• February 16, 2011
  • By Koa Beck, Editorial Assistant, CRM magazine

Study Finds Lower Churn Despite Decreasing Satisfaction

The number of consumers who changed service providers as a result of poor customer service declined in 2010, according to the latest edition of an annual consumer behavior study by Accenture. However, the study also revealed that consumers expect more from customer service and their satisfaction with customer service has been decreasing.

Consumer satisfaction has declined in each of the 11 service characteristics that survey respondents were asked to rate. Reasons for dissatisfaction range from not having customer service available at convenient times to not being able to access service through a variety of channels.

The Accenture Global Consumer Survey determined that 64 percent of consumers switched from at least one service provider, such as a bank, utility, or wireless carrier, due to poor customer service in 2010. This reverses a trend identified in previous surveys in which the number of consumers making a switch had steadily risen from a low of 49 percent in 2005 to a high of 69 percent in 2009. In the latest survey, retailers (26 percent) and banks (22 percent) demonstrated the highest rates of consumer defection, followed by Internet service providers (19 percent), wireless carriers (17 percent) and landline providers (16 percent).

“Generally, customer expectations are rising faster than companies have been able to respond," observes Chris Allen, managing director in Accenture's customer relationship management practice. "Customers develop their expectations for service based on the best experiences they have across a variety of businesses and across a variety of sectors, and then in turn expect all their providers to deliver that same level of service.”

Consumers also said using technology has improved their awareness of products and services as well as their experience with particular customer service issues. More than three-quarters (77 percent) of global consumers used technology, such as email advertisements, online banners, product comparison tools, and online ordering, in the presales process and it influenced their decision to purchase a service provider’s offerings.

Word of mouth remained the source of information respondents use most (76 percent) and also consider the most important (56 percent) when deciding whether to do business with a service provider. Social media has “accelerated” the importance of word of mouth rather than obliterated it, Allen says.

“The old adage that one satisfied (or dissatisfied) customer will tell seven others has been magnified by social media to the level that one customer can influence 700 –or 7,000, or 70,000—other customers in a matter of minutes,” Allen says. “One benefit to companies is that customers seek a good deal of support for products and services from individuals they interact with online on an everyday basis. Companies then have a tremendous opportunity to leverage social media to drive lower customer service costs as the possibilities of word of mouth and self-service explode across online channels.”

The survey also identified trust between a company and its customers and loyalty programs as strong influencers of consumer behavior in 2010. Across the 10 industries assessed in the study, the percentage of consumers who participated in at least one loyalty program increased in 2010 as compared with 2009. For example, participation in retail loyalty programs grew from 45 percent of consumers in 2009 to 52 percent in 2010. Participation in hotel loyalty programs grew from 18 percent to 24 percent, and for wireless service providers, consumer participation grew from 19 percent to 31 percent.

Similarly, the percentage of consumers who were persuaded to remain a customer as a result of loyalty programs increased in 2010 as compared with 2009: from 49 percent to 54 percent among retail consumers; 45 percent to 53 percent among wireless service provider consumers; and 49 percent to 51 percent among hotel customers.

Some other interesting statistics from the survey follow:

  • In the U.S., nearly a third of consumers (31 percent)have higher customer service expectations than they did just a year ago.
  • Almost half of consumers (44 percent) have higher customer service expectations than they did five years ago.
  • After having a bad customer service experience in the past year, four out of five (80 percent) U.S. consumers told the people around them, while 17 percent shared their bad experiences via social media.
  • In the U.S., only a quarter (24 percent) of consumers consider negative comments posted on social media sites a strong influence on purchasing decisions.
  • Expectations for customer service have increased most for getting knowledgeable customer service reps (80 percent) and easier access to customer service (78 percent). Sixty-eight percent of U.S. consumers also have high expectations for more options to get customer service and 65 percent expect faster customer service. Globally, expectations have increased most for easier access then knowledgeable reps.
  • The percentage of U.S. consumers who identified price as a reason for selecting a new service provider declined from 60 percent in 2009 to 55 percent in 2010.
  • Sixty-five percent of U.S. consumers are unwilling to compromise on product quality in exchange for lower prices, and more than half (51 percent) are unwilling to compromise on customer service for lower prices.
  • Eighty-seven percent of U.S. consumers cited being put on hold a long time as their top customer service frustration. Having to contact customer service multiple times for the same reason and having to repeat information to multiple customer service reps are also high on the list of frustrations.
  • During the buying process, U.S. consumers get most frustrated (79 percent) when dealing with employees who are not knowledgeable. Half of people (50 percent) who encounter employees who are not knowledgeable during the buying process will not consider buying the service.

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