Skip to content

Categories:

Customer View Darkens as Merger Mania Persists for Telecom Companies

Poor service and high cost is making consumers feel left out of the equation when it comes to telecommunications services. A year ago, the American Customer Satisfaction Index reported that customers were highly dissatisfied with subscription TV and Internet service—a situation that has worsened in 2015. While customer satisfaction with bottom-ranked ISPs has not budged, pay TV service has deteriorated further in the eyes of subscribers. The two telecom segments tie at an ACSI score of 63 (100-point scale), the lowest level of satisfaction among 43 consumer household industries. Fixed-line telephone service, often included in bundled packages along with Internet and TV, languishes as well—down 5.5% to 69.

telecom-national-2015

While consumers remain frustrated with their service providers, options are growing. Streaming services from Amazon, Apple, and Netflix are just one alternative in a fast-changing landscape. Moreover, these companies all display much higher customer satisfaction.

Meanwhile, the big telecom players continue to focus on mergers. In spite of an aborted Comcast-Time Warner Cable (TWC) marriage, Charter Communications continues to pursue both TWC and Bright House Networks. If successful, Charter would become the second-largest cable company in the country.

As with the now defunct Comcast-TWC merger, a Charter-TWC union joins together two poorly performing coaxial cable providers—a dubious prospect for consumers yearning for better service. Bright House shows higher customer satisfaction than either Charter or TWC, but even so, ACSI data show that most mergers tend to dampen satisfaction, at least in the short term.

ch-tw-bh

Among pay TV providers, fiber optic and satellite service beats cable. Verizon’s FiOS leads with an ACSI score of 71, followed by AT&T’s U-verse (69) and DIRECTV (68). AT&T’s bid for DIRECTV would allow it to deliver TV service via multiple technologies, which could benefit consumers. That said, neither AT&T nor DIRECTV shows any improvement in customer satisfaction over the past year, and their scores remain far below the national ACSI average.

tv-mergers-2015

Download ACSI Telecommunications and Information Report 2015 »

Posted in Results.


American-US Airways Merger Moves Smoothly Per Passengers

Over a year into its merger with US Airways, American shows no negative impact on customer satisfaction, a departure from a pattern seen in the aftermath of many mergers tracked by the ACSI.

The difference may lie in American’s slower approach to combining operations with US Airways, although it is still early in the merger. American brought US Airways customers into a joint loyalty program in March (after the ACSI Travel 2015 report interviews took place). The key step of reservation system integration will happen later this year.

Following its acquisition of AirTran in 2011, discount carrier Southwest appears to have stabilized with only a few bumps in satisfaction. Southwest’s merger pace was slow, with the last AirTran-branded flight taking place in December 2014. Southwest, however, has lagged rival JetBlue for passenger satisfaction over the past four years. JetBlue currently ranks number one in the airline industry with an ACSI score of 81 (0 to 100 scale).

15airline-mergers-5yrs

For the industry at large, consolidation has been the name of the game over the last several years. In 2008, legacy carrier Delta acquired Northwest—an airline with a history of lower customer satisfaction. Delta received its single operating certificate from the FAA in December 2009 and by 2011, its passenger satisfaction had tumbled to the very bottom of the industry (56). Delta has since recovered, with satisfaction stabilizing at 71 after a three-year climb.

The story for United differs in that it merged in 2010 with an airline that had a history of significantly higher ACSI scores—Continental. While the partnership gave United an initial 2% uptick in passenger satisfaction, the Continental brand’s ACSI score endured a two-year freefall. In 2012, the much larger United had a series of high-profile customer service issues, including reservations systems failures, website outages, and flights delays or cancellations. For the past two years, United has been flat 60—by far the lowest score of the legacy group.

Posted in Results.


Less Holiday Snafus Mean Higher Satisfaction for Online Retail

While traditional retailers see few gains in customer satisfaction for the holiday season 2014, one industry category manages an upswing: Internet retail. According to ACSI’s Retail Report 2014, customer satisfaction with department and discount stores stays flat, while specialty stores decline compared with the prior year. Yet consumers are more pleased overall with their online shopping experiences. The twist is that websites from brick-and-mortar competitors have a hand in the upswing.

Among the pure-play Internet companies in the ACSI study, nearly all show weaker satisfaction in 2014 compared to 2013. In contrast, the aggregate score for “all other” Web retailers—which includes smaller websites and the online channels of traditional stores—jumps 8% to an ACSI benchmark of 81 (0 to 100 scale). The small players’ positive momentum boosts the category average to 82, effectively recouping the large loss incurred in 2013 when bad weather caused a late-season shipping fail.

