Customer service more important than price in switching providers

This is an annual research project that assesses consumer attitudes toward customer service and marketing and sales practices. The 2010 survey includes online responses from more than 5800 people in 17 countries who were asked to assess their experiences with companies in 10 industries - retail, wireless service providers, Internet service providers, banks, airlines, hotels, home telephone service providers, utility companies, cable/satellite television service providers and life insurance providers.

Key highlights

South Africa - the percentage of consumers who identified reasons for selecting a new provider:

• Price declined from 78% (2009) to 56% (2010)
  
• Customer service: declined from 83% (2009) to 78% (2010)
  
• Product: declined from 72% (2009) to 64% (2010)
  
• Convenience: declined from 63% (2009) t0 56% (2010)
  
• Promotion: declined from 27% (2009) to 24% (2010)

Globally - consumers are not willing to compromise on:

• Product quality (67%)
  
• Customer service levels (54%)
  
• Product options (47%)
  
• Frequency of communications (44%)

Service is paramount

For the first time in six years, the number of consumers who switched service providers as a result of poor customer service declined in 2010. This occurred even as consumers continue to expect more from customer service and their satisfaction with customer service has been decreasing.

The study shows that consumer satisfaction is down across the board - in each of the 11 service characteristics survey respondents were asked to rate. Their satisfaction declined in areas ranging from having customer service available at convenient times to being able to access service through multiple channels.

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% in 2005 to a high of 69% in 2009. In the latest survey, retailers (26%) and banks (22%) demonstrated the highest rates of consumer defection, followed by internet service providers (19%), wireless carriers (17%) and landline providers (16%).

Quality counts

The survey also found that more than two-thirds (67%) of global consumers are not willing to compromise on levels of product quality in exchange for lower prices and more than half (54%) are not willing to compromise on levels of customer service. The percentage of consumers who identified price as the reason for selecting a new provider declined from 75% in 2009 to 57% in 2010.

"As the global economy recovers, we've identified some telling shifts in consumer attitudes," said Clare Wilson, customer relationship management lead, Accenture South Africa. "The unexpected reversal in switching rates indicates that despite the decline in satisfaction with service, other factors, including loyalty programmes and the use of technology, are influencing consumers' decision to stay with or leave their providers."

Technology important but word of mouth still critical

Consumers report that the increased use of technology has improved their awareness of products and services as well as their experience with customer service issues. More than three quarters (77%) of global consumers reported that the use of technology in the pre-sales phase - such as e-mail advertisements, online banners, product comparison tools and online ordering - has improved their experience when deciding to purchase a service provider's offerings.

More than two thirds (66%) say their growing use of technology for customer service through such channels as automated phone attendants, live Internet chats and self-service options on a website has improved the level of service over the past five years. In each survey since 2007, that number has increased, from 50% in 2007 to 53% in 2008 and 61% in 2009.

Still, however, word of mouth is the source of information respondents use most (76%) and consider most important (56%) when deciding whether to do business with a service provider. Word of mouth extends to postings on social media sites, where one in four respondents say they trust the comments about companies and brands posted online by people they know.

"Offering customers a variety of interaction points for learning about a company's offerings and obtaining service has never been so important to an organisation's success," said Wilson. "Customers are clearly voting with their precious Rands and responding to newer communication channels such as social networking sites, online self-service and online chats in addition to traditional phone and in-person encounters."

Growing role of trust and loyalty

The survey also identified trust between a company and its customers and loyalty programmes as strong influencers of consumer behaviour in 2010. Just over one in four (27%) of consumers indicate they trust the companies with which they do business. Of the people (22%) who switched banks, nearly one-fifth (18%) of consumers switched retail banks as a result of loss of trust. While banking still experienced a loss of consumers due to trust, they are now more aligned with the other industries.

As compared with a year ago, loss of trust increased as a reason for consumers switching their consumer goods retailers (from 7% of consumers in 2009 to 15% in 2010), travel and tourism providers (from 11% in 2009 to 17% in 2010) and consumer electronics manufacturers (from 14% in 2009 to 17% in 2010).

Across the 10 industries, the percentage of consumers who participated in at least one loyalty programme increased in 2010 as compared with 2009. For example, participation in retail loyalty programmes grew from 45% of consumers in 2009 to 52% of consumers in 2010. Participation in hotel loyalty programmes grew from 18% to 24%, and for wireless service providers, consumer participation grew from 19% to 31%.

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

"At a time when consumers expect more but think they're getting less, loyalty programmes can be an effective way to set expectations earlier in the customer relationship, and ultimately improve trust and satisfaction. Effective programmes go beyond transactional rewards - they value and strengthen the overall emotional connection with consumers through tailored experiences," concludes Wilson.