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.

Forget millennials. Here’s the generation most impacting your bottom line

By this time next year, Generation Z will outnumber millennials globally, accounting for nearly 32 percent of the population. While millennials have recently been in the spotlight for having unreasonable expectations and supposedly “killing” industries, it’s consumers born after 2000 that are likely to have more of an impact soon.

With the oldest members (ages 18-20) of this massive generation now in the market as consumers, there a few things companies should keep in mind as they try to woo this digital-savvy demographic.

Be prepared for a harsh critic

Younger consumers have never had a reputation for being particularly optimistic when it comes to satisfaction. Gen Z customers appear to be overwhelmingly negative in their response to new products and services; in fact, almost every variable the ACSI measured in 2017, including loyalty and perceptions of quality, proved Gen Z ranked the lowest.

Most notably, these young consumers were 10 percent less satisfied than the Silent Generation, and 4 percent less satisfied than millennials, who have a reputation for being critical consumers. To overcome this trend, companies will need to work harder to prove the worth of their products and services over competitors’ offerings to young shoppers. Growing up with digital conveniences like Amazon and phones that also function as wallets has fostered higher expectations for convenience and value among Gen Z.

Customers that don’t know how to properly complain

Aside from the general negativity associated with Gen Z consumers, an underlying problem is that these consumers often don’t productively complain about their dissatisfaction. Our data consistently shows customers who complain to the provider of a product or service generally have a better experience, in part because they have an opportunity to see the issue resolved and also because they feel their issues are being heard.

Yet, instead of calling or emailing customer service, Gen Z tends to take to social media to express their frustrations. This becomes problematic when consumers tweet or post without tagging or messaging the company directly. Not all corporate structures have the resources to search for and respond to indirect customer complaints on social media. As a result, they have fewer opportunities to address the customer’s experience directly, salvage customer satisfaction, win back the customer’s loyalty, or manage their reputation. Customers, in turn, miss out on a chance for resolution.

For example, earlier this year 20-year-old celebrity Kylie Jenner complained about the newest Snapchat update to her 25.4 million Twitter followers, many of whom belong to Gen Z. The tweet received over 73,000 retweets and 5,000 replies, many of which conveyed the tweeter’s plans to delete Snapchat altogether or to stick to other social platforms until an update was made. In the aftermath of Jenner’s post, Snapchat, Inc. lost $1.3 billion of its market value.

While a single tweet from a celebrity isn’t typically enough to influence satisfaction overall (and we can’t say Jenner’s tweet was solely responsible for Snapchat, Inc.’s stock plummet), the example shows the impact Gen Z could have on company bottom lines.

A problematic generation, or a problematic age?

Before companies across the country redirect their concern over the impact of millennials toward Gen Z, they should think back to being an 18-year-old shopper. The “problem” with 18-20-year-old consumers may not be that they belong to a digital generation raised with more conveniences, but instead that they’re too young to be a well-informed buyer. Perhaps it’s time to consider that this might happen again … and again and again, as each new generation reaches the early stages of adulthood.

Members of the Silent Generation and Baby Boomers tend to be the most satisfied customers because they’ve spent years shopping, which has shaped them into a much wiser customer than they may have been in their late teens and early 20s. More practice in purchasing leads to better habits, including research before buying, which ultimately leads to a higher level of customer satisfaction. They also tend to have more disposable income and therefore less stress associated with each purchase, whereas younger consumers with less income may be more significantly impacted by their purchasing decisions, and could be more critical of companies because of that added burden.

The fact that Gen Z ranks the lowest in satisfaction should still be taken as a warning sign for companies. But before scrambling to please the youngest consumers entering the market time and time again, it’s worth considering that the real answer to achieving satisfaction in the younger generations might be to give them some time.

Customer satisfaction with hospitals grows as health care sector shifts

One word defines health care right now: consolidation.

Pharmacy benefits managers (PBMs) are merging with insurers. United Health Group led the charge a few years ago, buying Catamaran. Now CVS is buying Aetna and Cigna is buying Express Scripts. Walmart is in talks to buy Humana. Some see this as motivated by the potential for Amazon to leap into the health care space; the major players are joining forces to ensure they’ll be able to compete.

But the joining of PBMs with insurers could have an effect on hospitals as well.

UnitedHealth bought Surgical Care Affiliates to expand into primary and urgent care in ambulances, and picked up a physician group, moving closer to direct delivery of medical care. CVS and Aetna plan to add community medical clinics to their repertoire. Walmart already operates retail health clinics and has said it would begin offering lab-testing services in some stores.

The $18 billion urgent care center space is expected to grow nearly 6 percent in 2018, building on the more than 7,600 urgent care centers in the U.S. as of June 2017. The number of centers in 2017 was up nearly 10 percent over 2015.