2015-Inet-Retail-compare

Coming into this season, both retailers and shippers were better prepared to avoid the prior year’s disappointments. Shipper UPS, however, may have over prepared. The company hired thousands of extra workers only to find that demand turned out to be lower than anticipated with the exception of peaks on Cyber Monday and December 22.

Yet, in spite of shipping successes, four big Web retailers show customer satisfaction declines: Amazon (-2%), Newegg (-2%), eBay (-1%), and Overstock (-3%). The only major player to gain in 2014 is Netflix, a company that is still in recovery mode following its severe decline in 2011, when consumers reacted to price hikes.

The upward ACSI path of Netflix since 2012 coincides with a quadrupling of its stock price and success with producing original content. While Netflix still falls short of its pre-2011 satisfaction level, it is again closing the gap to leader and streaming rival Amazon. With the streaming market poised to receive an influx of new players, some from the traditional TV business, neither company should rest on its past laurels when it comes to satisfying customers.

Posted in Results.

Tagged with , , , , , .


Recovery Will Lose Energy Unless Consumers Start Spending

By Claes Fornell

Despite a flurry of good economic news, the U.S. recovery, while better than just about any other country at the moment, will not gain much momentum unless there is a substantial increase in consumer demand.

Following the February jobs report, which showed better-than-expected employment growth, many economic commentators contend the economy is poised for sizable expansion in the near future, perhaps by as much as 4% or better.

The stock market seems to agree. Share prices fell on the news, fearing an increase in interest rates.

But neither is likely unless consumer spending strengthens substantially. In fact, spending growth probably needs to double in order for the economy to take off.

This is what the numbers indicate: Last year, consumer spending increased by 2.5% and GDP grew by 2.3%. In the late ’90s, when the economy last grew by 4%, consumer spending increased by more than 5% per year.

Since consumers represent about 70% of GDP, the arithmetic is straightforward: The economy cannot expand much without more consumer demand. Retail sales actually dropped in December and barely moved in January.

Why is consumer demand in short supply? The recession ended a long time ago. There are two main reasons: continued meager wage growth and a decline in buyer satisfaction.

Read ACSI Chairman and founder Claes Fornell’s perspective in Investor’s Business Daily »

Posted in Results.


Consumers Agree: Wal-Mart Least Satisfying for Merchandise, Food, or Pharmacy

Based on consumer evaluations across various retail categories, Wal-Mart provides the least satisfying customer experience—three times over. According to the American Customer Satisfaction Index’s annual report on retail, Wal-Mart consistently ranks at the bottom among competing stores in three categories: department & discount stores, supermarkets, and drug stores. Compared with industry averages in these categories, the mega-retailer receives its best rating for groceries, but Wal-Mart’s customer satisfaction score of 71 (100-point scale) remains a far cry from the supermarket leaders: Trader Joe’s and Wegmans at 85.

walmart-lowest

The ACSI report is based on survey data collected in the critical fourth quarter of the year, which encompasses the holiday shopping season. The best of the best in 2014 includes upscale department store Nordstrom and perennial ACSI leader Amazon.com, which tops the Internet retail category at 86. But even among rivals on the discount side, Wal-Mart lags far behind. Target and Dollar Tree earn ACSI scores of 80 and 79, respectively, while Family Dollar and Dollar General tie at 75.

A year ago, Wal-Mart scored 71 in the department and discount store category, but now tumbles down 4% to 68—its lowest score since 2007. In the supermarket category, Wal-Mart’s customer satisfaction also declines, but by a scant 1%. 2014 marks Wal-Mart’s debut in ACSI’s drug store category. At 68, Wal-Mart’s pharmacy services are no more highly regarded than its overall merchandise or groceries.

This dismal customer satisfaction picture for Wal-Mart coincides with the company posting its weakest sales growth in five years. As reported by the Associated Press, Wal-Mart recently announced its intention to raise worker pay. While there is a connection between highly satisfied customers and happy employees, Wal-Mart clearly has a long way to go to reach a level of satisfaction that matches—let alone exceeds—retail sector averages.

24/7 Wall St.: Customer Satisfaction Lowest at Wal-Mart, Highest at Nordstrom and Amazon »

CBS MoneyWatch: Meet America’s Most Hated Retailer »

Marketplace Radio : Walmart’s way to growth »

MarketWatch: 4 Reasons Walmart is the Most-Hated Retailer in America »

Posted in Results.


