Customer experience can make or break a company. Whether customer service is very good or very bad, it gets peoples' attention, creates customer loyalty and affects a company's bottom line
Forrester Research launched the U.S. Customer Experience Index as an annual report in 2007. This year, for the first time, the company published it twice, and from now on it will release two reports per year. The company looked at 299 brands in 18 industries.
"The impetus was that companies were increasingly looking to customer experience as a way to set themselves apart and how important it is in terms of customer loyalty,” says Megan Burns, an analyst at Forrester and the report's principle author. “As companies decided to focus on this, they wanted to measure themselves in some way. The problem is there's a disconnect between selling and marketing and what's actually happening."
According to Forrester, analyzing and tracking customer buying behavior to ensure that they keep coming back is only the beginning. Customer experience improvements also drive revenue, ensure customer loyalty and benefit investors.
The edition published in May presents the example of AT&T, which grew its U-verse service 28 percent after improvements in the TV and Internet service provider product experiences. Forrester also found that customer experience "explains anywhere from 47 percent of the variation in loyalty for investment firms on the low end to 76 percent of that variation for car rental companies." It also states that Watermark Consulting has analyzed differences in stock performance between customer experience "leaders and laggards," accounting for 80 percentage points of difference, and a gap in the S&P 500 Index by 26 percentage points.
According to Burns, "The audience is broader than just CRM executives. It's a growing population of people. In addition to the vice president of customer experience and CMO, increasingly CEOs have cited the data on investor calls. Sprint, for example, has done this. They say, 'The way we'll compete is on customer experience, and we need a benchmark to measure that.' Even COOs, interestingly, are part of the audience, because they're operationalizing customer experience."
"Overall, and we have 25 different drivers per industry. Things like how quickly did they solve a problem? The report publishes a synopsis, the best of the best. Now, companies don't aspire to be the best in their industry, but to be the best in any industry. Regardless of what industry they're in, they want to benchmark against Amazon or Zappos."
The second report for 2015, released in October, reveals that most companies have a long way to go, "but they're trying," says Burns. The lowest scorers in each industry have their work cut out for them. The list of the worst scorers reads like a who's who of organizations that have plenty of publicity, and proved the old saw about any publicity being good publicity dead wrong.
It’s hard to climb out of the cellar
Comcast gets double the bad news in the report, earning the worst score in two industry categories.
In an effort to improve customer service, last year, the company appointed Charlie Herrin as senior vice president of customer experience. In the press release on the new hire, Comcast's Neil Smit, president and CEO, Comcast Cable, and executive vice president, Comcast Corp., said "Transformation isn’t going to happen overnight. In fact, it may take a few years before we can honestly say that a great customer experience is something we’re known for. But that is our goal and our number one priority … and that’s what we are going to do."
But Comcast continued to struggle with its image, and in May, after federal government regulators denied its plan to buy Time Warner Cable, Comcast pledged to devote $300 million to customer service. The plan included hiring 5,500 new customer service representatives, new technicians, and an app called Tech Tracker, building three new call centers, and redesigning its bills.
Comcast didn't fare any better in other customer service reports. It scored the third lowest in the American Customer Satisfaction Index's 2015 Telecommunications and Information Report. The company's satisfaction score slipped 10 percent from 2014. Comcast's Internet service was rated last in that industry.
For its part, Consumer Reports placed Comcast near the bottom in the telecom industry. According to the Philadelphia Inquirer, the company's hometown newspaper, Brian Roberts, Comcast's CEO said that resources that would have been directed at merging with Time Warner Cable would be directed into improving its experience. Neil Smit, head of the cable division said customer experience would come to be viewed as the company's best product. He announced a 10-point plan to achieve that.
U.S. Cellular survived widespread billing problems in 2013, including cases where customers using electronic payment were billed multiple times, and some weren't billed at all. The company has taken a long fall from its position in first place among wireless carriers in Forrester's 2012 and 2013 U.S. Customer Experience Index reports.
After a renewed focus on turning profits on its smartphones, Acer made a push in China by inking deals with Chinese carriers in 2012. While that may have helped the bottom line, the company still gets bad marks from Forrester in terms of customer experience. The company took the bottom spot in both 2015 reports.
In response to our request for comment, Acer's vice president of customer service, Mark Groveunder, responded as follows:
"With the goal of raising the bar on our customer experience, we've leveraged Forrester's U.S. Customer Experience Index this year to begin implementing key changes within our organization with a priority on customer service. Customer needs are changing and we're working to adapt to not only accommodate them, but to really exceed their expectations. We believe we've always provided good service, but we are taking it to an even higher level. In that spirit, we launched "Project CX" that includes investing heavily in improving employee involvement, employee training on the importance of the customer experience and leveraging journey mapping to determine from the customer's perspective what works best and what doesn't in terms of our internal processes. We're using this training to create cross-functional teams to identify the moments that matter in the various customer journeys and working to implement changes to improve the customer experience at these critical moments. Toward the end of this year, we'll start implementing the changes based on our research, while we're also providing feedback to our product design teams on how to improve future products and to our web team on how we can improve the customer experience there."
