Advantage Rent A Car and USAA Lead in 2013 Temkin Forgiveness Ratings

All companies, even customer experience leaders, make mistakes. But how much goodwill have companies built up for consumers to forgive them after those miscues? To answer this question, Temkin Group surveyed 10,000 U.S. consumers about companies with whom they’ve recently interacted. We used this data for the third annual Temkin Forgiveness Ratings of 246 companies across 19 industries.

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Company Results

Here are the highlights of the 246 companies in the 2013 Temkin Forgiveness Ratings:

• Advantage earns top spot. With an excellent score of 61%, Advantage earned the highest rating.
• USAA dominates forgiveness. USAA grabbed the next three spots for its banking, insurance, and credit card businesses.
• The rest of the top 10. H.E.B., Blackboard, Aldi, Alaska Airlines, credit unions and Publix round out the top 10
• No industry owns the top. The top 25 companies in the ratings comes form a variety of industries: Four grocery chains, three airlines, three retailers, two banks, two hotel chains, two investment firms, two software firms, one appliance maker, one auto dealer, one credit card issuer, one fast food chain, one health plan, one insurance carrier, and one rental car agency.
• HSBC dominates the bottom. HSBC earned the bottom two spots in the ratings for its credit card and banking businesses.
• Many TV service providers are at the bottom. Six of the bottom 12 companies are TV service providers: Cox Communications, Time Warner Cable, Comcast, Verizon, Charter Communications, and Optimum (iO)/Cablevision.
• USAA most outperforms its peers. We compared company ratings with their industry averages and USAA came in the top three spots, 36 points above in banking, 31 points ahead in credit cards, and 28 points ahead in insurance. Three other companies are more than 20 points above their industry averages: Advantage (car rentals), credit unions (banking), and TriCare (health plans).
• HSBC most underperforms. HSBC fell the farthest below its industry average in two areas, 23 points behind its peers in banking and credit cards. Five other companies had scores that were 15 points and more below their industry: US Airways (airlines), Motel 6 (hotels), McAfee (software), Kia (auto dealers), and Hertz (rental cars).

We also examined year-over-year results for 204 companies that were in both the 2012 and 2013 Temkin Forgiveness Ratings. Here are some highlights of that analysis:

• Chrysler improves the most. With a jump of 29 percentage points, Chrysler is the most improved company.  Six other companies gained 20 points or more: Continental Airlines, Citigroup, Avis, EarthLink, Ameriprise Financial, and Alaska Airlines.
• US Cellular declines the most. With a drop of nearly 20 percentage points, US Cellular dropped the most in 2013.  Nine other companies fell by more than 10 points: Bright House Networks, HSBC, Cox Communications, Hertz, PNC, SunTrust Bank, Dollar Rental Car, Hyatt, and TD Ameritrade.

Industry Results

Here are the highlights of the 19 industries in the 2013 Temkin Forgiveness Ratings:

• TV service providers are unforgivable. TV service providers, as an industry, earned the lowest Temkin Forgiveness Rating of 12%. It was five points below Internet service providers and seven points below wireless carriers.
• Grocery chains are the most forgivable.  With an average rating of 39%, grocery chains are the highest scoring industry. Three industries are just four points behind: hotel chains, auto dealers, and rental car agencies.
• Credit cards make the most improvements. Credit cards made the largest improvement, nine percentage points, over the previous year.  Auto dealers, rental car agencies, and airlines also improved by more than five points.
• TV service providers head in the wrong direction. Led by TV service providers that dropped three points between 2012 and 2013, three industries earned lower scores in 2012. The other industries are retailers and appliance makers.

Calculating the Temkin Forgiveness Ratings

During January 2013, Temkin Group asked consumers to identify companies that they have interacted with during the previous 60 days.  For a random subset of those companies, consumers are asked to rate companies as follows:

How likely are you to forgive these companies if they deliver a bad experience?
Responses from 1= “extremely unlikely” to 7= “extremely likely”

For all companies with 100 or more consumer responses, we calculated the “net forgiveness” score. The Temkin Forgiveness Ratings are calculated by taking the percentage of consumers that selected either “6” or “7” and subtracting the percentage of consumers that selected either “1,” “2,” or “3.”

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To see all of the companies in the Temkin Forgiveness Ratings as ell as all of our other Temkin Ratings and sort through the results, visit the Temkin Ratings website

The bottom line: Forgiveness is an asset that you accumulate by consistently meeting customer needs.

