The results of our 2008 Customer Service Champs ranking make clear something most consumers already suspect: Customer service is on the decline. Consumers who responded to this year's J.D. Power & Associates (MHP) surveys, which provide the data used for our second annual list of Customer Service Champs, spoke up about their frustration. The average score on our list fell slightly, with a majority of companies scoring lower than last year. Even the scores of a few longtime service stars, including Four Seasons Hotels and Saturn (GM) cars, tumbled. (Four Seasons says its research shows guests are highly satisfied with the company's service; Saturn says an expanded lineup has added complexity at dealer service centers.)
Why the decline? J.D. Power's chief research officer, Gina Pingitore, thinks the economy could be the culprit. While J.D. Power's research shows strength in product satisfaction, the results for service measures—things like employee expertise or processes such as returning merchandise—are a different story. "[Companies are] cutting back on staff, they're cutting back on services," Pingitore says. "Consumers are beginning to see it."
Sentiments about customer service may have dipped, but our top 25 companies, which are selected using input from J.D. Power studies and BusinessWeek readers, still garnered plenty of praise. While there were many repeat winners, 10 new names made our list this year, including companies well-known for service, like L.L. Bean and Amazon.com (AMZN). Cult favorites Trader Joe's and Chick-fil-A made it into our rankings, too. A few names, such as Wachovia (WB) and Fairmont Hotels & Resorts, simply beat out prior winners in their industries. And of course there's JetBlue Airways (JBLU), which earned its way back on to our list after getting booted last year when massive February storms sent its operations into a tailspin. Following that snafu, JetBlue created a customer bill of rights that mandates vouchers for delays and added customer service managers.
How did we come up with our winners? We started with existing data from J.D. Power, a consumer researcher (MHP). We combined the scores from a series of studies in J.D. Power's 2007 database for each brand. To qualify, the studies had to have at least 100 responses. We eliminated industries that cater to niche markets, such as motorcycles, and those in which consumers rarely base decisions on service, such as airports. Only luxury and upscale hoteliers were considered. And in order to compare similar services in banking, cable, and telecom, we eliminated brands that did not appear on most of J.D. Power's studies for that industry. (For example, banks had to show up on at least four of the five related surveys—retail banking, car loans, home equity, and two mortgage studies—to be considered.) We looked only at the studies in J.D. Power's database that measure processes and people. Thus, our results may differ from the J.D. Power satisfaction rankings, which also consider product quality, presentation, and price.
Like last year, we supplemented J.D. Power's database by surveying 5,000 readers using the BusinessWeek Market Advisory Board, asking them to nominate three companies they felt were the best and three they felt were the worst at customer service. More than 1,000 readers responded, with 2,596 "votes" and 1,885 "complaints." Companies that got at least 10 votes, had a vote-to-complaint ratio of at least 2:1, and were not already in J.D. Power's database were added to our list. J.D. Power created a Web-based questionnaire for these brands and surveyed at least 100 customers to get a comparable score.
J.D. Power then ranked all of the brands, using scores from both their database and the supplemental surveys. We combined the "people" and "process" scores from J.D. Power's data to create the Service Index, with people weighted at 60% and process at 40%. Then, because we were comparing widely divergent industries—a romantic weekend at the Ritz-Carlton is a much different experience than an afternoon waiting for the cable guy to arrive—we gave credit for scoring high within an industry. Brands that ranked first in their category received 100 bonus points; those ranking second received 50. We subtracted 50 points from each company's score that fell below third place.
We made three changes to our methodology this year. Because many consumers rave about the service they get from smaller companies, we lowered the revenue bar for companies on our list to $1 billion from the $1.5 billion mark we set last year. Last year we subtracted an additional 50 points from the bottom player in each industry; we did not apply that penalty this year. Finally, to recognize companies that did particularly well in our reader poll, we awarded an extra 25 points to those whose vote-to-complaint ratios were in the top 10%.
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A table accompanying "The Customer Service Champs" (Special Report, Mar. 3) mischaracterized the incentives Wachovia (WB) uses to reward employees who provide exceptional customer service. Honorees receive certificates and become eligible for monthly cash drawings.