CUSTOMER OPINION INDEX

CUSTOMER OPINION INDEX

Report

OpinionLab’s

Table of Contents

Letter from the President ...3

About OpinionLab’s Metrics ... 4

Customer Opinion Index (COI) Rankings ...5

COI Industry Trends ... 6

Top COI Performers...8

Functional Mean Ratings (FMR) ... 9

FMR Trends ...10

Exclusive Study: The Store and Mall of the Future ... 12

Letter from the President

The customer experience landscape continues to evolve to meet the expectations of a new generation of fully mobile, omnichannel consumers. With that evolution comes greater urgency to intelligently measure and manager customer feedback in real-time and at every single brand touchpoint.

We publish the Customer Opinion Index Report once every quarter as a way of capturing and representing the pulse of the customer experience, viewed through the lens of real-time omnichannel feedback. In Q1 2014, we found some evidence of a post-holiday lull in many major sectors. As the holiday euphoria subsided, customer experience performance slipped across the board and the benchmark COI rating fell to its lowest point in more than a year. This report helps to make sense of what catalyzed the decline, while also pointing to areas that foreshadow brighter days ahead.

There are several new elements to take note of in this edition of the report:

• For the first time, we are tracking the Telecommunications sector within our COI Rankings and COI Industry Trends.

• We have added Mobile to our list of Functional Mean Ratings.

• We have changed the presentation of data in some of our charts to emphasize rises and falls on a quarterly basis.

This edition of the COI report also contains the results of an exclusive study designed to capture current opinions about and analyze the future of the mall and the retail store. We have unearthed some exciting insights about how Millennials want to shop offline and what they expect out of the store and mall of the future compared to older segments of the population.

Finally, one of my favorite aspects of the COI Report is taking the opportunity to salute OpinionLab clients that have done an amazing job of delivering great customer experiences in every channel. This month, we extend congratulations to

Verizon Wireless for its sector-leading COI score.

We trust that you will enjoy this report, and please feel free to send any questions my way.

About the Customer Opinion Index

Based on a sophisticated measurement model designed specifically for an omnichannel world, the Customer Opinion Index (COI) is a key measure of customer experience excellence online, in-store, in contact centers, and on mobile devices. As the only true omnichannel customer experience index, the COI is a leading indicator of future customer behavior such as purchasing likelihood, loyalty, and brand endorsement. The COI is computed using a proprietary formula that incorporates overall experience ratings, customer satisfaction and loyalty ratings, customer intent performance, open-ended comments, as well as ratings of the critical components of the customer experience across channels. COI calculations are derived from OpinionLab’s patented real-time, opt-in feedback solutions, which to date have captured more than 200 million pieces of real customer feedback for nearly half the Fortune 50 and hundreds of the world’s greatest brands.

About Functional Mean Ratings

Functional Mean Ratings (FMR) are a new and revolutionary type of benchmark reporting, offered exclusively by OpinionLab. Functional Mean Ratings are the only set of normative metrics that aggregate customer experience performance scores for highly specific functions, areas, and sections of a brand’s digital touchpoints. Based on guidance from industry leaders, Functional Mean Ratings group together more than 2 million URLs that serve similar functional, thematic, and experiential purposes on a website. The result is a score computed on a 1 to 5 scale that provides half of the Fortune 50 with precise, location-specific insights and prescriptive roadmaps for improving customer satisfaction and boosting customer experience performance across channels.

Etailers

361

463

Financial

753

COI Rankings

Customer sentiment was down to start 2014, as the Customer Opinion Index–a proprietary benchmark of omnichannel customer experience performance and leading indicator of future customer loyalty–kicked off the year with a score of 508, its lowest mark in over a year.

