UK Customer Satisfaction Index

UK Customer Satisfaction Index The state of customer satisfaction in the UK January 2015 instituteofcustomerservice.com

foreword The January 2015 UKCSI reveals a fourth consecutive fall in customer satisfaction. UK customers are now, on average, less satisfied with the service they receive than at any point since July 2010. I believe that these results reflect profound shifts in the market environment. Customers expectations have evolved rapidly, leading to an ever-growing desire for convenience, speed and value. Moreover, we expect the service experience to be more personalised than before, with organisations expected to anticipate our current and potentially future needs. As customer expectations have evolved, some organisations have evolved with them or even ahead of them. This report shows that a number from a range of sectors deliver consistently high UKCSI scores, indicating a sustained focus on meeting and where possible exceeding what customers expect. But no fewer than 58% of the organisations in UKCSI have seen their customer satisfaction score fall by more than one point over the past year. Meanwhile the average satisfaction rating in all but two of the 13 sectors in UKCSI has dropped over the same period. The business risks of service under-performance are acute. As UKCSI reveals, customer behaviour is strongly influenced by service quality. Organisations that deliver better service benefit from more recommendations, driving customer acquisition and sales. They also create more customer loyalty and trust. For the retail food sector, the research demonstrates a striking and consistent link between service levels and growth in market share. In the relationship economy, customer relationships are a critical factor in business success, as are relationships with suppliers, partners and employees. In this new environment, those organisations that put service at the heart of their business models and collaborate to deliver the end-to-end experience will be the most successful. Given the clear links between customer service and business outcomes, the findings in this report should serve as a call to action for organisations across all sectors. The results have national implications as well. The ability of UK companies to compete successfully in international markets depends on the service skills, leadership and innovation they demonstrate, as does the ability of UK plc to attract inward-investment as a great place to do business. I believe that organisations have much to gain by driving a genuine and sustained focus on the service agenda and the results of the UKCSI serve to prove this point. Joanna Causon CEO The Institute of Customer Service 1

contents UKCSI January 2015: key findings 3 Customer satisfaction in the UK: the state of the nation 4 Customer service in 13 sectors 5 The new environment for customer service 10 Why customer service matters 13 Customer satisfaction and employee engagement 17 Trends in customer satisfaction measures 19 The customer service performance of organisations 21 What should organisations do? 26 2 The Institute of Customer Service

key findings UKCSI January 2015 The downward trend in customer satisfaction continues Customer satisfaction, as measured by the UKCSI at the national level, is now lower than at any point since July 2010. This suggests that organisations in the UK are not keeping up with customers increasing expectations of service and that many are missing out on the business performance benefits of high and/or improving customer satisfaction. Only two sectors have improved customer satisfaction Of the 13 sectors covered in UKCSI, Utilities have delivered the most improved average customer satisfaction ratings over the past year, with a rise of 1.9 (out of 100) since January 2014. Banks & Building Societies is the only other sector to have registered an improvement over the period, albeit by just 0.3 points. Meanwhile, three water companies Southern Water, Yorkshire Water and United Utilities have registered the largest improvements in customer satisfaction by any organisation during this period. Customer segments offer contrasting levels of satisfaction The most significant contrast between customer segments revealed by UKCSI is around age groups. Younger people are considerably less satisfied as customers, underlining the importance of understanding the needs and satisfaction levels of different customer groups. Service drives customer engagement, trust and loyalty The UKCSI results provide evidence of the link between customer satisfaction and business outcomes. Highly satisfied customers are significantly more likely than less satisfied customers to make a recommendation, remain as customers and feel a sense of trust towards the organisation. Satisfaction ratings related to speed, complaints and staff issues have fallen In the past two years, customers have reduced their ratings on 26 of the 28 customer experience metrics included in UKCSI. Some of the most significant declines can be seen in metrics relating to three key areas: speed/responsiveness, complaints handling and staff behaviour/attitude. Consistent high scorers dominate the UKCSI top 10 A group of seven organisations has consistently scored over 83 (out of 100) in UKCSI over the past two years. One of these organisations, John Lewis, is the highest rated named organisation in UKCSI January 2015. Employee engagement is strongly linked with customer satisfaction Those sectors where customers rate employees to be more engaged tend to deliver higher levels of customer satisfaction, indicating the critical role of employee engagement in improving and sustaining service. Service drives sales and market share in the Retail Food sector For the sixth consecutive period, leading food retailers with a UKCSI score above the Retail Food sector average have grown their combined market share, while the below average competitors in the sector have lost market share. The Institute of Customer Service 3

customer satisfaction in the UK: the state of the nation Based on the experiences of 10,000 customers across 13 sectors of the economy, the UKCSI reveals the trend in customer satisfaction at the national level. The January 2015 findings indicate that customer satisfaction continues to be under pressure, with a drop in the index of 0.3 points compared to July 2014, and a drop of 1.1 points since January 2014. This decline continues a downward trend recorded since customer satisfaction peaked at 78.2 in January 2013. At 76.0, the index is now lower than at any point since July 2010. We believe this downward trend in customer satisfaction is due to a combination of factors associated with market environment changes, shifts in customer expectations, preferences and behaviour and in some cases, a number of organisations that have not focused sufficiently on their customer service strategies and delivery. 79 What is the trend in customer satisfaction? UK Customer Satisfaction Index (UKCSI) 78 77 76 75 74 73 72 72.0 74.1 75.2 75.6 76.7 77.3 77.4 78.0 78.2 77.9 77.1 76.3 76.0 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 Jan-15 4 The Institute of Customer Service

customer satisfaction in 13 sectors UKCSI scores by sector 50 60 70 80 90 100 81.4 Retail (Non-food) 82.2 83.1 Retail (Food) 79.6 80.9 81.0 Tourism 79.4 79.8 80.0 Automotive Banks & Building Societies Leisure Insurance Services Transport Public Services (Local) Telecommunications & Media Public Services (National) Utilities 78.6 79.7 80.5 78.4 77.7 78.1 78.3 79.6 80.9 77.1 77.6 78.9 77.0 78.8 80.2 72.3 72.1 72.5 72.1 71.9 72.8 71.6 72.2 73.3 71.3 70.9 71.9 70.9 69.4 69.0 Jan-15 Jul-14 Jan-14 The Institute of Customer Service 5

