Many brands failing customers

14 January 2011

NEW YORK: A majority of leading brands are failing to deliver a high standard of customer service, a study has found.

Research firm Forrester surveyed 7,700 people to gain an insight into popular perceptions covering 154 corporations in 13 sectors.

The criteria contributors assessed included whether the company concerned met their needs, alongside how enjoyable and easy their experience had been, across all possible channels.

Having secured these figures, the percentage of interviewees giving negative feedback was then subtracted from those providing favourable input to yield an overall index reading.

Exactly 65% of featured organisations were rated as "OK" or "very poor", scoring below 75 points on a 100-point scale.

More specifically, 35% fell in to the "OK" segment, registering between 65 points and 74 points.

Only 6% of the businesses under scrutiny were regarded as being "excellent" – a status achieved by hitting 85 points – measured against 10% in the same study last year.

"What this tells us is that mediocre-to-bad customer experience is the norm, and great customer experience is really hard to find," said Harley Manning, a Forrester analyst.

"Going from a so-so customer experience to a good one can add hundreds of millions of dollars to a large company's annual revenue."

Among the corporations performing strongly in the eyes of shoppers were Borders and Barnes & Noble, which are responding to substantial challenges as new media gains ground.

"A great experience by itself doesn't make up for an industry facing digital disruption," said Josh Bernoff, Forrester's svp, idea development

In December 2010, Mike Edwards, Borders' ceo, predicted consumer research conducted with the Boston Consulting Group, rolling out "e-digital" shops and a growing loyalty scheme would enable it to bounce back.

"Our Borders Rewards Plus program has generated more than $11m in membership revenue since launching just one hundred days ago," he said.

"Notably, Borders Rewards Plus members shop more frequently and have a higher than average ticket driven by significantly higher units per transaction."

Barnes & Noble had its most impressive holiday season for a decade during the recent Christmas period, a trend aided by its NOOK e-readers.

"NOOK's popularity is helping to drive new sales at both our stores and online, where 60% of NOOKcolor owners are new customers of our Barnes & Noble digital bookstore," said ceo William Lynch.

Another characteristic shared by Costco, JCPenney, Target and BJ's, also well-placed in Forrester's analysis, was price competitiveness.

This month, Target reported that its revenues for the five weeks ending January 1, 2011 climbed 1.4%, primarily attributed to "lower margin" items and REDcard Rewards initiative.

"We're confident that we will continue to generate profitable growth, even while consumer buying patterns exhibit volatility across categories and over time," said ceo Gregg Steinhafel.

Online giant Amazon, pharma chain Walgreens and USAA, offering financial products to military families, were the other firms highly praised by Forrester's panel.

Retailers posted the top median score, 82 points, beating hotels' 77 points and parcel delivery specialists' 74 points.

Less positively, health insurance providers received 53 points, television services recorded 56 points and their internet counterparts logged 54 points.

Elsewhere, Liberty Mutual Insurance, Comfort Inn, Sprint and Time Warner Cable witnessed considerable improvements compared with last year's results.

However, Cablevision's haemorrhaged 22 points, SunTrust Banks slid 14 points, and Humana and ING Direct lost ten points apiece.

Data sourced from Forrester, AdAge; additional content by Warc staff