Credit Card Customer Satisfaction Charges Upward
Credit card companies are doing a steadily better job at satisfying customers, according to new figures from J.D. Power and Associates. Scores climbed in 2011 for the third year running, with American Express topping the pack. One reason for the industry's upward trajectory is that credit card companies have significantly improved their handling of customer problems year over year.
08/24/12 5:00 AM PT
Customer satisfaction with the credit card industry has stabilized after years of dramatic changes to the space, according to J.D. Power and Associates' 2012 U.S. Credit Card Satisfaction study. It found that for the third consecutive year, customers' satisfaction with their credits cards has increased.
This year overall credit card satisfaction clocked in at 753 on a 1,000-point scale. Last year that number was 731, and in 2010 it was 714. This year's score is the highest it has been since the study's launch six years ago.
American Express ranked highest in customer satisfaction for a sixth consecutive year with a score of 807. Discover Card followed with a score of 799. Chase ranked third with 762.
Why the Improved Score?
One reason for the improvement, the study suggested, is a lack of negative developments over the last year, such as new fees, suddenly reduced credit limits or new onerous terms. Only 11 percent of customers reported a problem with their credit card, down from 18 percent in 2009.
Another reason for the industry's upward trajectory is that credit card companies have significantly improved their handling of customer problems year over year, J.D. Power said, with the average length of time to resolve problems dropping to four days in 2012 from five in 2011.
Also, it found that credit card representatives are more likely to provide time frames for resolution -- time frames that are more likely to be met in 2012 compared with 2011.
The Problem With Problem Resolution
The study measures satisfaction in six key factors -- interaction, credit card terms, billing and payment process, rewards, benefits and services, and problem resolution.
Problem resolution had the largest satisfaction increase with a 31-point improvement. For this year's study, a majority, or 84 percent, of credit card customers had their problems resolved in 2012, up from 82 percent in 2011. Also, 61 percent of customers had their problems resolved in the first contact.
Satisfaction is higher among customers who have their problem resolved by just one person on the same day they contact their issuer, the study found. Having to deal with only one representative appears to be key -- the study also noted that even if resolution takes more than one day, satisfaction is significantly higher when the problem is resolved by just one person, compared with customers who were transferred around to multiple representatives.
Communicating Bad News and Good
Credit card fraud was the most commonly reported problem, found among 24 percent of those surveyed. More than one-half, or 52 percent, of customers who experienced credit card fraud were contacted by their issuer before they realized they were being victimized. When this happened, those customers' satisfaction with their card issuer was markedly higher than customers who weren't notified by their card companies that they were a victim of fraud.
Credit card companies also are doing a good job communicating their rewards programs, with 66 percent of customers in 2012 saying they "completely" understand how to earn rewards, and 80 percent of customers declaring that they "completely" understand how to redeem their rewards.
One big way that credit card companies are increasing customer satisfaction is through very transparent reward programs, agreed Joel J. Ohman, a certified financial planner.
"In the past many reward programs -- though there are still some -- usually involved very complicated point conversion formulas and other complex 'black box' metrics which essentially meant that there was a lot of smoke and mirrors making it difficult for consumers to know just how much in rewards they were earning," he told CRM Buyer.
"Now, you will notice that even in the current marketing, companies are making a big deal out of reward program simplicity. Consumers appreciate this easy to understand approach to rewards," he said.
An Uneven Industry
Not that this survey should be seen a blanket approval for the industry at large, said Matthew Goldman, CEO and cofounder of Wallaby Financial.
"I think credit card companies are very uneven in regards to customer service," he told CRM Buyer. "You have companies with great customer service, such as Amex, but then a lot of companies with bad service."
People tend to become attached to their cards because of the service, Goldman said, with the rewards only a secondary consideration. "If the rewards are not as good as they used to be, they stick with Amex, as an example, because the service they receive has continued to be good."
J.D. Power and Associates did not respond to our request for further details.