The UKCSI scores and change in scores of the last 13 sectors in UKCSI present significant contrasts. Sectors in category UKCSI performance Characteristics Retail (Non-food and Food) Tourism Automotive Leisure Insurance Services UKCSI down but remains above all-sector average Characterised by a high level of competition and customer demand for speed and convenience Most but not all organisations set strategic priorities based on the role of service in driving business performance Some organisations have focused on gaining market share in the short term but not addressed sustainable improvements that drive customer satisfaction and loyalty Banks & Building Societies UKCSI up slightly and above all-sector average Sector has maintained satisfaction levels year-on-year Regulatory and media focus on business practices and treatment of customers has highlighted links between service, reputation and business performance Improved ability of customers to switch banks likely to incentivise further investment in improving service First Direct and Nationwide both feature in the UKCSI top 10 showing that high customer satisfaction can be achieved and sustained; however, four of the 13 banks covered in UKCSI score below the all-sector average of 76.0 Telecommunications & Media UKCSI down and remains below all-sector average A wide range of ratings between different providers Strong links between higher customer satisfaction and trust, reputation, recommendation and repurchase The sector which consistently generates the highest proportion of problems and complaints for customers 1. The full details of the performance of individual organisations in each sector can be found in the UKCSI Sector Reports. These are available from The Institute of Customer Service. 6 The Institute of Customer Service

Sectors in category UKCSI performance Characteristics Transport UKCSI down and remains below all-sector average A wide range of ratings between different providers Strong links between higher customer satisfaction and trust, reputation, recommendation and repurchase Sector with the highest proportion of customers who don t report problems Public Services (Local and National) UKCSI down and remains below all-sector average Challenges include: Rising customer expectations and demand Budget pressures Fragmentation of services How to incentivise innovation in environments which are traditionally risk averse UKCSI shows the wide range of customer satisfaction scores between different branches of the public sector Utilities UKCSI up slightly and above all-sector average Remains the lowest scoring of 13 UKCSI sectors but biggest improvement 1.9 points in the past year Three water companies are the top three improvers in UKCSI Four of the big six energy companies have improved their UKCSI score by more than one point in the past year The Institute of Customer Service 7

Customer satisfaction in 13 sectors: UKCSI score vs change in score 3 UKCSI all-sector average = 76.0 2 Utilities UKCSI up but remains below all-sector average UKCSI up slightly and above all-sector average Change in UKCSI score (Jan 2014 to Jan 2015) 1 0-1 -2 Transport Public Services (Local) Public Services (National) Telecommunications & media Banks & Building Societies Tourism Retail (Food) Insurance Retail (Non-food) Automotive Leisure -3 UKCSI down and remains below all-sector average Services UKCSI down but remains above all-sector average -4 70 72 74 76 78 80 82 Sector UKCSI score, Jan 2015 8 The Institute of Customer Service

UKCSI scores and change in scores by sector UKCSI score January 2015 UKCSI score July 2014 UKCSI score January 2014 Change in UKCSI January 2015 - January 2014 Highest scoring organisation in the sector Retail (Non-food) 81.4 82.2 83.1-1.7 Retail (Food) 79.6 80.9 81.0-1.4 Tourism 79.4 79.8 80.0-0.6 Automotive 78.6 79.7 80.5-1.9 Banks & Building Societies 78.4 77.7 78.1 +0.3 Leisure 78.3 79.6 80.9-2.6 Insurance 77.1 77.6 78.9-1.8 2 Services 77.0 78.8 80.2-3.2 Transport 72.3 72.1 72.5-0.2 Public Services (Local) 72.1 71.9 72.8-0.7 Telecommunications & Media 71.6 72.2 73.3-1.7 Public Services (National) 71.3 70.9 71.9-0.6 Utilities 70.9 69.4 69.0 +1.9 John Lewis (87.2) Ocado (85.4) Center Parcs (82.9) Skoda (82.9) First Direct (86.7) Greggs (82.5) LV= (83.5) Autoglass (80.2) Thomson Airways (82.8) Your local library (81.9) Tesco Mobile (82.5) DVLA (76.2) Yorkshire Water (77.3) 2. The average UKCSI score of the Services sector has been reduced by the inclusion of Royal Mail in the sector from the July 2014 survey onwards. This change follows the government s sale of a majority share in the organisation. Without this addition, the Services sector score for January 2015 would be 79.0, which is a drop of 1.2 compared to January 14. The Institute of Customer Service 9

the new environment for customer service The Institute s research published in November 2014, Beyond Measurement: customer service and business performance 3, highlighted a range of factors which are forcing organisations fundamentally to rethink relationships with customers. Decline in trust Levels of trust in organisations have fallen 4 Recent research from the CBI suggests that few customers instinctively trust business 5 In a Financial Times poll, nearly two-thirds of UK voters said they wanted the next government to be tougher on big business 6 Diversity of customer segments There are markedly different levels of customer satisfaction in different customer segments This research demonstrates different levels of satisfaction by age group, region and socio-economic group Young people are on average less satisfied. But where they are satisfied they are more likely to recommend organisations An intense focus on value An enduring legacy of the recession is an intense focus on value UKCSI has consistently shown a range of different attitudes to the relative importance placed on service and price 62% of customers want a balance of price and service with at least a minimum threshold standard of service 7 23% indicate a preference for excellent service, even if it costs more 14% of customers seek the cheapest possible deals and will sacrifice levels of service to achieve them Changing attitudes to ethics and sustainability New attitudes to ethical and sustainable business are emerging Customers who are more selective with their spending also have higher expectations of products and services and the organisations they deal with, including values that are important to them personally such as quality, integrity and sustainability 8 3. The report is available through the Institute s website at www.instituteofcustomerservice.com/research 4. See for example the analysis in the annual Edelmann Barometer, a summary of which is available online at www.edelman.com 5. CBI (2014), Research on business trust 6. Starbucks backlash was not just froth by Michael Skapiner. Financial Times, 14 July 2014 7. Data is taken from the UKCSI January 2015 survey results. For the previous results see the UKCSI July 2014 Executive Summary by the Institute of Customer Service, available online here: http://www.instituteofcustomerservice.com/5629-15640/ukcsi-july-2014-executive-summary.html 8. See for example Sainsbury s (2012), The Rise of New Fashioned Values 10 The Institute of Customer Service

