NCSI-UK Commentary First Quarter 2008
Supermarkets, Banks and Mortgage Lenders
Commentary by Patrick Barwise,
Emeritus Professor of Management and Marketing, London Business School
May 27, 2008
Note: All scores are on the 0-100 Customer Satisfaction Index (CSI) scale, which measures the in-store customer experience at the respondent’s main supermarket, although online propositions may also influence customer behaviour.
Results include the six largest supermarkets, accounting for almost 85% of total UK supermarket sales: Tesco, Asda, Sainsbury’s, Morrisons, Somerfield, and Waitrose; smaller companies are included as ‘All Other’.
Grocery shopping, at £130 billion, is one of the largest items of UK household expenditure. Supermarkets account for nearly 80% of this spend.
The Customer Satisfaction Index (CSI) for all supermarkets is 72. Waitrose leads with easily the highest customer satisfaction (82), followed by Asda (76) and Morrisons (74). Waitrose leads on all the NCSI diagnostics (e.g. perceived quality, claimed loyalty, complaint handling) apart from perceived value (price relative to quality), for which Asda has the highest score.
Somerfield has the least satisfied customers (63). It has the lowest scores on all the diagnostics except for its perceived treatment of suppliers, for which Sainsbury’s, Morrisons, and especially Tesco score lower. (Waitrose is the only major with a high score for this). Somerfield customers also complain less frequently than customers at the other majors (except Waitrose), although this may partly reflect their low quality and service expectations. Tesco customers are the most frequent complainers.
Tesco and Sainsbury’s both struggle with customer satisfaction (71). (The US shows similar results for large supermarkets). Tesco customers are among the most loyal in the industry. This may partly reflect its high market share, but is probably also a reflection of its successful Clubcard loyalty scheme.
NCSI-UK: Retail Banks
Note: All scores are on the 0-100 Customer Satisfaction Index (CSI) scale and relate to the retail bank where the respondent has his/her main current account.
Results include the six largest banking groups: RBS (The Royal Bank of Scotland /NatWest/Ulster Bank), HSBC (includes online/telephone bank First Direct), Lloyds TSB, Barclays (includes Woolwich), HBOS (Bank of Scotland/Halifax/ Intelligent Finance), and Abbey (includes online/telephone bank Cahoot); smaller retail banking services are included in the ‘All Other’ category.
Customers of the six biggest UK retail banks are not very satisfied. Among the six, Customer Satisfaction Index (CSI) scores range from only 64 for Abbey to 71 for HSBC and the RBS Group and 70 for Lloyds TSB. The weighted average for the six was only 69. This low score may partly reflect the challenge of maintaining service quality during a period of industry consolidation: ACSI scores for retail banks in the US are lower when customers are “lost in the organizational shuffle of ownership change.” Relationships with banks tend to be passive unless something goes badly wrong.
The average CSI for ‘All Other’ banks is much higher (79), bringing the industry average up two points to 71. The other banks most frequently mentioned were Nationwide, Alliance & Leicester, Yorkshire Bank, Clydesdale Bank and Co-Operative Bank.
These UK scores are not directly comparable to the average US score of 78 for retail banks, because of different data collection methods as well as possible cultural/response-style differences. But the 7-to-9-point gap (9 for the big six UK banks, 7 for all UK banks) is significantly wider than for supermarkets (72 for the UK, 76 for the US), suggesting that bank customers really are less satisfied in the UK than in the US.
None of the big six is seen by its customers as either good value for money or, especially, as handling complaints well. Abbey has the highest proportion of customers who have complained in the last year (31%), followed by HBOS (28%). Abbey customers, as well as being the least satisfied (64, again followed by HBOS at 67), are also the most likely to be considering switching banks in the next six months.
NCSI-UK: Mortgage Lenders
Note: All scores are on the 0-100 Customer Satisfaction Index (CSI) scale and relate to the respondent’s main mortgage lender.
Results include the six largest UK mortgage lenders: HBOS (Bank of Scotland/Halifax/Birmingham Midshires), Abbey, Lloyds TSB (including Cheltenham and Gloucester), Nationwide (including Portman Building Society), Northern Rock, and
RBS (The Royal Bank of Scotland /NatWest; smaller companies are included as ‘All Other’.
Customer satisfaction with the mortgage lending industry is low, with an average CSI score of 70, only one point higher than for the top six retail banks’ current accounts (69). Only Nationwide (77) scores significantly higher than the average, beating customers’ expectations and with market-leading perceived quality, value for money and customer loyalty, reinforced by its advertising, which focuses on its popular policy of offering existing customers the same terms as new customers. After Nationwide, the next-ranked lenders are RBS, with a CSI of 72, and Lloyds TSB (71).
Complaint handling is perceived as poor for all major lenders, although RBS and Nationwide are seen as somewhat better than the rest.
Worst on complaint handling and several other measures is Northern Rock, which has been damaged by the recent crisis. The data suggest that customers have lost their trust in the institution and are likely to leave. This may be consistent with its strategy, which appears to be to liquidate as much capital as possible in order to repay its debt to the taxpayer. Northern Rock’s CSI is 68.
Overall, however, Abbey customers were the least satisfied, with a CSI of only 65 (close to its bottom-ranking 64 for current accounts). Abbey suffers from low perceived quality and value, very poor complaint handling, and little commitment to corporate social responsibility, especially investment in the community.
Customer satisfaction increases with household income, possibly because customers with higher incomes have access to better terms.