Amazon.com, Costco, and USAA Are The Most Recommended Companies

In the 2011 Temkin Loyalty Ratings, we examined three elements of loyalty that includes the likelihood of consumers to recommend U.S. companies to their friends and relatives. I decided to take a closer look at the companies with the most, and the least, percentage of consumers that are likely to recommend them.

Here are some observations of the results across the 143 companies we examined:

  • Amazon.com, Costco, and USAA are on top. No surprise; these companies do well in just about every measure of loyalty.
  • Southwest Airlines and Vanguard stand out. Besides USAA, Southwest Airlines and Vanguard are the only companies that aren’t retailers or hotel chains on the top 20 list.
  • Anthem, Blue Shield Of CA, and Charter Communications are on the bottom. Led by Anthem, Blue Shield Of California, and Charter Communications, 15 companies had less than 50% of consumers willing to recommend them.

We also looked at the level of consumer recommendations compared with industry averages. This analysis showed that:

  • USAA and Regions outperform the most. Led by USAA (credit cards and insurers) and Regions (banks), seven firms have 10 percentage points more consumers willing to recommend them compared with their industry average. The others: Southwest (airlines), Amazon.com (retailers), TriCare (health plans), and USAA (banks).
  • Gap and Radio Shack underperform the most. Led by Gap (retail) and Radio Shack (retailers), five companies fall at least 10 percentage points their industry average level of recommendations. The others: US Airways (airlines), Super 8 (hotels), and Anthem (health plans).

The bottom line: Recommendations are an asset that companies must cultivate.

Report: 2011 Temkin Loyalty Ratings

We just published a new Temkin Group report, 2011 Temkin Loyalty Ratings.

The report identifies the level of loyalty that US consumers have for 143 organizations across 12 industries.

Here’s the executive summary:

Amazon.com, Kohl’s, and Costco took the top spots in the 2011 Temkin Loyalty Ratings. We asked 6,000 US consumers to rate their level of loyalty to companies across three components: purchasing additional products and services, reluctance to switch business away, and likelihood to recommend the company to friends and relatives. This data allowed us to rate 143 companies across 12 industries. Only 17% of those companies received a “strong” or “very strong” loyalty rating. The results show that retailers have the highest level of loyalty while TV service providers and health plans have the lowest.

Download report for $195

First of all, let me give a shoutout to the five companies with the highest ratings, indicating that they have the most loyal customers:

  • 1. Amazon.com
  • 2. Kohl’s
  • 3. Costco
  • 4. (tie) Lowe’s
  • 4. (tie) Sam’s Club

Here’s a list of the top 20 companies in the ratings. Click on the graphic below or click right here if you want to see the results for all 143 companies.

The Temkin Loyalty Ratings are calculated by examining three levels of loyalty that companies have earned from consumers: willingness to buy more products, reluctance to switch business away from, and likelihood to recommend those companies.

Overall, consumers don’t have a strong degree of loyalty across many industries. Retailers, by far, earn the highest levels of loyalty. TV Service providers and Internet Service providers, on the other hand, have earned woefully little loyalty with consumers.

Here are some of the other findings from the research:

  • Results versus industry averagesLed by USAA (insurance and credit cards), TriCare (health plans), credit unions (banks), and Southwest Airlines, 12 companies had double-digit advantages in loyalty over their industry. At the other end of the spectrum, Radio Shack (retailers), Super 8 (hotel chains), and Gap (retailers) led 18 companies with loyalty scores at least 10 points below their industry averages.
  • “Recommending” leaders and laggardsLed by Costco and Amazon.com, 36 companies have “very strong” ratings for consumers that are likely to recommend them to friends and colleagues. At the other end of the spectrum, Charter Communications, Anthem, and Comcast are the only firms with a “very weak” rating in this area.
  • “Switching” leaders and laggards. While no companies have very strong ratings for customers that are reluctant to switch, TriCare and USAA lead the five companies that have a “strong” rating in this area. Blue Shield Of California and Lenovo are at the low-end of the spectrum along with 12 other companies that have negative ratings in this area.
  • “Repurchasing” leaders and laggards. When it comes to having customers who are likely to purchase something else from them, Amazon.com and Old Navy lead 21 companies with “very strong” loyalty ratings in this area. HSBC and Charter Communications are two of the seven companies that didn’t even cross the 20% mark in this area.

Download report for $195

For access to more data, you can visit Temkin Ratings Website.

Now that we’ve published the Temkin Loyalty Ratings and the Temkin Experience Ratings, we’re analyzing the correlation between the two datasets. Look for out upcoming report: Customer Experience And Loyalty: Connecting The Dots

The bottom line: Loyalty is up for grabs!

Report: Online Gift Card Buying Needs Work

We just published a new report, Online Experiences For Buying Gift Cards Need Work.

The report examines the Websites of 12 companies using Temkin Group’s SLICE-B experience review methodology.