OpinionLab analyzed over 2 million pieces of real-time, opt-in customer feedback from web and mobile sites, mobile apps, stores, and contact centers operated by hundreds of the world’s leading brands, and found that customers were markedly less thrilled with their experiences in the post-holiday period. The overall COI benchmark was down by 29 points (5%) on a yearly basis and slipped by 20 points (4%) on a quarterly basis. When shopping for goods, paying bills online, obtaining insurance quotes, or booking travel dates, the holiday hangover was clearly weighing heavily on customers’ moods and mindsets, and brands failed to overcome this with remarkable customer experiences.

The Telecommunications vertical makes its debut in this edition of the COI Rankings, bringing the total number of sectors tracked in the COI Report up to 8. This inclusion comes at an especially important juncture for the Telecommunications industry, as rapid consolidation creates major ripples for the customer experience in this important vertical.

COI Scores

289

299

Insurance

620

Travel

447

508

Overall COI

Score

The Telecommunications vertical makes its debut in

this edition of the COI Rankings, bringing the total

number of sectors tracked in the COI Report up to 8.

Airlines

COI Industry Trends

The overall COI decline was driven by two distinct factors: first, sharp drops were observed in the COI scores for Travel, Airlines, and Insurance; second, the Telecommunications industry was added to the COI Benchmark Report for the first time and that industry itself experienced a sharp dip in COI scoring over the first three months of 2014.

In both cases, topical events were significant. The tragic circumstances surrounding the disappearance of Malaysia Airlines Flight 370 brought mainstream attention to customer experience challenges that airlines have been struggling with for years, namely issues of transparency, responsiveness, and accountability when it comes to communication with customers. Having these issues routinely debated on nightly news programming certainly reinforced negative viewpoints for many travelers. Similarly, customer sentiment in the telecommunications industry was also negatively influenced by mainstream news stories, most notably fears of monopolization at the provider level and the gradual erosion of Net Neutrality caused by preferential internet access deals for top-tier content producers.

200 300 400 500 600 700 800 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Travel Etailers Omnichannel Retailers Insurance Healthcare Financial Airlines Telecommunications

COI

There was much better news to start the year in the retail sector, for both pure-play eTailers and omnichannel retailers. Omnichannel Retail shook off suspicions around payment security, which plagued customer opinion scoring during the latter part of Q4, and posted a COI increase of 49 points (12%). Real-time feedback indicated that investments in omnichannel technology like responsive design, ship to/from store fulfillment, and mobile apps that allow for personalized “store mode” experiences have begun to pay dividends for omnichannel retailers, while at the same time, new and innovative store formats and experiential concepts are breathing life into physical shopping experiences.

The COI for eTail also rose in Q1, though not quite as dramatically. Pure-play eTailers still lag omnichannel retailers in several critical aspects of the customer experience, most notably Home page design, richness of product descriptions and details, and the overall execution of the checkout experience, where omnichannel flexes its muscle with maximum flexibility on the fulfillment front. With omnichannel retail, shoppers can buy online and pick up an order in store, buy online and have an order shipped for free to the store, buy online and have a product shipped from a local store that same day, or buy in-store and have a product conveniently delivered to their home.

Conversely, on the pure-play e-commerce front, Amazon is among the few to boast a network of fulfillment centers that can cost-effectively support same-day or next-day fulfillment on a scale that threatens omnichannel retailers. Limited to a handful of fulfillment centers, most eTailers lack these capabilities, and rely instead on expensive overnight shipments to guarantee rapid delivery—shipping options from which customers have traditionally tended to shy away.

Omnichannel Retail shook off suspicions around

payment security, which plagued customer

opinion scoring during the latter part of Q4, and

posted a COI increase of 49 points (12%).

SALUTING TOP PERFORMERS

Verizon Wireless is an innovative wireless communications company that connects people and businesses with advanced wireless technology and service. With the largest 4G LTE mobile broadband network in the United States, Verizon Wireless delivers the wonders of mobile connectivity every single day to over 100 million mobile subscribers. Not many companies get the chance to change the world through innovation, but that’s exactly what Verizon Wireless does.