Emotional factors Growing complexity, technological change, the decline in trust and economic pressures have heightened customers emotional needs and make it more critical for organisations to find authentic ways of connecting with them There is also evidence that emotional factors are increasingly important in B2B buying decisions, often connected with the consequence of the decision for an employee s career or job security 9 Omnichannel and technology Customers use of technology has shifted rapidly to mobility and always-on access Tablets will outsell all PCs and laptops worldwide for the first time in 2015 10 Many customers especially active online users are receptive to personalised services, which anticipate and reflect their needs based on insight about preferences and purchasing behaviour, but this needs to be managed intelligently Transparency of information means that customers increasingly refer to recommendations. Many organisations have reported that customers benchmark their service against market leaders such as Amazon and John Lewis Some customers are willing indeed increasingly expect deeper and ongoing relationships with organisations and active involvement in co-creating products and services; they are also expecting organisations to provide an end-to-end service experience, which may mean outside of the actual organisation driving organisations to collaborate across company boundaries Employee engagement There is growing awareness of the link between engaged, knowledgeable, helpful employees and customer satisfaction and business performance 11 Levels of investment in customer service During the economic downturn, many organisations cut investment in customer service As growth has begun to return, investment has often focused on short term objectives of customer acquisition rather than a consistent and sustained focus on the whole customer experience 9. CEB Marketing Leadership (2013), From Promotion to Emotion: Connecting B2B Customers to Brands 10. See www.gartner.com/newsroom/id/2791017 11. See the report Are you being engaged? Employee engagement and its influence on customer satisfaction and buying behaviour, as published by the Institute of Customer Service in 2014 The Institute of Customer Service 11

Satisfaction varies between customer groups Analysis of the demographic data in UKCSI shows that there are important variations in customer satisfaction between broadly-defined groups of customers. This is particularly true when segmenting by age, with younger people claiming significantly lower levels of satisfaction. Analysis of the UKCSI results shows that these lower satisfaction levels among younger age groups are reflected in the levels of trust and loyalty they feel towards the organisations they deal with. However, among the 18 24 age group in particular there is a noticeable tendency to make recommendations. Despite their relatively low average satisfaction levels, 42% of 18 24s have recommended the organisation they have dealt in the past six months, a higher proportion than for any other age group. This indicates that organisations that can raise satisfaction among younger customers will benefit from increased word of mouth, particularly via online channels. UKCSI score by age group UKCSI score by socio-economic group 72.9 72.7 75.7 76.2 77.3 80.2 75.0 76.4 76.7 77.4 78.6 79.3 18 to 24 25 to 34 35 to 44 77.3 76.6 76.6 76.3 76.2 75.9 75.0 Wales Northern England Scotland South West England 45 to 54 Central England Northern Ireland South East England 55 to 64 65 and above A B C1 C2 D E UKCSI score by region/country 12 The Institute of Customer Service

why customer service matters Customer service is crucially important to the performance of individual organisations in both UK and global markets, the attractiveness of the UK as a place to visit and do business and the overall health and sustainability of the economy. More than 70% of the working population deal directly with customers in their job roles 12 The UK service sector accounts for over three quarters of GDP 13 In manufacturing industries, service is increasingly important as a differentiator in domestic and global markets Customer service and business performance Amid a volatile and changing customer environment, successive UKCSI surveys have revealed a consistent relationship between high levels of customer service and key measures of business performance and brand value, including sales growth, loyalty, recommendation and trust. 95% of highly satisfied customers are very likely to remain as customers Only 5% of dissatisfied customers are very likely to remain 12. Finding based on unpublished research carried out by the Institute of Customer Service in 2013 13. See the World Bank data on service sector contribution to GDP at data.worldbank.org/indicator/nv.srv.tetc.zs The Institute of Customer Service 13

Customer satisfaction and sales growth: Retail Food Food Retail is one of the most challenging and highly contested sectors of the economy, where changes in customer needs and preferences quickly affect business performance. Analysis of UKCSI scores and Kantar World Panel sales data 14 demonstrates the links between customer satisfaction, sales growth and market share. Importantly, these links are consistent over time, having been observed on each of the six occasions that the analysis has been carried out since July 2012. Performance Indicator Food retailers with higher than average UKCSI Food retailers with lower than average UKCSI Pattern of results for all UKCSI analysis since July 2012 Average annual sales growth (12 weeks to 12 Oct 2014) Annual market share change (12 weeks to 12 Oct 2014) +8.2% -1.9% +0.2% -0.5% Food retailers with above average UKCSI scores have outperformed their below average competitors by a margin of at least 3% on all six occasions that this analysis has been run since July 2012 Food retailers with above average UKCSI scores have grown their combined market share, while the below average competitors have seen a fall in their combined market share; this pattern has been observed on all six occasions that this analysis has been run since July 2012 Customer satisfaction and sales growth: the Retail Food sector Annual sales growth for the 12 weeks to 12/10/14 Source: Kantar Worldpanel 30% 25% 20% 15% 10% 5% 0% -5% The Co-operative (Food) Morrisons Tesco Lidl Asda Sainsbury s Aldi Waitrose Iceland -10% 72 74 76 78 80 82 84 UKCSI scores 14. The Kantar Worldpanel data can be found at http://www.kantarworldpanel.com/global/news/uks-grocery-market-enters-deflation 14 The Institute of Customer Service

