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.

You thought Facebook’s privacy was bad? Its amount of ads is even worse.

Facebook has spent much of 2018 on the defensive.

The revelation that Cambridge Analytica had mined millions of users’ personal data set off a wave of fury and a call to #DeleteFacebook.

The company’s struggles to contain misinformation, fake profiles and organizations, and other ill-intentioned uses of its platform – and what it plans to do about them – have kept it in the spotlight as bad news piles up.

It’s no wonder that Facebook’s ACSI score dropped 1 percent to a 67 this year, perilously close to the bottom of the industry. According to users, Facebook has by far the worst privacy protection in social media.

But despite the media focus, privacy protection isn’t Facebook’s only problem. Users also said the company’s navigation and video speed is poor and its content is stale. Its advertising is the most intrusive of any social media site by a wide margin, users say.

What’s interesting is that users gave Facebook’s amount of advertising a lower score than its privacy protections.

That mirrors a trend across the entire social media industry. What’s worse? Lack of privacy protection or too much advertising?

How other social networks fared in privacy and advertising

Some of Facebook’s woes extend across the entire social media industry. Social networks’ ability to protect privacy declined for the second year in a row to tie its all-time low of 71.

But the customer experience factor that social media users were least satisfied with is the amount of ads. This measure dropped 1 percent year over year to an all-time low of 68.

The scores for those particular factors shaped satisfaction for the highest and lowest-scored social media sites.

The top ACSI scores in social media this year belong to Pinterest (80), Google+ (79), and Wikipedia (77). All scored well in privacy protection and amount of advertising.

Pinterest and Google+ tied for the best privacy protection in the industry, with a score of 78. Users rated Pinterest’s advertising on par with Wikipedia, which has no ads, while Google+ received the best customer satisfaction score for its amount of advertising.

Facebook did not have the lowest ACSI score among social media companies; its 67 narrowly beat out LinkedIn and Twitter, which tied for last place with a score of 66.

In terms of privacy, Twitter and LinkedIn join Facebook at the bottom of the heap, with LinkedIn narrowly in front of Twitter, but trailing all other social networks. Facebook was in last place by a wide margin, sinking to a 61 for privacy.

Users ranked Twitter above average for its amount of advertising, while LinkedIn is in second-to-last place, beating only Facebook, which again trails by a significant margin at a score of 59.

Why users are less satisfied with advertising than lack of privacy protections

Privacy protections are certainly a concern, and their return to their all-time low shows that users care about how social media companies guard their data.

But privacy concerns are often in the back of users’ minds, stirred up only when a breach or violation of that privacy occurs.

Advertising, however, is in users’ face every time they log on. It seems that some of the biggest social media companies are still working out ways to seamlessly integrate advertising and find the right balance of advertising and content.

While most consumers are used to commercials interrupting TV shows or radio broadcasts, it seems they’re still unsatisfied being inundated with ads while looking at pictures of their grandkids or sitting through a commercial before a YouTube video.

That Facebook, the largest social network by monthly active users, reflects these problems more vividly in its scores and recent controversies makes sense. What remains to be seen is if it can dig itself out of this hole and find a path to better customer satisfaction.

iPhone 7 Plus beats the Galaxy S8 and iPhone X in customer satisfaction

Smartphone sales may have plateaued, but customer satisfaction is still high.

While the latest data and phone manufacturer earnings reports show the impact of longer replacement cycles and fewer leaps ahead in technology, phone manufacturers’ ACSI scores have held steady.

Whether that’s good news or bad news for the industry depends on what comes next.

Apple and Samsung hold steady out in front

It should be no surprise that Apple and Samsung are neck and neck in the lead for customer satisfaction, as they have been since 2014.

Samsung has the higher market share, with 21.9 percent to Apple’s 15.2 percent, but when it comes to customer satisfaction, Apple remains on top with a score of 81, ahead of Samsung’s score of 80, according to the 2018 ACSI Telecommunications Report. Those scores have held steady since 2016.

This year Motorola took third with a 79, rising 3.9 percent year over year, while LG rose 4.1 percent to 77 and HTC sat still at 76.

Cellular telephones as a whole stood at 79 for the third straight year, a sign that we’ve reached a point where new phones aren’t impressing customers the way they once did with leaps in features and capabilities.

