• by Robert Wollan , September 11, 2012

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.

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.