Etsy and Amazon are where it’s ‘app’ on mobile

There’s a first time for everything.

In our most recent Retail and Consumer Shipping Report – where customer satisfaction dipped 0.9 percent to an ACSI score of 77.4 (out of 100) – one of those firsts was the inclusion of Costco, Etsy, Wayfair, and other major internet retailers to the list. But it didn’t stop there.

For the first time since 2010, Amazon lost its grip on the e-commerce space. The new king of internet retail? Costco, with an ACSI score of 83.

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One other first stood out, an element within internet retail that we officially measured for the first time: mobile app satisfaction.

The highs and lows of the mobile experience

If you consider e-commerce a hot market, then the use of mobile in retail is like walking on the sun. Unfortunately, while some companies know how to walk the walk, others, not so much.

The HP Store earned the highest ACSI score for mobile reliability with an 88, however it also came in with the lowest mobile quality score at 72.

Staples struggled in both categories, scoring 76 in mobile reliability and 78 in mobile quality. Sears had the same marks but reversed, with 78 in reliability and 76 in quality.

On the flip side, Amazon, which scored an 87 in both mobile reliability and mobile quality, and Etsy, which also scored an 87 in reliability and recorded a category-best 88 in quality, appear to have cracked the code.

“There’s an app for that” is a cliché for a reason. Every company recognizes the importance of creating a footprint in the mobile market. The real question is, what can companies do to differentiate their application from the competition?

Amazon’s staying power

Consumers don’t just download Amazon’s app; they keep it. Some 76 percent of millennials have Amazon’s mobile app on their phone.

Lincoln Merrihew, senior vice president of client services at Millward Brown Digital, Boston, sees a correlation between the success of Amazon’s app and the success of its overall business model. Merrihew told Retail Dive he sees Amazon as a “combination of a transaction environment and a search engine,” and this works out in its favor.

Amazon offers “one-click ordering and fast shipping options” and has the highest penetration rate among shoppers at 76 percent.

Its app is easy to navigate, easy to use, and offers “special app-only functions.” On top of that, Amazon gives consumers a consistent experience across all of its mobile platforms.

Amazon is truly a “one-stop shop for consumers,” noted Claudia Hoffner, vice president of global marketing for Feedvisor, based on a recent study conducted by the company. It knows what its customers want, where they’re going, and how they’re behaving.

Now that more people are turning to mobile shopping, Amazon continues to make it a priority to adhere to its customers’ needs, thus helping the company maintain customer loyalty.

Etsy listens to its customers

Meanwhile, Etsy pays considerable attention to consistently improving customer experiences. Which is why it redesigned the homepage of its mobile app by including “recommendations.”

“We designed and built the new home screen to give shoppers a better and more inspiring experience on Etsy’s mobile apps,” said Bowen Slate-Green, product manager at Etsy, New York, to Retail Dive. “By providing shoppers with an improved experience, they can better find items and shops that intrigue them.”

By implementing a feature that helps personalize the user experience, Etsy is creating a simpler shopping experience for its customers. Users no longer need to spend time searching for products, Etsy has already done that for them. This streamlines the process, and puts the items shoppers find appealing – based on previous searches and purchases – right in front of them. Consumers are likely already on Etsy because they want to shop. Now there’s less hurdles involved.

Said Slate-Green: “Mobile is a priority for us and the new home screen in the Etsy apps is the latest of our enhanced mobile offerings. Going forward, we will continue to develop and roll out new features that improve the overall experience for our mobile-focused community of shoppers and creative entrepreneurs.”

If Etsy continues catering to its individual customers by making its app more personal and embracing the power of technological advancements, it will likely remain among the leaders in mobile customer satisfaction.

Companies must continue to focus on mobile

This was the first year we looked at customer satisfaction with mobile apps within retail, but it certainly won’t be the last.

As we’ve noted before, consumers are becoming increasingly reliant on their mobile devices. They use their phones to do everything from browse the web and watch their favorite movies and TV shows to shop, shop, and shop some more.