The telecommunications sector makes its debut in this issue of the COI Report, and OpinionLab is thrilled to take this opportunity to salute Verizon Wireless for its sector-leading COI score. In Q1 2014, Verizon Wireless posted a COI score that was 17% higher than the Telecommunications sector average. Whether managing their accounts in My Verizon, browsing the Shop’s vast selection of smartphones and accessories, or accessing comprehensive help material in the Support section, visitors to verizonwireless.com were almost always able to complete their primary tasks. As Verizon Wireless continues to lead the mobile revolution, OpinionLab looks forward to helping them drive their COI score even higher.

Verizon Wireless posted a COI score that was

17% higher than the Telecommunications

sector average.

Functional Mean Ratings

Functional Mean Ratings (FMRs) are a key element of the Customer Opinion Index benchmark. FMRs group together web pages that perform common functions and roll their real-time feedback scores into a precise and meaningful online performance framework that allows for maximum precision and actionability.

Loyalty (3.13) and Account Management (3.09) pages delivered the best customer experiences in Q1, while Service & Support pages continued to elicit the lowest customer feedback ratings. For the first time, this COI Report includes an FMR benchmark for Mobile, which includes mobile apps, m-sites, and full-featured sites delivered in a responsive fashion to a smartphone or tablet. Mobile enters the report with an FMR of 2.68, second lowest among the functional areas tracked by OpinionLab.

Home Page

2.99

Loyalty

3.13

Service &

Support

2.49

Search

2.81

Mobile

2.68

Information

2.91

Account

3.09

Functional Mean Ratings Trends

The Q1 COI Report gives us a chance to look back and compare this quarter’s scores to FMR established in the first quarter of 2013. Year over year, some dramatic changes have occurred. The Functional Mean Ratings for Loyalty pages fell from 3.58 in Q1 2013 to 3.13 in Q1 2014, a drop of almost 13%. From a customer experience standpoint, Loyalty pages no longer enjoy the same dominance they used to, suggesting that brands have allowed Loyalty sections to stagnate and have been slow to release new and interesting features designed to continue delighting customers.

Conversely, the FMR for Service and Support pages rose by nearly 11% over the past 12 months. In fact, over the past year, that metric has improved incrementally each quarter, indicating that website operators are listening to their customers, reacting to long-known pain points related to support pages, and deploying fixes as part of a virtuous optimization loop.

Loyalty Information

Service & Support Account Search Home Page Mobile 2.0 2.5 3.0 3.5 4.0 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13

Mobile makes its debut with a quarterly increase in its FMR score, but the Mobile customer experience score still came in about 9% lower than where it stood one year ago. At that point, customers were reacting positively to the potential of untethered experiences, but over the intervening 12 months, some disillusionment has set in. With mobile traffic hitting or about to hit the 50% threshold for major brands like ESPN and CNN, mobile experiences are still a mixed bag, and the audience remains split between native app usage and mobile website visits. Responsive sites are gaining steam, but there are still a sizable amount of m-sites with limited functionality compared to desktop sites, as well as full-fledged desktop sites that some brands still elect–shockingly enough–to serve to smartphone and tablet users.

Mobile makes its debut with a quarterly increase

in its FMR score, but the Mobile customer

experience score still came in about 9% lower

than where it stood one year ago.

Exclusive Study:

The Mall and Store of the Future

In April 2014, OpinionLab conducted an exclusive customer experience research study based on a representative sample of over 1,100 US adults. The purpose of the study was to capture consumers’ opinions around the mall experience, as well as to peer into the future and gauge shoppers’ expectations for both the future of the mall and the future of the retail store. The study was designed to explore contrasts and similarities between the opinions of Millennials (defined as adults between the ages of 18 and 29) and older, non-Millennial segments of the population.

The first section of the study was designed to capture current opinions on the mall experience. Surprisingly, the study found that the mall is still alive and well among Millennials. 37% of Millennials choose the mall as their favorite place to shop, followed by 27% who preferred to shop online. Among non-Millennials, shopping preferences are significantly different. eCommerce leads the way, with 32% of non-Millennials citing the web as their favorite place to shop, followed by 27% who prefer to shop at standalone store locations operated by national chains. The mall is the preferred shopping spot for only 23% of non-Millennials.

