As Fewer Consumers Switch Service Providers, CMOs Must Piece Together the Customer-Loyalty Puzzle

What the Results of the Most Recent Accenture Global Consumer Survey Mean for Marketers

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Consumers expect more from customer service every year, while their satisfaction with customer service is declining. Why, then, did the number of consumers who switched service providers as a result of poor customer service decline in 2010 -- for the first time in six years? Are companies doing something right, or are consumers just tired of switching?

The most recent Accenture Global Consumer Survey, which assessed consumer attitudes toward customer service and sales practices in 10 industries among more than 5,800 people in 17 countries, found that 64% of consumers switched from at least one service provider -- such as a bank, utility or wireless carrier -- due to poor customer service in 2010. In previous surveys, the number of consumers making such a switch had steadily risen, from a low of 49% in 2005 to a high of 69% in 2009.

We believe the co-existence of these three seemingly contradictory trends -- higher customer expectations, lower customer satisfaction and lower overall switching rates -- can be explained by two key factors. The first is companies' broader and better use of technology in marketing, sales and customer service.

Consumers report that investments in customer-facing technology solutions have improved both their awareness of the products and services that companies offer, as well as their experience with customer-service issues. In fact, more than three-quarters of survey respondents around the world said that pre-sales technology such as email advertisements, online banners, product-comparison tools and online ordering made the experience of buying a service provider's offerings easier.

Consumers are also growing increasingly comfortable with the use of technology in customer service. More than two-thirds (66%) of survey respondents said that choices such as automated phone attendants, live internet chats and self-service options on a website have improved the level of service over the past five years. That number has grown steadily in each Accenture survey since 2007, from 50% in 2007 to 53% in 2008 and 61% in 2009. The bottom line is that consumers both noticed and valued these new capabilities -- winning combination.

The second factor that we believe is responsible for keeping customers from switching is the tailoring of loyalty programs to better recognize and reward customers for their business. Across the 10 industries evaluated in the study, the percentage of consumers who participated in at least one loyalty program increased in 2010 over 2009. For example, participation in retail loyalty programs grew from 45% of consumers in 2009 to 52% of consumers in 2010, and participation in hotel loyalty programs grew from 18% of consumers in 2009 to 24% in 2010. Wireless service providers saw consumer participation in loyalty programs grow from 19% to 31% in the same period.

Not only was there a rise in participation, but loyalty programs played a larger role in persuading consumers to remain customers. The percentage who were persuaded to remain customers as a result of loyalty programs increased across industries in 2010 over 2009, from 49% to 54% among retail consumers, from 45% to 53% among wireless service provider consumers and 49% to 51% among hotel customers.

These survey findings bring focus to a new CMO agenda, but they don't mean that CMOs should rush out to spend money on technology upgrades and loyalty programs -- at least not without a clear understanding of what such spending might accomplish. We see three key areas deserving immediate attention:

The digital agenda
Convergence of online, social media and mobile solutions for customers is critical. CMOs are in a unique position to draw together the strategy and the implementation of this next wave of solutions that customers crave and value. These are often shaped by different parts of the organization today, but they have greater impact when better focused on a common set of customer priorities and segments.

Customer analytics
Online websites, social-media networks and mobile applications are increasing the already vast quantities of information available to the CMO. Together, these provide a more robust customer profile and sharpen insights into customer behavior and preferences. Social-media monitoring also provides unfiltered feedback from customers on a scale that focus groups and surveys alone simply cannot provide. The technologies that support this -- including web crawling, text mining and sentiment analysis -- are evolving quickly, requiring a closer relationship with the chief information officer.

Loyalty programs
Companies will benefit from continuing to evolve and tailor their loyalty programs beyond the traditional points-for-merchandise models. In general, the most-successful programs transform loyalty beyond just rewards to a customized, two-way dialogue that reaches across all parts of the customer experience.

The silver lining in this year's Global Consumer survey is that customers notice and value the innovation that comes from the rise of customer analytics and social media and mobile solutions -- investments that make it easier for companies to communicate directly with consumers on their terms, to segment product offerings and offer a tailored, satisfying customer experience.

Well-connected approaches also leverage the amplified impact of word-of-mouth that comes with today's social networking and mobile consumers. Rising consumer expectations and declining satisfaction with customer service are certainly making the CMO's job that much harder, but they're also providing a renewed opportunity to drive growth in today's environment.

ABOUT THE AUTHOR
Robert Wollan is global managing director of the Accenture Customer Relationship Management practice and co-author of "The Social Media Management Handbook," published by Wiley in January, 2011. Visit accenture.com/crm for more information.
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