Customer satisfaction and sales growth: the Retail Food sector -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% +8.2% -1.9% Food retailers with above Sector average UKCSI Food retailers with below Sector average UKCSI Customer satisfaction and market share growth: the Retail Food sector 1.5% Annual market share change, 12/10/14 Source: Kantar Worldpanel 1.0% 0.5% 0.0% -0.5% The Co-operative (Food) Aldi Lidl Waitrose Asda Iceland Morrisons Sainsbury s -1.0% Tesco -1.5% 72 74 76 78 80 82 84 UKCSI scores Customer satisfaction and market share growth: the Retail Food sector -0.6% -0.4% -0.2% 0.0% 0.2% 0.4% +0.2% -0.5% Food retailers with above Sector average UKCSI Food retailers with below Sector average UKCSI The Institute of Customer Service 15

Customer satisfaction drives retention, recommendation and trust In a volatile and demanding customer environment, organisations are having to work harder to engage their customers. The evidence from UKCSI demonstrates that focusing on customer service is a tangible way of building trusted and sustainable relationships. Customer measure High satisfaction (UKCSI of 9-10 out of 10) Low satisfaction (UKCSI of 1-4 out of 10) Gap between high and low satisfaction Loyalty % of customers who are highly loyal (scoring 9-10 on the measure of intention to remain a customer) Recommendation % of customers who have recommended an organisation Trust % of customers who give a trust rating of 9 or 10 (out of 10) 95% 5% 89% 56% 6% 50% 83% 1% 82% 100% 80% 60% 40% 20% 0% 1-1.9 2-2.9 3-3.9 4-4.9 5-5.9 6-6.9 7-7.9 8-8.9 9-10.0 % of customers who are highly loyal (i.e. scoring 9 10 for intention to remain a customer) % of customers who have recommended the organisation % of customers who give the organisation a high trust rating (i.e. scoring 9 10 for trust) Customers satisfaction rating (1 10 scale) as measured in UKCSI Overall satisfaction score per customer (out of 10) % of customers who are highly loyal (i.e. scoring 9-10 for intention to remain a customer) 1 1.9 2 2.9 3 3.9 4 4.9 5 5.9 6 6.9 7 7.9 8 8.9 9 10.0 3% 6% 6% 6% 8% 13% 29% 66% 95% % of customers who have recommended the organisation 2% 5% 6% 12% 17% 21% 28% 40% 56% % of customers who give the organisation a high trust rating (i.e. scoring 9-10 for trust) 0% 1% 0% 1% 2% 4% 10% 38% 83% 16 The Institute of Customer Service

customer satisfaction and employee engagement Where employees are perceived by customers to be engaged, knowledgeable, friendly and helpful, there is a higher incidence of not only more satisfied customers but also increased loyalty and repurchase 15. This underlines the growing importance of employee engagement to organisations as a differentiator and driver of customer satisfaction. The employee engagement measures tracked by the Institute of Customer Service are based on customers responses when asked to rate the staff they have dealt with (either in person or on the phone) against key attributes on a scale of 1 10. These attributes include: Knowledgeable Friendly Helpful Interested in meeting my needs Seemed proud to work for the organisation Sector satisfaction scores vs employee engagement scores Average employee engagement score on 5 key attributes 8.0 7.9 7.8 7.7 7.6 7.5 Public Services (Local) Banks & Building Societies Services Insurance Automotive Leisure Tourism Retail (Food) Retail (Non-food) 7.4 Telecommunications & Media 7.3 Transport Public Services (National) 7.2 Utilities 70 72 74 76 78 80 82 Sector UKCSI scores 15. See the report Are you being engaged? Employee engagement and its influence on customer satisfaction and buying behaviour, as published by the Institute of Customer Service The Institute of Customer Service 17

UKCSI score for the sector Average employee engagement score based on 5 key attributes Ratings for 5 key indications of employee engagement Knowledgeable Friendly Helpful Interested in meeting my needs Seemed proud to work for the organisation Retail (Non-food) 81.4 7.58 7.55 7.87 7.86 7.56 7.05 Retail (Food) 79.6 7.62 7.64 7.92 7.93 7.59 7.00 Tourism 79.4 7.70 7.70 7.90 7.90 7.69 7.31 Automotive 78.6 7.91 7.97 8.15 8.08 7.85 7.49 Banks & Building Societies 78.4 7.84 7.93 8.14 8.12 7.78 7.21 Leisure 78.3 7.54 7.59 7.88 7.82 7.52 6.89 Insurance 77.1 7.69 7.77 7.97 7.95 7.64 7.11 Services 77.0 7.72 7.76 7.94 7.92 7.71 7.27 Transport 72.3 7.31 7.48 7.55 7.54 7.21 6.75 Public Services (Local) Telecommunications & Media Public Services (National) 72.1 7.47 7.67 7.71 7.70 7.39 6.91 71.6 7.30 7.34 7.59 7.50 7.24 6.83 71.3 7.26 7.50 7.50 7.45 7.14 6.71 Utilities 70.9 7.24 7.27 7.48 7.44 7.24 6.75 18 The Institute of Customer Service

trends in the UKCSI customer satisfaction measures The UKCSI survey covers 28 metrics encompassing different aspects of the customer experience. The detailed data on these metrics for sectors and all organisations covered in UKCSI can be found in the individual UKCSI Sector Reports 16. Looking broadly across all organisations and sectors, customers are rating performance lower on almost all of the 28 metrics included in the survey, compared to two years ago: Only two metrics The outcome of the complaint and On time delivery are judged by customers to have improved since January 2013, by 0.2 points out of 10 and 0.03 points respectively The remaining 26 metrics have seen a fall in rating since January 2013, with 11 dropping by more than 0.25 out of 10. The 11 aspects of the customer experience that customers say have deteriorated the most in two years Average customer score in UKCSI 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Competence of staff Helpfulness of staff Product/service range Speed of service in person Availability of support (Website) Reputation of the organisation Ease of getting through over the phone Speed of response (Writing) Staff doing what they say they will do (Complaints) Handling of the complaint Speed of resolving your complaint 16. For details of the latest UKCSI sector reports, please visit: www.instituteofcustomerservice.com/ukcsi The Institute of Customer Service 19

