National Customer Satisfaction Index-UK

NCSI-UK Commentary First Quarter 2011

National Customer Satisfaction Index Results for Electric and Gas Utilities, Mobile Services, Airlines

Small Gains for Utilities and Airlines; Not Enough to Boost Customer Satisfaction Overall

June 1, 2011

After five straight quarters of improvement, customer satisfaction with businesses in the United Kingdom has stalled, according to the National Customer Satisfaction Index (NCSI-UK). Airlines and Energy Utilities show slight improvements, but not enough to impact customer satisfaction on a national level. The index is unchanged at a score of 74.7on a 0-100 scale.

Mobile phone service maintains a relatively high score, unchanged at 74. Despite small gains, both airlines and energy utilities trail far behind. Airlines improve 1.5% to 68 followed closely by utilities, up 1.5% to 67, still the lowest score among the fifteen industries included in NCSI. Results are mixed among individual companies, but decliners outnumber gainers: 33% of the companies improve their customer satisfaction compared with a year ago, while 50% decline and 17% are unchanged.

Economic growth has been sluggish as well. Despite rising customer satisfaction, GDP growth was negative in the fourth quarter, possibly due in part to some of the coldest weather in a century. In the first quarter GDP rebounded slightly, growing 0.5% as some of the consumer spending anticipated last December was deferred until the beginning of the year.
Had the weather not disrupted spending patterns, the economy would perhaps have grown in the fourth quarter followed by a flat first quarter, matching the movement in NCSI.
In general, sustainable economic growth is difficult to achieve unless consumer utility also improves.

Airlines: Virgin Atlantic Leads; BA and Flybe Gaining
Passenger satisfaction with airlines rises from 67 to 68, still below most other industries, but better than Airlines in the United States, which have an average score of 66. Passenger complaints are surprisingly few at 8%, barely half the level of mobile phone service. However, poor complaint handling by airlines may be discouraging passengers from complaining at all.

Virgin Atlantic declines by 1% to an NCSI score of 73. It still leads the industry by a large margin despite the second straight year of 1% losses. British Airways (BA) improves by 4% to 70, driven in large part by competitive pricing and improving service. BA passengers also performed better than their passengers expected.

Low-cost regional airline Flybe gains 6% to an NCSI score of 69 to tie with the aggregate of all smaller airlines (up 3%). BMI is down 3% to 67, while discount airline Easyjet continues to occupy last place, down from 66 to 65. Easyjet’s low fares keep value for money better than average, but according to their passengers, quality of service is well below the rest of the industry.

Mobiles:  Tesco Mobile Leads While Virgin Mobile Fades
Customer satisfaction with mobile phone service is steady at an NCSI score of 74. In comparison, customer satisfaction with US wireless telephone service scores 71 on the American Customer Satisfaction Index (ACSI). Tesco Mobile continues to earn the highest score in the industry despite a slight drop of 1% to 82. Although Tesco Mobile is based on the O2 network, Tesco leads O2 and Virgin Mobile by 7 points. With a focus on prepaid accounts, Tesco’s strength remains value for money.

O2 and Virgin Mobile both decline to tie at 75, but Virgin Mobile’s drop is much larger. O2 slips 3%, while Virgin Mobile falls 6%. The decline is due in part to a significant drop in reliability. Virgin mobile is also losing prepaid customers and shifting focus to contract customers.

The merger of Orange and T-Mobile into the Everything Everywhere network has thus far left both brands largely unaffected in terms of customer satisfaction—T-Mobile gains 1% 74, while Orange dips 1% to 72.

Vodafone maintains a score of 73. Hutchison 3G, which operates under the brand Three, makes the biggest improvement in the industry, up 3% to 67, but remains behind the other mobile phone providers. In 2010, Three made major upgrades to its network, which now covers virtually all of the UK. Still, while pricing is competitive, service quality trails the industry and complaint levels are nearly double that of the industry average.

Utilities: SSE Reclaims Top Spot
The electric and gas utilities industry in the UK is one of the most competitive in the world, with hundreds of thousands of customers switching suppliers at a fairly regular pace. This should benefit customer satisfaction, but nevertheless, utilities remain the lowest scoring industry in the NCSI. High energy rates and increasing tariffs dampen satisfaction across the industry. Nonetheless, despite a particularly harsh winter, customer satisfaction with utilities rises slightly, up from 66 to 67. According to customers, the industry has improved complaint handling by nearly 20%, and Corporate Social Responsibility is also on the rise (up 7% from 2009).

A year after falling out of the lead for the first time, Scottish & Southern Energy (SSE) reclaims the top spot, gaining 7% to an NCSI score of 72, well ahead of the rest of the industry. SSE has made customer service initiatives a top priority, focusing heavily on electronic services designed to make customers’ account management more efficient. According to customers, SSE billing is the most straightforward of the big utilities companies.

At 68, Scottish Power (-1%), E.ON (unchanged), and EDF Energy (unchanged) are closer to the industry average.  British Gas (Centrica) slips 2% to 65. RWE npower gains 5% to 63, but remains the lowest scoring company for the fourth year in a row. RWE npower bills are also rated most difficult to understand.