Smart companies are recognizing this growing trend and are taking the steps needed to ensure their customers have the smoothest possible mobile experience.

Amazon and Etsy are off to a hot start. But the race has only just begun.

The energy utilities sector should give the people what they want: More green initiatives

Do you know what the energy utilities sector needs? A spark. Badly.

Energy utilities suffered a sector-wide plunge in customer satisfaction, falling 2.7 percent to an ACSI score of 73.2 (out of 100), per our latest Energy Utilities Report.

Despite record-high U.S. natural gas production and exponential growth in electricity generation from renewable energy sources, all three categories of energy utilities took a significant hit in customer satisfaction. Cooperative dropped 2.6 percent to 75, and investor-owned and municipal both fell 2.7 percent into a tie at 73.

Prices are high, the weather has been extreme, and there’s been a decline in electric power reliability. Yet, as it turns out, if there’s one area that has truly hindered customer experience, it’s green initiatives. Specifically, a lack thereof.

Green programs are failing across the board

Efforts to support green programs are flat or falling in all three categories.

For those efforts, cooperative utilities received an ACSI score of 74 (unchanged), municipal utilities had a score of 70 (down 4 percent), and investor-owned utilities came in with a score of 70 (down 3 percent).

This is not good. In fact, it’s worse than not good – it’s bottom-of-the-barrel bad. The customer experience benchmark for green programs is the worst, or tied for the worst, individual benchmark in each of the three energy utility categories.

What’s the takeaway here? Customers are clamoring for eco-friendly solutions.

Some providers are taking these concerns more seriously than others.

Companies committing to green initiatives  

Consumers Energy, a subsidiary of CMS Energy, is dedicated to a “triple bottom line,” according to CEO Patti Poppe.

As part of its commitment to “people, planet, and prosperity,” the company became the first U.S. borrower to enter into “syndicated sustainability-linked revolving credit facilities.” By meeting certain sustainability goals, CMS can reduce the interest rate on its $1.4 billion loan from Barclays. Consumers Energy has a goal of 40 percent renewable energy by 2040 and recently announced plans to develop its third solar power plant.

Back in April, MidAmerican Energy, which is part of Berkshire Hathaway Energy, was named one of the U.S.’s top “environmental champion” utilities for the fourth straight year, based on a nationwide pre-Earth Day survey. Consumers look at the following five categories as part of the study: “promoting clean energy, enabling consumption management, facilitating environmental causes, encouraging environmentally friendly fleets and buildings, and consistently seeking ways to protect the environment.”

As much as we’d like to believe these providers are taking on these responsibilities out of the goodness of their hearts, it’s important not to overlook the obvious business implications. You see, there is a younger generation on the precipice of becoming the country’s largest living generation. And this group is not going to let the planet fall by the wayside.

Millennials in the market

When it comes to eco-friendly endeavors and green program initiatives, millennials definitely have something to say.

In its “2018 State of the Consumer” report, the Smart Energy Consumer Collaborative (SECC) took a deep look at millennials’ interest in renewable energy. And let’s just say this generation is all about it.

While 41 percent of consumers said they’d be willing to pay an extra $15 a month for access to clean energy, over two-thirds of millennials were open to forking over the extra cash. Over half of millennials are intrigued by the concept of solar panels.

Clearly these consumers believe protecting the planet is worth the cost.

Go green or go home

We’d be remiss to claim that all utilities providers have to do to regain favor with their customers is to fix their “green” problem. However, what is clear is that the consumers have spoken – and they are in support of more green initiatives.

Some companies have heard the call and are taking action. Others would be wise to follow their lead.

Costco tops Amazon as the new king of internet retail

Amazon’s reign is officially over – for at least one year, anyway.

After leading customer satisfaction in the e-commerce space since 2010, Amazon dropped 4 percent to an ACSI score of 82 (out of 100), according to our latest Retail and Consumer Shipping Report. The new leader? Costco.

