By Stephen Hampshire, Client Manager, TLF Research
Public services satisfying customers in tough times
In July 2011 a representative sample of 26,000 UK adults was surveyed over the internet by The Leadership Factor on behalf of the Institute of Customer Service. This article outlines the key highlights and presents the latest UK Customer Satisfaction Index (UKCSI) which is the national measure of customer satisfaction for UK organisations.
The UKCSI has maintained its upward trend, improving from 76.7 in January of this year to 77.3 in July. Customer satisfaction has remained essentially static for most sectors. The biggest increase has been for Public services (local,), up by a very good margin of 2.2 to 75.5. Telecommunications has also seen a good improvement, driven mostly by improved scores for all mobile providers, up from 73.4 to 74.8, although landline and broadband providers have did fare so well. Other improving sectors include Automotive, up 1.1 to 79.5, Transport, up 0.9 to 74 and Leisure, up 0.8 to 79. Although they have more or less flat-lined, the top four sectors from January are still delivering the best customer experience as far as the UK public is concerned.
The top 10
52 named organisations achieved a CSI over 80; six are over 85. The 10 highest scoring organisations are:
- John Lewis (87)
- Marks & Spencer (food) (87)
- Waitrose (87)
- Virgin Atlantic (86)
- Marriott (86)
- First Direct (85)
- Aldi (84)
- Virgin Holidays (84)
- Marks & Spencer (retail) (84)
- Boots (84)
Movers and shakers
Whilst most of the sectors, particularly those near the top of the league table, have shown relatively little movement between January and July 2011, there have been some significant movers when we look at the level of individual companies. We’ll pick out some of the key movements within some sectors.
Aldi is the most improved food retailer, with its CSI of 84 three points up on January’s score of 81. This puts it third behind Marks & Spencer and Waitrose in the sector, and also gains the company a place in the exclusive list of the top 10 companies scored in UKCSI. Looking back to July 2010, a year of improved satisfaction has seen the company overtake competitors like ASDA, Morrisons, Sainsbury’s and Tesco to reach that third spot. By focusing on the things that matter to its customers, Aldi is performing well in a tough economy.
In the non-food retail sector, WH Smith has shown a very significant movement from January, with a CSI of 80 that is 8 points up on last time. That places it in 9th place in the sector (a very tough one from the point of view of customer satisfaction).
3 has made the biggest improvement of any organisation since January, improving its CSI by 9 points to 76. Although it still lags competitors O2, Orange, and T-Mobile it has overtaken Vodafone. This also means that the mobile networks are more tightly bunched, with only 8 points separating the highest in the market from the lowest scoring. Among landline providers, BT is the most improved (up 2 points), while Talk Talk is the only telecoms provider to show a significant decrease in satisfaction.
The insurance market has been largely stable. Although BUPA has lost some ground it remains firmly at the top of the league table. This is another very competitive market in terms of customer satisfaction, with the top 12 suppliers scoring between 77 and 82.
Finance—banks and building societies
First Direct and the Bank of Scotland have extended their lead at the head of the league table. Other banks that have improved since January include Royal Bank of Scotland and HSBC (both up 2). The only bank listed in our top 10 to have decreased since January is The Co-operative Bank, which has slipped back 3 points to 76.
A number of car manufacturers have seen their scores improve this time, particularly Volvo and Toyota who are both up 3 points. This is another very competitive sector, with 8 companies achieving a score over 80.
The stand-out success story in the transport sector is the Virgin brand, topping the league table with Virgin Atlantic at 86 (up 2 points, and one of the best organisations measured) and Virgin Trains at 79.
The impact of complaints
Sectors with higher CSI create fewer problems for customers
We’ve shown before that the level of customer satisfaction in each sector feeds through to the number of customers who say they have had a problem in the last 3 months. Sectors with higher satisfaction have fewer customers who say they have experienced a problem.
Sectors with higher CSI are more likely to hear about problems
We also know that customers in sectors with higher satisfaction are slightly more likely to complain if they have a problem, giving organisations a chance to put things right. This effect is less pronounced and more varied, depending on the nature of the sector. Telecommunications, for example, is a clear exception to the trend.
Sectors with higher CSI have fewer complaints to deal with (even though they hear about more)
When we put these two effects together, it is clear that the total number of complaints that an organisation will have to deal with is larger in sectors with lower satisfaction, even though they tend to hear about a smaller proportion of the problems they create.