Which phones are customers most satisfied with?

Among individual phones, the iPhone 7 Plus came out on top with an ACSI score of 85, beating out the Galaxy S8 Plus at 84, and the Galaxy S8, iPhone 8, and iPhone 8 Plus, which all tied at 83.

Despite being the best-selling smartphone in the first quarter of 2018, the iPhone X landed in the middle of the pack, scoring an 80 – the same as the iPhone 7, iPhone 5S, iPhone SE, and Moto G, among others.

Perhaps the iPhone X’s cost affected its score—criticism that it wasn’t much different from the iPhone 8, just more expensive, could have dampened enthusiasm for the flagship model.

At the bottom of the list are the iPhone 6 and LG G Stylo tied at 78, followed by the Galaxy S5 at 76, and the iPhone 5 in last place at 75.

The age of these phones is likely a factor in their scores, as the iPhone 5 was originally released in 2012, the Galaxy S5 and iPhone 6 in 2014, and the G Stylo in early 2015.

Different phones excel at different tasks

The customer satisfaction ratings for particular features show how different phones succeed in different areas.

For example, the Galaxy S8 Plus ranked first for the quality of its video, while the iPhone 8 and Galaxy Note 5 tied for top marks for quality of audio.

The G Stylo, which overall ranked near the bottom of the list, ties the iPhone 7 Plus for first place in the ease of navigating menus and settings, and takes a close second, behind the Galaxy S8 Plus, in its design—which includes overall size, weight, and size of the screen.

While the G Stylo is more than three years old, it beat out the Galaxy S8, the iPhone X, 8, and 8 Plus in quality of design.

Among the many features measured for the different phones, battery life was among the lowest-ranked. The Galaxy S8 Plus came out on top in battery life, with the iPhone 8 Plus close behind, and the iPhone 7 Plus and Galaxy S8 tied for a distant third.

Why customer satisfaction with phones has held steady for years

Pretty much any phone you buy today is going to offer an outstanding experience. Of course there are varying degrees of outstanding, but the differences are around the edges – a slightly larger screen here, a slightly better camera there, and so on.

The iPhone X, despite improving upon existing iPhones, didn’t revolutionize the market the way the first iPhone did back in 2007.

The iPhone 7 Plus had higher customer satisfaction ratings than newer phones because it’s not that much different than the new phones, but it’s more affordable than recent models. Many don’t feel the need to upgrade as often as they once did, both because of the lack of attractive new features and because changes in phone contracts make getting a new phone more expensive.

We’re all waiting for the product that comes along and makes us want to chuck our smartphones in the trash because the new one is everything we never realized we needed.

It’s getting hard to imagine what that next big thing will be, but eventually it will arrive and shake up this space’s ever-steady customer satisfaction ratings.

Video streaming services compared: Which ones have the highest customer satisfaction?

At one point, “streaming video service” was just a synonym for Netflix. But Hulu and Amazon Prime Video were close on its heels, and now dozens of streaming providers are wading into the waters.

But not all streaming providers are created equal. Some, like Netflix, Hulu, and Amazon Prime, are investing billions of dollars in original programming. Some have a better and broader selection of movies and TV than others.

It’s clear that streaming services are trouncing subscription TV in terms of customer satisfaction—streaming has an ACSI score of 75, while subscription TV declined this year to a 62.

But in this highly competitive space, measured for the first time in the 2018 ACSI Telecommunications Report, some streaming services set themselves apart, while others fare no better in customers’ eyes than subscription TV.

Here’s who came out on top, who still has work to do, and the aspects of video streaming that customers are most – and least – happy with, from their bill to the quality of original programming.

Netflix, Vue, and Twitch on top

Tied for first place in customer satisfaction, Netflix, Sony PlayStation Vue, and Amazon’s Twitch scored 78, the highest score in the telecommunications segment.

Netflix is the undisputed leader among streaming services, having paved the way for others in the industry, and it continues to dominate. It added a record 7.41 million customers in the first quarter of 2018.

While its subscriber numbers are nowhere near Netflix’s, PlayStation Vue’s customization and flexibility aid its ranking; users don’t mind paying more for what they perceive to be a strong value. Vue sits in a good position with cord cutters disgruntled with cable TV service.