In its first year in the internet retail category, Costco posted an ACSI score of 83, matching its in-store mark for both the department/discount and supermarket categories.

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Costco wasn’t the only newcomer to score high in its first year in the internet retail category. Among the 21 new companies, Etsy, Kohl’s, Nike, and Nordstrom each debuted with an ACSI score of 81. Apple, HP Store, Macy’s, Target, and Wayfair also made strong impressions, scoring 80 a piece.

The expansion of this category makes Costco’s top-ranking performance all the more impressive. Costco has historically succeeded in categories linked to the in-store experience – especially when you consider the popularity of its pizza – so when you factor in the e-commerce experience, the results seem almost inevitable.

Costco’s recipe for success

Membership-based warehouse stores were the real winners in the retail trade sector in 2018, and none shined quite like Costco. According to CNN Business, Costco’s strategy to accomplish this was to “perfect what’s been working for four decades.”

Brick-and-mortar stores are the company’s bread and butter; that’s unlikely to change. Customers enjoy the experience of shopping at Costco, they remain unwaveringly loyal – 90 percent of Costco members renew their subscriptions – and perhaps most importantly, they appreciate the value they receive.

Costco offers cheaper products without sacrificing the quality. Look no further than its signature Kirkland brand, which offers less expensive alternatives and is considered by analysts to be “one of the most popular white labels across retail.”

How does all of this tie into Costco’s success in online retail? Perhaps it’s best to look at why Costco decided to go online in the first place.

What’s driving Costco online?

Costco had been reluctant to venture into online retail for two reasons. First, its winning formula has always been based around giving customers a great in-person experience, and second, it’s pricey to ship bulk items.

Costco may have been dubbed “Amazon-proof,” but there’s no guarantee the label lasts forever. One way Costco has staved off the competition is by cornering the food market. Per CNN, 93 percent of Costco members turn to the warehouse store for their groceries. But for how long?

Costco can’t afford to get complacent when other online retailers want a piece of the pie. The only way to defend itself against would-be assailants is to embrace internet retail.

And it has. Costco now offers same-day fresh delivery through Instacart and also launched CostcoGrocery.

With CostcoGrocery, members receive two-day delivery when they order “shelf-stable” products on the website. They also get free shipping if the purchase exceeds $75, according to The Wall Street Journal.

How Costco is reshaping the e-commerce and retail landscape

Costco’s biggest selling point is its in-store experience. It’s made a killing in that respect. But it also recognizes the importance of creating a presence in the e-commerce space.

Costco offers 10,000 products on its website and app. It lets you buy expensive items online, including furniture not previously sold in stores, and gives you the option to pick up your online purchases in the store. The result of Costco’s expanded online offerings has been a 21 percent increase in online sales since July 2018.

In a world where most customers are choosing to shop online, Costco has managed to keep its customers coming back to the warehouse. And yet, that hasn’t prevented it from dabbling in the e-commerce space. From the looks of it, Costco is clearly succeeding there as well.

Even if the Oscar Doesn’t Go to ‘Roma,’ Netflix Has Already Won

If you’re a film buff, a fan of A-list celebrities, or simply can’t turn down a full-fledged red carpet extravaganza, odds are you’ll be glued to your television on Sunday for the 91st Academy Awards.

While we can’t guarantee this year’s event will be any more (or less) exciting than years past, we already know it will feature something that’s never been seen before: a Netflix film nominated for Best Picture.

Sure, Netflix has earned a few Oscar nods over the past few years. But it’s never been up for Best Picture. With Alfonso Cuarón’s “Roma” – nominated for 10 awards – the streaming behemoth has a legitimate shot to take home the year’s most prestigious gold statue.

Winning the Academy Award for Best Picture would be big for Netflix – and for streaming services in general. It would represent proof that the “Davids” of the small screen can take down the “Goliaths” of the silver screen.

And yet, as much as coming away victorious in the Best Picture category might help Netflix’s credibility among the Hollywood elite who believe that awards season is all that matters, the truth is, Netflix has already won – and has been doing so for quite some time.

