June 2009 According to the nation’s first overall customer satisfaction measure - the National Customer Satisfaction Index (NCSI-UK) - companies do a better job satisfying their customers in the UK than they do in Japan, Sweden, Finland, Denmark, Singapore, Hong Kong, Thailand, and South Korea, but lag the United States, Turkey and Colombia. The National Customer Satisfaction Index (NCSI) score for the UK is 73 on a 0-100 scale.
Because overall customer satisfaction has a positive effect on aggregate consumer demand, it also has an effect on economic growth. NCSI-UK is the sister initiative of the prominent American Customer Satisfaction Index (ACSI) developed by Professor Claes Fornell in conjunction with the University of Michigan, and should have a similar role in the UK as it does in the US. The latest ASCI shows a second quarter improvement after a period of decline preceding the recession. When the ASCI score improved in the fourth quarter of 2008, it stood alone among economic indicators showing positive movement. Since then – and after correctly predicting an increase in consumer spending during the first quarter in the US - it has been joined by most other indicators of the economy.
“Not only does customer satisfaction have an effect on consumer demand, it also impacts share prices,” said Fornell, Founder of the NCSI-UK and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. “For most companies, stock prices fell sharply during the past year, but as in the US, companies with average or better customer satisfaction were punished less by investors.” On average, companies that equal or better the national NCSI-UK score lost 33% of their market value in 2008, while those that fell short of the national average lost 49%. By comparison, the FTSE 100 dropped by 31%.
In the first quarter of 2009, the NSCI-UK examines Utility Providers, Mobile Network Operators and Airlines.
Airlines: Virgin Atlantic Dominates; Easyjet Trails
Airlines debuts in the NCSI with a score of 69, below the national average. Last year, The New York Times ‘Quote of the Day’ featured the statement that Fornell was “…constantly surprised at the creativity in the wrong direction of airline management.” But UK airlines outperform the US airline industry, which scores only 64.
Virgin Atlantic has the top score of 75, outpacing British Airways at 69 points. BMI scores 67, slightly below BA and the industry average of 69, while Easyjet is at the bottom with an NCSI score of 66. NCSI data show that airlines do a poor job handling passenger complaints, with the exception of Virgin, which appears to complaints well.
Utilities: Low value for money drags the industry down
Customer satisfaction with Utilities declines significantly, falling 5% to 63. The utilities industry is the lowest scoring in the NCSI. Rate increases and new tariffs on both electricity and gas across the industry have contributed to the downturn in satisfaction. Five of the big six suppliers decline of 3% or more. Contrary to the mobiles and airlines, utilities score much lower in the UK than in the US.
Despite a 4% drop, Scottish and Southern Energy (SSE) score highest at 67, closely followed by EDF Energy, down 3% at 66. E.ON and ScottishPower decline 5% to the industry average of 63. Centrica (British Gas) is the lone improver, up 2% to 62. Gas and electric provider RWE Npower drops this year, falling 6% to 59.
Mobile Service Providers: Tesco Mobile Leads, But O2 Gaining Ground
The mobile service industry scores 73 points, significantly better than the U.S. average of 69, and equal to the national average for all goods and services in the UK.
Tesco Mobile has the highest score of 82 points, but drops 2% from last year. The fast growing networks’ recently launched new tariffs that provide customers with bundles of free credit as a reward have provided hugely popular with consumers.
Tied for second place are O2 (up 3%) and Virgin Mobile (up 1%) with 77 points. Orange’s position is of particular interest –Orange is fourth overall with a score of 73, but has improved the most (up by 6%) and is moving ahead of Vodafone, unchanged at 72. In last place is 3G provider 3.
Although the new technology is competitive in price, 3’s quality lags far behind the industry as a whole and the number of complaints is twice the industry average. Customer satisfaction with 3’s services remains at the bottom of the mobiles category, down 2% to 67.
For a complete list of measured companies and scores, please visit www.ncsiuk.com