Amazon’s Twitch has taken a different path, capitalizing on the growing popularity of streaming video games, including e-sports, a popular category especially with younger viewers—61 percent of e-sports viewers are between 18 and 34.

Tied for second place are à la carte streaming services Apple iTunes and the Microsoft Store, both with scores of 77.

Amazon Prime, Hulu, YouTube Red in the middle

Google’s YouTube Red comes in at 76, ahead of Amazon Prime Video, Google Play, Walmart’s Vudu, and Hulu, which all tied at 75.

While YouTube Red is rebranding to YouTube Premium, it has had success recently with Cobra Kai, an original series based on the Karate Kid franchise that recently beat out original shows from Hulu and Netflix to top the streaming charts.

Hulu has few ways to differentiate from its competitors in terms of subscriber satisfaction, but with Disney set to assume majority ownership, the service may offer more content and original programming in the future.

Amazon Prime Video has joined rival Netflix with Oscar nominations – and wins – in the last couple years, and has about 26 million viewers.

Network channel subscriptions bring up the back of the pack

Limited by the content they can provide, network channel subscriptions rank below average. CBS All Access (74) comes in ahead of HBO Now and Starz (both 72) and Showtime Anytime (70). DISH Network’s Sling TV (71) has a narrow lead over AT&T’s DIRECTV NOW (70).

At the bottom, Sony’s Crackle takes last place with 68. Even with the lowest score in the video streaming category, Crackle rates higher than all but two pay TV providers.

What viewers like and don’t like about streaming video

The top-rated aspect of video streaming is the ease of understanding the bill, which streaming customers find much more straightforward than subscription TV customers (ACSI score of 80 for streaming, 73 for subscription TV).

Website satisfaction is high (80) among video streaming customers, as is overall performance reliability (78). Call center service was rated 75, head and shoulders above subscription TV, whose call centers were rated 63 after a 3 percent decline from last year.

Streaming video services face an ongoing battle for content, which is often outside of their control. While viewers rate the quality of original programming at 74, they say the most room for improvement is in the availability of current season’s TV shows (71) and new movie titles (69).

The future of video streaming services

While video streaming handily beat subscription TV, that isn’t exactly difficult considering that subscription TV, along with internet service providers, is one of the lowest-rated industries the ACSI tracks.

Many aspects of video streaming services, from ease of understanding the bill to call center experience, outstrip those of subscription TV, but within the streaming space itself, it’s getting harder for some services to differentiate themselves in a crowded market with a few entrenched household names.

By more closely examining how consumers rated their services, however, video streaming providers can better meet viewers’ preferences and redefine perceptions – as well as improve their ACSI score – moving forward.

The best and worst airlines according to customer satisfaction

Fortunes in the airline industry can change in an instant.

Southwest, which led all airlines in the latest ACSI Travel Report with a score of 80, recently had a plane engine explode and kill a passenger.

Allegiant Airlines, which jumped 4 percent in 2018 to a score of 74, was the subject of a damaging investigation that alleges the airline fails to follow safety standards, among other issues.

Not to mention the rising costs of fuel and new labor agreements. Or the spate of recent mergers that gives no more than four operators control of 80 percent of the market.

If you follow the news, you’ve likely seen countless stories of customer service mess ups on the part of airlines. And yes, the ACSI score for airlines dropped 2.7 percent from last year. All but four of the largest airlines saw weaker passenger satisfaction this year. And with the exception of the check-in process, which remained unchanged from last year, every aspect of flying has deteriorated in 2018.

But there is also good news for airlines in the scores. Let’s take a closer look.

Airlines with the highest customer satisfaction

Southwest, whose ACSI score remained unchanged from last year, took the lead from JetBlue, which fell 4 percent. JetBlue now sits tied for second with Alaska Airlines, which inched up 1 percent.

Southwest’s low fares and high service levels, combined with its growing network, have kept its customer satisfaction levels steady – this is its third year in a row with the same score. Alaska Airlines was boosted by considerably lower ticket prices and its merger with Virgin America, which has a legacy of good customer service.

Tied for third place are Allegiant (up 4 percent), American (down 3 percent), and Delta (down 3 percent). United fell 4 percent, and bringing up the rear are Frontier (down 2 percent) and Spirit (up 2 percent).