Where is your favorite place to shop?

Mall Standalone store (national brand) Standalone store (local brand) Online 37% 23% 20% 27% 15% 18% 27% 32% Non-Millennials Millennials

In line with these findings, OpinionLab also discovered that the mall is a centerpiece of Millennials’ plans for the summer. 59% of Millennials indicate that they plan on heading to the mall at least once a month this summer, while only 15% of Millennials indicate that they would shy away from the mall altogether. Among non-Millennials, one in five indicate that they have no plans to make even a single trip to the mall this summer.

How often do you plan on going to the mall this summer?

> once a week Once a week Once in the entire summer Once a month Not at all 3% 2% 8% 12% 48% 36% 26% 29% 15% 21% Non-Millennials Millennials

Millennials and non-Millennials also differ when it comes to their current and future expectations surrounding the mall. When asked about their primary reasons for visiting the mall, 48% of Millennials say they take to the mall primarily to browse and shop different stores, whereas non-Millennials are far more utilitarian where their expectations for the mall are concerned. Slightly more than half of non-Millennials indicate that their primary purpose for visiting the mall is to get what they need and leave, suggesting that they prize the mall for its convenience and functionality, rather than its capacity to deliver novel shopping experiences.

What is your primary reason for going to the mall?

Get what I need and leave

Browse different stores

Hang out with friends

See a movie Eat good food

35% 50% 48% 41% 1% 1% 9%

1%

When asked about the factors that could motivate them to spend more time at the mall, non-Millennials are more than twice as likely (23%) as Millennials (11%) to indicate that nothing could drive them to spend more time at shopping centers. Millennial open-mindedness toward the mall should not, however, be misinterpreted. This is less an endorsement of the current model of the mall–replete with cookie cutter chain stores and greasy food courts–as it is a reimagining of what the mall could be. In the years to come, Millennials expect malls to feature more unique and exclusive shops (65%), a greater variety of stores to choose from (52%), and better quality or specialty selections in the food court (49%).

What factors could motivate you to spend more time at the mall? Please select all that apply.

More stores to choose from

Unique shops or items I can’t find elsewhere

More entertainment options Free wi-fi or social

media center

Better quality food / specialty foods 52% 36% 56% 65% 32% 34% 49% 32% 16% 18%

Outside location with a mix of homes and shops

18%

15%

11%

Non-Millennials

No matter where the shopping experience takes place–mall or otherwise–all shoppers prefer convenience and practicality to unique experiences. When asked which factors matter most to them when shopping in a retail store, 93% of Millennials say “good value & deals,” followed by “ability to touch and feel merchandise,” which garners the support of 61% of Millennials. Responses are similar among non-Millennials, except that older segments are more likely to demand low wait times (50% agreement vs 46% for Millennials) and personalized service from sales associates (28% agreement vs. 22% for Millennials).

Which of the following factors matter to you when shopping in a retail store? Please select all that apply.

Unique, curated items that can’t be found everywhere

Items are locally sourced and made

Good value / deals

Extensive selection

Sales associates provide a personal touch

Ability to touch and feel merchandise

I get the item immediately

45% 42% 31% 33% 93% 90% 56% 44% 22% 28% 61% 64% 46% Non-Millennials Millennials

Despite major investments in “wiring” store associates and turning them into brand ambassadors, Millennials seem blasé about retail sales professionals. When asked which improvement would have the single biggest impact on the shopping experience, only 23% say personalized attention from sales associates (vs. 38% for non-Millennials).

Which improvement would have the biggest positive impact on your shopping experience in-store?

A more seamless online and offline shopping experience

Special deals and information fed to my mobile phone

Personalized service and attention from sales associates

Special store experiences like events, coffee bars, etc.