The surge in clinics could be the reason that customer satisfaction with emergency room services jumped 6 percent since last year, to an ACSI score of 73.

That was the most dramatic change in the health care and social assistance sector, and drove the 1.3 percent increase in customer satisfaction with hospitals.

Inpatient hospital care saw a 1 percent rise to an ACSI score of 77. The gains in ER and inpatient care helped offset a decline for outpatient care, which ebbed 3 percent to 78.

Patient satisfaction with ambulatory care (office visits to doctors, dentists, optometrists, and mental health professionals) held steady at 77 for the third year in a row.

Among patients 51 years and up, satisfaction with hospitals was much higher, at a score of 80, than among those 18-50 years old, where it stood at just 72. The difference in satisfaction between the two age groups was most pronounced in outpatient care and emergency room services, where ACSI scores among those 51 and up were 10 points higher than scores for those 18-50.

It will be interesting to see the effect that continued growth of urgent care clinics will have on ER perception moving forward. And when Amazon, along with its collaborators JPMorgan Chase and Berkshire Hathaway, does make moves in health care, it will be anyone’s guess how the health care and social assistance sector, and patients’ satisfaction with its services, will respond.

UPS tops FedEx in customer satisfaction, as Amazon appears on the horizon

Amazon overshadows many industries, as we saw last month in the retail sector. Now, consumer shipping, long the beneficiary of all those Amazon orders, is bracing for a future in which Amazon makes its own deliveries.

The Wall Street Journal last month reported that Amazon is planning to launch “Shipping with Amazon,” a delivery service for businesses shipping to consumers. Of course it would take years for Amazon to build a parcel delivery network at the scale of United Parcel Service (UPS) and FedEx, but even the specter of Amazon should be enough for the established players in the shipping industry to redouble their efforts in serving customers.

Where do they stand right now?

Customer satisfaction with consumer shipping was stable at an ACSI score of 81 (out of 100), but UPS jumped into the lead at 82, growing 1 percent over 2017. FedEx fell 1 percent to 81. The U.S. Postal Service’s Express and Priority Mail business climbed 1 percent, but remains a distant third place at 76.

Customers gave top marks to shippers for delivering packages in good condition (88) and making it easy to track shipments (86). Customers who visited a post office or a UPS or FedEx store feel that service staff members were slightly less courteous and helpful this year (85), but all other customer experience benchmarks remained the same.

It might seem easy to write off the U.S. Postal Service’s Express and Priority Mail business, which remains well behind the category’s leaders in terms of overall customer satisfaction. But it’s actually tied with FedEx in customer loyalty and has a lower percentage of customer complaints. UPS had the best scores in the industry for each of those measures.

With Amazon dipping its toes in the shipping space and, according to the Wall Street Journal, threatening to undercut UPS and FedEx pricing, the shipping giants can only rely on their established infrastructure so long. Investing in customer service could continue to set these companies apart.

Drug store mergers heat up as retailers defend against the Amazon threat

Among retailers, health and personal care stores were one of the bright spots in our latest Retail Report 2017.

Just like supermarkets, health and personal care stores climbed one point to an ACSI score of 79. While that doesn’t match the 82 of internet retailers, it’s a high score, and the improvement points to the results of both M&A and preparations for Amazon to enter the space.

But that vote of confidence from customers is just the prelude to a shake up that the industry’s many mergers are creating.

The leaders shed points, but still lead

Kmart pharmacies and Kroger were tied at a score of 80 at the top of the health and personal care industry. However, both saw their ACSI score fall in 2017, with Kmart pharmacies shedding 4 points and Kroger down 1 point. Kmart pharmacies did show significant improvement in service quality, and both brands improved in meeting customer expectations.

CVS customer satisfaction powered by and preparing for mergers

CVS was right behind the leaders at a company-best 78. It was the most improved in the category, gaining 2 points, and one of only two large chains to improve over 2016.

Acquiring Target pharmacies may have boosted CVS’s customer satisfaction scores. When dividing CVS’s score into CVS and Target pharmacies, Target stands at a score of 80, while CVS sits at 77.

The health care retailer’s possible merger with Aetna is suspected to be a preemptive move to counter the threat of Amazon, which may begin selling prescription medicine. Whether this merger will boost customer satisfaction – or even go through – remains to be seen.

Rite Aid split among Albertsons and Walgreens

Rite Aid, which fell 1 point in 2017 to a score of 77, is in the middle of being purchased.

Walgreens is snatching up 1,932 Rite Aids (it tried to buy all of them before antitrust scrutiny led to a scaled-back deal). And now Albertsons plans to buy the remaining 2,500 Rite Aids, further expanding its footprint after merging with Safeway in 2015.

