Rising customer trust and satisfaction boosts Tesco financial recovery

26th Jan 2017

Improved customer trust and customer satisfaction has underpinned the financial recovery of Tesco, new data has suggested.

The Institute of Customer Service’s latest UK Customer Satisfaction Index (UKCSI) reveals that the retailer has recorded the sector’s largest year-on-year increase in customer satisfaction, of 1.2 points (on a 100-point index).

Asked whether they trust the retailer, consumers scored 7.7 (out of 10) this year – up from 7.5 in January 2016. The data suggests that this improvement is because customers have been impressed with the attitude demonstrated by Tesco’s staff (scoring 6.6 compared to 5.8 out of 10 last year). The result is that customers score 8.5 out of 10 when asked if they are likely to repurchase from the retailer.

Tesco’s biggest areas of improvement were for measures of complaint handling and the proportion of customers who reported staff got things ‘right first time’ (85 per cent). The supermarket giant also saw improved sales for the third consecutive quarter, and revealed a 0.7% revenue increase for the 2016 retail period over the previous year.

“It has been widely acknowledged that customer trust in Tesco suffered during the 2014 accounting scandal which saw the company lose touch with loyal patrons,” says Jo Causon, CEO of The Institute. “This loss in trust saw record losses of £6.4bn during 2014/15, but a renewed focus on service excellence has finally got customers back on side – this can be seen in the 2017 UKCSI, and, as shown by the company’s recently announced full year results, has paid dividends.”

Major impact

The impact of customer satisfaction on sales growth can be seen across the sector. Retail (food) companies with a UKCSI score of at least one point higher than the sector average achieved average year-on-year sales growth of 7.2%, compared to -0.2% for those at least one point below the sector average. Iceland, which now ranks ninth out of all organisations in the UKCSI, reported that sales increased 8.3%. Aldi, which ranks in the top 20 this year and was one of the standout success stories from the July 2016 index, reported record sales at the end of last year.

Causon emphasises: “The importance of the customer cannot be ignored when it comes to business success for UK supermarkets. Traditional supermarkets have felt the pinch this year with the perfect storm of competition from new entrants to the online arena, fluctuations in exchange rates and rising costs in the shape of prices and raw ingredients.

“With the smallest gap in customer satisfaction between the highest and lowest performing businesses out of any sector, a sustained focus on customer satisfaction will be key for business success in 2017. There is everything to play for and UK supermarkets cannot take their eye off the ball.”

Click here to find out more, and to download the full UKCSI report.

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