The combined figure, shown on the vertical axis in the chart above, represents the percentage of the total customer base of organisations in each sector who say that they have complained in the last 3 months. This is likely to be a far higher number than is captured in formal complaint systems because a “complaint” is defined here as a customer telling any member of staff about their problem. However, it does illustrate one of the main reasons why customer satisfaction pays – satisfied customers cost less to service. This financial benefit applies just as much in non-profit sectors as it does for commercial companies.
Resolution time is crucial
Resolution time has a big impact on customers’ satisfaction with complaint handling, although there are many other important factors. In particular there is a noticeable exception to the trend (stronger for the outcome than handling) at 3-4 weeks, suggesting that customers are sometimes happy to wait for their complaint to be resolved if it is resolved to their satisfaction.
Complaint resolution times vary widely by sector
For something that makes such a difference, the time taken to resolve complaints varies greatly from sector to sector. In particular it’s notable how many problems are resolved within 24 hours by organisations in the Retail sectors and, especially, in Leisure. By contrast, public services take the longest to resolve complaints, although worryingly, tourism isn’t much better, which surely offers an opportunity for competitive advantage to any switched on tour operators.
Sectors with higher CSI deal with more complaints very quickly
That ability to deal with problems immediately is strongly linked to good customer service across the board. The best sectors overall are also those which resolve most complaints within 24 hours.
The cost of complaints
If we make some assumptions about the cost of handling complaints, we can start to see the financial impact that customer service failure has on organisations working in these sectors. Organisations often estimate that a complaint which is handled at the first point of contact costs between £2.50 and £51. That cost rises as complaints take longer to resolve and involve more points of contact. As shown in the table below, we have worked on the basis of representative cost estimates which we believe to be conservative.
Within 24 hours £3
2-3 days £5
4-7 days £5
1-2 weeks £10
3-4 weeks £10
Over 1 month £15
Still unresolved £15
Based on these estimates, we can work out how much an organisation in each sector is likely to be spending per quarter on handling complaints for every 100 of its customers.
To get the full picture, we would need to gross up to the total size of the customer base. For instance a mobile telecoms provider with 18 million customers would, on this basis, be spending over £23 million per quarter on handling complaints, nearly £100 million per year (18 million/100 x £128).
Holidaying in the UK
As well as the crucial CSI questions, we take the opportunity of the UKCSI survey to take the temperature of the nation on a topical issue. This time we explored people’s attitudes about their holidays.
To begin with, we wondered what proportion of people were planning a UK holiday this year. 40% of customers across the UK said they were. Fortunately this proportion was identical among men and women, but there were noticeable differences by age.
We asked all customers about the factors influencing their choice of holiday destination. (Note that customers could select more than one reason).
There’s good news for the UK tourist industry in that good experiences in the past are the main reason for people to choose a “staycation”. Cost savings, unsurprisingly, are another major reason at the moment, but it’s good to see that price perceptions are more likely to lead people to stay at home (48%) rather than drive them away (18%). The desire to “get away from it all” and the weather are the main drivers of people planning to holiday outside the UK.
We also asked people to indicate how much they agreed or disagreed with a number of statements about the UK tourist industry on a scale of 1 to 5. The average scores in the chart below show the extent to which people agreed or disagreed with each, broadly a positive picture.
Attitudes to the UK tourist industry
Strongly disagree Strongly agree
We asked people which region they think offers the best customer service to holidaymakers. The results (shown below) seem to show a significant lead for the South West and Scotland.
Which region offers the best customer service to holidaymakers?
It might be suspected that there is an element of regional pride at work here, though, as respondents tended to favour their own region when answering this question! In particular, 73% of Scots and 74% of people from the South West of England thought that their own region offers the best customer service to holidaymakers.
When we did the same analysis, but removed customers who had voted for their own region, the results are even more compelling.
Which region offers the best customer service (excluding those who said their own region)?
And the data allow us to identify some trends:
Scotland is more highly rated by those in the North of England, Northern Ireland, and Wales than by those in the South of England.
The South West of England is seen as very good for customer service across the board, except for Northern Ireland, but is particularly popular in the South East.
Scots rate the service in London more highly than people from other regions, with 38% of those who didn’t choose Scotland stating that London was the best region for customer service.