It seems many of the health and personal care stores toward the bottom of the ACSI rankings are banding together in hopes of better serving customers and getting ahead of Amazon’s potential entrance in the market.

Walgreens gained a point in 2017 to tie Rite Aid at 77. Safeway pharmacies was just a point higher at 78 after plummeting five points from last year, a drop of 6 percent. Declines in customer loyalty and perceived value contributed to the fall.

Perhaps the many mergers and acquisitions will give these stores more resources to improve customer satisfaction.

The elephant in the room

In the end, M&A in the health and personal care space, as well as the improvements in service quality and meeting customer expectations, are all about Amazon. The potential for the dominant internet retailer to enter the space and push out any and all competitors has many companies making big moves to shore up their ranks.

If Amazon steps into the space, a focus on customer satisfaction will be critical to winning customer loyalty and dollars.

3 ways financial advisors can hold onto customers despite market volatility

The stock market’s rocky start to February has investors, observers, and advisors watching the peaks and valleys and wondering what’s next.

At least for financial advisors, there are a few steps forward in the latest ACSI data around customer satisfaction.

The ACSI Financial Advisors Report 2017 collected data in the fourth quarter of 2017 and reflects customer perceptions when the stock market was still soaring. As you might expect, the scores were high. The average of 81 (out of 100) places it in the top 10 industries measured by the ACSI.

But it also contains opportunities for advisors to differentiate themselves and rise above their competitors, something especially crucial if market volatility remains a trend.

Currently, the major financial advisors have ACSI scores within a few points of each other. LPL Financial and Charles Schwab lead the pack with a score of 82, while Fidelity, Merrill Lynch, and UBS all have the lowest score of 79.

The narrow range shows how competitive the industry is right now and how small, incremental changes can help advisors stand out. Here are three ways to improve customer satisfaction, according to the data:

1. Focus on improving customer service.

Despite the relatively high scores for financial advisors overall, they also have the fourth highest complaint rate of any industry measured by the ACSI – a red flag of negative feedback from customers experiencing problems.

This is probably the biggest opportunity for financial advisors to set themselves apart. A concerted effort to improve service – whether through more face-to-face contact or instantaneous chat capabilities on a website — could increase customer satisfaction and loyalty.

2. Develop or upgrade mobile options.

Mobile options for account management had one of the lowest scores among all the benchmarks, coming in at 78.

While the industry has to contend with compliance constraints, a push behind better mobile capabilities could set advisors apart and give them a technological lead over their competitors.

3. Establish routine contact with investors.

Scores for routine contact with investors (81) and personal contact (79) were two others with lower scores among financial advisors.

Investors will likely have questions about the recent volatility in the markets, making this a prime opportunity for improvement. By taking a more proactive approach to client communication, advisors can not only help clients navigate a suddenly shaky market, but develop relationships with customers that could weather further market volatility.

How customers feel about their financial advisors

While these steps are a start, we’ll have to wait and see how the markets fare in the coming weeks and months.

We’ll closely monitor the perceptions of customers and see whether the high ACSI scores for financial advisors hold up even if the big upticks we saw in 2017 don’t materialize in 2018.

Take a deeper dive into all the customer satisfaction data for financial advisors for more insights on this segment of the market.

Love or hate Trump, government satisfaction just hit an 11-year high

Customer satisfaction for U.S. federal government services just hit an 11-year high. Yes, you read that right.

If you watch the news, skim the headlines, or scroll through Facebook, you’ve probably noticed that people have wildly different perceptions of how well the government is working.

But as far as customer service is concerned, many Americans agree: The federal government is much better than it was just a few years ago, and is the best it’s been since 2006.

Just a few hours before President Trump gives his first State of the Union address, the economy appears to be flourishing and GDP is rising. But there are other measures of success to factor in. Let’s look at a few.

“Customers” are satisfied with the government

Citizens using the government’s services are happy with their experience, according to our most recent data. In fact, customer satisfaction with the federal government’s services improved for a second year in a row, increasing 2.5 percent to reach 69.7 (on a 100 point scale).

Four key factors drive satisfaction:

  1. Quality of federal websites (up 1 percent to 77)
  2. Courtesy and professionalism of customer service personnel (down 1 percent to 77)
  3. Clarity and accessibility of information received from agencies (up 1 percent to 73)
  4. Timeliness and efficiency of government processes (up 3 percent to 72)

Last year, the federal government’s website performance saw the highest gain, but customer service was the highest-ranking factor in overall customer satisfaction. This year they tie as the most important indicator for happiness.

Political affiliation doesn’t matter

You may think that customer satisfaction with the government directly correlates to political affiliation. The party in power surely must impact the overall consumer satisfaction rate.

But, surprisingly, you’d be wrong.

In fact, satisfaction among Republicans dropped over the past year (1 percent decrease to 69), and it remained unchanged (73) among Democrats. Independents shifted the most, with a 3 percent gain to 67.

