Smartphones: Apple iPhone SE Has Happiest Users

It has been four years since Apple updated a smaller, pocket-sized phone and consumers are over-the-top with the new iPhone SE. Among smartphone brands, the lower-priced, no-frills iPhone SE scores a sky-high 87 on a scale of 0 to 100—the best rating among an array of primarily Apple and Samsung models in a recent study from the American Customer Satisfaction Index (ACSI).

The 4-inch SE beats out phones that are larger and designed with premium in mind. In second place, big-screen models Galaxy S6 edge+ and iPhone 7 Plus tie at 86, followed by three more Galaxy phones (scoring 84 to 85). Further down, the 5.7-inch Galaxy Note 5 comes in at 82.

Overall, Apple and Samsung dominate the category, and other manufacturers occupy the low end. Motorola’s Moto G and the larger LG G4, with its 5.5-inch screen, trail behind with scores of 75 and 73, respectively. The lowest-rated model, however, belongs to Samsung—the Galaxy Core Prime (70).

CNET: People Are Actually Happier With the iPhone SE Than the iPhone 7 »

Apple Insider: Apple’s iPhone SE, iPhone 7 Plus Take Top Spots in Customer Satisfaction Index »

Airlines: In a Year of Gains, Ultra-Low-Cost Yields Low Satisfaction

Surprise: The airline industry overall is improving its customer experience, according to surveys of thousands of passengers flying over the past year conducted by the American Customer Satisfaction Index (ACSI). While recent high-profile incidents peppered April headlines—from United’s passenger debacle to Delta’s spring break computer outage—consumers evaluating their experiences between April 2016 and March 2017 see year-over-year improvement as industry satisfaction bumps up 4.2% to an ACSI score of 75 (scale of 0 to 100).

Industry leaders JetBlue (82), Southwest (80), and Alaska Airlines (78) turn in scores that compare well with top-scoring companies in other industries. Other carriers—including legacy airlines—fall anywhere from middling to below-average for customer satisfaction. But passengers that are the most dissatisfied are those who opt for low price above all else. In a year that brings nearly across-the-board escalation in passenger satisfaction, the ultra-low-cost operators Spirit and Frontier lose ground (dropping 2% and 5%, respectively).

With major airlines like Delta and American starting to compete more aggressively on price, low ticket prices are not enough of a trade-off for low service quality. Across three years of ACSI measurement, Spirit consistently ranks last for passenger satisfaction, although the airline did improve last year (up from 54 in 2015 to 62). In 2017, however, the airline does not build upon that gain. Thus far, Spirit’s efforts over the past year to better customer relations and improve on-time arrivals are not paying off as passenger satisfaction instead recedes to 61.

Consumerist: For Third Year Running, Spirit Airlines Still Scores Lowest For Customer Satisfaction »

FOXNews.com: Spirit Airlines Ranks Last in Customer Satisfaction Survey for Third Year »

HuffPost: There’s an Airline People Dislike Even More Than United »

NBC News: Guess Which Big Airline Scored Lowest in the Airline Satisfaction Survey Again? »

Passengers Prefer JetBlue; United Last Among Legacy Carriers

JetBlue proves that airlines can deliver a satisfying experience to passengers in an industry that, on average, still shows ample room for improvement. The discount carrier’s low-cost business model and cabin upgrades appear to be the right combination for its passengers, according to data from the American Customer Satisfaction Index.

In 2017, JetBlue leads the industry with an ACSI score of 82 on a scale of 0 to 100—a satisfaction level deemed excellent by ACSI standards. JetBlue has maintained an ACSI score in the low 80s in all but one year over the past five. A close second goes to low-cost operator Southwest—an airline that also occupies the industry’s upper tier with a five-year average of 79.

While both JetBlue and Southwest sail above the average in 2017, most of the major legacy carriers take the industry’s middle ground, well ahead of the ultra-low-cost fliers—Spirit (61) and Frontier (63). United, however, ranks third from the bottom with a score of 70 despite a net gain of 10 points over the past two years.

United’s forcible removal of a passenger—captured on social media—triggered a stock market drop for the airline, but is not reflected in the 2017 ACSI results as data collection had ended prior to the media storm. The impact of such a high-profile incident on future satisfaction is unknown, but passengers tend to base their satisfaction levels on their own experiences. For many United customers, that experience has been less than stellar as the airline’s satisfaction has been lagging for some time. In sharp contrast this year, both American and Delta score 76—a record-high for American and the best score in over two decades for Delta. Looking at five-year trends for legacy airlines, United is still playing catch-up among the majors.

Airlines overall continue to rank in the bottom third among 43 ACSI industries. The ACSI Travel Report 2017—which includes airlines, hotels, and internet travel services—is based on thousands of customer surveys completed over 12 months.