It’s Netflix’s world, and we’re all living in it

On the most recent episode of Recode Decode, IAC and Expedia Group chairman Barry Diller said, “Hollywood is now irrelevant.” While that’s a bold statement, there’s plenty of evidence consumers are flocking to streaming services for their original content. And in terms of customer satisfaction for that content, Netflix rules the roost.

According to our most recent data, as of February 7, 2019, Netflix boasts an ACSI score of 81 (out of 100) specifically for its original content. That’s a 2.5 percent bump in customer satisfaction since the May 2018 telecommunications report. The streaming giant has a two-point advantage on its closest competition, HBO Now, which rose 2.6 percent during that same time to 79, and has no intention of slowing down.

Netflix is reaping the rewards of its heavy investment in original content, according to The Motley Fool, and plans to continue with that strategy, with 85 percent of its new spending going toward original productions, per chief content officer Ted Sarandos.

“Netflix has won this game,” said Diller later in the podcast. “I mean, short of some existential event, it is Netflix’s. No one can get it, I believe, to their level of subscribers, which gives them real dominance.” With 245 original shows on its service and another 257 originals in the pipeline, it’s hard to argue with him.

Amazon and Hulu on the rise as well

Although Diller claimed, “those who chase Netflix are fools,” it’s not as if Netflix is the only streaming service seeing success.

Amazon Prime Video’s customer satisfaction with original content is up over 4 percent since May to an ACSI score of 76. The studio has a strategy for taking on Netflix, which includes putting out 30 movies a year, per Amazon Studios chief Jennifer Salke. Amazon also isn’t afraid to drop big money on the festival circuit, spending $47 million at Sundance this year – more than anyone else.

For its part, Hulu increases its original content satisfaction as well, jumping 1.3 percent to 75. The company has 34 original shows available for streaming and another 53 in the queue. Hulu’s main focus is on the comedy genre — 36 percent of its upcoming shows fall under that category.

Win or lose…

Amazon had a Best Picture nominee back in 2017 with “Manchester by the Sea,” but ultimately lost out to “Moonlight.” Now, we’ll wait to see if Netflix can do what Amazon could not.

You’ll have to tune in on Sunday to see it all happen live. Of course, even if “Roma” can’t beat out the competition, it’s clear Netflix is already a winner. Don’t expect that to change anytime soon.

Mobile apps help drive satisfaction with insurance and investment services

Every year we take stock of customer satisfaction in the financial and insurance sector. In recent years, we’ve noted digitalization is driving the success of retail banks, and technological advancements are improving satisfaction across the sector. Our latest report supports those points.

In particular, mobile apps – which we measured for the first time this year — are improving customer satisfaction even as other online resources, like websites, dip within the sector.

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Based on our 2018 finance and insurance report, here are a few ways mobile apps are already contributing to the finance and insurance sector’s success.

Nationwide most improved among insurers, thanks to cutting-edge mobile app

In early 2018, Nationwide became the first company to enhance its mobile capabilities with a new blockchain framework. Designed specifically for the risk management and insurance industry, the framework enables Nationwide to offer customers real-time policy verification and eliminates the need for hard-copy documentation—streamlining a historically cumbersome process.

The app, which also allows consumers to start and process claims from their mobile devices, scored exceptionally high marks in customer satisfaction in 2018 and propelled Nationwide’s 5 percent gain in overall satisfaction, which is the largest improvement by any property and casualty insurer this year.

Industry-wide, the quality and reliability of mobile apps, which can be used to pull up policies, document accidents, and easily reference claims, rank near the top of all benchmarks measured. Customers give mobile app quality an ACSI score of 87 and the reliability of mobile apps, defined by minimal downtime, crashes, and lags, an 85.

Life insurance leads in mobile app satisfaction

Life insurers are getting creative with mobile options, too. For instance, John Hancock has developed a program, available via its app, that encourages policyholders to be more proactive with their health. For every 10 workouts they record, policyholders earn the chance to spin a wheel of fortune in their mobile app and accrue points they can redeem for gift cards. These incentives are improving customer engagement, experience, and satisfaction.