The ACSI survey doesn’t measure satisfaction with government policy and leadership, instead relying on the four factors above to analyze interactions and determine the scores. But it’s still interesting that affiliation and opinions on the administration didn’t appear to muddy consumers’ perceptions of the processes and services they received.

Not all government services are created equal

While customer satisfaction with the federal government overall has been climbing, there’s varying opinion of which government services are most customer-friendly.
The Departments of Justice and Interior performed particularly well this year (81 and 78 respectively), while the Departments of the Treasury and Housing and Urban Development were at the bottom of the spectrum (61 and 60 respectively). The IRS is included in the Treasury Department, which will be interesting to watch now that the tax overhaul is in effect — both from the perspective of lowering costs as well as simplifying the process, which historically results in higher satisfaction.

The 21-point gap between the highest and lowest performing departments is significant, but not unusual or unexpected. The 69.7 average means consumers are getting what they need and are relatively satisfied, but there’s room for improvement.
Private companies still reign supreme

While almost 70 percent doesn’t seem too bad for a customer satisfaction score, the government still falls short of the private sector.

For example, credit unions have a high customer satisfaction level (82), as do the banking and shipping industries (81). Many other private companies are in the low-to-mid-70 range, putting the federal government’s report card on the lower end of all industries the ACSI surveys. In fact, only subscription TV services rank lower than government services, at 64.

Based on historical data, the government is always at or near the bottom of the ACSI. This isn’t a new finding, but it is significant in the context of customer perception.

What to watch moving forward

Tonight’s State of the Union should give insight into the government’s priorities for the next year and what we might expect for major projects and policies.

But a more politically polarized country and low approval ratings for President Trump don’t necessarily translate into a change in the ACSI report. However, if there are positive changes to government websites and the friendliness of service-oriented staff, we could continue to see the upward shift in customer satisfaction.

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.

ACSI Attends EMACS 2012

In October, ACSI staff will travel to San Diego, California, to join 350+ energy utility professionals at the 15th annual  EMACS – The Customer Experience Conference, organized by Chartwell. The 2012 conference, set for October 9 to 12, will feature over 30 presentations on topics that shape the overall experience of residential energy utility customers.

The conference represents the flagship customer experience event for the energy utility industry. EMACS attendees are invited to stop by Booth 805 in the Exhibit Hall of the Manchester Grand Hyatt to meet with ACSI staff and learn about our services for energy utility clients.

For nearly two decades, the ACSI has benchmarked residential customer satisfaction for the largest investor-owned utilities in the United States. In 2013, the ACSI will complete its third year of measuring satisfaction with municipal and cooperative utilities.

In April of each year, the ACSI publicly releases first quarter scores for approximately 30 utilities, identified by independent ACSI researchers based on size of residential business. The first quarter scores, however, tell only a small fraction of the customer experience story. By engaging ACSI services, energy utility clients access confidential data four times each year, covering not only customer satisfaction itself, but also customers’ perceptions of power reliability and the ability to restore power after an outage.

Crave More Cell Phone Features? You May End Up Being Less Satisfied.

Smartphones have radically altered the landscape of the cellular telephone industry, offering a startling array of apps that reach well beyond sending and receiving phone calls. But, more functionality makes for increasingly complex devices. With smartphones, it’s like you’re carrying a pocket-sized personal computer, and ACSI results show that PCs earn lower customer satisfaction scores than other types of durable goods, in part because of their complexity.

So, how happy are customers who use their phone as a mobile computing device versus those who use their phone as—simply put—a phone? ACSI results released in May 2012 show that the more complex the use, the less satisfied the user is overall with their chosen cell phone.

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Respondents to the survey were asked “other than making or receiving phone calls, what do you use your cell phone service for the most?” For phone-only users, satisfaction is 74 (on a 0 to 100 scale). But, when users do more than phone calling, satisfaction tapers off—from 70 for text messaging all the way down to 65 for multimedia use (such as gaming and video streaming).

While all cell phone users expect about the same level of quality from their phone (77 for phone only versus 76 for multimedia), differences emerge when they consider their actual experiences. The ACSI measures quality as a combination of customization (meeting personal requirements) and reliability (how often things go wrong). Both measures decrease as complexity of use increases, especially reliability.

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According to ACSI research, satisfaction tends to decrease as the number of customer touchpoints increases. This is because there are more opportunities for customers to be disappointed. To put this in context for cell phones: The more functionality the phone has—and that the customer makes use of—the greater the chance that something will go wrong. This can be anything from data upload speed to hardware and software problems.

Indeed, the percentage of customers who have complained to the manufacturer or wireless provider about their cell phone is dramatically lower for phone-only users versus any of the other categories.

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