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Customer service blind spots lead consumers to switch to competitors

January 31st, 2012
Accenture report

Cover of the Accenture study

It never ceases to amaze me how many companies, large and small, fail to realize that selling us something is just the beginning of a relationship, particularly when it comes to technology products. But those who provide poor customer service are likely to lose customers in droves.

Even though many firms have improved their customer service efforts, blind spots remain that lead consumers to change channels on their cable company, wireless provider or bank.

Two out of three (66 percent) consumers switched companies – including wireless phone, cable and utilities – as a result of poor customer service in 2011 even as their satisfaction with the services provided by those companies rose, according to new research released today by Accenture (NYSE: ACN).

New challenges for marketers

The research findings pose new challenges for marketers as they focus on building customer loyalty and improving market share in a very competitive business environment.

The research shows that as companies use their overall retention rate as a measure of effectiveness, many remain blind to customers who have partially switched, leaving them unable to respond until it is too late,” says one Accenture executive.

The Accenture Global Consumer Survey asked consumers in 27 countries to evaluate 10 industries on issues ranging from service expectations and purchasing intentions to loyalty, satisfaction and switching.

Number of consumers switching rose

Among the 10,000 consumers who responded, the proportion of those who switched companies for any reason between 2010 and 2011 rose in eight of the 10 industries included in the survey.

Wireless phone, cable and gas/electric utilities providers each experienced the greatest increase in consumer switching – five percentage points. This includes consumers who switched entirely to another provider as well as those who continued to do business with their current provider but added services from another provider – a new, but growing trend.

According to the survey, customer switching also increased by 4 percent in 2011 in the wireline phone and internet service sectors.

The survey also found that fewer than one-quarter (23 percent) of consumers surveyed feel “very loyal” to his or her providers, while 24 percent indicated that they had no loyalty at all. And, only half (49 percent) indicated that they are strongly influenced by at least one loyalty program offered by their service providers.

At the same time, however, consumer satisfaction with their providers’ customer service actually increased in 2011 in 10 attributes measured by the survey.

These attributes include the wait time for service (33 percent satisfied compared to 27 percent in 2010), the ability to resolve issues without speaking with an agent (38 percent satisfied compared to 33 percent in 2010) and speaking with just one customer service agent to resolve an issue (39 percent satisfied compared to 32 percent in 2010).

“Companies are improving many of the most frustrating parts of the customer service experience, but they are facing a customer who is increasingly willing to engage multiple providers for a service and is apt to switch quickly,” said Robert Wollan, global managing director, Accenture Customer Relationship Management.

“While high-quality sales and service in areas such as product knowledge and efficient issue resolution remain a basic requirement, in order to achieve sustainable, profitable growth, companies must better understand what really keeps their customers engaged by examining a number of overlooked, but critical points of interaction in the customer relationship.”

Blind Spots Emerge

The Accenture study identified a number of blind spots in the customer relationship that many companies appear to be overlooking. Addressing these issues may enable organizations to improve customer retention and stem the tide of switching. Most noteworthy among the blind spots identified:

Organizations are failing to offer consumers opportunities to engage with them, including through digital channels

Consumers expect a multi-channel experience, and in fact, 57 percent reported frustration when they were not able to access company information or purchase a product through the channels of their choice.

Personally, if we find a company’s digital channels balky, ineffective or non-existent, we’re likely to find another company to buy from, an attitude many consumers share. Social media appears to be helping in that regard.

And, according to the survey, social media sites have improved overall engagement of consumers with providers and their brands, up from 14 percent in 2010 to 21 percent in 2011.

More than a quarter (27 percent)of consumers want companies to interact with them in social media environments even before they are customers, and 24 percent reported greater likelihood of doing business with providers that are actively engaged with social media.

“Companies that are not engaging with consumers digitally, as part of a multi-channel experience, are letting significant drivers of loyalty go untapped,” said Brian Whipple, global managing director– Accenture Interactive.

Companies are overlooking signs that customers are itching to switch

Although complete switching from one service provider to another did not increase significantly, the rate of partial switching, in which consumers stay with their current provider but add another provider, is up in each of the 10 industries surveyed.

Retail banking experienced a one percent drop (from 16 percent to 15 percent) in complete switching from 2010 to 2011, yet partial switching was up three percent (from 24 percent to 27 percent).

Wireless phone companies experienced a two percent increase in complete switching year over year (from 19 percent to 21 percent), but when adding in those who made a partial switch, the combined switching rate increased by five percent (from 38 percent to 43 percent).

“As companies use their overall retention rate as a measure of effectiveness, many remain blind to customers who have partially switched, leaving them unable to respond until it is too late,” Wollan said.

At the TechJournal, we hear complaints about the difficulty of dealing with wireless providers all too frequently and with the number of competitors out there, wireless users no longer have to lock themselves into years long contracts to get good rates or decent service. So we suspect it behooves them to pay attention to consumer satisfaction.

Companies are failing to keep promises they make on the service experience

The study found that consumers rate “having the service experience match the promise a company makes to me up front” as one of the most important areas of customer service. Yet the greatest service frustration cited is a provider’s failure to deliver on the service experience promised up front.

“As companies tackle these blind spots, building a solid foundation in data, analytics and research will help clarify the voice of the consumer, making the task of identifying and responding to rapid changes in consumer behavior easier,” said Wollan.

“Better harnessing customer analytics will help identify key moments of change, competitive threats and service opportunities and position the organization to more effectively deliver on its brand promise.”

–Allan Maurer

Allan at TechJournalSouth dot com.

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