Allegiant’s gains may be short lived following news reports of mechanical issues and safety concerns that sent its stock tumbling. Beleaguered by customer service issues, United saw the sharpest decline in the airline industry in ratings of its employees’ courtesy and helpfulness.

Business travelers vs. leisure travelers

Dividing travelers based on the reason for their travel – business or leisure – uncovers interesting insights into customer satisfaction.

One of the biggest differences between the two is that business travelers are more apt to complain. More than a third of the business travelers surveyed filed a complaint with an airline, over three times the 11 percent of leisure passengers who did the same. But business travelers are also much more satisfied, with ACSI scores more than 8 percent higher than those from leisure passengers.

That makes sense: Business travelers travel more often and are more emboldened to address any issues they experience. Airlines, knowing business travelers are among their best customers, make an effort to right any wrongs. Business travelers are also just more experienced, smart travelers. While infrequent leisure travelers might be unhappy with an unexpected part of the boarding process, for example, business travelers know how to play the game.

ACSI-travel-business-vs-leisure

There are also stark differences around airline baggage fees. Among leisure travelers who didn’t pay fees to check luggage (56 percent), the ACSI score was more than 4 percent higher than among leisure travelers who did pay.

For business travelers, it was the opposite. The 69 percent of business travelers who paid to check baggage also had the highest ACSI score among business and leisure travelers, and nearly 7 percent higher than the business travelers who didn’t pay for checked luggage. Not having to pay out of your own pocket certainly helps.

What needs improvement: Nearly everything

The ACSI score for the check-in process held steady, but every other aspect of flying declined.

Ease of making a reservation, the courtesy and helpfulness of flight crews, timeliness of arrival, and website satisfaction all dropped about 1.2 percent. Seat comfort, already in last place, fell an additional 3 percent.

What’s the good news in all this? That even small improvements could pay big dividends for airlines. Just as fortunes can change in an instant for the worst, they can also shift for the better. By homing in on even a few areas to upgrade, airlines can improve their perception among customers.  

Facebook privacy issues: Consumers rank Facebook last among social media sites

Facebook has had a busy couple weeks. Between back-to-back hearings on Capitol Hill last week and new questions from the European courts this week, the social media behemoth is getting its fair share of regulator attention, negative press, and user complaints.

One of the main spotlights is on Facebook’s privacy policy, especially after the Cambridge Analytica scandal news broke. However, the company’s less-than-stellar record with customer privacy has long been an issue.

Facebook has always struggled with satisfying customers – particularly in the privacy department — according to eight years of customer satisfaction research. When looking at its ability to protect the privacy of personal information, Facebook ranks dead last, which is likely due to its revenue goals encroaching on customer privacy. The second worst, LinkedIn, scores a full 11 percent higher than Facebook.

Overall, Facebook is one of the lowest-ranked companies among e-business sites, scoring a 68 out of 100 — and that’s before the last six months of negative press.

For reference, the social media industry average score is 73.

ACSI-social-media-site-scores-2017Overall ACSI customer satisfaction scores for social media sites as of July 2017.

Across all industries, a key driver of satisfaction is maintaining privacy of information. However, people also value convenience and Facebook is engrained into the social fabric of our lives. Users haven’t changed their privacy settings, and even Facebook’s stock has risen – but not recovered – since Zuckerberg’s testimony to Congress.

Facebook may be too large to be quashed by these recent privacy fumbles, but its satisfaction score can – and likely will – take a hit. It’s certainly a warning to all companies in privacy management: Customers expect their information to be secure.

We’ll take a closer look at social media website scores this summer, but for now, take a deeper dive into the most recent customer satisfaction data with more insights on this industry.

 

Bank Customer Satisfaction Offers Challenge to Credit Unions

Customers are finding retail bank services more satisfying in 2017—so much so that banks hit an all-time industry high score on the American Customer Satisfaction Index that is close to approximating member satisfaction with credit unions. Historically, banks were once among the lower-scoring industries in the ACSI, but now they are in the top quartile for customer satisfaction.

In 2008, credit unions debuted in the ACSI with a score that nearly topped all other industries in the Index. At 84 on the ACSI’s 100-point scale, credit unions came in second only to personal care and cleaning products (85) and were ahead of retail banks by a whopping 9 points. Now 10 years later, retail banks score 81, trailing credit unions (82) by just a point.

