Customer satisfaction levels across financial services, telecoms and retail are flatlining and many businesses in the UK are failing to deliver a differentiated customer experience, according to data from GfK.
This may surprise many companies, particularly those that have been ploughing vast sums of money into making processes more customer-centric.
Over the past five years, customers’ satisfaction with their current bank account has been relatively static dropping from 67 per cent to 66 per cent between 2008 and 2013. Over the same period, satisfaction among motor insurance customers has dropped from 71 per cent to 62 per cent.
“People always tell us how much they are investing in customer service and how closely they listen to customer feedback, so this will come as a shock to many,” says John Banerji, director of customer experience research at GfK.
“The reason it may not be cutting through is that feedback sometimes comes from a vocal minority who may not be wholly representative. Some businesses also have a tendency to focus on short-term changes to maintain profitability, so the more complex, longer-term issues are deferred.”
A long-term approach
Heather Smith, sales and marketing director at Aviva Direct Insurance, understands the dedication required to have a lasting effect and has been focused on improving the customer experience for the past three years.
“It takes sustained effort,” she advises. “It doesn’t happen overnight and you can’t give up after 12 months.”
The insurance provider is seeing the benefits of its long-term approach, which she admits is an on-going process (see Marketers’ Response, below).
Although the data shows that banks as a whole have not improved, they have maintained a consistent level of customer satisfaction despite negative media and a difficult economy.
“If you ask consumers about banks as a category, negative media coverage kicks in, but if you ask them about their own bank, although they might not have a great emotional attachment to it, few people are really dissatisfied, particularly as online and mobile banking solutions are making their lives easier,” adds Banerji.
Banks also get a higher satisfaction rating than insurance providers because consumers interact with them more regularly, so unless someone has made multiple claims it is unlikely they will be aware of improvements from one year to the next.
Stuart Crawford-Browne, divisional director of brand and customer service at GfK, suggests this means insurers need to work harder to differentiate their offering.
Customer satisfaction is flat or declining (between 2008 and 2013)
“Unless the marketing and communications teams tap into how they can add value, make sure they are relevant to consumers and refresh their proposition effectively it is likely consumers will not feel engaged,” he warns.
High street banks introducing tangible rewards and beginning to recognise customer loyalty is also starting to stimulate positive sentiment. For example, Lloyds Bank introduced its Everyday Offers rewards scheme last October, which allows customers to earn cashback on daily spending and has been credited with helping parent company Lloyds Banking Group return to profit.
Customers are noticing improvements too with 30 per cent suggesting customer service has got better over the past 12 months, finds GfK.
Similarly, Barclaycard has made a conscious effort to drive up the customer experience by overhauling its terms and conditions and improving transparency.
It kicked off a campaign for its relaunched Freedom Rewards service in October, which has contributed to 17 per cent of consumers seeing an improvement in customer service.
For both Barclaycard and Lloyds Bank the majority of customers (77 per cent and 60 per cent respectively) believe service levels have remained fairly static over the past year.
Keeping in touch
Brands that do not have an on-going connection with customers should also think about offering added value services, says Crawford-Browne.
“If the customer relationship is fairly latent, as with motor insurance providers, brands risk not being top of mind and that means engagement levels become a challenge,” he adds.
Perceptions of customer service remain fairly flat in the telecoms sector too – both for landline providers such as BT (62 per cent) and Sky (61 per cent), as well as mobile networks including Vodafone (67 per cent) and EE (59 per cent).
At O2 , while 70 per cent say nothing has changed, 22 per cent have noticed an improvement but 9 per cent have seen service decline. This compares to EE where 24 per cent of people have noticed the customer experience slipping and Vodafone where 18 per cent of customers feel worse off.
On a more positive note, 17 per cent of EE customers have seen an improvement, as have 15 per cent of Vodafone users.
“This sector should be getting it right because they’re ahead of the curve in technology, but customers aren’t seeing the improvements they expect,” says Crawford-Browne.
“They might be in love with their phone and apps, which add value to their lives, but they are not seeing what the network providers and operators are doing as part of that relationship.”
The risk, then, is that mobile networks become a commodity in the same way that energy providers are but Crawford-Browne believes that benefits such as 4G will be a differentiator, so long as it is bundled up appropriately.
Retail brands are also struggling to boost customer service – 11 per cent of consumers say Tesco is doing a worse job than a year ago, compared to Sainsbury’s where 6 per cent of people have noticed a negative change.
This could explain why consumers are ditching the ‘big four’ in favour of value retailers such as Aldi, which saw a sales increase of 35 per cent in the first quarter of the year.
“New brands like Aldi and Lidl were originally about value but are now providing a differentiated experience, which is being communicated through their marketing,” says Crawford-Browne.
“This is a short-term snapshot but we are seeing that the major supermarket brands are struggling. If they lose focus on their objectives and lose touch with consumers, they can easily lose ground.”
The market is constantly moving so all brands, no matter what sector they operate in, must be able to continually respond in order to keep up with consumer expectations.
“Having a continuous feedback loop is powerful so if organisations are listening and creating agile processes to respond to what they’re hearing, it will go a long way to ensure they’re in step with customers’ needs,” adds Crawford-Browne.
Sales & marketing director
Aviva Direct Insurance
Service is an important part of our brand’s differentiation.
Among other things, we have been focusing on service and giving customers a reason to choose Aviva. It’s not just what you pay, it’s what you get for that and as a result most of our metrics have gone up over the past three years.
We monitor transactional Net Promoter Score on a rolling 12-month period and it has been steadily rising. When we started this we weren’t in as good a shape as we should be, but we have come from a negative score to a plus 44 score.
The turnaround has been driven by a ‘systems thinking’ methodology, which is about removing failure and listening to the customer and your frontline staff.
Director of customer insights
Lloyds Banking Group
Customer’s expectations are constantly increasing, especially in this age of fast paced technological change. They need to be at the heart of a company’s strategy to anticipate future needs.
Across our high street brands, we realise the importance of having customers at the heart of what we do. Our research programme measures their experience from walking into a branch, taking out a mortgage or starting a business.
By listening to our customers, we can understand whether our products and services are delivering the right things, and if they’re not, we can use that feedback to make improvements.
Through this focus we have seen a year on year improvement in our scores, with a 6 per cent rise in ratings in the first three months of this year.
Seven ways brands can become more customer-centric
• Ensure that the voice of the customer influences decision making at all levels.
• Listen more effectively to customers and read between the lines about what they want from the relationship and what they want next.
• Move away from continuous improvement to making breakthrough changes.
• Resist daily fire-fighting to focus on strategic objectives as high churn and complaints are reminders that the business is out of touch with customer requirements.
• Don’t underestimate the challenges posed in trying to change organisational culture.
• Make sure it is easy to act on customer feedback. New customer-driven approaches and processes need to be intuitive if employees are expected to change the way they think and work.
• Use real-time feedback to respond, adapt and iterate quickly with new offerings. Lean approaches can improve margins but being agile means objectives can be met with speed and flexibility.
The research is based on a combination of data including the GfK Financial Research Survey (FRS), which is conducted among 60,000 consumers across Great Britain. The GfK Energy Monitor, which is derived from GfK Online Consumer Panels, was also taken into account, as was GfK’s Omnibus research.