Decreases in customer experience metrics over the past 2 years: three key themes Key theme Relevant metrics Implications Speed and responsiveness Speed of service in person Speed of resolving your complaint Speed of response (writing) Availability of support (website) Ease of getting through over the phone Expectations have evolved rapidly; customers expect faster service and more convenience whether queuing to buy in-store, making an enquiry or attempting to resolve a problem Organisations need to ensure that they are easy and quick to do business with In many cases this means simplifying service processes to remove avoidable complication and delay Complaints processes Handling of the complaint Speed of resolving your complaint Staff doing what they say they will do (complaints) Despite slight improvements in the last two surveys, scores for these three complaints metrics remain below January 2013 levels and significantly lower on average than other customer experience metrics Not all complaints can be resolved to the customer s satisfaction but unsatisfactory complaints procedures drive overall customer dissatisfaction and negative word of mouth Many organisations need to reassess their complaints processes to prevent complaints from occurring and resolve them more effectively Staff behaviour and attitude Staff doing what they say they will do (complaints) Helpfulness of staff Competence of staff Employees behaviour and attitude has a significant impact on customer satisfaction and buying behaviour, particularly via the in-person and phone channels Proactive employee engagement strategies developing key competences such as emotional intelligence and coaching are key to empowering employees to deal with challenging customer situations 20 The Institute of Customer Service

the customer service performance of organisations The top-scoring organisations in UKCSI John Lewis retains the no.1 ranking in UKCSI that it regained from Amazon in July 2014. Both organisations are part of a select group of organisations that consistently appear towards the top of the rankings because they are delivering a consistently high level of customer service. In total just seven organisations have scored over 83 in UKCSI over the past two years (i.e. in all UKCSI surveys since January 2013), indicating that they are sustaining a particularly high level of customer satisfaction. These seven, all of which operate in the retail or banking sectors, are highlighted below. A total of 205 named organisations are included in the UKCSI results for January 2015. January 2015 rank Organisation January 2015 score January 2014 score January 2014 rank Change in score January 2014 - January 2015 1 John Lewis 87.2 88.1 2-0.9 2= Amazon 86.7 88.6 1-1.9 2= First Direct 86.7 86.6 4 +0.1 4 Ocado 85.4 no data 5 Marks & Spencer (Food) 83.9 85.8 7-1.9 6 Nationwide 83.8 83.0 27 +0.8 7= LV= 83.5 82.8 33 +0.7 7= Waitrose 83.5 86.9 3-3.4 9 Argos 83.3 83.3 19 0 10 Aldi 83.0 85.5 8-2.5 11= Center Parcs 82.9 83.0 27-0.1 11= Skoda 82.9 83.6 14-0.7 13 Thomson Airways 82.8 80.1 65 +2.7 14= Greggs 82.5 84.2 10-1.7 14= Tesco Mobile 82.5 82.0 43 +0.5 16 Next 82.4 83.5 15-1.1 17 Iceland 82.3 83.5 15-1.2 The Institute of Customer Service 21

January 2015 rank Organisation January 2015 score January 2014 score January 2014 rank Change in score January 2014 - January 2015 18 Jet2 82.0 no data 19= Matalan 81.9 78.0 96 +3.9 19= Specsavers 81.9 no data 21= Marks & Spencer (Non-food) 81.8 83.2 21-1.4 21= Superdrug 81.8 83.2 21-1.4 23= BMW/Mini 81.4 81.9 45-0.5 23= booking.com 81.4 no data 25 Premier Inn 81.3 83.2 21-1.9 26 Audi 81.1 81.6 48-0.5 27 Boots 80.8 84.0 12-3.2 27 Hyundai 80.8 82.7 35-1.9 29 Kia 80.6 83.3 19-2.7 30 Tesco Bank 80.5 83.0 27-2.5 31= Expedia 80.4 78.0 96 +2.4 31= Mercedes Benz 80.4 83.4 18-3.0 31= Toby Carvery 80.4 84.0 12-3.6 34= Asda 80.3 80.6 60-0.3 34= LoveFilm 80.3 78.4 91 +1.9 34= Virgin Atlantic 80.3 82.4 36-2.1 34= Virgin Holidays 80.3 81.3 53-1.0 38= Autoglass 80.2 82.8 33-2.6 38= Sainsbury s 80.2 81.7 47-1.5 38= The Co-operative Bank 80.2 86.4 5-6.2 41 Mazda 80.1 77.9 100 +2.2 42= Debenhams 80.0 80.9 57-0.9 42= Enterprise Rent-A-Car 80.0 80.5 61-0.5 42= Land Rover 80.0 81.5 49-1.5 42= Lidl 80.0 78.7 87 +1.3 42= Wilkinson 80.0 82.1 39-2.1 47 Saga Insurance 79.9 83.5 15-3.6 48 Pizza Express 79.8 80.8 58-1.0 49= Marriott 79.7 84.1 11-4.4 49= Toyota 79.7 81.5 49-1.8 22 The Institute of Customer Service

