The customer is always right

Research shows consumers are increasingly dissatisfied with the service and value for money they get from companies – but that companies which listen and respond to complaints can reap rewards

The third FDS annual Comparisat report unveiled this month shows increasing customer dissatisfaction driven by poor complaint-handling and resolution, as well as a perceived lack of value for money.

Unhappiness is also accounted for by higher prices, particularly in the energy utilities sector where there is no apparent increase in value. As customer satisfaction ratings are a known predictor of market share, companies would do well to look at the customer-satisfaction rating top-ten chart.

Despite a decline in overall satisfaction for the second successive year, the good news is that companies like Marks & Spencer (M&S) and Sainsbury’s, which make efforts to tackle the reasons for this dissatisfaction, are likely to see a corresponding rise in revenues. The return of M&S and Sainsbury’s to this year’s top ten shows that customers really do respond to the “holy trinity” of great product, good service and effective communication.

While unsatisfactory complaint-handling in itself isn’t enough to drive customers away, in combination with poor service and product, it will. The report identifies that one in five consumers had made a complaint against a major organisation in the past 12 months. Interestingly, seven out of ten complaints are made by telephone – just 10% are by e-mail – indicating consumers would rather talk to a real person to resolve service issues.

Complaints have grown by 10% in just one year. Given that almost a third of complainants reduce or stop using the supplier concerned altogether, it’s clearly time organisations woke up to the importance of customer care.

Comparisat shows Asda and Morrisons have the most loyal customer base, but while they retain their top-ten places, the challenge from e-tailers is sustained. Amazon and eBay lead in advocacy and overtake both store groups. However, while e-tailers have enhanced their performance, they need to consider how they can engender loyalty and not just advocacy among consumers. E-tailers are only as good as the last experience they delivered. Could this be because the “relationship” is principally transaction-based and essentially anonymous? Organisations that provide a personal service are rewarded with increased loyalty, trust and high customer satisfaction.

This may explain why the Identity & Passport Service (IPS) has come top for the third year running, with a ten out of ten score. Not an obvious contender, its ability to deliver a good service, efficiently and by real people is recognised by consumers. If you call for help you get an “adviser”, not an offshore call centre operator. This is what makes the difference and keeps this public sector giant at the top. Asda, also highly rated by its customers, takes care to provide the products customers want at a price they can afford. It communicates well with customers and employs staff trained to advise and help in store.

Worst performers in the survey are the energy utilities, a sector where customers point to increasing prices with no “added value” in service. The survey said that 42% of customers are disappointed with the value for money energy suppliers’ offer.

Electrical retailers fared poorly too – Dixons was cited as least likely to be recommended or revisited, and Currys had the least satisfied customers of all 36 benchmarked companies. Perhaps some retailers need to rethink their high street presence. Their staff could be highly trained advisers who, by providing an added-value service to customers, help to drive sales in store and online. Stores and their e-tail arm should be working together to service customers.

E-tail giants Amazon and eBay, although competitively priced, have little or no personal relationship with the consumer, hence their low scores for loyalty. To satisfy customers and generate repeat business and loyalty companies need staff who can interact and offer a professional service to the purchasing experience.

Trust is a key ingredient that seems to be missing for many organisations, and may explain Tesco’s two-place drop. Although M&S and Sainsbury’s are doing well, they have not yet fully recovered their former positions. Trust is easy to lose but is regained much more slowly.

The report also looks at demographic and regional differences. Statistically, customers are likely to be happiest if they are a C2DE female aged over 55. Similarly, the further north and further away from London, the happier consumers appear to be. However, it is particularly striking that ethnic minorities are less satisfied than the rest of the population. Are they harder to please or are they really getting poorer service? Companies need to tackle this issue.

So, who’s getting it right? Companies gaining market share are those that successfully manage two-way dialogue with customers, building feedback into their product cycle. M&S and Sainsbury’s seem to have found the formula. They are singled out for their improvements to product, availability and well-targeted marketing, underpinned by helpful and courteous in-store assistants.

M&S and Sainsbury’s have tackled the issues that were causing customers to complain and used this information to provide the products and service consumers want. Other companies would do well to follow their example.

Methodology:

For the 2006 Comparisat report, 1,500 households from across the UK provided 10,000 response sets to provide an overview of whether we are more or less impressed with customer service levels, and measure satisfaction with staff, quality, range, innovation, trust, loyalty, value for money and the complaint-handling process.