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UK CUSTOMER SATISFACTION FALLS FOR THE SECOND YEAR

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UK Customer Satisfaction Falls for the Second Year, warning organisations to maintain focus on customer experience to achieve sustainable growth

  •  Consumers are less satisfied with their customer experience now than they were in January 2011
  •  Only ten organisations in the top fifty have improved on their performance since July 2013
  •  John Lewis and Amazon came top of the survey of nearly 10,000 consumers
  •  In every sector, there are examples of organisations that have defied the overall trend and improved their customer satisfaction
  •  People most likely to be dissatisfied with levels of customer service are from younger age-groups

The latest UK Customer Satisfaction Index (UKCSI), which surveys nearly 10,000 consumers, reveals that satisfaction has continued to fall leaving people more unhappy with their customer experience now than they were in January 2011, a major concern for organisations as the economy begins to grow.

John Lewis and Amazon top the index again, exchanging positions this year as the online retailer drops to second place. Of the index’s top ten organisations with the highest levels of customer satisfaction, only Tesco Mobile, Next and Center Parcs have shown improvement year-on-year. Almost half of the 197 organisations featured in the index saw a drop in satisfaction by at least one point, including organisations that are consistently amongst the highest rated by their customers.

In every sector there is a range of customer satisfaction scores, including examples of organisations that have defied the overall trend and improved their customer satisfaction. In fact, some of the organisations which have registered the biggest improvements in satisfaction are in sectors that have lower than the UK average satisfaction, such as Transport and Utilities. Eight organisations in the top fifty have improved on their performance since July 2013, by at least one point.

Jo Causon, CEO of the Institute of Customer Service, commented:

“There are a number of factors that could be influencing the downward trend in satisfaction. Customer expectations are rising and their needs are changing more quickly, with speed, convenience and being easy to do business with particularly important. In this environment, organisations must invest in customer insight and apply it with agility. They will also need continuously to review their customer service skills, capabilities and standards to ensure they are relevant to changing customer needs.”

“The UK is now a genuine relationship economy, where an organisation’s long-term success is determined by the quality of interactions between customers, suppliers, partners and organisations. The evidence in UKCSI shows a clear correlation between high levels of customer satisfaction and increased trust, loyalty, recommendation and sales growth, something that can be demonstrated clearly in the retail food sector.”

Causon adds: “Organisations that deliver sustained, long-term success are those with a strategic leadership commitment to customer service across the whole customer experience. As the economy moves into growth, there is a temptation to prioritise a short-term boost in customer numbers; but the evidence from UKCSI demonstrates that only a consistent focus on the customer experience will enable organisations to adapt to changing customer expectations and achieve sustainable success.”

For the first time, UKCSI investigates levels of satisfaction by age group and reveals what customers look for in their transactions with an organisation. The research showed that, rather than being a nation of grumpy old men, the people most likely to be dissatisfied with levels of customer service are from younger age-groups. This suggests that customer expectations will continue to rise over time, and that organisations will need to adapt in order to maintain their customer focus. .

Interviews conducted as part of UKCSI also asked customers to assess the balance of price and service they want from the organisations they deal with. The majority of customers (60%) want a balance of price and service with at least threshold levels of customer service, in all sectors. 24% of customers indicated that they favour excellent service and would be prepared to pay a premium for it, whereas 15% of customers are primarily motivated to seek the cheapest prices, even if this means compromising the quality of customer service.

UKCSI, commissioned by the Institute of Customer Service, takes its results from more than 40,000 individual customer experiences. It is the UK’s largest and most comprehensive survey of customer satisfaction and the only one carried out by a not-for-profit organisation.

About the Institute of Customer Service

The Institute of Customer Service is the professional body for customer service delivering tangible benefit to organisations and individuals so that our customers can improve their customers’ experience and their own business performance.

The Institute is a membership body with a community of over 400 organisational members – from the private, public and third sectors – and over 5,000 individual memberships.

For more information about the Institute of Customer Service go to:

www.instituteofcustomerservice.com

UK Customer Satisfaction Index

UKCSI (UK Customer Satisfaction Index) is the national measure of customer satisfaction. It is based on an online survey of consumers, geographically and demographically representative of the UK population.

The UKCSI began in January 2008 and is published twice a year, normally January and July. The Index covers 13 sectors – 11 in the private sector as well as local and national public services. Sector reports giving a detailed breakdown of scores by sector and organisation are available.

