COMMENT: Why has Aldi overtaken Waitrose and M&S?

The UK Customer Satisfaction Index sets out how customers hold the power when it comes to business performance. It consistently shows how the highest performing supermarkets for customer satisfaction also experience an increase in market share, while the opposite happens with those who rank poorly. The CEO of the Institute of Customer Service, the group behind the index, pens her thoughts on why this is the case.

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Aldi

Our most recent UK Customer Satisfaction Index (UKCSI) reveals striking evidence that customers hold the power when it comes to business performance.

The index reveals Aldi as the highest performing supermarket for customer satisfaction, overtaking heritage brands M&S and Waitrose, while also making the largest gains in sales and market share.

The three supermarkets with the lowest customer service levels – Tesco, Asda and Co-Op Food – all saw small drops in market share. Our analysis finds food retailers with satisfied customers saw a sales growth of 10.7 per cent, compared to only 1.8 per cent for those with satisfaction falling below average. Indeed, in each of the last 11 UKCSI reports, we have consistently seen that, on average, supermarkets with the highest customer satisfaction outperform the sector for sales and market share. Customer service is a clear driving force behind those who reaped the benefits of this sector growth – and a clear issue for those who were left behind.

Retailers would do well to take note. Indeed, wider analysis from the Institute of Customer Service presents a clear correlation between customer satisfaction and business performance. It shows, for example, that in 60 per cent of cases, when customer satisfaction increases or decreases, share price follows suit. Ignoring this places organisations at risk of huge potential loss.

The UKCSI suggests that not only is Aldi satisfying its current customers and securing the repeat custom which comes with this success, but the retailer is also increasing market share through customer recommendation. In addition, the effort customers are having to make to get what they want is lower for customers of Aldi than both heritage brands – meaning that their customers are experiencing a more seamless customer experience.

READ MORE: Big Interview: Jo Causon, CEO, The Institute of Customer Service

The prospect of inflation rising faster than incomes may well lead to more exacting demands over both price and service, so it is also interesting to note that Aldi significantly outperforms the sector as a whole in two key areas: satisfaction with price and complaint handling. It does seem that if food prices continue to rise, Aldi appears well placed to satisfy the needs of price-conscious customers whilst widening its appeal to broader segments for whom service and the overall experience is a key concern. I hope other retailers recognise this – customer satisfaction is a crucial differentiator and the realigned expectations of consumers must be met, particularly in an environment where competition is so fierce.

For those supermarkets who recognise that there needs to be a step change in their approach and a commitment to the customer service agenda, our recommendations are as follows:

• Get it “right first time”
Making the customer journey even easier, straightforward and intuitive and maintaining a high focus on getting it “right first time” is essential to convert customer satisfaction to stronger loyalty and recommendation.

• Prevent problems
Organisations must focus on preventing problems at their source in key areas such as the availability, quality and reliability of goods and services, which account for the largest proportion of problems.

• Maintain relentless focus on complaint handling
Dealing with complaints quickly and effectively is crucial. Key expectations of staff include listening carefully, showing understanding of the problem, taking responsibility and following up complaints.

• Develop engaged, competent people
Employees’ attitudes and competence are amongst the most important attributes of the retail customer experience. Investing in employees’ knowledge, emotional intelligence and problem-solving skills is therefore central to improving customer service. Organisations should commit to employee engagement, training and development as proactive, ongoing business strategies.

It may seem obvious that customers are key to business performance, but service too often falls by the wayside in boardroom conversations. Our research offers a clear imperative: retailers should place the customer at the centre of their business strategy, or risk losing out to those who do.

Jo Causon is the Chief Executive Officer of The Institute of Customer Service

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