Credit Unions and USAA Lead Banks in 2013 Temkin Experience Ratings

We recently released the 2013 Temkin Experience Ratings that ranks the customer experience of 246 companies across 19 industries based on a survey of 10,000 U.S. consumers. Here are highlights from the banking industry:

• The banking industry has been steadily improving over the last three years, from an average Temkin Experience Rating of 62.0% in 2011 to 68.6% this year. Banks also made the largest improvement of any industry between 2012 and 2013, gaining 3.4 percentage points.
• Credit unions take first place in the industry for the second straight year with a rating of 79%. USAA earned the second spot with a rating of 78% followed by ING Direct and TD Bank that tied for third place with ratings of 74%.
• The lowest-ranked bank is HSBC, earning a score of 57%. It also earned the lowest functional, accessible, and emotional ratings. The two next lowest banks are Capital One (62%) and Bank of America (63%).
• Credit unions lead in the functional and accessible components while USAA leads in the emotional component.
• Citibank improved by 15 percentage points between 2012 and 2013. This gain represents the largest improvement by any company across all industries.
• Regions also had a significant improvement of 10 percentage points over the last year.
• PNC had the worst decline from 2012 to 2013, experiencing a loss of six percentage points. HSBC was the only other bank with a ratings drop since last year.
• Here’s a link to industry results from the 2012 ratings.

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Report: 2013 Temkin Experience Ratings

We published the 2013 Temkin Experience Ratings. The report analyzes feedback from 10,000 U.S. consumers to rate 246 organizations across 19 industries. Congratulations to the top firms in this year’s ratings: Publix, Trader Joe’s, Aldi, Chick-fil-A, Amazon.com, and Sam’s Club.

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You can also download the data for $395.

The Temkin Experience Ratings are based on evaluating three elements of experience:

1. Functional: How well do experiences meet customers’ needs?
2. Accessible: How easy is it for customers to do what they want to do?
3. Emotional: How do customers feel about the experiences?

Here are the top and bottom companies in the ratings:

Here’s how the industries compare with each other:

(NOTE: We have published posts on the detailed results for all 19 industries)

Here are the companies that are leaders and laggards across the 19 industries:

In this year’s ratings, 37% of companies earned “good” or “excellent” scores, while 28% are rated as “poor” or ”very poor.” Companies with at least a “good” rating grew by nine-percentage points since 2012 and by 21-points since 2011. Of the 203 companies that are included in both the 2012 and 2013 Temkin Experience Ratings, 57% firms had at least a modest increase. The companies that made the largest improvement over 2012 are Citibank, TriCare, TD Ameritrade, Office Depot, EarthLink, Hardees, and Regions Bank.

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Get the Data

Do you want to see all of the data? You can purchase an excel spreadsheet for $395…

To view all of our ratings (experience, loyalty, trust, forgiveness, customer service, and web experience), visit the Temkin Ratings website…

The bottom line: Customer experience is improving, but there’s still a long way to go

Companies Don’t Earn The Loyalty Their CX Deserves

Our report The ROI of Customer Experience shows that customer experience is highly correlated to loyalty. The research analyzed the relationship between Temkin Loyalty Ratings and Temkin Experience Ratings (TER) for 206 U.S. companies.

After analyzing the connection between these ratings, we found that some companies seem to have higher loyalty levels than they seem to deserve based on their customer experience while others have lower loyalty levels.

Using that dataset, I compared actual loyalty levels with projected loyalty levels. How? By plugging each company’s experience rating into our regression model to identify what their loyalty rating should be (normalized to their industry average) based on its TER and compared that projected rating with its actual loyalty rating. In the chart below you can see the companies with the largest positive and negative variances from the model’s projections.

The companies with loyalty levels the most above the projections are USAA, Highmark, Medicaid, credit unions, and TriCare. The companies that fall the most below the projections are T-Mobile, BMW, Bosch, AT&T, and Alamo.

Let’s examine USAA as an example. Since it has very high experience ratings compared with its industry peers, our model projects that its loyalty ratings should be at the high end of banks, credit card issuers, and insurance carriers. This analysis shows that USAA’s actual loyalty levels are higher than expected, even after factoring in its wonderful customer experience.

So what?!? There’s nothing inherently good or bad with being above or below the projected loyalty level. There’s no reason to expect companies to fall directly on their projected loyalty levels.

