Drop in customer satisfaction signals threat to organisations in a growing economy

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Customer satisfaction fell in 2013, after a continuous rise since 2008
Satisfaction drops in 12 out of 13 sectors measured – Banking and building societies is the only sector with an increase in customer satisfaction
Retail food and non-food are the best performing sectors in the index, while utilities, public sector and telecoms perform poorest
Despite the overall fall in satisfaction some organisations have focused on customer experience, increased customer satisfaction and grown market share
Amazon is the highest scoring organisation in the UK Customer Satisfaction Index (UKCSI)

The UK Customer Satisfaction Index (UKCSI) has revealed that customer satisfaction in the UK fell during the last quarter of 2013. The national measure of customer satisfaction, which is published every 6 months by the Institute of Customer Service, also recorded a fall in July 2013, following an unbroken series of increases between January 2009 and January 2013.

Overall customer satisfaction in the UK is 77.1 (out of 100) in the January 2014 UKCSI, compared to 78.2 in January 2013. Customer satisfaction levels have fallen in 12 of the 13 sectors covered by UKCSI, with only the banking and building societies sector bucking the trend with a small increase of 0.2 points.

Having already established the link between customer service and a business’ bottom line, these results represent a threat to organisations’ ability to take advantage of economic growth and recovery in the UK. The bar has been raised for customer satisfaction. Customers have become more savvy, selective, and have greater choice and opportunity about where they make purchases.

UKCSI also demonstrates that customer service is a key part of customers’ buying decisions. 60 per cent of customers favour a balance of price and service and will not accept low service levels in exchange for a cheap deal. 25 per cent of customers prefer the highest levels of service and are prepared to pay a premium for it, whilst just 15 per cent of respondents are looking for low cost, no-frills service,

Some organisations are better placed than others to take advantage of the opportunities of economic growth. 39 organisations achieved an increase of one point or more in their customer satisfaction score since January 2013, whereas 81 saw a fall of at least one point. The remaining 69 organisations included in UKCSI either registered no movement or moved up or down by less than one percentage point. Amazon is the highest scoring organisation with John Lewis in second place on the index, but only four of the top 20 ranked organisations increased their customer satisfaction by more than one point, signalling the importance of keeping a clear focus on service.

Jo Causon, CEO Institute of Customer Service; says:

“As the economy begins to grow organisations need to recognise that the customer service experience they deliver is increasingly important in customers’ buying decisions. Those organisations that focus on differentiating through customer service are well placed to achieve sustainable performance. But to do this they need to view customer service as integral to building customer relationships across the value chain, not just as a series of transactions.

“These results are a wake-up call to UK business. In an environment where customers are more aware than ever about the standard of service they should receive, organisations cannot afford to lessen their focus on customer service. This is important because it impacts not only the success individual organisations, but also the growth and competitiveness of the UK economy as a whole.

Causon continues “UKCSI has consistently demonstrated the close link between customer service and market share, loyalty and sales growth. In the retail food sector the highest performing organisations for customer service have increased their market share, further strengthening the business case for customer service.”

The index revealed that food retailers with a UKCSI score above the average for the sector saw an average year on year growth (based on the 12 week period prior to 14^th October 2013) of 9 percent compared to only 3 percent period for those with scores below the sector average, evidence that delivering better than average customer satisfaction boosts sales.

Retail (non food) remains the highest performing sector, despite posting a drop of 1.3 points (from 84.4 in July 2013 to 83.1 in January 2014). Utilities is the lowest performing sector with a score of 69, down 2 points since July 2013.

For the first time, the UKCSI January 2014 report includes ratings for the top 50 organisations that have the highest scores for customer satisfaction. The organisations with the biggest improvement in their customer satisfaction scores over the past year are Tesco Bank, Northern Ireland Electricity Service, and Center Parcs.

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