Highlights of customer satisfaction trends for desktop, laptop, and tablet computers.
With automobile recalls at record-high levels, it comes as no surprise that car buyer satisfaction declines for a third straight year, according to recent results from the American Customer Satisfaction Index (ACSI). At the industry level, driver satisfaction falls 3.7% to 79 on ACSI’s 100-point scale in 2015, and nearly all nameplates lose ground in the eyes of their customers.
While consumers are seeing a rapid influx of technology innovation that is transforming the driving experience, recalls are becoming a more common occurrence for car owners. The ACSI automobile customer satisfaction survey asks all respondents to indicate whether or not their car has been the subject of a recall since the time of purchase, allowing researchers to investigate the impact of recalls on satisfaction.
In 2011, ACSI researchers used a pooled sample of 2010 and 2011 data to show that customers who experience recalls are significantly less satisfied with their cars than those who have not. One of the industry’s highest-profile recalls happened before and during that period—Japanese automaker Toyota’s massive, worldwide safety recall that started in 2009.
Recalls generally signal major quality defects, so it is not unexpected that they will depress satisfaction. But, as automobiles become more and more complex, there is the possibility that consumers could come to accept recalls as a normal part of car ownership. Nevertheless, ACSI data from the past three years confirm the 2011 findings. Customer satisfaction for owners who experience recalls is significantly lower than non-recall respondents, and the percentage of owners that say they have gone through a recall has increased substantially in 2015.
The negative impact of recalls on automakers does not end with lower satisfaction. Because there is nearly a one-to-one relationship between satisfaction and customer loyalty for this industry, recalls create customers who are significantly more likely to defect to a competitor the next time they purchase a car. And because current customers are generally “cheaper” customers for automakers (requiring fewer acquisition costs), recalls have tangible and negative economic consequences for automakers. A pooled sample of 2013 to 2015 data for all nameplates shows that customers who experience recalls are significantly less likely to be repeat buyers.
Satisfaction declines caused by recalls also have a host of indirect, negative consequences because satisfaction drives behaviors such as word-of-mouth, cross-selling, up-selling, brand image, and corporate reputation. Like many other nameplates, Volkswagen’s driver satisfaction tumbles 5% in 2015, but the drop is based on interviews that took place prior to the company’s well-publicized emissions scandal. Although diesel engines are less widely used in the United States than elsewhere around the globe, the revelation of emissions rigging by Volkswagen—along with the sheer number of vehicles that the company will now recall and refit—could be devastating on future satisfaction. Current customers may be even less likely to repurchase from Volkswagen if they perceive the company’s actions as a breach of trust.
Social media websites—previously stuck in the bottom 5 among 40+ industries measured by the American Customer Satisfaction Index—unleash a tide of improved user satisfaction ratings in 2015, led by a 12% year-on-year leap for social-networking juggernaut Facebook.
Across the industry, user satisfaction is up since 2014. Pinners remain the most satisfied user group, bumping up their assessment of Pinterest to 78. Wikipedia, YouTube, and Instagram follow in a tight configuration, scoring 76 to 77, just ahead of a greatly improved Facebook.
Between 2011 and 2014, Facebook either held last place alone or tied with LinkedIn for the worst user satisfaction in this already low-scoring category. With a steady three-year climb, Facebook hits the middle of the pack (75), while LinkedIn continues to anchor the bottom (68).
ACSI data point to three key areas where users perceive improvement in their experience with social media websites this year: advertising, privacy, and mobile access.
In 2014, advertising and privacy protection were the least satisfying aspects of the social media user experience. With the advent of more targeted advertising, users encounter fewer ads to sort through—speeding up the experience and lowering frustration. Social media sites also are paying more attention to privacy concerns and are doing a much better job of protecting personal information.
For a user base that is increasingly on the go, mobile access is critical and social media seems to be getting it right—better than search or news sites at present. Social media rates highest for ease of use on different devices, such as tablets or smartphones. And while news and opinion websites receive the best score for performance on a desktop, social media is the leader for both access via mobile browser and access via mobile app.
At a time when smartphone market penetration is at 75%, social media is proving adept at making the mobile experience work for users.
Highlights of customer satisfaction trends in fast food and full-service dining.
Chick-fil-A customers are loving their experience—so much so that the company vaults to the top of the fast food restaurant category in its first appearance in the American Customer Satisfaction Index. What about the love coming McDonald’s way? Well…not so much. In fact, the world’s largest fast food chain can’t get out of the industry’s basement. In 2015, McDonald’s takes another hit for customer satisfaction—down 6% to an industry low of 67 on ACSI’s 100-point scale.
With a laser focus on poultry, Chick-fil-A debuts at the sky-high level of 86, handily beating rival KFC (-1% to 73) and setting an all-time ACSI high among fast food outlets. Additionally, across nine key elements of the restaurant customer experience, Chick-fil-A is the industry benchmark leader for the fast food category, with only Papa John’s providing a challenge in one area—website satisfaction.
Across the board, pizza makers see big drops in customer satisfaction this year—ranging from an 8% decline for Little Caesars to 5% and 6% drops for Papa John’s, Domino’s, and Pizza Hut. Other established names including Burger King, Wendy’s, Arby’s, and Taco Bell populate the low end of the ACSI ratings, perhaps receiving a collective yawn from consumers looking for healthier menu items, better service, and amped-up décor. Seemingly fitting the bill better are Panera Bread and Chipotle Mexican Grill, debuting in second and third place with ACSI scores of 80 and 83, respectively.
In the full-service category, steak houses do well by their customers as Texas Roadhouse grabs first place at 83, followed by LongHorn Steakhouse at 81. Outback Steakhouse, however, ends up below the industry average after retreating 3% to 78.
Across the customer experience, LongHorn leads in six of nine food and service areas, including food and drink quality, layout and cleanliness, and staff courtesy. Texas Roadhouse offers the best website while matching Longhorn for beverage quality and service speed. Cracker Barrel—placing third among sit-down venues with an ACSI score of 80—is well-liked by its customers for food-to-table speed as well as food menu variety.
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.
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.
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.
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).
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.
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.
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.
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.
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.
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.