Customers aren't satisfied, and it's killing sales

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By: Wise Marketer Staff |

Posted on February 6, 2014

The UK Customer Satisfaction Index (UKCSI) has revealed that customer satisfaction in the UK fell during the last quarter of 2013, with overall customer satisfaction standing at 77.1 out of 100 in the January 2014 index compared to 78.2 in January 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.

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.

The UKCSI also demonstrates that customer service is a key part of customers' buying decisions. Some 60% of customers favour a balance of price and service and will not accept low service levels in exchange for a cheap deal, while 25% of customers prefer the highest levels of service and are prepared to pay a premium for it, and only 15% 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, as 39 organisations achieved an increase of one point or more in their customer satisfaction score since January 2013, while 81 saw a fall of at least one point. The remaining 69 organisations either registered no movement, or moved up or down by less than one percentage point.

Amazon was the highest scoring organisation with John Lewis coming in second place, while only 4 of the top 20 organisations increased their customer satisfaction by more than one point, signalling the importance of keeping a clear focus on service.

"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," said Jo Causon, CEO for the Institute of Customer Service.

In an environment where customers are more aware than ever about the standard of service they should receive, brands cannot afford to lessen their focus on customer service because it affects not only the success of individual organisations but also the growth and competitiveness of the country's economy as a whole.

The index also 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 14th October 2013) of 9% compared to only 3% 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.

The UKCSI January 2014 report included 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 were Tesco Bank, Northern Ireland Electricity Service, and CenterParcs.

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