The 7 organisations consistently scoring over 83 in UKCSI since January 2013 Organisation Aldi Amazon First Direct 17 John Lewis Marks & Spencer (Food) Nationwide Waitrose Sector Retail (Food) Retail (Non-food) Banks & Building Societies Retail (Non-food) Retail (Food) Banks & Building Societies Retail (Food) The most improved organisations in UKCSI Out of the 196 named organisations that received a UKCSI score in January 2014 and January 2015: 33 improved their UKCSI score by more than one point during this period 113 have registered a fall of more than one point The most improved organisations over the past year represent a range of sectors. Particularly noticeable, however, is the performance of the three water companies Southern Water, Yorkshire Water and United Utilities which top the most improved list. This underlines the opportunity for utilities companies to improve service, not only to meet regulatory requirements but also to enhance their business performance. 10 most improved organisations - one year January 2015 UKCSI score January 2014 UKCSI score Change Sector Southern Water 71.4 64.5 +6.9 Utilities Yorkshire Water 77.3 71.3 +6.0 Utilities United Utilities 76.1 70.6 +5.5 Utilities Endsleigh 74.1 68.7 +5.4 Insurance Sports Direct 78.5 74.2 +4.3 Retail (Non-food) Matalan 81.9 78.0 +3.9 Retail (Non-food) Santander 79.2 75.4 +3.8 Banks & Building Societies British Gas 71.0 67.4 +3.6 Utilities EDF Energy 72.5 68.9 +3.6 Utilities Jobcentre Plus 55.1 52.0 +3.1 Public Services (National) 17. First Direct has scored over 83 in all surveys since July 2013. It did not appear in the January 2013 UKCSI The Institute of Customer Service 23

Short term improvements in customer satisfaction are an encouraging indicator of future performance, but realising the business benefits of better customer service requires a sustained and consistent focus. We therefore highlight below the ten organisations that have registered the largest rise in UKCSI score over the past five years (i.e. since January 2010). 10 most improved organisations - five years January 2015 UKCSI score January 2010 UKCSI score Change Sector Northern Ireland Electricity 75.6 65.1 +10.5 Utilities Santander 79.2 71.1 +8.1 Banking Nationwide 83.8 75.9 +7.9 Banking Royal Mail/Parcelforce 72.6 65.7 +6.9 Services 3 74.3 67.9 +6.4 Telecommunications Halifax 79.2 72.9 +6.3 Banking National Express 76.5 70.4 +6.1 Transport Aldi 83.0 77.0 +6.0 Retail (Food) Fiat 78.9 73.1 +5.8 Automotive Thames Water 68.0 62.3 +5.7 Utilities The ten most improved organisations over five years: change in UKCSI score 55 60 65 70 75 80 85 90 Northern Ireland Electricity Service (NIES) Santander Nationwide Royal Mail/Parcelforce 3 Halifax National Express Aldi Fiat Thames Water 24 The Institute of Customer Service

Highest scoring organisations by area of the customer experience High scoring organisations in UKCSI typically deliver strong scores across the range of service metrics covered in the survey, highlighting the importance of a sustained focus across the whole customer experience. Service component Definition Top 5 named organisations Professionalism Quality & efficiency Ease of doing business Problem solving Timeliness Staff helpfulness, competence and friendliness, and overall ability to make the customer feel valued Ability to deliver a reliable, high-quality product or service at a reasonable price Providing accessible information/ advice and making the overall experience easy for customers Handling and resolution of enquiries and complaints Speed of service/response and on-time delivery 1. John Lewis 4. Waitrose 2. First Direct 5. Marks & Spencer (Food) 3. Ocado 1. First Direct 4. Aldi 2. John Lewis 5. Marks & Spencer (Food) 3. Amazon 1. Amazon 4. First Direct 2. John Lewis 5. Marks & Spencer (Food) 3. Ocado 1. First Direct 4. Amazon 2. Ocado 5. Center Parcs 3. John Lewis 1. Ocado 4. John Lewis 2. Amazon 5. LoveFilm 3. First Direct The Institute of Customer Service 25

what should organisations do? In an unpredictable and challenging customer environment, organisations need to rethink how they deliver and measure customer service and respond with agility to changing customer needs and preferences. We recommend 11 areas of focus to succeed in the new environment for customer service. 1) A strategic leadership commitment to customer service Setting a clear vision of the organisation s customer service aspirations Customer service is recognised and communicated across the organisation as a central organisational objective There is board-level accountability for customer service Individuals job descriptions, at all levels, include defined customer service objectives Customer service standards are applied across the organisation, and with partner or supplier organisations 2) Measure across the whole customer experience Many organisations choose an overarching measure such as Net Promoter Score or overall customer satisfaction, which has the advantage of being clearly understood and recognised across the organisation. However, organisations need to measure across the whole customer experience. This includes hygiene factors, such as service availability and an organisation keeping its commitments; dealing with problems and complaints; customer effort or ease of doing business; quality and value for money; but also employee engagement; customers emotional engagement; brand and reputation; and future customer behaviours such as propensity to recommend or repurchase. 3) Consistency across channels A characteristic of the highest performing organisations for customer service is consistency of experience across whichever combination of channels customers choose. Organisations need to understand customers use of and behaviour across a range of channels, measuring the impact of distinct channels as well as the overall multi-channel experience. 4) Invest in customer insight Using multiple sources of data, including quantitative, qualitative, structured and unstructured online data to generate deep insight about customer segments and identify changes in customer preferences and behaviour. 26 The Institute of Customer Service

5) Co-creation of services Increasing numbers of customers especially active online users expect a deep engagement with the organisations they want to do business with and expect to co-create products and services. 6) Proactive employee engagement strategies Employee engagement is increasingly seen as a key point of differentiation and a significant influence on customer satisfaction and buying behaviour. Key elements of employee engagement include: Recruiting people who have a genuine desire to help others Supporting line managers to lead effectively, with training and development which maximises their ability to lead and inspire others Unleashing employees creativity to generate solutions to problems and do the right thing for customers, while acting within a consistent and commercially appropriate framework Visibility of senior management and an authentic dialogue with employees Organisations need to assess how engaged their employees are, the extent to which they understand and believe in the organisation s strategy; and whether employees believe that people across the organisation are committed to a customer-focused strategy 7) Equip people with skills and competences Key areas of focus include: Investing in emotional intelligence training for employees dealing with customers, especially in challenging situations Developing the coaching and people management skills of team leaders and line managers Encouraging employees to develop their capabilities through professional qualifications in customer service The Institute of Customer Service 27

