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The Switching Economy Hits Home
Poor customer service accounts for most company defections.
For the rest of the April 2015 issue of CRM magazine please click here

Last year, 53 percent of U.S. consumers switched wireless carriers; TV, phone, and Internet service providers; retail banks; and other service providers, taking $1.6 trillion in business with them, according to recent research from Accenture.

"Switching continues to erode profitability in America," reports Robert Wollan, senior managing director at Accenture's strategy, sales, and customer services division. "Business leaders are seeing a real impact to their bottom lines."

Of those who switched service providers, 80 percent stated that their original providers could have done something differently to keep them.

However, few companies are doing anything about this, according to Wollan. And that's the way it's been for at least the past five years. Most companies simply accept such defections as part of doing business in what Accenture calls "the switching economy."

This switching economy, Wollan says, has grown by 29 percent since 2010. Today, only 28 percent of consumers claimed they are very loyal to their providers, Accenture finds, and only 31 percent stated they would recommend their providers to others.

But companies don't have to sit idly by and watch their money go to competitors. They just need to listen to what their customers are saying and then make the necessary changes to address their issues.

The top three complaints among those who switched providers were companies not solving their problems during the first interaction (86 percent), lengthy hold times (85 percent), and interacting with service reps who couldn't answer their questions (84 percent). These are the same issues that irked customers in 2009.

"The fact that these indicators have remained stagnant is the reason for the switching," Wollan says. "Companies haven't made any progress on the issues that are important to [their customers]."

The same issues surfaced in an earlier study of the wireless industry conducted by J.D. Power. That research found that when wireless customers are forced to shift between channels to resolve their issues, satisfaction drops considerably, and customers' likelihood to switch carriers more than doubles.

According to J.D. Power's research, 47 percent of customers forced to use multiple channels, including the phone, the Web, and retail stores, to resolve their problems stated that they definitely or probably would switch carriers, compared to just 17 percent who are able to resolve their issues via a single channel.

Across the wireless industry, 25 percent of customer service contacts follow previous attempts to resolve the same issue via another channel. "It's imperative that wireless service carriers improve their ability to resolve customer issues in one contact and reduce the number of service channels customers need to visit to address their problem," Kirk Parsons, senior director of telecommunications at J.D. Power, said in a statement. "Understanding the types of problems that customers contact their carriers about and driving them to the appropriate channel for problem resolution the first time will reduce operating costs and improve the overall customer experience."

Customers, Wollan adds, "inherently aren't looking to switch. If you can provide the experience that they know and trust, they are not likely to switch."

For some companies, the problem might be a lack of interest, according to Wollan, but for most, the problem is more systemic. "Many companies try to fix the problem across the entire business rather than making more targeted improvements," he says.

Wollan first recommends that service providers abandon the notion of a one-size-fits-all customer service environment. "Customers want more tailored experiences," he says.

Then he recommends that they build up and support their partner and customer ecosystems to generate more positive word of mouth. And, finally, they need to look for their weak spots and strengths to determine where to spend and invest. "They really need to look to seize opportunities to make changes rather than just sealing the leaks in the bucket," he says.

Giving customers what they want is the simple answer. "These are customers that you already have. You don't have to open new offices or bring on new people to capture them," Wollan says.


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