Customer satisfaction rise underpins Tesco financial recovery

20th Jan 2017

Tesco is today revealed as the most improved UK supermarket, with the company’s upsurge in financial fortunes driven by a rise in customer satisfaction.

Tesco has just revealed its third consecutive quarter of improved sales, and a 0.7% revenue increase for the Christmas period in 2016 vs. 2015.
The latest UK Customer Satisfaction Index (UKCSI), published today by The Institute of Customer Service, reveals that during that time, it has also recorded the sector’s largest year on year increase in customer satisfaction, of 1.2 points (on a 100 point Index). 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 percent).

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 ten last year).  The result is that customers score 8.5 out of ten when asked if they are likely to repurchase from the retailer.

The UKCSI is the national measure of UK customer satisfaction. It rates customer satisfaction at a national, sector and organisational level across 13 sectors – individually rating many leading organisations. The Index has run every six months since January 2008 and involves interviews with 10,000 UK consumers.

Jo Causon, CEO of The Institute of Customer Service, said: “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. This loss in trust saw record losses of £6.4 billion 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.”

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 9th 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 UKCSI reported record sales at the end of last year.

Despite the overall increase in customer satisfaction, there has been an increase in the score for customer effort – in other words, customers said they had to expend more energy dealing with organisations than they did a year ago.  For example, 51% of people say that it has taken them more than two attempts to get a problem fixed.

Causon continues: “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 of the ball.”

To find out more, and to download the full UKCSI report, visit: www.instituteofcustomerservice.com/ukcsi 

Watch a short animation on the key highlights of the report here or view an infographic here


Ends

Notes to editors

For further information please contact:

Ellie Scott
E: [email protected]
T: 0207 010 0831

About the UKCSI

UKCSI (UK Customer Satisfaction Index) is The Institute of Customer Service’s national measure of customer satisfaction. It provides insights into the state and direction of customer satisfaction at a national level, across 13 key sectors and for individual organisations. UKCSI was launched by The Institute of Customer Service in 2008. It provides a unique way of measuring the current customer satisfaction of UK customers, as well as trends over time.

About The Institute of Customer Service
The Institute of Customer Service is the professional body for customer service delivering tangible benefit to organisations and individuals so that our customers can improve their customers’ experience and their own business performance.  The Institute is a membership body with a community of over 500 organisational members – from the private, public and third sectors – and over 4,000 individual memberships.  For more information about the Institute of Customer Service go to www.instituteofcustomerservice.com

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