Customers are asked to rate organisations on customer priorities that they have identified as important. Priorities are grouped in terms of professionalism; quality and efficiency; ease of doing business; problem solving and timeliness. Each priority is given a weighted score. The weighted satisfaction scores are used to produce the index.

Customers score their responses for each measure on a 1-to-10 scale. Overall scores for each sector are mean averages of all responses. The overall UKCSI score for each organisation is the average of all of its customers’ satisfaction scores, weighted for each question grouping.

The July 2014 UKCSI includes 40,842 unique responses. 9,522 customers have been surveyed. Customers are geographically and demographically representative of the UK population and participate in the survey through an online panel. Customers are asked to provide a score for organisations based on their most recent transaction.

197 individual organisations received a UKCSI rating. Only organisations that exceed a minimum sample size are scored in the 13 sector reports. In addition, scores are given for 16 generic providers including “your local NHS / Hospital”, “your local Council”, “your local restaurant” etc.

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Euro zone business activity shrank in January as lockdowns hit services

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Euro zone business activity shrank in January as lockdowns hit services 1

By Jonathan Cable

LONDON (Reuters) – Economic activity in the euro zone shrank markedly in January as lockdown restrictions to contain the coronavirus pandemic hit the bloc’s dominant service industry hard, a survey showed.

With hospitality and entertainment venues forced to remain closed across much of the continent the survey highlighted a sharp contraction in the services industry but also showed manufacturing remained strong as factories largely remained open.

IHS Markit’s flash composite PMI, seen as a good guide to economic health, fell further below the 50 mark separating growth from contraction to 47.5 in January from December’s 49.1. A Reuters poll had predicted a fall to 47.6.

“A double-dip recession for the euro zone economy is looking increasingly inevitable as tighter COVID-19 restrictions took a further toll on businesses in January,” said Chris Williamson, chief business economist at IHS Markit.

“Some encouragement comes from the downturn being less severe than in the spring of last year, reflecting the ongoing relative resilience of manufacturing, rising demand for exported goods and the lockdown measures having been less stringent on average than last year.”

The bloc’s economy was expected to grow 0.6% this quarter, a Reuters poll showed earlier this week, and will return to its pre-COVID-19 level within two years on hopes the rollout of vaccines will allow a return to some form of normality. [ECILT/EU]

A PMI covering the bloc’s dominant service industry dropped to 45.0 from 46.4, exceeding expectations in a Reuters poll that had predicted a steeper fall to 44.5 and still a long way from historic lows at the start of the pandemic.

With activity still in decline and restrictions likely to be in place for some time yet, services firms were forced to chop their charges. The output price index fell to 46.9 from 48.4, its lowest reading since June.

That will be disappointing for policymakers at the European Central Bank – who on Thursday left policy unchanged – as uncomfortably low inflation has been a thorn in the ECB’s side for years.

Factory activity remained strong and the manufacturing PMI held well above breakeven at 54.7, albeit weaker than December’s 55.2. The Reuters poll had predicted a drop to 54.5.

An index measuring output which feeds into the composite PMI fell to 54.5 from 56.3.

But despite strong demand factories again cut headcount, as they have every month since May 2019. The employment index fell to 48.9 from 49.2.

As immunisation programmes are being ramped up after a slow start in Europe optimism about the coming year remained strong. The composite future output index dipped to 63.6 from December’s near three-year high of 64.5.

“The roll out of vaccines has meanwhile helped sustain a strong degree of confidence about prospects for the year ahead, though the recent rise in virus case numbers has caused some pull-back in optimism,” Williamson said.

(Reporting by Jonathan Cable; Editing by Toby Chopra)

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Volkswagen’s profit halves, but deliveries recovering

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Volkswagen's profit halves, but deliveries recovering 2

BERLIN (Reuters) – Volkswagen reported a nearly 50% drop in its 2020 adjusted operating profit on Friday but said car deliveries had recovered strongly in the fourth quarter, lifting its shares.

The world’s largest carmaker said full-year operating profit, excluding costs related to its diesel emissions scandal, came in at 10 billion euros ($12.2 billion), compared with 19.3 billion in 2019.

Net cash flow at its automotive division was around 6 billion euros and car deliveries picked up towards the end of the year, the German group said in a statement.

