Tapping the Switching Economy
How much change can take place in 10 years? If you were to ask consumers today about their experiences with brands and service providers, they would likely tell you that too much has stayed the same.
Over the past decade, Accenture Global Consumer Pulse Research has painted a picture of steady erosion in customer loyalty and an increase in switching—both total and partial—from one provider to another. In fact, many established companies have been experiencing an ongoing exodus of customers, who represent an ever-expanding amount of revenue ripe for the taking. In the United States, this switching economy amounts to a $1.6 trillion market, a 29 percent increase since 2010.
The Accenture research reveals how consumer behavior, needs, and expectations have been reshaped by digital technologies. We have reached the point at which all customers are digital customers—albeit ones who move at different speeds.
However, the research also shows that companies have struggled to keep pace with these changes. After a decade of monitoring customer satisfaction, Accenture found that customers are still encountering confusing Web sites, staggering call center wait times, and difficulty solving problems, regardless of the channel they use.
The rise of digital options has given consumers many more choices in how they interact with companies. Five years ago, 78 percent of U.S. consumers used at least one online channel when prospecting; today, that has risen to 88 percent—and four in 10 want even more digital interactions than what companies are providing. It's too bad that only one in 10 U.S. consumers strongly agree that companies are effectively converging digital, mobile, social, and traditional channels.
Consumers also have much more choice in terms of the pool of brands and providers from which they can select. Two-thirds said the number of companies or brands they consider for purchase has increased significantly compared to 10 years ago.
Consumers not only have more choice, but they are doing more research before they commit to purchases. Seven in 10 make much more informed decisions about providers, and slightly more than half rely to a much greater degree on other people's experiences or reviews to inform their purchase decisions than they did a decade ago.
Companies must stop targeting their efforts in low-impact examples of just doing things better and learn from the source of their challenges—digital channel integration—to help them do things differently.
They need to adopt customer-centric practices that can help them become a multispeed customer organization—one that acts at the same pace as consumers. Only then will they be able to tap into the revenue potential presented by the switching economy.
To do this successfully requires three key actions:
- Striving for targeted digital experiences. Companies can move away from adding more disjointed capabilities, instead working to improve the combinations of capabilities that customers most value. Key to that is understanding the right mix of channels—digital and analog—for each customer and developing new operating models based on customers' needs and preferences. The right mix of channels is critical. In the United States, our survey found that only 11 percent of consumers strongly agree that companies are effectively converging digital, mobile, social, and traditional channels.
- Focusing on the ecosystem, not the enterprise. Rather than continuing to emphasize the traditional "customer-to-company" model, providers need to use digital capabilities to create seamless, omnichannel, end-to-end customer experiences—ones that include a broader ecosystem of stakeholders, including dealers, brokers, distributors, co-consumers, co-producers, influencers, and institutions.
- Investing to address customers' needs, not the organization's problems. Companies need to increase the direct business value generated by the experience to employees and the end customer. This means creating more sharply focused investments and metrics on only those initiatives that customer analytics show are truly relevant to customers and deliver business results that keep business leaders investing in them.
With a more robust mix of digital and analog capabilities—driven by an understanding of what today's nonstop customers truly want and which customer experience initiatives really create value—providers will be better positioned to retain customers while competing more effectively for those who are looking for something better.
Robert Wollan is the senior managing director at Accenture Strategy, Sales, and Customer Services.