Adding stardust to SharePad

Bad news: customer service is in decline in the UK. Good news, we can still invest in the companies bucking the trend. Richard sprinkles some stardust on SharePad to reveal companies that are doing the right thing and reaping the rewards.

A chance encounter with an article about declining standards of customer service in the Financial Times last month has sent me down, perhaps, a profitable furrow.

Putting culture first

The article reported that UK customer satisfaction has hit a nine-year low based on data from the Institute of Customer Service (ICS), a company that supports organisations and individuals in business that want to improve customer satisfaction.

The institute surveys consumers and produces the UK Customer Satisfaction Index (CSI), which ranks 287 UK organisations across 13 consumer-facing sectors. The CSI says the index is a national barometer of customer satisfaction, and that inclusion in the index is unrelated to membership of the institute.

Looking at the names, we’re talking big retailers, utilities, hotel chains, holiday companies, banks, insurers and so on. We’re not going to find miners, defence contractors, engineering companies, distributors and other kinds of business-to-business firms in the list. Neither will find small businesses.

You can read about how the index is compiled and download a free report from the CSI website. The report names the index’s top 50 companies.

Despite the small sample and the fact that many of the companies in that sample are unlisted and some are the UK arm of a much bigger business listed in the USA, I think this is useful information.

It is axiomatic that businesses must satisfy their customers to prosper in the long term. The most obvious way to achieve that is by mobilising employees through incentives, opportunities for career and personal development, and a common purpose.

I love companies that do this, apart from anything else it’s satisfying being associated with them. But also, by putting culture first, they are more likely to invent strategies that ensure they prosper over the long term.

Reassuringly, according to the article in the FT, the institute finds employee engagement, customer satisfaction, growth and profitability are all correlated.

It found that companies with index scores at least 1% above their sector averages grew revenue at a Compound Annual Growth Rate (CAGR) of nearly 8% between 2017 and 2023. Companies with index scores at least 1% below their sector averages didn’t grow. The profit growth disparity was greater.

It also found that every 1% increase in employee engagement generates a 0.4% increase in customer satisfaction. At the top firms in the list, employee satisfaction is twice the average level.

If you look at the top 50 index names in January, I don’t think you will be too surprised. Number 1 is Ocado (retail, not the technology business), and they also include First Direct, John Lewis, Nationwide, Tesco Mobile, Costco, Jet2holidays, Timpson, Holland and Barrett and Starling Bank.

Jet2holidays is the package tour part of Jet2. The other part of Jet2, the airline, is ranked 11.

If we exclude Ocado and Tesco Mobile, because they are relatively small parts of much larger businesses, Jet2 is arguably the highest-ranked UK-listed firm.

Having owned Jet2 shares for over a decade, I’m not surprised. The company is feted by Which? and during the pandemic, it was one of very few airlines to win praise for the speed with which it dealt with customer refunds.

In common with a number of employee/customer-focused companies I know, Jet2 bangs on at some length about its customers and staff in its annual report (and on its website).

Adding stardust to SharePad

We subscribe to SharePad to improve our edge as investors, because it gives us high-quality information and makes it easy to analyse and interpret. One of the underappreciated aspects of SharePad, though, is that we can put data into it using the notes columns.

By edge, I just mean what we do differently to other investors that will enable our portfolios to perform better than average. After all, if we all had the same data, produced the same interpretations, and behaved the same way, we would all be average.

What we put into SharePad is unique to us, so it could be very powerful.

This is what I am doing with my 5 strikes system (see below), and by tracking B Corps in SharePad. Now I am also tracking CSI data.

Here is a list of listed companies that pass my Minimum Quality Filter, with the number of strikes I have awarded against them, and their CSI ranking.

Name TIDM AR date Strikes # Strikes Notes
Marks & Spencer MKS 6/6/23 – Holdings – Growth – Debt – ROCE 4 CSI 14/17= (non-food/food)
Greggs GRG 10/4/24 – Holdings 1 CSI 16
Next NXT 12/4/24 – Debt ? Growth 2 CSI 21=
Domino’s Pizza DOM 2/4/24 – Holdings – Debt 2 CSI 42=
Pets at Home PETS 7/6/23 – Holdings – CROCI – ROCE 3 CSI 50=

Source: SharePad, Richard Beddard, and CSI Index, January 2024.

Unfortunately, Jet2 does not pass the filter because the airline and holiday company haemorrhaged cash during the pandemic when we couldn’t travel. One of the filter criteria requires average Cash Return on Capital Invested (CROCII) to be higher than 5%.

Sometimes filters will exclude companies that a human exercising discretion might not, it is an occupational hazard. I think this is one of those cases.

All airlines and holiday companies haemorrhaged cash but some of Jet2’s decisions were particularly expensive. Paying customers back for cancelled flights promptly, and retaining staff when it could not fly, were very expensive decisions in the short run. But the goodwill it generated all but guaranteed Jet2 would experience heavy demand when holidays were permitted again, and, of course, it retained the capacity to supply it.

Next is more famous, I would say, for being a very efficiently run business (I have just reviewed it on Interactive Investor), than it is for being a particularly employee or customer-centric business.

But that efficiency is all aimed at putting the right product at the right price in front of customers (and making a good margin for Next).

And as far as employees go, this is what it has to say on page 18 of its annual report for 2024 about “developing great people”:

“Whilst it is often beneficial to bring in a fresh pair of eyes and new skills from outside the business, at NEXT we put a great deal of effort into the development and promotion of those within the organisation. This requires the courage to promote talented, ambitious individuals who are unproven in a new position, rather than bringing in a safe-pair-of-hands from outside and already established at that level. It is not uncommon to hear people described as being a year away from being ‘ready’ for promotion. More often than not, these people enthusiastically seize the opportunity and flourish beyond expectations. Our Chairman talks about his experience of developing ‘ordinary folks’ who go on to achieve extraordinary things; it is a lesson we have taken to heart.”

Does it sound authentic to you? It does to me.

Four more for 5 Strikes

Coincidentally one of the B Corp aspirants I am tracking, “growth consultancy” Next 15, scores less than three strikes in my latest trawl of the market. It is one of four shares to reach that standard out of twelve that have published annual reports since I last went through the process.

Name TIDM AR date Strikes # Strikes Notes
Fevertree FEVR 9/5/24 – CROCI – ROCE 2
Property Franchise Group TPFG 8/5/24 – Shares 1
M Winkworth WINK 3/5/24 – Growth 1
Next 15 NFG 3/5/24 ? Growth ? ROCE – Shares 2 BC?
Eleco ELCO 2/5/24 – Holdings ? CROCI ? Growth – Shares 3
Concurrent Technologies CNC 1/5/24 – Holdings – CROCI – Growth ? ROCE – Shares 4
Touchstar TST 1/5/24 – CROCI – Growth – ROCE – Shares 4
Anglo-Eastern Plantations AEP 30/4/24 – Holdings – CROCI – Growth ? ROCE 3
London & Associated Properties LAS 30/4/24 – CROCI – Growth – Debt – ROCE – Holdings X
LSL Property Services LSL 30/4/24 – CROCI – Growth – ROCE 3
Ferrexpo FXPO 29/4/24 – Holdings ? CROCI – Growth – ROCE 4
Bisichi BISI 26/4/24 – CROCI – Growth – ROCE 3

The other three companies to receive less than 3 strikes are mixer maker Fevertree, M Winkworth, the estate agency franchise I talked about last time, and The Property Franchise Group, another estate agency and lettings franchise.


Contact Richard Beddard by email:, Twitter: @RichardBeddard, web:

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