Business Insider: United Was Plagued With a Huge Issue Even Before Dragging a Customer off a Plane »

CBS MoneyWatch: United Ranks as America’s Bottom-Rated Legacy Airline »

Chicago Tribune: United Scores Lowest Among Legacy Airlines in Customer Satisfaction; JetBlue Tops Survey »

CNN Money: America’s Least Favorite Airline (Hint: It’s Not United) »

Department Store Dilemma: Less Foot Traffic, Better Customer Service

At a time when online shopping sales keep growing and malls keep emptying, customers who still make the trip to brick-and-mortar venues may be in for a surprise: better customer service. According to surveys conducted during the busy holiday season by the American Customer Satisfaction Index, key aspects of the department and discount store customer experience are much better in 2016 compared with the prior year. Not only did shoppers report higher satisfaction overall, they also encountered cleaner stores, more courteous staff, and a much speedier checkout process.

Less foot traffic brings shorter lines and customers gain when staff have more time to offer personal service and keep merchandise in order. But less foot traffic is hardly sustainable as a massive wave of store closings sweeps across the industry and some of the oldest names in the business—Macy’s, Sears and Kmart, and JCPenney—shutter property after property.

Traditional department and discount stores have made strides with omnichannel offerings and website satisfaction shows an uptick to 79. On the other hand, sales and promotions are not as common (down 3% to 78) and perceptions about locations and hours are starting to erode as more stores close (-2% to 82). While customer satisfaction may be getting a short-term boost from better service, in the long run, consumers may get frustrated if favored locations close and they need to go farther to reach stores.

Going head-to-head with online shopping, brick-and-mortar languishes behind. With an overall ACSI score of 78 (up 5.4%), department and discount stores trail internet retail by 5 points. Coming in at 83 (+3.8%), online retail now ties for third place in customer satisfaction among 43 ACSI industries. Simply put, shopping online is so easy and convenient that it continues to place pressure on traditional retailers not only in terms of sales, but in just getting people into stores.

At the customer experience level, the advantages of online shopping remain clearly delineated, as in past surveys. While checkout speed at stores has improved greatly, it still pales in comparison with the convenience of online purchasing (88). Moreover, department and discount stores are not keeping up with merchandise selection—including brand names—or inventory availability. Perhaps most telling, however, is that despite store staff becoming more helpful and courteous, the industry does not have an edge over the customer support offered online via live chat, help pages, and call centers (both score 79).

ACSI Retail Report 2016 »

Consumerist: Maybe Emptier Stores Mean Higher Customer Satisfaction? »

Columbus Business First: With Fewer People at the Mall, Retailers See Customer Satisfaction Ratings Rise »

NBC NEWS: Despite Declining Sales, Do Shoppers Still Prefer Brick-and-Mortar Stores? »

Health and Human Services Department Drives ACSI Gain for Federal Government

Better government websites, including updates to HealthCare.gov, help boost citizen satisfaction with the federal government overall in 2016. The gain is a welcome reprieve for U.S. federal services as it reverses three years of eroding satisfaction.  In fact, ACSI data show citizen satisfaction reaching its highest level since 2012—up 6.4% to 68.0 on a 100-point scale.

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Health and Human Services (HHS), which oversees implementation of the Affordable Care Act, experiences a significant uptick in user satisfaction (+8% to 67) compared with a year ago. Moreover, citizens interacting with HHS now account for the biggest slice of the ACSI respondent sample, which gives the department the prime responsibility for the 2016 government-wide satisfaction gain.

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Departments at the high and low ends of the spectrum also show gains in user satisfaction for 2016. The popular National Park Service puts the Interior Department at the top (78), along with the State Department, which many Americans access for passport issuance and renewal. The low end belongs to Treasury (59), whose tax-collecting mission via the Internal Revenue Service is unlikely to appeal to most citizens.

Among the key aspects of government services tracked by the ACSI, website quality has improved the most, which shows that better e-government also contributes to higher citizen satisfaction.

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ACSI Federal Government Report 2016 »

24/7 Wall St.: Satisfaction With Federal Services at 4-Year High »

CBS News: Americans Give Uncle Sam a Surprising Positive Review »

ExecutiveGov: ACSI Report: Federal Govt Services User Satisfaction Score Rose 6.4% in 2016 »

Federal Times: Satisfaction With Federal Services Hits 4-Year High »

Health Insurance Megamergers: Customer Satisfaction Outlook

January proves rough on plans for health insurance megamergers as two deals appear to be hitting barriers. The proposed union of Aetna and Humana has been blocked by a federal judge as being likely to reduce competition substantially. According to the Justice Department, less competition would lead to higher prices and lower quality. The merger of Anthem with smaller rival Cigna is expected to undergo a similar fate in court this month, prompting Anthem to push back its merger end date to April.

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Given that the health insurance industry already has below-average customer satisfaction compared with all sectors and industries in the American Customer Satisfaction Index structure, it seems unlikely that more consolidation would give consumers the quality of service they crave. On a 100-point scale, the industry scores 72, which lags well behind the national ACSI average of 75.4 (as of Q3 2016).

Of the two mergers that are running into roadblocks in 2017, neither would bring together high-scoring entities. The health insurance leaders in 2016, Aetna and Anthem, would both be combining with companies that score at or below the industry average. For Anthem, Cigna would likely be a significant drag on policyholder satisfaction as the latter scores rock bottom for a second consecutive year. Cigna, despite its large year-over-year gain, still ranks in the lower 40 among 300+ companies in the Index.

