Blog - ESG - Customer Satisfaction

Gaia – ESG for Asset Manager – How to include Customer Responsiveness as an ESG indicator?

Customer responsiveness is all about offering the right product/service at the right time to your client. A firm boosts its customer responsiveness  by answering to clients’ needs and complaints in a positive, accurate and timely manner.

Customer responsiveness is divided into two actions.

-        How fast representatives get to answer clients

-        and the efficiency in solving the client’s problem.

With the rise of Environmental, Social, and Governance (ESG) investing, where does customer responsiveness lie in the ESG spectrum? Under the “Social” umbrella, resides all the people’s considerations and relationships. It encompasses all the actions that companies overtake to enhance Diversity, Equity and Inclusion (DEI) inside and outside their societies.

Customers are key stakeholders of a company. They often are overlooked in an ESG analysis, but their satisfaction is key to social welfare and it should be included in a thorough ESG investment analysis.

In order for firms to fuel their participation in the ESG movement, companies should take further into consideration raising their customer satisfaction. With all the options nowadays that consumers have, having customer loyalty and a respectable brand image is crucial. Providing clients with a place to leave their reviews, asking for their feedback, and being able to answer and solve their needs in a timely manner attracts investors even further and deepens their trust with the company.

What metrics?

How can a company track their Consumer Responsiveness in order to take a step forward towards the ESG race? Businesses could use some simple metrics:

-        Customer Satisfaction Score (CSAT), by dividing the number of positive responses by the total number of responses.

-        Customer Retention Rate (CRE), by evaluating the proportion of lasting customers who consistently remained loyal over an extended period of time.

And at a Portfolio Level?

Using Gaia, Portfolio Managers can import and insert any ESG indicator:

-        On a security level

-        Apply a formula to calculate it on a Portfolio level

Apply the weighted average formula – The global portfolio CSAT equals the total number of positive responses by the total number of responses. Hence the best aggregation of the metric is to take a weighted average (using value as a weight factor) of the individuals CSAT of the different securities

The same logic applies for the CRE

If you as an Asset Manager can get hold of more precise information such as:

• Number of clients per company
• % Ownership in each company

Then Gaia gives you the tool to input a custom formula and calculate more precisely the global portfolio score