How We Ranked the Champs

Top scorers outdid themselves in customer satisfaction this year. Here's our methodology

The battered economy has made even starker the differences between companies that put customers first and those that are sacrificing loyalty for short-term gain. As retailers continue to slash staff, as airlines tack on fees, and as banks tighten lending standards, some companies are resisting such cost-cutting moves. And customers are rewarding them for the effort.

In our third annual ranking of Customer Service Champs, the scores of this year's top 25 brands were actually higher than in 2008. The data, gathered by market researcher J.D. Power & Associates (like BusinessWeek, a unit of The McGraw-Hill Cos. [MHP) posted leaps of 40 points or more. Among the bottom 25 of the more than 200 brands surveyed, scores fell significantly. There was only one gainer in this lowest quartile, which consists mainly of telecom, wireless, and airline companies: Cablevision (CVC).

The 2009 list also reveals that consumers are focused on getting value for their money in these tough times. While luxury hotels and upscale car brands were recognized again, the discount prices and one-stop service model of (AMZN) propelled it to the top spot this year., which offers free shipping—even on returns—for shoes, clothing, and accessories, also made its debut on the 2009 list. And in a year when food costs jumped amid rising commodities prices, the cheap eats at funky grocery chain Trader Joe's helped it make a repeat appearance among the top 25.

The Scoring Process

To put together the ranking, we started with existing data from J.D. Power. To qualify for the list, each brand had to have at least 100 responses and had to be owned by a company with at least $1 billion in annual revenues. We eliminated industries that cater to niche markets and those in which consumers rarely base decisions on service, such as airports. Only luxury and upscale hoteliers were included.

We combined the scores for all of each brand's 2008 studies in J.D. Power's 2008 database for each brand. (For instance, there are studies for car loans, home equity and bank branches, and two for mortgages, all of which we combine into one "banking" score.) That said, while financial-services firms often work across several industries, such as banking, brokerage, and insurance, we only listed them under the industry in which they scored highest. Finally, to make fair comparisons across banks, brokers, and telecom providers, we included only brands that appeared 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 listed above—retail banking, car loans, home equity, and two mortgage studies—to be considered. Only brokers that appeared on both the full service and the online studies were included.

Because we wanted to focus on customer service, we used only two of the measures from J.D. Power's studies: the perceived quality of a company's staff and what customers think of its processes, such as return policies or reservation procedures. Thus, our results may differ from J.D. Power's overall customer satisfaction rankings, which also consider product quality, presentation, and price.

As in past years, we supplemented J.D. Power's database by surveying 5,000 readers using the BusinessWeek Market Advisory Board. We asked them to nominate the three companies they felt were the best in customer service, and three they felt were the worst. More than 1,000 readers responded, with 2,485 votes for top service and 2,000 complaints about companies falling short. Brands that received more than 10 votes, had at least twice as many votes as complaints, and were not already in J.D. Power's database were considered for the list. J.D. Power then 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 their database and the supplemental surveys. We combined the scores from J.D. Power's data for quality of staff and efficiency of service to create the total score, with staff weighted at 60% and service efficiency, or processes, at 40%. To acknowledge the differences between sectors—the experience of buying a Lexus is nothing like buying a cell phone—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 the score of each company that fell below third place. Finally, to recognize brands that did well in our reader poll, we awarded 25 points to those with the best ratios of votes to complaints.

That methodology left one outlier this year. In our reader poll, Starbucks, which is not part of J.D. Power's database, received a high number of votes and low number of complaints for the third year in a row. Because we had no other fast-food restaurants or coffee retailers to compare it against, we weren't able to determine award bonus points for being No. 1 in its industry. So we're giving the Seattle-based chain a venti honorable mention.

This year's list of customer service champs.

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