It can get crowded at the bottom
The banks that were "too big to fail" already had their work cut out for them after the 2008 financial crisis and federal government bailout. Consumer Reports’ Consumerist website, in its annual poll to nominate the Worst Company in America, has consistently placed the company in the top three worst performers. At the same time, the Consumer Financial Protection Bureau has recorded tens of thousands of complaints about the banking giant over the past several years, most of them about how it services mortgages. Bank of America has received more than 30,000 mortgage complaints in the database since 2011, representing about 23 percent of all mortgage-related complaints.
The company has made annual appearances on other worst-performers lists, including appearances in the Zogby Analytics and 24/7 Wall Street Customer Service Hall of Shame since 2009, and the American Customer Service Satisfaction Index five of the last six years, leading the pack in 2014.
Don Vecchiarello, a spokesman for Bank of America, responded to our request for a comment with the following statement:
"We take our clients’ feedback very seriously, and we are confident in our strategy and the investments we have made to improve their experience with us. Everything we do now is focused on making the financial lives of our clients better. We believe over time, we will earn a better perception in the eyes of our clients."
For its part, Cigna spokesman Joe Mondy, provided this statement:
"The 2015 customer experience index runs contrary to the findings of Cigna's own Net Promoter Score (NPS) research, as well as the findings of other third party studies that measure customer experience that we have been part of over the past several years. We are reviewing the recently released data, as well as what impact the recent changes in methodology that company has instituted, but our efforts to improve customer experience have been showing great results, and we will continue to invest in efforts to improve the experience customers have with Cigna."
Lower-cost doesn’t mean lowered expectations
Low cost is the name of the game for Frontier Airlines, but travelers should still expect a modicum of customer service. Earlier this year, CEO Dave Siegel stepped down, and was replaced by the company's chairman, Bill Franke, and president, Barry Biffle.
In May, a government report ranked Frontier last among U.S. carriers in on-time performance and customer complaints. Complaints were logged at the rate of 8.2 per 100,000 boardings, compared with 2.98 in May 2014. At the time, Biffle told the Denver Post that the new leadership was focused on improving reliability by changing the design of the schedule. As a result, the airline's on-time performance improved.
Still, in 2015, Frontier ranked last in J.D. Power's North America Airline Satisfaction Study. More than one third of the company's flights were at least 15 minutes late in March 2015. The federal government said that Frontier had the highest complaint rate and worst on-time performance among the nation's leading airlines in March.
Customers are paying for more than just their car rental at Dollar Rent a Car, even if they didn't know it. Among rental car agencies, Dollar Rent a Car scored lowest, possibly due in part to complaints that it signed customers up for insurance even when they explicitly did not want it.
Anyone who expected not to see Walmart take the last spot hasn't been on the Internet or watched TV in the past few years. In 2014, the American Customer Satisfaction Index found that overall satisfaction with retail stores fell 1.4 percent after improving steadily for three years. Walmart scored its worst rating since 2007, at the bottom of the list.
Early this year, the company announced it would spend $1 billion to raise pay for employees. CEO Doug McMillon vowed to make customer service a priority after a rash of complaints from customers about empty store shelves and not being able to find store clerks, even as pallets of merchandise piled up in warehouses. Bloomberg recently reported that even though stores grew 13 percent, the number of employees only grew 2 percent.
Analytics firm ForeSee's annual ranking of customer satisfaction during the holiday shopping season in 2012 ranked Gilt at the bottom for the eighth consecutive year. The company attributed the poor result to bad Web site functionality.
The Feds aren’t getting off the hook, either
In an audit by the federal government's Office of Inspector General in May, the U.S. Postal Service was charged with having an excess of rude employees, and this could cost the government $288.5 million in lost revenue. The audit stated, "While the Postal Service's goal is 90 percent customer satisfaction, we found that more than 20 percent of its customers in FY 2013 responded to the POS [point of service] survey that they have been treated 'worse than other retailers when visiting Postal Service retail counters. Dissatisfied customer exist, in part, because procedures for improving customer service are not functioning as intended."
The agency also took a hit in a survey conducted by Accenture in 2013, in which the company evaluated 24 government-operated postal organizations and two private companies that account for 75 percent of the world's mail. Accenture concluded that the USPS blamed pensions and "restrictive" universal service obligations.
It has been a battle for HealthCare.gov. When it was rolled out in 2013, the Web site was full of bugs and agonizingly slow. The site is due for upgrades that will take affect with the start of 2016 open enrollment. The changes are designed to make it easier to browse taxpayer-subsidized health insurance plans, among other things.
This story, "18 companies that suck at customer service" was originally published by CIO.