What’s interesting about this analysis is not what’s good or bad, but WHY are some companies so far away from the projected levels. This is where I’ll leave the data behind and offer my interpretation about WHY some companies have higher than projected loyalty while others have lower than projected loyalty:

• Product fit. CX is not the only component of customer value. Companies that have tailored their products and services to better meet customers’needs (like USAA and TriCare) have an even better loyalty level than their CX would suggest. If companies have a poor product offering, then their loyalty may be lower than projected (this may explain Sears and DHL).
• Product quality. If companies have quality problems with their offerings, then they would have lower loyalty levels than their CX deserve (this may explain AT&T, T-Mobile, and Alamo).
• Service expectations. Companies that have premium status (BMW cars and Bosch appliances) often elicit higher expectations from customers, so they don’t earn the loyalty that their CX would suggest and have to work harder.
• Trapped customers. In industries where customers have a hard time switching, a bad experience may not lead to the loyalty decline anticipated by the model; the same type of situation would occur if a company is harder to move away from than it’s competitors (this may explain Medicaid, Medicare, MSN, and EarthLink).
• Commoditization. In industries that have a lot of pricing comparisons, customers may overly focus on price and not award good customer experience with the level of loyalty that the model projects (this may explain Alamo). It can also push consumers that have poor experience to more quickly leave a company for its competitor (this may explain DHL).
• Substitutions. In sitations where customers don’t have a lot of clear alternatives, they will be more loyal to a company than the model suggests (this may explain eBay). A company that relies on self-service may be seen as easier to move from than a company that forms more personal connections with customers (this may explain E*TRADE).
• Emotionality. Sometimes customers develop a strong affinity for a brand that increases loyalty and dampens the negative effect of any poor experiences (this may explain Southwest Airlines and Apple).

These items cover three broad topics: offerings, competitive environment and customer expectations. What do you think causes companies to earn more or less loyalty than their customer experience seems to deserve?

The bottom line: CX is correlated to loyalty, but other things matter as well

Report: Net Promoter Score Benchmark Study, 2012

We just published a Temkin Group report, Net Promoter Score Benchmark Study, 2012. It provides NPS data on 180 U.S. companies across 19 industries. Here’s the executive summary:

USAA took the top two spots for its banking and insurance businesses while HSBC came in at the bottom for banking and credit cards. Our analysis of differences across consumer demographic segments showed that NPS tends to go up with age, doesn’t vary much by income levels, and is often highest with Asians. We also asked consumers what would make them more likely to recommend the companies and found that promoters are more likely to select lower prices and detractors are more likely to select better customer service. While there is some debate about the efficacy of NPS, our analysis shows that promoters are much more likely than detractors to purchase more in the future across all industries. To help you implement a successful NPS program, we’ve included eight tips such as don’t believe in an “ultimate question” and use control charts, not pinpointed goals.

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(includes the data)

The industries included in this report are airlines, auto dealers, banks, computer makers, credit card issuers, fast food chains, grocery chains, health plans, hotel chains, insurance carriers, Internet service providers, investment firms, major appliance makers, parcel delivery services, rental car agencies, retailers, software firms, TV service providers, and wireless carriers.

The report contains the following components:

• NPS for 180 companies across 19 industries
• NPS differences based on age, income, and ethnicity of consumers
• Improvement areas selected by promoters and detractors by industry
• Connection between NPS and future purchases by industry
• Eight tips for implementing a successful NPS program

Download report for $295
(Includes the data)

The bottom line:  Companies need to give customers a reason to recommend them

Customer Experience Isn’t Enough in Banking

I read an interesting article in the New York Times: Bank Analyst Sees No Payoff in a Customer-Friendly Focus. It discusses how bank industry analyst Richard X. Bove believes that focussing on customers may be harmful for banks because it distracts them from making money. Here’s a bit of what he said:

Spending time solving problems with people is not selling products. It’s wasting time.

My take: First of all, I think that Bove is partially right. If you don’t have good products or if you don’t have solid sales processes, then you probably won’t have good business results; customer experience is not good enough on its own. As I’ve said for many years, customer experience is not a standalone activity, it needs to support your brand and business strategy.

Having said that, our research shows that companies with better customer experience have a better opportunity to improve their business results. That relationship holds up in our research across many industries.

I decided to take a look at one dimension of the Temkin Experience Ratings (easiness of doing business) and one dimension from the Temkin Loyalty Ratings (willingness to consider for another purchase) in banking. Here’s how those CX and loyalty items line up for 16 banks.

As you can see, there’s a high correlation between CX and potential loyalty. Just because 74% of USAA’s members are likely to consider the financial institution for another purchase, they aren’t going to do it unless USAA offers them an appropriate and competitive product.

The bottom line: CX is valuable, but not enough on its own

Credit Unions and PNC Deliver Best Customer Experience in Banking

This post examines the 16 banks included in the 2012 Temkin Experience Ratings.

Credit unions, which are ranked third across all industries, as a group were the only bank to receive an excellent rating. Four banks earned “good” ratings: PNC, TD Bank, USAA, and ING Direct. Eight banks received “okay” ratings while three banks received “poor” ratings: Citibank, Bank of America, and HSBC.

