Personal service — once considered “common courtesy” — has become an anomaly. But customer relationships are developed one experience at a time, and a single interaction can make or break a relationship.
In an economic downturn, relationships are even more important. A company must instill a service philosophy that differentiates it from the competition, enticing consumers while also encouraging repeat sales. To gauge companies’ success at meeting those expectations, we’ve surveyed consumers in each of the last four years. This year, 4,200 respondents from several countries reaffirmed the threat of customer defections — particularly given the rough economy, which drives consumers to reassess their purchasing decisions. Amazingly, the majority of global respondents (55 percent), and just less than half of United States respondents (47 percent, up from 43 percent in 2007), said businesses never, rarely, or only sometimes met their expectations.
Perhaps it’s no surprise, then, that customer churn is on the rise. Replacing lost customers with new ones is far more expensive than sustaining an existing customer base. The survey provides a glimpse of that cost: Consumers estimate they take, on average, $4,000 worth of business with them each time they change providers. And while pricing was not the main factor when consumers left, it was of greater interest when selecting a new provider — another cost of doing business in a way that, if differentiation is lacking, can lead to commoditization.
We found that a leading catalyst for customer churn is poor service, with 67 percent of consumer respondents citing that as the reason they cut ties with a provider in the past year — up from 59 percent in 2007. And of those consumers who said they’d dropped a business at least once, half actually did so multiple times.
Customer complaints now seem to outnumber the heart-warming stories about companies going above and beyond. The same survey found people frequently complained about having to speak with too many representatives before an issue was addressed; about company staffers failing to take responsibility for customer satisfaction; and about staffers allowing bureaucratic policies to get in the way of satisfactory solutions.
What’s true in the U.S. is proving just as true, if not more so, overseas: Consumers are demanding that companies know them and provide customer service representatives armed not only with appropriate training but also the resources to address customer concerns in an effective, efficient manner. And these consumers are using networking to rapidly and broadly communicate satisfaction — or dissatisfaction.
Taken together, the concurrent trends — rising consumer expectations and the increased ease of dropping unsatisfactory providers — pose a complex challenge. Even in the U.S., where consumer expectations appear to be rising at a comparatively slow pace, 18 percent of respondents said they had higher expectations than they’d had last year, and 35 percent said they had higher expectations than they’d had five years ago.
Companies that hoped emerging markets would offset those scorned U.S. customers will need to develop mature, localized customer service plans, but even then they’re in for a surprise: Whereas the share of Americans reporting higher customer service expectations after five years was 35 percent, the comparable figures in India and in China were 86 percent and 89 percent, respectively — and, worse, expectations in those countries rose to a greater degree.
The message is stark: Merely holding steady is no longer good enough, because today’s customers are more sophisticated and more demanding. Whether in Paris, Texas, or Paris, France, customers are definitely willing to take their business elsewhere if their expectations aren’t met.
To protect the value of existing relationships and minimize the cost of churn — particularly during periods of economic uncertainty — companies would do well to confirm that they know what customers expect, and to ensure they’re engaging in ways that are customer-centric.
Customer service isn’t just a nicety; it’s a requirement to succeed.
Woody Driggs (CRM.firstname.lastname@example.org) leads the CRM practice at Accenture, a global company offering management consulting, technology services, and outsourcing.
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