National Customer Satisfaction Index-UK

NCSI-UK Commentary Second Quarter 2012

National Customer Satisfaction Index Results for Carmakers, Full-Service Restaurants and Limited-Service Restaurants

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September 5, 2012

The National Customer Satisfaction Index (NCSI‐UK) continues to edge upward for the second quarter of 2012, rising 0.2%, which brings the national average to 74.8 on the 0-100 scale. The gain is the result of improved customer satisfaction with carmakers, full-service restaurants and limited-service restaurants. Results for individual companies in these industries are predominantly positive: 72% show some improvement, 22% register no change and only 6% decline.

The fifteen industries included in the NCSI represent nearly half of total UK consumer spending. All three categories reported in the second quarter show increased customer satisfaction for 2012 and exceed the national average. Limited-service restaurants score slightly above average at an NCSI score of 76; car manufacturers and full-service restaurants score well above average at 80.

The UK economy is in the midst of a double-dip recession, with the latest figures showing GDP contracting by 0.5% in the second quarter. Higher levels of consumer demand will certainly be needed to reverse the economic direction by stimulating future spending growth, and the gain in NCSI is a positive indicator in that regard. However, consumer spending is also affected by income growth, and without it, the small uptick in customer satisfaction may not be enough to pull the nation out of recession.

Quality and Efficiency Improvements Drive Customer Satisfaction and Sales

Customer satisfaction with carmakers improves by 1.3% to an NCSI score of 80, and sales for the same period are up 5% from a year ago. Despite the recession, new car sales have increased by 10.5% in the year from July 2011 to 2012, and July’s 9% growth was the fifth consecutive increase and the largest monthly gain for the industry in two years.

Every major carmaker has improved or sustained customer satisfaction from a year ago.  Motorists have been drawn to discounts and promotions, but the gain in customer satisfaction is largely the result of quality improvements. The increased fuel-efficiency offered by new, smaller models has had an impact, particularly as petrol prices continue to rise.

Volkswagen’s Audi continues to lead the industry in customer satisfaction, rising 1% to an NCSI score of 84. The vast majority of Audi drivers researched online before buying – and 81% visited the manufacturer’s website before purchase – more than any other car brand, and an increase from a year ago. Customer satisfaction is not only dependent upon what the company does – it is also determined by how well the buyer chooses among the various purchase alternatives.

Toyota’s customer satisfaction is also up by 1% to 83. According to consumers, Toyota’s service quality is the best in the industry. Nissan, which is included in the NCSI for the first time this quarter, debuts with an NCSI score of 82, matching BMW (+1%) and Volkswagen (+1%) two points above the industry average. All of these carmakers have made significant investments in UK operations and have registered positive sales growth.

Ford shows the most improvement, gaining 4% to an NCSI score of 79, while sales for the year to July 2012 are up 3.5%. Customer satisfaction with Vauxhall and Peugeot is static at 77. Despite a 3% gain to 76, Renault has the lowest customer satisfaction score and the lowest-rated dealership salespeople in the industry. It is one of the few major car manufacturers with declining sales, down 3.3% for the first half of the year. In an effort to cut costs, Renault has scaled back its lines sold in the UK, withdrawing nearly half of its available models.

Better Service, Innovative Menus and Healthier Options Improve Customer Satisfaction

Customer satisfaction increases for both full-service and limited-service restaurants in 2012. Limited-service restaurants continue to benefit from a weak economy as price becomes more important, but full-service restaurants also improve. The full-service category gains 2.6% to an NCSI score of 80. The limited-service category edges up 1.3% to a score of 76, the third straight year of small improvements.

In addition to continued price discounting, many restaurants have introduced new menus and healthier options, and according to customers, overall quality and value-for-money has improved. The larger casual-dining chains have been especially successful at attracting diners with price promotions, but this may come at the expense of customer loyalty as customers increasingly rely on vouchers. Despite having significantly higher customer satisfaction, the largest full-service restaurant chains have no more customer loyalty than fast food outlets do.

Smaller restaurants and local establishments have the highest customer satisfaction in both fast food and full-service categories, as they are typically able to offer more personalised service and menus. Among the largest limited-service chains, Subway has highest customer satisfaction on the NCSI with a score of 78, supplanting the lead held by Greggs for the past two years. Greggs holds the second place, unchanged at 76. Starbucks is up by 1% to 75, its second consecutive increase in two years. Coffee rival Costa nearly catches up to Starbucks with a 4% jump to 74, consistent with its strong year-on-year sales growth.

Yum! Brands (KFC and Pizza Hut) rises 3% to a customer satisfaction score of 73. The two big burger chains lag the rest of the industry, but both improve:  Burger King shows the greatest increase of all fast food chains, advancing 8% to a score of 71 and overtaking McDonald’s. Nevertheless, McDonald’s improves by 1% to 69, its highest customer satisfaction score to date.

Among the large restaurant chains, Nando’s declines slightly, down 1% to 75, as Gondola Holdings (ASK, Zizzi, PizzaExpress) gains 3% to tie at 75. However, this result falls short of the average for all smaller restaurants (including pubs and local establishments) which improves by 1% to 80. Tragus Holdings (Café Rouge, Strada, Bella Italia) and Whitbread Group (Beefeater and Brewers Fayre) are close behind at 74 following increases of 1% and 3%, respectively, with the result that there is very little differentiation in the customer experience among most of the large chains. Only the Restaurant Group (Frankie & Benny’s, Chiquito) lags the rest of the category by a significant margin, unchanged at 72.