ACSI Finance and Insurance Report 2016 »

National Banks Improve the Customer Experience

Across the bank industry—from large national banks to small regional and community institutions—the customer satisfaction momentum in 2016 is positive. Banks overall surge 5.3% to a score of 80 on the ACSI’s 100-point scale. This rising trend is one of the more surprising results from the ACSI’s report on the Finance and Insurance sector as it holds true across nearly every big bank.

Smaller size, however, continues to distinguish the top tier as community banks and credit unions remaining pacesetters. In general, more personalized service and the ability to offer lower fees make for happier customers. Nevertheless, both super regional banks and national banks post substantial gains, with the latter moving up 6.9% to 77.

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ACSI data show that big banks are making progress toward improving the customer experience. From the variety of financial services available to call center operations, national banks earn better ratings compared with a year ago. The critical website user experience is deemed more satisfying (up 2% to an ACSI benchmark of 85), but community bank websites set the pace at 88. When it comes to face-to-face contact, small banks earn the top mark for courtesy and helpfulness (91)—a level of excellence that staff at big banks have yet to attain (86).

Among the largest U.S. commercial banks, Citibank heads the field in 2016 with a 12% leap to 82, a score that rivals the satisfaction level of credit unions and nearly matches smaller community banks.

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Wells Fargo slips out of first place for customer satisfaction not by suffering an ACSI decline, but by showing less improvement than its competitors. Adding just 1% to an ACSI score of 76, Wells Fargo is now below average. Closing in on Wells Fargo, Bank of America (+10%) and Chase (+6%) are tied at 75.

Stock performance for big banks mimics their ACSI changes. Since February, Chase, Citibank, and Bank of America have each shown solid gains, whereas Wells Fargo’s stock lagged its national competitors even before news of improper sales practices broke.

ACSI Finance and Insurance Report 2016 »

Media Post:  Citibank Leads National Banks In Study »

Health Insurers Doing a Better Job at Basics

The health insurance industry is getting better at meeting policyholder needs as satisfaction rises 4.3% to 72 on ACSI’s 100-point scale. Among the big insurers, Aetna and Anthem tie for first place at 75 after posting large gains. Kaiser Permanente follows closely at 74, with Humana inching up to meet the industry average at 72. At the low end, Cigna trails the field at 67 despite earning this year’s biggest increase in policyholder satisfaction. This positive momentum is tempered by the fact that health insurers remain in the bottom dozen among 43 ACSI industries.

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Nevertheless, ACSI data show that the industry is making strides in key areas of the customer experience. Policyholders are the most pleased with access to primary care doctors (ACSI benchmark of 80, up from 78 in 2015). Claims are easier to submit and coverage of standard medical procedures is viewed more favorably. Call centers also receive a higher rating, but show ample room for improvement (73).

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TIME/Money: Americans Are Actually Happier With Their Health Insurance Companies Now Than They Were Two Years Ago »

D Healthcare Daily: Despite Rising Costs, Americans Report More Satisfaction With Insurance Plans »

Sears: Will it be Lights Out or Back in the Groove with Customers?

Sears, once a stalwart American brand, is currently a shadow of its former self, having fallen on hard times with both shoppers and investors alike. Back in 2001, Sears was tied for second among department and discount stores in terms of customer satisfaction, according to the American Customer Satisfaction Index. Since then, the chain has managed to beat the industry average only once in 14 subsequent years.

Looking at the last decade of ACSI scores and stock performance for Sears, the period from 2009 to 2013 shows customer satisfaction trending upward by 4% while stock price falls over 57%. The reason for this outcome lies in the connection between stable, or even increasing, customer satisfaction and a dwindling customer base.

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Customer satisfaction plays a vital role in competitive industries in large part because consumers can vote with their feet. That is, customers who do not like a company’s service can simply go elsewhere. The ACSI measures a company’s customer satisfaction by talking directly to the customers themselves. In situations where unhappy consumers leave en masse, the only remaining customers are the ultra-loyal.

In the case of Sears, these loyal customers are likely patronizing the store for reasons other than satisfaction, such as price, proximity, or tradition. In such situations, a rise in customer satisfaction can indeed coincide with a decrease in revenues—a red flag in terms of future financial performance. As dissatisfied customers defect to competitors, the diminished pool of customers includes a greater percentage of shoppers who like the experience for a specific reason. During the period 2009 to 2013, the rise in customer satisfaction for Sears coincides with a steady depletion in sales.

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In recent years, even the most loyal Sears shoppers have seen their satisfaction decline. The company now ranks second-to-last among department and discount stores. With an ACSI score of 71, Sears beats only Wal-Mart at the low level of 66. In comparison, industry leaders Nordstrom and Dillard’s score 80 or higher. It is no surprise to see Sears report terrible earnings for the third quarter of 2016. For Sears, the challenge ahead lies with improving the customer experience. Unless the company succeeds in becoming more customer-centric, it is unlikely that Sears’ faltering financial position will turn around.