Across all insurance industries ACSI measures, life insurance scores highest for both quality (90) and reliability (89) of mobile apps. Driven in part by these scores, satisfaction for the industry rises 2.6 percent to an ACSI score of 80.

The flip side: Technical glitches hurt satisfaction

While some companies are satisfying customers with mobile options, other companies can’t seem to master the basics. Vanguard, the previous customer satisfaction leader in the investment services industry, is one example. The company drops 4 percent to a score of 79 following system issues like phone and website connection problems that left customers fuming, as well as automated texts that incorrectly stated loans were being processed.

Vanguard’s technological hiccups weren’t enough to bring down the industry as a whole however. Reliability and quality of mobile apps (both 82) top the charts and life insurers continue to hold steady at a score of 79.

Digital technologies make strides

Mobile is high on customers’ priority lists, and with a few exceptions, insurance and investment companies are delivering. As our data shows, those companies investing in their customers’ digital experience and expectations are reaping the rewards in terms of customer satisfaction.

It’s a digital world, and whether policyholders are looking to file insurance claims or make changes to their investments, companies would do well to meet the demands of the on-the-go customer.

Health insurance continues to cause headaches for customers

There’s a correlation between lower customer satisfaction and the frequency of use or touchpoints with a product or service. The more often you interact with a specific product or service, the greater the chances that something is going to go wrong.

Few things encapsulate this concept more than customer satisfaction – or lack thereof – in health insurance.

Following two years of growth, customer satisfaction with health insurance is unchanged with an ACSI score of 73 (out of 100), according to our most recent Finance and Insurance Report. In fact, as it turns out, health insurance is far and away the least satisfying category in the entire sector.

Trending in the wrong direction

Humana and Kaiser Permanente continue to lead all insurance companies in customer satisfaction with an ACSI score of 78. Policyholders note that Humana has better access to primary and specialty care, while Kaiser Permanente offers the best prescription coverage and is the fastest to process claims. But these few positive marks aren’t enough to keep customers happy — both insurers fall 1 percent over last year

This downward trend plays out across much of the industry. Blue Cross and Blue Shield falls 1 percent to an industry-low 70, and “all others” also dip 1 percent to an ACSI score of 74. Only Cigna and Aetna saw gains in customer satisfaction. Meanwhile UnitedHealth stayed put with an ACSI score of 73.

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The industry as a whole saw no change in customer satisfaction in areas such prescription drug coverage, ease of submitting claims, the speed with which claims are processed, and access to specialty care.

A bright spot for insurers

The overall complicated nature and complexities of health insurance, makes it much more difficult to provide excellent customer satisfaction. Yet, some insurers are finding success, specifically through consolidation.

The only companies that experienced improvement in customer satisfaction also happened to be the only companies in the midst of separate mergers and acquisitions. Aetna, up 1 percent to 75, is in the midst of merging with CVS, and Cigna, up a staggering 11 percent to 73, is in the process of purchasing Express Scripts.

As a whole, the health insurance industry has seen customers more satisfied with access to primary care doctors and coverage of standard medical services.

Where health insurance can improve

The health insurance industry doesn’t have the best reputation. From the logistics of using it to questions surrounding what (or who) is covered, health insurance is known for causing ample amounts of unwanted stress.

Insurers would be wise to make it easier for customers to understand information on insurance statements, which ranks at 74. And most notably, companies need to improve the entire experience of interacting with a call center. This area sees the largest dip in customer satisfaction, dropping 5 percent to an ACSI score of 71.

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Health insurance is in the bottom 10 of all the industries we measure, but it doesn’t have to be that way. By simplifying the process, ensuring access to physicians, and upgrading websites, insurers can create a more seamless, satisfying experience and ultimately improve their long-term relationships with customers.