The banking industry received the fifth highest average customer experience rating, falling behind grocery chains, fast food restaurants, retailers, and parcel delivery services. Compared with 2011, banks increased their ratings by three percentage points, an improvement that was only outdone by insurance carriers and personal computer makers. Thirteen of the 16 banks improved their customer experience ratings between 2011 and 2012.

Credit unions and PNC experienced double-digit increases in their ratings between 2011 and 2012 while ING Direct, TD Bank, and Fifth Third improved by more than five percentage points. Only Regions experienced a double-digit decline in its ratings between 2011 and 2012 and Citibank is the only other bank that declined by more than five percentage points.

Do you want to see the data? Go to the Temkin Ratings website where you can sort through all of the results for free. You can even purchase the underlying data if you want to get more access.

The bottom line: Some big banks are heading in the wrong direction

Regions Delivers Top Banking Experience

In The 2011 Temkin Experience Ratings, we examined the customer experience across 12 industries. For this post, we will take a closer look at the 16 banks in the ratings.

Banks, as a group, had an average rating of “Okay” and ended up in the middle of the pack; the 5th ranked industry out of 12…

Let’s take closer look at the results for all of the individual banks…

As you can see, Regions is the only bank with a “Good” customer experience rating, but is closely followed by USAA, credit unions (as a group), and TD. At the other end of the spectrum, five banks ended up with “Poor” overall customer experience ratings: HSBC, Citibank, Capital One, Bank Of America, and Citizens.

Let’s take a look at the three components of the Temkin Experience Ratings…

While 10 of the 16 banks crossed the “Good” line for the Functional component of their experience, only the top three made it to that level for the Accessible component.

For more access to the data, visit the Temkin Ratings website.

The bottom line: Banks need to make it easier for customers

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20 Companies Most Susceptible To Negative Comments Via 3rd Party Ratings Sites

In my previous two posts, I listed companies that were susceptible to negative feedback via Facebook and Twitter. Now it’s time to look at 3rd party ratings sites like TripAdviosr and Yelp.. In the report How Consumers Give Feedback, we analyzed what US consumers did after they had a very bad or a very good experience.

As a part of the analysis, we examined the difference in social media use across 141 companies. Our analysis looked at how often people that had interacted with those companies had also used social media to talk about a very bad experience in the previous 60 days. We then compared that data to the overall US average.

This chart shows the 20 companies that interact with consumers who are most likely to post a comment or rating about a very bad experience on a 3rd party site.

As you can see, Days Inn, Super 8, TD Ameritrade, United Airlines, Hyatt, Hilton, and AirTram Airways are more than the most susceptible to having a bad comment or rating show up on these sites.

The bottom line: These firms need to track third party rating sites more than their peers

BofA + Merrill, The Customer Experience Angle

With Bank Of America buying Merrill Lynch, I thought I’d weigh in on the deal. Rather than joining the discussion about what it means to mega issues like the economy and financial markets,  I’ll talk about the impact on customer experience. Let me start with my overall assessment: it can’t hurt too much.

In Forrester’s Customer Experience Index (CxPi) which ranked 112 US firms, Merrill Lynch came out 49th overall and next to last out of 10 investment firms; only beating out E*TRADE. It’s key problem: The investment firm is not easy to do business with.

Bank of America came out even lower, 91st overall, which was 10th out of 14 banks in the rankings. The bank’s problems spanned all areas of the CxPi.

My research has shown that there’s a high correlation between customer experience and customer loyalty in financial services. So there’s an enormous opportunity. But the questions is: Which firms will benefit?

If Bank Of America takes the opportunity to overhaul it’s customer experience as part of the integration, then it could mean a siginficant improvement in customer experience in a few years; good news for both its banking and investment clients. But the integration will likely take the financial giant’s focus away from customer experience in the short-run.

So there’s significant opportunity for other financial institutions to beef-up their customer experience and grab some market share. My guess at some of the winners in this battle: Wells Fargo, Wachovia, and some smaller banks. It might also be a good opportunity for TD Bank to expand its Commerce Bank footprint and for someone to buy Umpqua Bank. And, I’m adding Edward Jones to the list of firms that could be winners (see the comments on this post, thanks Eva).

The jury is still out on what this means to the behemoth Citibank, which was the worst ranked bank on the CxPi and near the bottom of the entire list of firms. My suggestion to Citi is the same as in my post from late last year: Two Words For Vikram Pandit (Citigroup CEO): “Customer Experience”

The bottom line: I’d make customer experience improvement a core tenet of the BofA/Merrill integration effort.