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UK Customer Satisfaction at The Lowest Level Since 2010

Written by Mark Gould | Jul 12, 2024 2:10:29 PM

 

The UK Customer Satisfaction Index (UKCSI) report for July 2024 indicates the current state of customer satisfaction across different sectors. The latest UKCSI stands at 75.8 out of 100, a decrease of 0.8 points from a year ago and 2.6 points lower than its high of 78.4 in July 2022.

In this summary, I want to highlight the performance of retailers. The retail sector again showed the most robust performance, although scores have remained unchanged since 2023. The Retail (Food) sector scored an average of 79.4 out of 100, maintaining stability compared to the previous year (79.5). In contrast, the Retail (Non-Food) sector scored slightly higher at 80.4 but experienced a slight decline from 80.8 in July 2023.

Top Performing Retailers
  1. Waitrose: Achieved the highest score in the Retail (Food) sector with 84.4, a 4.4-point increase from the previous year. Despite its stable market share, Waitrose's sales growth significantly contributed to the John Lewis Group's profitability.
  2. Ocado Scored 82.7, maintaining its position as a top performer despite a 2-point drop from the previous year. It was the fastest-growing grocer in the 12 weeks until May 2024, with a 12.4% sales increase.
  3. Lidl, Tesco, and Sainsbury's: These retailers, scoring close to the sector average, demonstrated strong sales growth due to strategic initiatives like loyalty schemes, competitive pricing, and product quality improvements.

Timpson proved its customer service excellence by topping the overall UK Customer Satisfaction Index (UKCSI) with an impressive score of 86.0. The Institute of Customer Service classifies Timpson in the services sector, so I will not comment further on them in this retail analysis.

Comparative Performance

Retail (Food) companies with UKCSI scores at least 1 point above the sector average saw annual sales growth of 5.8%, significantly higher than the 0.2% growth for those below the sector average. This highlights the direct correlation between high customer satisfaction and robust financial performance.

The report shows that different sectors had varying performances:

Banks & Building Societies: This sector slightly declined, scoring 79.3 compared to 80.0 in July 2023. However, organisations with scores above the sector average had significant net current account gains, highlighting the importance of customer satisfaction in retaining and attracting customers.

Telecommunications & Media: This sector experienced the most significant decline, dropping by 2.1 points to 73.3. Issues in complaint handling were particularly problematic, with a notable fall in satisfaction scores.

Tourism and Leisure: Both sectors saw declines, with Tourism dropping to 79.3 from 80.4 and Leisure to 79.0 from 80.0. These declines suggest areas where enhanced customer experience strategies are needed.

Utilities: This sector remained the lowest in customer satisfaction, slightly increasing from 69.5 to 69.8, indicating persistent challenges in meeting customer expectations.

Recommendations for Retailers

To enhance customer experience and improve satisfaction scores, retailers should consider the following actions:

Invest in Employee Engagement: Ensure employees are well-trained, motivated, and aligned with the company's customer service values to enhance customer interactions significantly. Engaged employees are more likely to provide exceptional service, increasing customer satisfaction.

Leverage Technology: Implement advanced technologies for inventory management, personalised marketing, and seamless in-store and online experiences to improve operational efficiency and customer satisfaction. Retailers should focus on integrating systems that enhance the shopping experience, such as electronic shelf labels and robust loyalty programs.

Enhance Product Quality and Innovation: To attract and retain customers, continuously improve product quality and introduce innovative products. Retailers should monitor market trends and customer feedback to stay ahead in product offerings.

Focus on Competitive Pricing: Implement pricing strategies, such as price matching and exclusive discounts, to help retain price-sensitive customers while maintaining profitability.

Improve Accessibility and Convenience: To enhance the shopping experience, make it easier for customers to find assistance, navigate websites, and access products. Retailers should streamline contact channels and ensure sufficient staffing to handle customer inquiries efficiently.

Foster a Strong Organisational Culture: A culture prioritising customer service and ethical practices can build trust and loyalty. Retailers should instil values emphasising customer care, transparency, and ethical behaviour.

Develop Agility: Retailers must be agile in responding to market changes and customer needs. This involves fostering collaboration, critical thinking, and a proactive approach to managing risks and opportunities.

Wrapping up

The UKCSI report emphasises the crucial connection between customer satisfaction and business performance. Retailers that provide excellent customer service typically achieve better financial results. By investing in employee engagement, leveraging technology, focusing on product quality, and improving accessibility, retailers can significantly enhance customer satisfaction and drive business growth. Emphasising a solid organisational culture and developing agility will enable retailers to meet changing customer expectations and maintain a competitive edge in the market.

You can download a free copy of the full UKCSI report here.