Beer lovers love their beer more than ever before

The beer industry is at a crossroads of sorts. Millennials just aren’t that into beer. According to a report from Berenberg Research, Generation Z feels the same way, opting instead to reach for spirits. As a result, beer consumption and sales are down. This, however, is only part of the story.

Beer might not be the libation of choice for everyone, but for those that do choose brew, one word best describes their feelings toward the beverage: Love.

According to our most recent Nondurable Products Report, customer satisfaction with breweries is at an all-time high, climbing 1.2 percent to an ACSI score of 85 (on a scale of 0 to 100). Interestingly enough, it’s the “little” guys leading the charge among beer aficionados.

Smaller breweries, big-time satisfaction

Beer lovers are a passionate bunch. And craft beer drinkers might be the most passionate of them all. With a 1 percent jump over the past year, small breweries and craft beers, which the ACSI categorizes under “other breweries,” have the highest customer satisfaction among industry manufacturers, with an ACSI score of 86.

This group also leads the competition in many other aspects of customer experience, including perceived overall quality and perceived value. It’s clear that while the microbrews and small breweries lack the size of the big brands, they’re benefiting from the strong reputation they’ve built with their customer base.

Competition is good for the beer market

Competition tends to breed competition. We’re seeing the positive effects that “other breweries” are having on the rest of the category, generally propelling higher satisfaction across the entire market. This is most notable in the higher customer satisfaction with Anheuser-Busch InBev.

The megabrewery is up 1 percent in customer satisfaction year over year, giving it an ACSI score of 85, good enough for second place in the category. Anheuser-Busch InBev is thriving because of high marks in website satisfaction, customer retention, and most importantly, customer loyalty.

Bottom of the barrel

Although breweries have high marks in customer satisfaction overall, not every manufacturer is improving. Molson Coors saw its customer satisfaction take a major dip, plummeting 4 percent to a score of 81.

In fact, following a 4.8 percent dip in first quarter 2018 sales, the megabrewery opted to cease production on its MillerCoors line of Two Hats, essentially giving up on the brand that was intended to appeal to the millennial crowd. The manufacturer hopes to rebound by turning its attention to Coors Light.

The future of the beer industry

Microbrews and craft beers aren’t a fad. These “other breweries” have a loyal following, and its customers are drawn to a quality product. Inauthenticity isn’t going to fly with this crowd. Hopefully, the bigger beer manufacturers take note, and make the necessary adjustments to keep up with beer lovers’ preferences.

Regardless of what the future holds, one thing is clear: customer satisfaction with breweries is the highest we’ve ever seen. We can all agree to raise a glass to that.

Amazon bites into Apple’s control in the PC market

If it feels like everyone is on their smartphone these days, it’s because they probably are.

Consumers are now using their mobile devices to complete tasks – such as web browsing, banking, shopping, entertainment, etc. – that were once reserved for computers. However, if you were under the impression customers would abandon personal computers (PCs) merely because of overall satisfaction with their phones, you’d be sorely mistaken.

According to our latest Household and Electronics Report, customer satisfaction with PCs remained stable at 77 (on a scale of 0 to 100).

Interestingly enough, in an industry consisting of desktops, tablets, and laptops, it’s the desktops that garner the most love among consumers (up 4 percent to 83), followed by tablets (up 4 percent to 80) and laptops (down 3 percent to 75).

Of course, when you take a closer look at individual PC makers, the picture becomes even clearer.

These brands are riding high

Any way you slice it, the story remains the same: Apple leads all PC makers in customer satisfaction. The brand has an ASCI score of 83 and has the highest marks in almost every aspect of customer experience, including features, apps, and design. Clearly, customers remain drawn to the clean, sleek look and feel of Apple products.

But Apple isn’t running away with the show.

After a 4 percent spike this year, Amazon leaps into a tie for second place at 82. You can chalk up Amazon’s rise to the strength of its tablet. Users give it high marks for design, sounds and graphics quality, and ease of operation.

