Retail sales performance correlates with service excellence, ICS index finds

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Research from the Institute of Customer Service (ICS) reveals retailers with better customer service post stronger sales results. 

The 2012 UK Customer Satisfaction Index (UKCSI) found in challenging conditions for the retail industry, customer service is playing an increasingly crucial role in determining business performance.  

The most recent report analysed the relationship between service excellence and retail sales performance over Christmas, demonstrating for the first time a direct correlation between the two. 

Jo Causon, chief executive of ICS, said: “Our research provides compelling evidence service is the critical differentiator in a tough retail environment. 

“Customer churn is set to cost UK businesses £2.2bn this year. In this context, those retailers that focus on delivering the service their customers expect will prosper.”  

Service drives business performance

The retail industry continues to lead the UKCSI: the non-food and food sectors are the best and second-best performers respectively, with scores of 81.9 and 81.3 out of a maximum 100. 

Amazon, Marks & Spencer, John Lewis, Boots, Superdrug, Aldi and Waitrose all feature among the top 10 organisations for customer satisfaction. 

ICS mapped customer satisfaction scores of non-food retailers to year-on-year sales performance over the recent Christmas trading period(see fig 1* – Customer satisfaction and YoY Sales Growth Non-food). 

Amazon had the best customer satisfaction (92%) and achieved the best sales growth (20%), while the four companies with the lowest satisfaction ratings all suffered significant falls in sales. 

Comet posted the sharpest sales decline (14%), and was well adrift of other retailers when it comes to satisfying customers, with a score of just 71.7.

For food retail, the Institute mapped customer satisfaction to changes in market share(see fig 2 ** – Supermarkets’ CSI versus market share changes). 

The two food retailers with the highest customer satisfaction ratings were Waitrose and Aldi, both scoring 84.6. 

Despite having very different models and target customers, they also achieved the greatest gains in market share over the Christmas period – Waitrose by 0.2%, Aldi by 0.4%.

Causon said: “Our research proves that customer service is the key to sustainable growth in the retail sector. 

“The success of Waitrose and Aldi – two very different business models – goes to show it’s not just being the cheapest, or having the best products, that drives growth. Delivering an experience that meets the needs of your target customers is essential.”

Customer Satisfaction: Sector League Table 2012

Rank Sector Score/100Jan 2012  Score / 100 July 2011
1 Retail (non-food) 81.9 80.3
2 Retail (food) 81.3 80.9
3 Service companies 80.8 80.9
4 Tourism  80.6 80.7
5 Automotive  80.0 79.5
6 Leisure  79.8 79
7 Insurance 78.0 78.2
8 Banks 77.4 77
9 Local public services  74.8 75.5
10 Telco  74.1 74.8
11 Transport  73.4 74
12 National public services 72.4 72.3
13 Utilities  71.6 72.5

The 2012 Top Performing Organisations

Rank Organisation Score/100
1 Amazon 91.7
2 M&S (food) 87.3
3 Ambulance Service 87
4 First Direct 86.3
5 John Lewis 85.9
6 Fire Service 85.5
7= Virgin Holidays 85.4
7= Saga Holidays 85.4
9 Boots 85.0
10 M&S (non-food) 84.9
11 Superdrug 84.8
12= Hertz 84.6
12= Waitrose 84.6
12= Aldi 84.6