Non-Millennials Millennials 18% 23% 29% 20% 23% 38% 31% 19%

When you think of your favorite retail stores, what’s more important to you?

67%

33%

32%

68%

When asked about retail innovations that would make them more likely to shop in a store, support for “wired” associates among Millennials is only 14% and support for “on-brand” associates is only 26%.

Which retail innovations would make you more likely to shop in a store? Please select all that apply.

Social media lounges

Free wi-fi

Hyper-informed, “wired” sales associates

“On brand” sales associates with cool ideas, styles

Fun tech features (interactive mannequins, Instagram photo booths) Functional tech features (order

online from store; check out anywhere in store)

Food and drink kiosks

DJs and other live entertainment

Personalized special deals and promotions 13% 7% 48% 25% 14% 18% 26% 24% 24% 12% 40% 32% 36% 22% 15% 6% 63% 60% 24% Non-Millennials Millennials

Born and bred on the web, it could be that Millennials simply do not want their shopping experiences mediated by anyone or anything other than their smartphones and social networks. Certainly, this study shows that mobile-toting Millennials are the most social shopping generation ever, and are far more likely than non-Millennials to solicit the expertise of a friend or social media follower during the context of a shopping experience. When making buying decisions, 53% of Millennials will obtain advice from friend shopping with them, versus only 25% of non-Millennials. 28% of Millennials will call or text friends for real-time advice (versus only 11% of non-Millennials), while almost 10% will use a mobile chat app like SnapChat or WhatsApp to bounce ideas off friends.

When shopping at a store, how do you typically get advice or information? Please select all that apply.

Ask a sales associate

Chat with a friend on a mobile app (WhatsApp, etc.)

Ask a friend shopping with me

Consult my social network (Facebook, Twitter, etc)

Call or text a friend

Check online product reviews

69% 73% 53% 25% 28% 11% 9% 2% 5% 2% 49% Non-Millennials Millennials

Turning to the retail store of the future, it’s clear that all generations are looking for change: only 10% of Millennials and 16% of non-Millennials think that today’s store model is ideal. But Millennials and non-Millennials differ sharply when it comes to the type of vibe they are looking for in the store of the future. Millennials are more likely to choose an Etsy-style experience and gravitate towards a unique, cozy, and quirky ideal of the store. The older cohort, for its part, is more likely to gravitate toward an Amazon-style ideal, characterized by huge selection and great value.

What does your ideal store of the future feel like?

A café: Connected, social, open

A nightclub: High energy, sexy, fun

Etsy: Unique, cozy, quirky

Amazon: Huge selection, best value

No change: keep them exactly like today’s stores

16% 11% 5% 2% 35% 25% 34% 47% 10% 16% Non-Millennials Millennials

This study certainly shows that Millennials envision a web-like future for the store. Indeed, factors like connectivity, online-offline seamlessness, and self-serve capabilities are at the top of Millennials’ wish lists for the store of the future: almost half of Millennials are looking for features like free wi-fi, in-store pickup, and self check out in their ideal retail store. And yet, Millennials remain as bargain-hungry as older cohorts, with roughly the same proportion of Millennials and non-Millennials reporting an enhanced ability to deliver personalized deals and promotions as the

About OpinionLab

OpinionLab is the pioneer and global leader in omnichannel Voice of Customer (VoC) feedback innovation with over a decade of success and a dozen patents on major VoC advancements. Starting with the familiar [+] feedback symbol, the company’s end-to-end solution suite allows clients to improve the omnichannel experience with precise, real-time intelligence into what customers want and need. Global leaders choose OpinionLab for actionable VoC insight across web, mobile, store and product touchpoints. Recently recognized by Inc. Magazine as one of the fastest growing companies in America, OpinionLab is proud to service over half of the Fortune 50, including Walmart, Bank of America, and Ford Motor Company. For more information, visit OpinionLab online, read the blog or follow Voice of Customer on Twitter.

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