8) Prevent problems occuring High performing organisations act proactively to prevent their customers experiencing problems and where problems do occur they act quickly and decisively to resolve them. 9) Benchmark with organisations from other sectors Customers increasingly benchmark the organisations they deal with against service leaders like Amazon and John Lewis. Organisations need to benchmark both within and outside their sector to seek best practice and innovation. 10) Collaborate within and beyond the organisation Organisations need to acknowledge that customers expect great service from every possible touchpoint and at every stage of their experience. This can only be achieved when leaders align all departments and employees behind a strategy for service excellence. In many cases it also means collaborating closely with other organisations that influence the customer experience, be they partners responsible for delivering a product or service to the end user or other suppliers that impact the overall service the customer receives from the organisation. 11) Increase agility and innovation capabilities In an environment where customers expectations are growing and evolving rapidly, organisations need to be able to act quickly to keep up with the pace of change. The most successful companies are those that can move particularly fast, staying ahead of customers expectations and creating competitive differentiation through service innovation. Achieving this requires a continuous questioning and understanding of market needs, as well as an agile corporate structure and culture that is able quickly to implement innovation and change. 28 The Institute of Customer Service

UKCSI key facts 7 Number of years UKCSI has run, beginning in January 2008 13 Number of sectors UKCSI covers, 11 in the private sector as well as local and national public sector. Sector reports with a detailed breakdown of scores by sector and organisation are published for each sector. 39,000 Number of unique responses included in January 2015 UKCSI from 10,144 customers. Customers are geographically and demographically representative of the UK population and participate in the survey through an online panel. Customers are asked to provide a score for organisations based on their most recent interaction. 222 Number of individual organisations and organisation types which received a UKCSI rating. 205 named organisations which have exceeded a minimum sample size are scored in the 13 sector reports. In addition, scores are given for 17 generic providers including your local Council, your local restaurant etc. 2 Number of times per year UKCSI is published, normally January and July. To view the latest UKCSI results, please visit www.instituteofcustomerservice.com/ukcsi The Institute of Customer Service 29

organisations included in UKCSI January 2015 Automotive Audi BMW/Mini Citroen Fiat Ford Honda Hyundai Jaguar Kia Land Rover Mazda Mercedes Benz Nissan Peugeot Renault Skoda Suzuki Toyota Vauxhall Volvo VW Banks & Building Societies Bank of Scotland Barclays First Direct Halifax HSBC Lloyds Nationwide NatWest RBS Santander Tesco The Co-operative Bank TSB Insurance AA Admiral Aviva AXA Churchill The Co-operative Insurance Direct Line Endsleigh Esure Halifax Hastings Legal & General Lloyds LV= M&S More Th>n Nationwide Prudential SAGA Sainsbury s Sheila s Wheels Tesco Virgin Money Zurich Leisure Burger King Caffe Nero Cineworld Costa Coffee Domino s Pizza Greggs Harvester JD Wetherspoon KFC LOVEfilm McDonalds Odeon Pizza Express Pizza Hut Pret A Manger Starbucks Subway Toby Carvery Vue Cinema Your local fish & chip shop Your local restaurant Public Services (Local) GP surgery/health centre Library Your housing Association Your local Ambulance Service Your local council Your local Fire Service Your local Police Service Public Services (National) DVLA HM Passport Office HMRC (Inland Revenue) Jobcentre Plus NHS/hospital service Post office Retail (Food) Aldi Asda Iceland Lidl Marks & Spencer (food) Morrisons Ocado Sainsbury s Tesco The Co-operative (food) Waitrose Retail (Non-food) Amazon Argos B&Q Boots Currys/PC World Debenhams ebay Homebase Ikea John Lewis Marks & Spencer Matalan New Look Next Poundland Primark Specsavers Sports Direct Superdrug TK Maxx WH Smith Wilkinson Services AA Autoglass Avis City Link DHL Enterprise Rent-A-Car Green Flag Hermes Hertz Homeserve RAC Royal Mail/Parcelforce Timpson TNT Yodel Your local builder Your local dry cleaner Your local electrician Your local estate agent Your local hairdresser Your local painter & decorator Your local plumber Your local solicitor Telecommunications & Media 3 BT EE (Everything Everywhere) Giffgaff O2 Sky Talk Talk Tesco mobile T-Mobile Virgin Media Vodafone Tourism booking.com Butlins Center Parcs Expedia Haven Holidays Hilton Holiday Inn Lastminute.com Marriott P&O Cruises Pontins Premier Inn Thomas Cook Thomson Travelodge Virgin Holidays Transport Arriva - Bus group Arriva Trains Wales British Airways CrossCountry East Coast East Midlands Trains easyjet Eurotunnel First Capital Connect First Great Western First Group - bus companies First Scotrail Flybe Greater Anglia Jet2 London Midland London Underground Monarch Airlines National Express Northern Rail P&O Ferries Ryanair South West Trains Southeastern Trains Southern Railway Stagecoach The Trainline.com Thomson Virgin Atlantic Virgin Trains Utilities Anglian Water British Gas Dwr Cymru (Welsh Water) E.ON (energy) EDF Energy first utility Northern Ireland Electricity (NIE) Northumbrian Water npower Scottish and Southern Energy (SSE) Scottish Power Severn Trent Water South West Water Southern Water Thames Water United Utilities (water) Yorkshire Water 30 The Institute of Customer Service

