Poor customer experiences triggers switching epidemic
Nearly a quarter of UK adults switched companies in last six months
Companies are wasting billions on attracting new customers through advertising whilst delivering a poor customer experience, a new study has found.
According to the UK survey by customer experience programme provider Satmetrix, poor service has forced over 10 million consumers to switch suppliers in the last six months alone. The main culprits for this switching epidemic are unfair fees or charges, poor product or service quality and rude or disinterested employees.
This research found that much of the £14bn spent on advertising each year in the UK would be better spent on delivering a higher quality customer experience.
Only 2% of respondents trusted advertising the most as a source of information when choosing a product or service. Instead, almost half of consumers (49%) see personal recommendations from friends, family or colleagues as the most trustworthy source of information. And, over seven times as many people (15%) trust consumer opinions posted online than trust advertising.
Treat us fairly and treat us right or we’ll spend our hard-earned cash with a competitor
It seems the British don’t like it when they are not treated fairly. As a result, almost a quarter of respondents (23%) saw unfair fees or charges at the reason for switching. An additional 7% switched because discounts were offered to new customers but not to them.
Deborah Eastman, CMO at Satmetrix, commented: “Business choices that seem to make sense from a financial point can negatively impact revenue and reputation if consumers don’t think they’re fair. If companies drop these bad profits, they will likely recoup lost revenue many times over by keeping their customers for longer and acquiring new ones through recommendations.”
The second most common reason for switching (22%) is poor product or service quality. Almost as many (19%) people leave because of rude or disinterested employees. And, 12% move because they can’t get anyone to deal with their problem.
Eastman added: “It seems that many organisations chose to invest in attracting new customers through advertising rather than invest in a good customer experience that creates loyalty. If companies listened more to their customers, and if employees could understand the impact of their behaviour by seeing customer feedback for themselves, then businesses could significantly reduce churn.”
The hidden cost of negative word of mouth
This report found there is a clear signal from UK consumers -‘Focus on me and the experience I receive or I’m off.’ But the results show that the cost to a company doesn’t stop with a lost customer, While 2% might trust what they read in an advert, almost two thirds of consumers (64%) look to other consumers to guide their purchase decisions, As a result, the survey shows that a negative experience will lead to a negative recommendation and with it the loss of a new customer.
Eastman continued: “This survey shows that we live in the Recommendation Generation and that the key to what gets recommended is the experience a customer receives. The companies that understand this and have invested in customer experience programmes are already leaving their competitors in their wake by creating loyal advocates.”
Satmetrix will be announcing the brands in seven sectors that deliver a customer experience that drives loyalty in its annual European Net Promoter Benchmark Report. To be announced at the Net Promoter Conference in London on the June 17, the sectors include: banks, ISPs, mobile phone service providers, computer hardware, mobile handsets, car insurance and TV manufacturers.
The full survey results
The results of the Satmetrix survey are based on a sample of over 5,100 consumers in the UK.
When asked if they had stopped doing business with a company within the last six months due to a bad customer experience, 24% said yes – representing over 10 million adults in the UK.
When asked to identify the primary reason for leaving, respondents said:
• 23% Unfair fees or charges
• 22% Poor product or service quality
• 19% Rude or disinterested employees
• 12% Couldn’t get hold of anyone to deal with my problem
• 7% Discounts for new customers but not for existing customers
• 4% Inadequate return or refund policy
• 5% Out of territory call centres
• 1% Inadequate environmental policy
• 7% Other
When asked which sources of information they trust the most when choosing products or services, respondents replied:
• 49% Recommendations from friends, family, or colleagues
• 22% Product test reviews
• 15% Consumer opinions posted online
• 6% Media articles (magazine, newspaper, television)
• 2% Advertising
• 2% Direct mail
• 4% Other