Customer Service and the £81.5b Revenue Reward

Improvements in customer service could add £81.5 billion* to the UK’s GDP in the space of just 12 months, according to new research released by the Institute of Customer Service.

ics dec 2017

In the largest study of its kind ever undertaken, the Institute of Customer Service’s ‘The Customer Dividend’ report sees the customer satisfaction scores of 124 different organisations mapped against a number of financial metrics, including turnover, ebitda, profit, revenue per employee and human value capital add (HCVA).

The results reveal emphatic evidence that when an organisation has happy customers, it is more likely to have happy shareholders.

On average, organisations who maintain a customer satisfaction score above their sector average (taken from the Institute’s biannual UK Customer Satisfaction Index) achieve 9.1% revenue growth year-on-year, and compound growth of 4.7% across a five to eight-year period. Those with a lower-than-average customer satisfaction score achieve 0.4% growth year-on-year and just 3.5% in the longer period.

Among the firms analysed, Premier Inn (55%), Aldi (21%) and Costa Coffee (19%) are the UK organisations who have achieved some of the strongest long-term revenue growth whilst maintaining a high level of customer satisfaction.

Meanwhile, the Institute’s analysis shows that even organisations moving from below average to average for customer satisfaction scores could be worth £81.5 billion* to the UK economy across a 12-month period.

‘The Customer Dividend’ report reveals a consistent pattern of strong customer satisfaction performance leading to strong financial performance:

– organisations with higher-than-average customer satisfaction achieve superior productivity among their staff. Across five to eight years, the difference is £552,409 revenue per employee vs £257,614, a difference of 114%. When it comes to human value capital add (HCVA), the difference between high customer service performers and lower performers is 47%: £59,847 vs £40,863

– the average ebitda percentage for higher-than-average customer satisfaction scorers is 24.7%, compared to 14.5% for firms that score lower than average. When it comes to gross margin, the difference is 37% compared to 32.1%.

Broadly, these trends hold true across a number of business sectors, including retail (both food and non-food), leisure, tourism, services, telecommunications and transport.  The sector which sees the biggest year-on-year turnover improvements for its top customer satisfaction performers is tourism, at 32%. Across a three-year period, the sector which sees the largest revenue growth is telecommunications, at 16.8%. Telecommunications also has the largest gap between revenue growth for organisations who score higher than average for customer satisfaction, and those who score lower than average (16.8% vs 4.5% across a three-year period). Causon, Chief Executive of the Institute of Customer Service, said:

“This research shows compelling evidence that excellence in customer service holds the key to stronger financial performance. Amid a heightening debate around productivity in the UK, our new report shows that organisations with strong customer satisfaction also have more industrious staff, adding as much as 114% to revenue-per-employee.

“How customers react to the service they receive, and how managers motivate their teams, are essential elements of the quest for greater productivity. Mistakes are too costly and every investment needs to generate a genuine return. That is why we are calling on businesses to place their service strategy at the heart of their boardroom – it will add value not only to their customer relationships, but also to the bottom line.”

institute.of.customer.service.logo.june.2015Additional Information

To download the report Click Here

For additional information on the Institute of Customer Service visit their Website

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