about UKCSI UKCSI (UK Customer Satisfaction Index) is the Institute of Customer Service s national measure of customer satisfaction. It provides insights into the state and direction of customer satisfaction at a national level, across 13 key sectors and for individual organisations. UKCSI was launched by the Institute of Customer Service in 2008. It provides a unique way of measuring the current customer satisfaction of UK customers, as well as trends over time. Methodology To create UKCSI, the Institute of Customer Service runs a large online survey of consumers twice a year: The January 2015 UKCSI results included in this report are based on 39,000 survey responses. Each response is a completed online questionnaire relating to the customer experience with a specific organisation These responses are provided by 10,144 individual customers. The respondents are representative of the UK adult population, according to region, age and gender. UKCSI survey focuses on customers actual experiences of organisations. Respondents are asked to rate their experience of individual organisations they have dealt with in the previous three months. To do this they score a series of metrics on a scale from 1 to 10. These metrics relate to professionalism, quality and efficiency, ease of doing business, timeliness, problem solving and complaint handling. The metrics reflect the priorities that consumers rate as the most important elements of the customer experience, according to Institute of Customer Service research. The UKCSI score for each organisation is the average of all of its customers satisfaction scores. Overall scores for each sector and for the UK as a whole are mean averages of all responses. Each published set of UKCSI results incorporates the data from the previous two surveys, which creates a rolling measure of the state of satisfaction. In the January 2015 results, therefore, the responses included are those from the UKCSI surveys completed for January 2015 and July 2014. The Institute of Customer Service 31

also available UKCSI sector reports Sector reports are available for all 13 sectors covered in UKCSI at www.instituteofcustomerservice.com/ukcsi Use the sector reports to: Benchmark your organisation against others in the sector, using the detailed data on customer satisfaction, complaints and each of the customer priorities Identify the organisations rated highest for customer satisfaction in the sector and understand their service strengths, as viewed by their customers Compare the sector to others in the UK economy Identify which channels customers in this sector use and how satisfaction varies by sector Business Benchmarking UKCSI Members of the Institute of Customer Service are able to benchmark themselves against the results of the UKCSI survey, using the Institute s Business Benchmarking service. This provides detailed insights into an organisation s service performance and comparisons against the highest scoring organisations in their sector. ServiceMark ServiceMark is a national standard which demonstrates an organisation s commitment to customer service. ServiceMark provides an independent validation of an organisation s achievement in customer service, identifies opportunities for improvement and learning and helps motivate and engage your employees. ServiceMark consists of three elements: Business Benchmarking UKCSI ServCheck Assessment Assesses how your customers rate your organisation against more than 25 priority measures of satisfaction A unique assessment tool which provides insights into your employees engagement with your customer service strategy Independent assessment including a report with recommendations for action planning Find out more at: www.instituteofcustomerservice.com/servicemark Members of the Institute also have the option to benchmark themselves against business-tobusiness sector averages, where this is relevant to their business model and target market. 32 The Institute of Customer Service

other Institute research Beyond Measurement Customer service and business performance. The research aims to help CEOs, senior executives and customer service leaders measure customer service in order to deliver sustained improvement in business performance. Organisations can use the research to assess their current service measurement and insight activities and identify any gaps. The power of service How Utilities can improve customer focus and business performance. Shows how Utilities can address the challenges and opportunities of a changing market by placing a renewed focus on the customer. Includes frameworks and recommendations for improving customer satisfaction and enhancing trust and reputation. Customers and citizens Further building the case for customer service in the public sector. This research examines the key challenges in delivering excellent customer service in the public sector. It provides organisations, including government, with recommendations for developing customer focus and delivering better outcomes for citizens. Structures for success How models of business ownership influence customer service. Examines whether some business models are better at delivering customer service than others. Highlights ways in which organisations can learn from other business model types in order to improve service, be they mutuals, PLCs, private companies, partnerships or franchises. Are you being engaged? 2014 Employee engagement and its influence on customer satisfaction and buying behaviour. This research demonstrates the importance of employee engagement as a driver of positive customer experiences and improved business performance. It updates research the Institute published in 2012 on this topic. Visit: www.instituteofcustomerservice.com/research for more information and to access Institute research. The Institute of Customer Service 33

The Institute of Customer Service The Institute of Customer Service is the UK s independent, professional body for customer service, with over 450 organisational members and over 5,000 individual members. Our purpose is to enable organisations to achieve tangible business benefits through excellent customer service aligned to their business goals; helping individuals to maximise their career potential and employability by developing their customer service skills. We provide a framework for our members to share and learn from each others service delivery experiences and offer wide-ranging support for continuous customer service improvement. As the professional body we are independent setting standards so that our customers can improve their customers experiences and their business performance. Key activities undertaken by the Institute include: Research and reports on the latest customer service trends and thinking Publication of the UK Customer Satisfaction Index (UKCSI) twice a year Benchmarking and diagnostic tools to identify areas for improvement by surveying customers and employees Training and accreditation programmes for customer service professionals Professional qualifications for individuals at all stages of their career Public policy development. For further information please visit www.instituteofcustomerservice.com The Institute of Customer Service 35

notes 36 The Institute of Customer Service

UKCSI Sector Reports Get the latest insights on the state of customer satisfaction based on the experiences of customers in your sector Use the UKCSI sector reports to: Benchmark the customer satisfaction performance of leading organisations on a range of key metrics Identify the highest rated and most improved organisations for customer satisfaction See the link between customer service and business priorities including loyalty and trust Identify which channels customers use and how satisfaction varies by channel Compare the customer satisfaction performance of 13 sectors UKCSI sector reports are available at www.instituteofcustomerservice.com/ukcsi for the following sectors: Automotive Banks & Building Societies Insurance Leisure Public Services (Local) Public Services (National) Retail (Food) Retail (Non-food) Services Telecommunications & Media Tourism Transport Utilities T: 0207 260 2620 E: enquiries@icsmail.co.uk instituteofcustomerservice.com