Behind Our List

It could have been a lot worse. When it comes to customer service, one might have assumed 2009 would have dealt a massive blow. Amid a brutal recession, companies slashed inventories to the bone. They cut back sharply on employee hours, benefits, and pay. Many stopped new investments in technology and store upgrades.

But a funny thing happened on the way to the recovery: Customer satisfaction didn't sink like a 100-pound stone. The average score for the 25 brands that received our fourth annual Customer Service Champs award, which rates what customers think about the quality of a company's staff and the efficiency of its service, rose slightly in 2009. And when looking across the nearly 200 brands we considered in picking our winners, the average score only fell by about 1%. That small decline would be even better had there not been a rash of lower scores in the auto sector, a redesign of one of the industry’s studies by our research partner, J.D. Power & Associates. Even the telecommunications and wireless industries, which tend to score among the lowest in our ranking, saw improvements in 2009.

Analysts believe the recession-driven fear of losing consumers may be prompting companies to get religion about the customer service department. "There's been a resurgence of thinking about customer service as an asset," says Bruce Temkin, a vice-president at Forrester Research (FORR), who specializes in customer experience. "You see it with the tenor of what people are talking about. A couple of years ago it was how do we cut costs, how do we offshore it, how do we automate it. The discussion now is how do we make sure those customer service contacts build loyalty."

In addition, the downturn could have had some unintended upside. Worker morale may have been depressed by pay and benefit cuts, but many employees were likely happy to have a job at all. Service cutbacks customers did see may have gotten overlooked amid the rampant discounting and promotions companies used to lure suddenly frugal consumers. And widespread efforts by companies to address consumer problems directly using inexpensive social media tools like Twitter could be starting to make an impact.

Starting with J.D. Power Data

How did we pick our winners? We started with existing data from J.D. Power, which surveys consumers each year about customer satisfaction. To assess customer service, we looked at just two of its several measures: the perceived friendliness and competency of a company's workers, and what customers think of its processes, such as return policies or reservation procedures. Therefore, our results may differ from J.D. Power's satisfaction rankings, which also consider quality, presentation, and price.

To qualify for the list, each brand had to have at least 100 responses. (Some brands may not have had 100 responses to the questions about staff, but they met the sample criteria overall.) We eliminated companies that cater to niche markets and those in which consumers rarely base decisions on service, such as airports. To compare similar properties, only luxury and upscale hotels were included.

To get a complete score for each brand, we combined the results of all the 2009 studies in J.D. Power's database. For instance, there are separate studies for phone, Internet, and TV service for telecommunications and cable providers, all of which we aggregated into one score. To make fair comparisons, we included only brands that appeared on the majority of J.D. Power's studies for that industry. For example, telecom providers had to be included in at least two of the three surveys listed above to be considered. Insurance companies had to provide both auto and home insurance while brokers must have offered both full-service and online investing services to be considered.

Reader Advisory Panel

As in past years, we supplemented J.D. Power's database by surveying 5,000 people using the Bloomberg BusinessWeek Market Advisory Board, a panel of readers we tap for feedback on a range of issues. We asked them to nominate three companies they felt were best at customer service and three they felt were worst. More than 1,000 people responded. Then we gave the companies with the best ratio of positive to negative nominations to J.D. Power and had it ask consumers about them, applying the same rigor used when surveying the companies in its database. As a result, we were able to expand the rankings beyond J.D. Power's existing data set, which includes only a limited number of retailers. We gave 25 bonus points to brands that did best in our readers' poll.

J.D. Power then ranked all of the brands by a preliminary final tally, weighing the staff score and service efficiency score (each of which was converted to a letter grade) at 62% and 38%, respectively. To account for inherent differences between industries—upscale hotels, after all, have very different customer service than airlines—we also gave bonus points for those companies that lead their industries and subtracted points for those that fell below third place. As a result, some companies with lesser grades may have high total scores because they rank first in their industries.

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