Great Customer Service Harder to Find in Federal Agencies

Just two years ago, customer service was a strong point for the U.S. federal government, with citizens giving the courtesy and helpfulness of staff a rating of 80 out of a possible 100 points. The American Customer Satisfaction Index—which applies the same rigorous, scientific methodology to measuring satisfaction with both private and public sector organizations—deems scores of 80 or above as excellent.

This once-excellent customer service has diminished since 2012, down 6% according to the ACSI’s annual report on citizen satisfaction with government, but without the benefit of other aspects of agency performance—such as the critical website channel—improving to anywhere near the 80 mark. In fact, website satisfaction has failed to improve at all—staying flat at a benchmark of 72 in 2014, or 3% below its 2012 level. Other aspects of the citizen experience have downgraded further. The process of applying for and receiving services falls to a low score of 68, while the clarity and accessibility of information provided by agencies drops to 69.

15jan-citizen-experience

As in the private sector, customer service is often the first casualty of cost-cutting and poor service leads to less satisfaction. The overall score for citizen satisfaction with federal government is down for a second year, reaching a new low of 64.4.

15jan-citizen-sat-fed-gov-services

The downturn in citizen satisfaction comes amid cutbacks in agency budgets and fewer federal workers. As reported in January, reduced funding for the IRS could mean longer wait times for callers this tax season, delays in refunds for paper filers, and perhaps even a total agency shutdown later in the year.

If cuts are going to be made to the people delivering the services, then part of the solution is paying more attention to websites. ACSI data show that citizens are much happier when services are offered electronically. In the case of the Internal Revenue Service, satisfaction is dramatically higher for taxpayers who file electronically (76) than for those who file on paper (56).

Read more »

Federal Computer Week: Satisfaction With Fed Customer Service Worst Ever »

The Washington Post, Federal Eye: Index Shows Americans Increasingly Unsatisfied
With Federal Services »

MarketWatch: Americans Hate the Federal Government Now More Than Ever »

Federal Times: Satisfaction With Agency Services Continues to Fall »

Posted in Results.


Bank of America Lacks Post-Recession Customer Satisfaction Bump

Stalled out at a low customer satisfaction score of 69, Bank of America is the only big bank that still falls short of its prerecession satisfaction level, according to the American Customer Satisfaction Index’s 2014 results for commercial banks. For two decades, the ACSI has tracked customer satisfaction with checking, savings, and loan services for retail banks, many of which have undergone mergers. The research shows that smaller institutions consistently provide their customers with a much better experience than big banks.

2015-Banks-compare-3

Over the past 10 years, none of the measured banks come close to matching the numbers set down by the aggregate of all smaller banks, averaging 80 on ACSI’s 100-point scale. Since 2005, the highest score among the four banks is 76—earned in 2013 by JPMorgan Chase.

That said, the trend in 2014 is negative overall, as the industry retreats 2.6% driven by a 4% drop for smaller banks and a 3% decline for JPMorgan Chase. Citigroup, Wells Fargo, and Bank of America are unchanged compared with a year ago, but the lack of improvement for BoA keeps it well behind its rivals. And while most banks now match or exceed their prerecession ACSI scores, BoA remains 5% below its benchmark of 73 from 2008.

Money: Guess Which Big Bank Has the Unhappiest Customers »

MarketWatch: America Voted: This Is the Bank We Dislike Most »

The Charlotte Observer: Bank of America Continues to Lag Peers on Customer Satisfaction Scorecard »

Motley Fool: Believe It or Not, This Bank Has the Worst Reputation »

Posted in Results.


Consumers Say Credit Unions Offer Better Rates Than Banks

For a second year, credit union members feel that they receive better service and more competitive interest rates than consumers who have accounts or personal loans through retail banks. ACSI’s annual study on financial services shows banks down 2.6% for customer satisfaction to score 76 on a 100-point scale. Meanwhile, credit unions—with membership now surpassing 100 million—are second best among all ACSI industries with a high benchmark of 85.

ACSI’s findings coincide with record-high fees for checking accounts, but banks are actually collecting fewer fees than ever before. Consumers are becoming more adept at avoiding extra charges, but another strategy may be avoiding the big banks altogether. While the structure of credit unions allows for fewer fees, CUs still provide superior service in nearly every area, from transaction speed to Web banking.

bank-cu-ce-benchmarks

Indeed, consumers looking for free checking are much more likely to find it at a credit union. For interest rate competitiveness, customers put CUs ahead of banks by a wide margin of 13 points. The only areas where banks outpace credit unions are number and location of ATMs and branches. While this is not surprising given the more localized nature of credit unions, this may be an area that the industry could focus on improving, especially as membership continues to swell.

