaction levels declined across 12 of the 13 sectors covered in UKCSI. The exception was Customer service builds trust the Utilities sector, which saw a small increase (of 0.4 By delivering an increase of 10 percentage points in its points) in customer satisfaction between January 2014 customer satisfaction score, an organisation can expect and July 2014. Nonetheless, Utilities remains the lowest on average an increase of 12 percentage points in the scoring sector. Retail (Non-food) continues to be the trust ratings from its customers. highest performing sector in UKCSI. Customer service drives loyalty Relatively few organisations are raising Organisations with high UKCSI scores have significantly satisfaction levels larger numbers of customers who are very likely to Of the 197 named organisations featured in UKCSI, only remain as customers, compared to those organisations 28 increased their score by at least one point compared with lower levels of satisfaction. to July 2013. But 96 have seen their score fall by more than one point over the same period. Customer service drives recommendation 55% of highly satisfied customers stated that they Consistent high scores at the top of the had recommended the organisation in question. UKCSI rankings Recommendation rates drop below 15% for satisfaction John Lewis tops the UKCSI ratings for July 2014 with a ratings below 6 (out of 10). score of 87.7. It is followed by two other consistent high scorers, Amazon and First Direct. But 37 of the top 50 Customer service drives sales in the retail organisations for customer satisfaction have seen a fall food sector in their score in the past year. Dwr Cymru (Welsh Water) For the fifth consecutive period, the average year-on- is the organisation with the largest increase in its UKCSI year sales growth delivered by food retailers with a score (+6.7 points) over the past year. UKCSI score above the sector average is better than that of the below average competitors, by a margin of 3%. Older customers are on average much more satisfied than younger ones Customers aged 65 and above have an average customer satisfaction score of 80.3 compared to 72.5 for those aged 18 – 24. Customers in socio-economic groups A, B and C1 have lower average satisfaction than those in C2, D and E. Institute of Customer Service 3 UKCSI July 2014 | The state of customer satisfaction in the UK customer satisfaction: the state of the nation Customer satisfaction in the UK has fallen for the third consecutive six-month period. The July 2014 UK Customer Satisfaction Index (UKCSI) – the average of all customer responses in the Institute of Customer Service’s six-monthly customer survey1 - dropped by 0.8 points, to 76.3 (out of 100), from 77.1 in January 2014. We are now seeing a marked downward trend in the satisfaction of UK customers. The national UKCSI score, 2009 to 2014 79 78 78.2 78.0 77.9 77 77.3 77.4 77.1 76 76.7 76.3 75 75.6 75.2 74 73 74.1 72 UK Customer Satisfaction Index (UKCSI) 72.0 71 70 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 1. The UKCSI survey is run twice each year, in May and November. The results are published in the July and January editions of the report. 4 Institute of Customer Service UKCSI July 2014 | The state of customer satisfaction in the UK UKCSI performance by sector The fall in customer satisfaction applies to all sectors except Utilities, which achieved a small increase of 0.4 points between January 2014 and July 2014. However, it remains the lowest-scoring of the thirteen sectors in the UKCSI, with an average rating of 69.4. The biggest drops in satisfaction by sector were seen in Leisure (-1.3), Insurance (-1.3) and Services (-1.4). For the first time since the UKCSI began in2008 , satisfaction with the Insurance sector has fallen behind satisfaction with Banks & Building Societies. It should be noted that the Services sector score has been affected by the UKCSI reclassification of Royal Mail (from Public Services (National) to Services) following the government’s sale of a majority share of the organisation. The score in Services excluding Royal Mail was 80.1, a drop of just 0.1 compared to January 2014. UKCSI scores by sector 50 60 70 80 90 100 Retail (Non-food) 82.2 Retail (Food) 80.9 Tourism 79.8 Automotive 79.7 Leisure 79.6 Services 78.8 Banks & Building Societies 77.7 Insurance 77.6 Telecommunications & Media 72.2 Transport 72.1 Public Services (Local) 71.9 Public Services (National) 70.9 Jul-14 69.4 Utilities Jan-14 Institute of Customer Service 5 UKCSI July 2014 | The state of customer satisfaction in the UK Customer service performance of organisations Amid the overall drop in satisfaction, there is significant variation in customer satisfaction performance among the 197 named organisations featured in the UKCSI. Only 28 organisations increased their score by at least one point compared to July 2013. But 96 have seen their score fall by more than one point over the period. Evidence from the UKCSI suggests that there are four broad segments of organisations, in terms of customer satisfaction: Segment Business impact Remain well placed to benefit from customer Organisations with consistently high customer recommendation, loyalty and trust, but are potentially satisfaction ratings vulnerable