Samsung joined Amazon with an ASCI score of 82, the same mark from a year ago. However, while customer satisfaction with Samsung remains high, it trails its competitors in most key features, including operating system, preloaded apps, and data storage.

These brands are playing catch up

While Amazon’s PCs are satisfying customers, other big-name brands are trending in the wrong direction. Which brings us to Dell and Toshiba, two companies that have a lot of work to do.

When your processor speed is an issue and your machines consistently experience system crashes, you’re going to struggle to win over the masses. These are the problems Toshiba faces, as it experienced a 5 percent drop — the largest among PC makers — to an ASCI score of 71. This is Toshiba’s lowest score to date, and unfortunately it’s not the only company that’s failing to impress consumers.

Dell is down 4 percent year over year to an ASCI score of 73. This is partially because where companies like Apple thrive from a design standpoint, Dell is struggling to keep up with competition. If this doesn’t change, Dell might have difficulty digging itself out of its current hole.

What PC customers want

Desktops continue to serve as the preferred devices of business users and gamers who require power and functionality. And with the gaming industry reaching broader popularity than ever before, it’s hard to imagine desktops ever becoming completely unnecessary.

Unfortunately, over the last year, the PC industry as a whole has experienced a decline in customer satisfaction in key areas. For example, customers care about the product’s design, where the ACSI score has dropped to 82. They care about accessories, software and apps, and graphics and sound quality, but customer satisfaction in all three categories has fallen to 80. Systems crashes have become more of a problem (down to 77), features aren’t exciting customers as much (down to 77), and processor speed has slowed, resulting in a 3 percent drop in the ASCI score to 76.

Worst of all, customer service took big hits. Website satisfaction dropped 5 percent to 78 while the accessibility and reliance of call centers suffered a staggering slump down 14 percent to 67.

There is a silver lining. Although most aspects of the PC industry have taken hits in the eyes of its consumers, these are still high marks overall. PCs continue to cater to specific use cases that phones aren’t yet capable of handling.

But if PC manufacturers hope to regain any of the ground they’ve lost in recent years, it’ll take more than just a better call center experience to satisfy customers’ needs.

Consumers have problems with the auto industry but a recall isn’t one

Automakers recalled vehicles by the millions in the past year.

For the second time in the U.S., Kia issued a recall of over 342,300 Soul vehicles because of a steering flaw, and back in March, Ford announced a massive safety recall of 2014 through 2018 models of Ford Fusions and Lincoln MKZ cars built in Michigan and Mexico. More than 1.3 million Ford vehicles were recalled because of the risk that steering wheels could detach from the steering column. According to Ford, two accidents and one injury have been linked to the problem.

While the number of recalled vehicles remains high, at least it’s steady, according to drivers. Per the ACSI’s 2018 Automobile Report, the proportion of drivers who experienced recalls hasn’t changed over the past year.

What’s surprising, however, is the effect these recalls are having, or rather, not having, on customer satisfaction.

How do vehicle recalls affect customer satisfaction?

According to ACSI data, customer satisfaction among drivers who had a recalled vehicle is only moderately lower than individuals who didn’t have a recall (80 to 81, on a scale of 1 to 100). On top of that, the data for Ford’s Lincoln shows that customers with a recalled vehicle actually reported higher satisfaction than the ones without a recall.

What can we attribute this odd behavior to? For one, the automobile industry has been doing a better job of handling recalls. Automakers have become more efficient in their recall process, using a more proactive approach to the problem, as opposed to a reactive one. But most importantly, automakers are owning up to their mistakes. ACSI’s latest recall data shows this level of honesty goes a long way with car owners.

This isn’t to say that all car manufacturers are benefiting from a more understanding clientele. Mercedes-Benz, for one, hasn’t been quiet on the recall front, and it’s paid the price. The company recently recalled nearly 500,000 cars because of possible accidental airbag deployment and nearly 43,000 Smart cars because of the risk of engine fires, among others. These incidents have contributed to Mercedes-Benz’s customer satisfaction score falling 2 percent to 82 this year.

