Maintaining a steady relationship today can be challenging. Companies spend seemingly limitless resources to deliver better service and lock in consumers, and what
happens? Those consumers may well give their providers higher satisfaction ratings, but that doesn’t stop them from jumping to competitors. Protecting these relationships (and revenues) in the
digital age requires companies to find new ways to engage consumers on a more personal level.
A recent survey of 10,000 consumers in
27 countries reveals customers’ mixed signals in this courtship. They claim they are more satisfied with the companies they do business with, but admit feeling less loyal to specific companies,
and eagerly switching among products or brands. On top of this, they cheerfully state that they shop for better deals as their expectations continue to rise. This paradox baffles companies that have
long-believed that higher customer satisfaction automatically yields greater customer retention.
advertisement
advertisement
The survey shows that two-thirds of consumers
switched providers during 2011 because of poor customer service despite being more satisfied with those companies the year before. Consumers credit companies for improving service
wait time (33 percent satisfied compared to 27 percent in 2010). They also applaud businesses’ ability to resolve customers’ issues without an agent (38 percent versus 33 percent) and to
resolve issues through only one agent (39 percent versus 32 percent). But it’s clear that they still are switching at near-record levels. Companies are trying to fix the issues that drive their
customers to leave, but aren’t giving their customers enough reasons to stay.
Few industries are immune from this turmoil. Even wireless phone
and cable companies, and gas and electric utilities -- which used to be monopolies -- have experienced the highest increases in consumer switching: fully five percentage points each. Switching rose by
four points for landline phone and Internet providers. These figures include consumers who switched to another company entirely. The data also account for partial switchers -- those who continue to do
business with their current provider but add services from another, taking part of their business with them.
What does it take to sustain a steady
relationship with consumers? The survey points to five key factors:
1. Set expectations at the outset, and ensure that
customers’ experience meets those expectations. Failure to deliver on what’s promised up front is a huge source of dissatisfaction. Too many companies (most likely
unknowingly) make promises during prospecting and customer setup that they cannot deliver.
2. Use analytics to turn casual customers into loyal customers. To expand
its audience base and encourage more repeat visits, a major theater company based in the UK created an audience database, which included information on income, profession and lifestyle. Targeted
marketing to several segments that resulted from the database led to a 70 percent increase in “regulars” who attend at least four shows per year -- and account for the bulk of
revenues.
3. Recognize customers in ways that matter to them. Customers want to be rewarded for loyalty -- but with meaningful rewards. Less
than one-quarter of consumers surveyed feel very loyal to their providers, another quarter indicate no loyalty at all, and only half say that current loyalty programs convince them to stick with
companies.
4. Identify the triggers that signal imminent switching. The rate of partial switching -- staying with a current provider but adding another one -- rose
in every industry in the survey. For example, although retail banking experienced a one-point drop (to 15 percent) in complete switching from 2010 to 2011 -- seemingly good news -- partial switching
in the sector rose by three points (to 27 percent).
5. Provide meaningful ways for consumers to engage with the company. Companies should dig deeper to understand
what motivates different customer segments and what they would like from their providers.
Consumers value offerings that target their needs and desires with deft precision. Leading companies
will develop those kinds of offerings by combining their analytics’ horsepower, improving traditional marketing, sales and service processes, and committing to consider customer churn as a real
threat to their future growth prospects.