The Washington Post: Why Customers Are Less and Less Happy With Their Banks »

Denver Business Journal: Rising Fees Hurt Banks’ Image, but Consumers Happy With Credit Unions »

Albuquerque Business First: Study Finds Credit Unions First in Customer Satisfaction »

Credit Union Journal: CUs Still Enjoy High Customer Satisfaction: But Have Levels Peaked? »

Posted in Results.

Tagged with , , .


Health Insurance and Airlines: Close Partners for Dissatisfaction

Few industries have offered less satisfaction to consumers over time than commercial airlines, but now health insurers find their policyholders nearly as disgruntled as air travelers in the American Customer Satisfaction Index’s annual study on Finance and Insurance industries. While subscription TV and Internet service providers earn the very lowest ratings among 43 industries in the Index, health insurers share a berth close to both airlines and social media among ACSI’s bottom five.

bottom-five-2

Among the three insurance categories in the study, health shows the biggest decline in policyholder satisfaction, down 4.1% to 70—the industry’s lowest ACSI score since 2005. The satisfaction history of health insurance, however, reveals a record of lower performance than other insurance types. Claims processes are more complex, but also more frequently used, which means there are more opportunities for things to go wrong. High premiums, along with deductibles and co-pays, may feel as hard on the wallets of consumers as shrinking legroom is on passengers’ knees.

insurance-industries-compare

But the adverse effect of higher cost on satisfaction this year stems primarily from employer-provided group policies, which are by far the industry’s largest segment. Satisfaction with group policies tumbles 7% to a very low benchmark of 67 whereas individual policies are unchanged at 74. If the industry were evaluated on group policies alone, customer satisfaction would dip below airlines.

health-insurance

Nearly every aspect of the customer experience for health insurance policyholders has deteriorated over the past year—several by 5% or more. Consumers are much less pleased with prescription drug coverage, as well as coverage of standard procedures. They find it more difficult to submit claims and are frustrated when dealing with call centers. While bright spots are access to primary and specialty care, the industry falls well short of the customer experience offered by other insurance types.

Download ACSI Finance and Insurance Report 2014 »

CBS MoneyWatch: Americans Put Health Insurers on the Hate List »

PropertyCasualty360: Report: Consumers Reasonably Satisfied With P&C Insurance;
Health, Not So Much »

Posted in Results.


Is the Thrill Gone for Tablet PCs?

In a new twist this year for PCs, findings from the American Customer Satisfaction Index indicate that desktops have gained favor with users to the point that tablets no longer hold sway over the beleaguered desktop. According to the ACSI’s recent study on customer satisfaction with personal computers, tablets overall edge back 1% to an ACSI score of 80, while desktops surge 3% to 81, a healthy improvement over a year ago. Laptops, however, trail behind both—down 4% to a much lower benchmark of 76.

computing-devices-percent-change

The ACSI results coincide with recent trends in the PC market—namely, a flattening in the decline of PC sales along with a slow down in tablet sales. Over several years, consumers poured money into tablets, but now the market is becoming saturated. Simultaneously, there has been an uptick in PC users who are entering the market to upgrade their older home desktops—some of whom were prompted by the end of  Windows XP support in April.

Part of the picture may be that high consumer expectations for mobile devices make it challenging for manufacturers to satisfy users. In contrast, buyers looking to refresh home PCs—perhaps replacing desktops that are three years old or more—are pleasantly surprised by the speed and power of new machines on the market. Higher desktop satisfaction this year could be reflecting a modest ‘wow’ factor among consumers re-entering the PC market.

With regard to laptops, before tablets came on the scene, laptops received higher user satisfaction ratings than desktops because back then, the laptop was the tablet. But now, the laptop is orphaned, falling in the middle between the traditional set-up of a desktop and the ‘carry-everywhere’ tablet. For the industry, the next wave could come from products that bridge the gap by marrying the functionality of the desktop with the ease of use and portability of the tablet.

HotHardware: Desktop PCs Gain Traction in American Customer Satisfaction »

NBCNews: Desktop Computers Show a Gain in Customer Satisfaction »

NewsFactor Network: Consumers More Satisfied With Desktop PCs Than Laptops, Tablets »

PCMag: Consumers Love Their…Desktop PCs? »

Tech Times: Desktop Comeback on Horizon? It May Be So, Given User Satisfaction Report »

TWICE: As PC Demand Slips, Desktop Approvals Climb »

Posted in Results.




copyright 2015 American Customer Satisfaction Index. All Rights Reserved.