Areas of improvement for the driving experience

So, if recalls aren’t causing a blatant negative impact among car owners, then what is? The answer: gas mileage and warranties. It doesn’t matter if an individual owns a mass-market vehicle or a luxury automobile, these two areas really grind customers’ gears.

Among mass-market vehicles, gas mileage is the worst part of the customer experience, though its score rose 1 percent to 79. Warranties are second from the bottom, holding steady at 80. Among luxury vehicles, gas mileage fell 1 percent to 77, while warranties retreated 1 percent to 82.

However, this isn’t the case across the board. Volkswagen, one of the most improved mass-market cars with a 4 percent increase in driver satisfaction, has shown it’s listening to consumers when it comes to warranties and gas mileage. The automaker has doubled the length of its warranties and drivers say that the fuel economy of Volkswagen vehicles is now among the best in the industry.

Despite these areas for improvement, automobiles continue to rank high in customer satisfaction among the 46 industries ACSI measures on an annual basis. Making changes for better warranties and gas mileage could be enough to bring the automotive industry up to the top of the list in the near future.

How rising summer gas prices will change consumer spending habits

The weeks between Memorial Day and Labor Day are the busiest American travel days of the year. This summer, drivers are paying 60 cents more per gallon of gas than they were last year, and airline fuel prices are up 12 percent, with higher fares on the horizon. But the higher costs don’t seem to be stopping vacationers from hitting the road… or the sky.

In fact, airlines are expecting their busiest travel season ever, with an estimated 246.1 million passengers expected to fly between June 1 and August 31. And according to a National Association of Convenience Stores survey, even more vacationers, especially millennials, will travel by car than by plane.

With gas prices demanding more from Americans’ pockets, consumers will have to find room elsewhere in their budgets to keep their wheels turning and their vacation plans intact. For other retailers, that means doubling down on customer satisfaction to make sure their goods or services aren’t the ones to get cut.

Reprioritizing spending habits

Americans spend more than half their food budget on dining out, making it perhaps one of the easiest expenses to cut back on in order to fund those summer travel plans. This is especially true for millennials, who on average eat out a whopping five times per week, spending more on dining out ($92 billion in 2016) and on comforts and conveniences (like pricey coffee) than other generations.

There’s been a lot of fuss over the past several years, too, about the brand loyalty of these young consumers. And it’s at least in part for good reason. Consider 2017 data from all of the ACSI’s private sector industries, which found millennials are least loyal in 39 percent of the industries measured, with the highest loyalty intention score in just 13 percent of industries (perhaps not surprisingly, tech and personal computers). It’s worth noting, though, Gen X isn’t that far off – they’re least loyal in 42 percent of industries and considered to be the most loyal in just one (computer software).

This brand apathy could prove dangerous for the coffeehouses, restaurants, and bars that typically benefit from millennials’ dining out tendencies, particularly when they’ve got bigger, more expensive purchases on their minds.

Satisfaction gains power as gas prices rise

People are going to spend money wherever they’ll be the most satisfied and get the most enjoyable experience for their dollar. Quality plays a more important role than price in satisfying customers in almost all ACSI-measured industries. But the ultimate millennial craving can’t be satisfied with good food. Convenience continues to be the most important factor in attracting millennial customers across all industries.

That means that those restaurants (and other retailers) that cater to the expectations of these fast-moving, technologically savvy 20-and-30-somethings will have a better chance of staying in favor. Online ordering and payments and fast delivery or curbside pickup make it easier for consumers to buy (and be satisfied), while things like personalized discounts or offers based on purchase history will keep brands top of mind.

Those brands with the highest customer satisfaction scores are likely already doing these things well and may not have to fear a millennial shift in purchasing habits this summer. But those with below average satisfaction should take note and bolster efforts to improve the quality of interactions with customers.

The high cost of fuel this summer might not be enough for millennials to cancel their vacations, so something else will have to give. Restaurants and other “comfort” brands that fail to deliver the quality or convenience shoppers need could be the first to go.