Here’s the executive summary:

Gift cards are a popular choice for consumers, especially around the holidays. Almost all major stores and restaurants sell them online. How user-friendly are those online purchasing processes? To answer this question, we used Temkin Group’s SLICE-B methodology to evaluate the experience of 12 large companies: three grocers (Kroger, Publix, and Safeway), three electronics retailers (Apple, Best Buy, and Radio Shack), three department stores (J.C. Penney, Kohl’s, and Macy’s), and three restaurant chains (Applebee’s, Chili’s, and Outback Steakhouse). Outback Steakhouse and Radio Shack were the only sites to receive an “excellent” rating. At the other end of the spectrum, Safeway, Chili’s, Kroger, and Best Buy were at the bottom with “mediocre” ratings. Many of the sites lacked key functionality such as free shipping, sending the cards at a later date, and sending multiple cards in a single order.

Download report for $195

Here are the overall results:

Download report for $195

The bottom line: Make it easier for people to give you money

Barnes & Noble Tops Retail Customer Experience List

As a part of my effort to examine the industry results from Forrester’s Customer Experience Index (CxPi), I recently published a research report called Customer Experience Index 2008 Snapshot: Retail analyzing the 25 retailers in the rankings. Here are some of the findings:

  • Retailers did well. As a group, the retailers received a “good” rating of 81% and ended up taking 9 of the 10 top spots in the overall rankings. The industy had the second highest increase from last year’s rankings (behind only banks).
  • Books lead. Barnes & Noble replaced Costco at the top of the 2008 CxPi rankings, and the next two retailers near the top of the rankings were also booksellers: Borders and Amazon.com.
  • Electronics lag. The electronics retailers Best Buy, Circuit City, and Radio Shack ended up tied for next to last place in the retail list.
  • Depots disappoint. In many cases, retailers in the same sectors ended up with very similar CxPi scores. But there were a couple of notable exceptions: Staples ended up 9% higher than Office Depot, and Lowe’s ended up 5% higher than The Home Depot.
  • Barnes & Noble and Office Depot lead opposite trajectories. Comparing results from last year, Barnes & Noble showed the largest improvement while Office Depot had the largest decline.

The bottom line: Retailers are good, but could be much better.

Microsoft Takes A Giant Leap Into Retail

Microsoft has been contemplating a new frontier…

Retail.

Over the past couple of years, Microsoft has recognized that it needs to take a more active role in the retailing of it’s products. It can no longer leave in-person merchandising and selling to retailers. What’s driving the urgency in Redmond to get into stores?

Apple.

Apple has radically changed the paradigm for retailing in technology. Rather than relying on retailers to deliver in-person experiences, Apple stores have revolutionized both the sales model and the service model for technology retailing.

That’s why it’s no surprise that Microsoft just hired a former Walmart executive to open a chain of retail stores. This effort will report into Kevin Turner, Microsoft’s COO (and a former Walmart executive) who says the aim is to

Transform the PC and Microsoft buying experience at retail by improving the articulation and demonstration of the Microsoft innovation and value proposition so that it’s clear, simple and straightforward for consumers everywhere.

This follows Microsoft’s recent unveiling of its huge Retail Experience Center in Redmond. I actually visted the center last year while doing some work with Microsoft on its retail strategy; it’s quite impressive.

My take: The technology market is maturing. Mainstream consumers are now the largest market; not techies. There’s a broad base of customers who want to buy technology products (PCs, phones, MP3 players, TVs, etc) who don’t understand anything about the underlying technology. So the listing of speeds-and-feeds (along with other technical specs) is an outdated retail marketing approach.

Unfortunately, retailers have not kept up with this shift. If you look at the 25 retailers that we ranked in Forrester’s Customer Experience Index, three of the bottom four were electronics retailers (Best Buy, Circuit City, and Radio Shack). This might also explain why stores like Circuit City and Tweeter are going bankrupt. So manufacturers like Sony, Apple, and now Microsoft are taking a lead in finding the right approach.

Here’s some of the things that mainstream technology users need:

  • Plain language about feature benefits to enable trade-offs (why should I care about 60 HZ or 120 HZ when buying an LCD TV?)
  • Products that are easy to setup and provide very simple interfaces for making common configuration changes
  • Easy-to-use decision making tools for narrowing potential products
  • Human advice (through trained employees and social media forums) for making product decisions
  • Access to help for setup, repair, and usage questions

The bottom line: The electronics retail experience is overdue for a makeover

Radio Shack Reformats Its Stores; At Last

Radio Shack announced that it plans to reformat two-thirds of its 6,000 stores. According to Peter Whitsett, Radio Shack’s head of merchandising:

The changes will result in more organized and easier-to-navigate stores that will help customers better compare products.

My take: It’s about time. In a previous post, I mentioned that Radio Shack customers aren’t very loyal to the retailer. The retailer’s experience has a lot to do with it. Radio Shack came in at the bottom of the 27 retailers in Forrester’s Customer Experience Index. During other research, we found flaws in Radio Shack’s in-store shopping experience as well as its Web-store cross-channel experience. When we looked at the process of shopping for a digital camera, we actually found that Radio Shack had some excellent content at the front of the store. But it was almost impossible to see the information, because it was buried in small font behind the cameras. The rest of the Radio Shack store seems like a random collection of stuff; not easy to navigate and not compelling to browse.

The bottom line: I’m looking forward to Radio Shack’s new look.

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