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Digital Customers Less Loyal

The digital economy has driven innovation and created new channels and profit centers, but organizations that look at technology to totally displace human interaction are misguided, according to a study.  

Customer loyalty is on the decline, a 7% drop since last year, per a global study by Verint Systems, with attrition higher among digital customers. While technology advances are welcome by many, there is still a technological gap for addressing emotional triggers presenting roadblocks to positive customer experience, according to the research.

Consumers who prefer to engage with organizations digitally are more prone to switching providers. Just under half (49%) of those who prefer to engage with organizations via digital channels have been with providers for more than three years, compared with 58% who prefer to pick up the phone and 57% who prefer to go in-store.

“This is a wake-up call for many organizations looking to introduce more digital channels with the aim of reducing costs and improving customer convenience,” says Rachel Lane, director of customer analytics, EMEA at Verint. “As our research shows, consumers feel more positive about a brand when they interact directly with a person, so organizations need to consider how to make the digital experience more personal to avoid increased customer churn.”

Banks lead the way in terms of customer retention, with consumers noting they are more likely to switch credit card providers or travel agents. Mobile phone providers ranked second best, with 63% of consumers remaining with their provider for more than three years.

The study included more than 24,000 consumers in 12 countries across 9 industry sectors and was conducted in partnership with Opinium Research LLC.

Consumers in India, Mexico, Brazil and the UK are more prone to switch, while French and Japanese consumers stay with their providers longer.

Japanese companies had the highest retention rates of all countries surveyed — an average of 64% of consumers have been with their providers for more than three years. French companies also fared well, with 60% of consumers staying with their providers for more than three years. 

There are a couple of key underlying influencers in the Japanese market that lead to enterprises having higher retention rates, Lane says. 

“The first one being culture driven,” Lane tells Marketing Daily. “Loyalty is a highly respected value of Japanese culture, and most customers have long-standing relationships with their service providers. Workers in Japan tend to hold long employment tenures, and so there is often an enduring relationship between a customer and the account manager in the business. Having that one-on-one interaction seems to be more important to Japanese business people than other global regions. It ultimately provides more opportunity for customer service agents to build rapport or go the extra mile in encouraging loyalty.”

In turn, Japanese consumers have high expectations for efficient, personal service and they also want to be sure that they get the best products and deals first, from their key service providers.

In the U.S., 55% of consumers have been with their service providers for more than three years. However, Brazilian, Indian, Mexican and British consumers are more prone to switching. Only 35% of Brazilians reported remaining with their providers for more than three years, followed by 46% of Indians, 50% of Britons and 50% of Mexicans.

The research aims to help marketers understand that tipping points will differ according to consumer metrics. And, it has nothing to do with regional demands, sector requirements or just the nature of genders. 

“Because of the aging population, some lag behind in terms of customer adoption,” Lane says. “This is why it’s so important to offer both digital and human touch points so customers can get the personalization they expect."

2 comments about "Digital Customers Less Loyal".
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  1. Daniel Olson from The Loyalty Consultants, January 25, 2017 at 12:22 p.m.

    Tonya, Great Article. I totally agree. I think a huge mistake being done by marketers today is to think that they can create great customer expereinces through an automated process only. Consumers are humans and no matter how savvy we become nothing replaces a legitimate human focused experience. This doesn't mean that technology is bad. No to the contrary it is great, it just isn't the only thing. Customer experiences have many dimensions, are they personalized, accessable and approachable, do they bring utility in my life, is there value to me. But most importantly are they meaningful to me. Until I have an emotional connection I cannot be truly loyal. Many times the technology driven programs can give you an observed loyalty behavior based on transactions, but it is when brands can create a culture that is focused on the customer's emotional connection that they can get to an emotionally given loyalty. Thanks again for these great thoughts.

  2. Shep Hyken from Shepard Presentations, January 29, 2017 at 5:29 p.m.

    This makes total sense and companies need to consider this as they build their digital/online presence. The emotional connection between people doing business with people is typically lost online. Thanks for a great article.

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