Digital banking plays a strong role in helping banks meet their customers’ needs more efficiently. As mobile banking grows in popularity, customers choosing to use apps can have a satisfying experience—leaving more time for bank staff and tellers to offer a personal touch for those who continue to do their banking in-branch.

Size still matters when it comes to satisfying bank customers, and smaller community and regional banks continue to offer an experience that beats both super regional and national banks. With an ACSI score of 85, small banks are significantly ahead of credit unions as well.

Credit unions and smaller banks show similar ACSI results across key elements of the customer experience and for the most part exceed the performance level of the larger banking institutions. With more personalized service, small institutions score better than big banks for staff courtesy, transaction speed, account information, ease of making account changes, and competitiveness of interest rates. The exceptions are number and locations of branches and ATMs, where the scale of big banks comes into play.

As credit union membership grows, however, the industry may be struggling with maintaining the very high level of service that once set it apart from big banks. Looking at some of the touch points where small institutions typically shine, it is interesting to note that big banks are closing the gap to credit unions over the past two years. In 2015, for example, national banks trailed credit unions by 7 points for transaction speed, but this has lessened to 3 points this year. For staff courtesy, the gap between national banks and credit unions has gone from 5 to 3 points. A similar pattern prevails for both website and call center satisfaction.

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PCs Follow Negative Trend for Big-Ticket Durables

American consumers are not finding new technology appealing enough to offset pricing across an array of durable products including personal computers, autos, household appliances, and even televisions. For PCs, weak demand is reflected in lower customer satisfaction (-1.3% to 77) as many customers turn increasingly to smartphone use.

For durable products like PCs, prices are not down—if anything, they are rising. The global shortage of NAND flash storage caused an uptick in PC prices, which also contributes to lower satisfaction. But innovation—or lack thereof—is dampening buyer enthusiasm whereby consumers have little incentive to replace or upgrade their PCs. Over the last few years, basic desktop and laptop functionality has not changed much, and innovation is moving more slowly around the margins.

Among PC makers, the top of the industry for customer satisfaction is driven by Apple and Samsung—mirroring results for the cell phone category. High-scoring Apple has led the PC industry for years, while Samsung, first measured in 2015, has sprinted up to nearly catch the leader. The two companies’ cell phone offerings also run nearly neck-and-neck, and some of their individual smartphone brands earn very high scores in the upper 80s. In ACSI’s smartphone brand study released last spring, Apple’s iPhone SE ranks first among 20+ phones at 87, followed by Galaxy S6 edge+ (86), iPhone 7 Plus (86), and Galaxy S6 edge (85).

On the computer software side, customer satisfaction wanes 3.7% to 78 as both smaller companies and Microsoft tumble—the latter declining even as it transforms into a supplier of cloud-based services. Despite MS increasing the frequency of feature updates, both Windows and the Office Suite have yet to give users improvements that are compelling enough to propel higher satisfaction.

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Toyota Snags Double Win in Customer Satisfaction Ratings

Toyota headlines the automobile industry when it comes to customer satisfaction, earning the top spot among both luxury and mass-market brands in this year’s American Customer Satisfaction Index. Toyota’s Lexus is the luxury leader at 86 (100-point scale), followed by an improved Mercedes-Benz at 84. For mass-market plates, Toyota’s namesake brand comes in first with an equally high score of 86, with Subaru closing in at 85.

General Motors is the only domestic automaker in the top five overall, with its GMC nameplate grabbing third place at a stable score of 84. Among luxury plates, two domestic offerings tie for third: GM’s Cadillac and Ford’s Lincoln. For the former, 2017 is a comeback year as Cadillac gains 5% to earn its berth on the leader board. Not so for Lincoln, which tumbles after holding first place among all vehicles a year ago—down 5% from 87 to tie with Cadillac (83).

While the overall trend for autos in 2017 is one of receding satisfaction, Toyota brands are on an upswing. Likewise, Korea’s Hyundai earns a slot at number four among mass-market cars with a 2% gain. In fact, five of the six top-scoring mass-market vehicles are imports, and all show ACSI gains.

Historically, Toyota has been a consistent leader in customer satisfaction. For three years running, the Japanese carmaker has placed in the top two among mass-market cars, while its Lexus nameplate hit number one in 2015 and tied for third in 2016 among upscale vehicles.

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