“The deliveries to customers of the Volkswagen Group continued to recover strongly in the fourth quarter and even exceeded the deliveries of the third quarter 2020,” it said.

Volkswagen’s shares, which had been down as much as 2%, turned positive and were up 1.5% at 164.32 euros by 1158 GMT.

Sales at the automaker rose 1.7% in December, at a time when new car registrations in Europe dropped nearly 4%, data from the European Automobile Manufacturers’ Association showed.

Like its rivals, Volkswagen is facing several challenges due to the coronavirus pandemic as well as a global shortage of chips needed for production.

It also sees tough competition in developing electrified and self-driving cars. The merger of Fiat Chrysler and Peugeot-owner PSA to create the world’s fourth-biggest automaker Stellantis adds to the pressure.

Volkswagen said on Thursday it missed EU targets on carbon dioxide (CO2) emissions from its passenger car fleet last year and faces a fine of more than 100 million euros.

The group is expected to release detailed 2020 figures on March 16.

($1 = 0.8215 euros)

(Reporting by Kirsti Knolle; Editing by Maria Sheahan and Mark Potter)

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Global chip shortage hits China’s bitcoin mining sector

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Global chip shortage hits China's bitcoin mining sector 3

By Samuel Shen and Alun John

SHANGHAI/HONG KONG (Reuters) – A global chip shortage is choking the production of machines used to “mine” bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency drives demand.

The scramble is pricing out smaller miners and accelerating an industry consolidation that could see deep-pocketed players, many outside China, profit from the bitcoin bull run.

Bitcoin mining is closely watched by traders and users of the world’s largest cryptocurrency, as the amount of bitcoin they make and sell into the market affects its supply and price.

Trading around $32,000 on Friday, bitcoin is down 20% from the record highs it struck two weeks ago but still up some 700% from its March low of $3,850.

“There are not enough chips to support the production of mining rigs,” said Alex Ao, vice president of Innosilicon, a chip designer and major provider of mining equipment.

Bitcoin miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify bitcoin transactions in a process which produces newly minted bitcoins.

Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, the main producers of specially designed chips used in mining rigs, would also prioritise supplies to sectors such as consumer electronics, whose chip demand is seen as more stable, Ao said.

The global chip shortage is disrupting production across a global array of products, including automobiles, laptops and mobile phones. [L1N2JP2MY]

Mining’s profitability depends on bitcoin’s price, the cost of the electricity used to power the rig, the rig’s efficiency, and how much computing power is needed to mine a bitcoin.

Demand for rigs has boomed as bitcoin prices soared, said Gordon Chen, co-founder of cryptocurrency asset manager and miner GMR.

“When gold prices jump, you need more shovels. When milk prices rise, you want more cows.”

CONSOLIDATION

Lei Tong, managing director of financial services at Babel Finance, which lends to miners, said that “almost all major miners are scouring the market for rigs, and they are willing to pay high prices for second-hand machines.”

“Purchase volumes from North America have been huge, squeezing supply in China,” he said, adding that many miners are placing orders for products that can only be delivered in August and September.

Most of the products of Bitmain, one of the biggest rig makers in China, are sold out, according the company’s website.

A sales manager at Jiangsu Haifanxin Technology, a rig merchant, said prices on the second-hand market have jumped 50% to 60% over the past year, while prices of new equipment more than doubled. High-end, second-hand mining machines were quoted around $5,000.

“It’s natural if you look at how much bitcoin has risen,” said the manager, who identified himself on by his surname Li.

The cryptocurrency surge is affecting who is able to mine.

The increasing cost of investment is eliminating smaller players, said Raymond Yuan, founder of Atlas Mining, which owns one of China’s biggest mining business.

“Institutional investors benefit from both large scale and proficiency in management whereas retail investors who couldn’t keep up will be weeded out,” said Yuan, whose company has invested over $500 million in cryptocurrency mining and plans to keep investing heavily.

Many of the larger players growing their mining operations are based outside of China, often in North America and the Middle East, said Wayne Zhao, chief operating officer of crypto research company TokenInsight.

“China used to have low electricity costs as one core advantage, but as the bitcoin price rises now, that has gone,” he said.

Zhao said that while previously bitcoin mining in China used to account for as much as 80% of the world’s total, it now accounted for around 50%.

(Reporting by Samuel Shen and Alun John; Editing by Vidya Ranganathan and William Mallard)

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