Unhappy customers are finally making the switch

When it comes to customer disservice, it never ceases to amaze how stupid some companies can be. They spend millions of euro on glossy advertising campaigns and slick marketing and public-relations strategies aimed at convincing us to buy into their brand or service, and then, once we do, they treat us so shabbily we quickly learn to hate them.

For years, companies were able to treat paying customers appallingly because they knew that, no matter what, they would stick with them out of laziness or apathy or because of a perceived lack of options. But times are changing and according to a major new survey that Pricewatch has been given first sight of, Irish consumers are becoming increasingly likely to punish bad customer service by complaining about it on social networks and taking their business elsewhere.

The research, carried out by Accenture and published this morning, shows 72 per cent of consumers are now active switchers – up 11 per cent on last year and much higher than the global average of 54 per cent. What should trouble companies with a bad reputation for service is that two-thirds of customers shifted at least a portion of spend to another provider based on bad service or support.

Is it any wonder Michael O’Leary had a Damascene conversion last year after which he unveiled a new caring, sharing airline? Switching is big business. Accenture estimates the State’s “switching economy” is worth about €13 billion a year.

But while we expect more, companies do not appear to be delivering. The survey shows customer satisfaction has fallen to 31 per cent, compared with 36 per cent in 2013.

Consumers’ willingness to buy more products or services from their providers has fallen to 12 per cent compared with 17 per cent last year, while the number of people who say they are inclined to recommend their providers to their friends has also fallen and is now 18 per cent compared with 22 per cent last year.

When it comes to the switching economy, retailers suffered most last year, with 33 per cent of consumers telling researchers they switched their spending from one shop to another – up 9 per cent on the previous year. The survey found people were next most likely to have switched banks, with 19 per cent of those polled saying they had taken their money elsewhere. This is significantly up on the previous year – although many switchers had no choice after Danske Bank left the Irish market last year.

Overall, poor customer experience is the most common reason for switching, with two-thirds saying that was behind their decision to change provider. A loss of trust in the company was the second most common reason, with 47 per cent saying that was behind their move. A quarter switched due to a lack of customised offers.

Issues resolved

The majority of respondents – 86 per cent – told Accenture’s people

they could have been convinced to stay with their original provider had their issues been resolved on first contact.

Accenture defines the “switching economy” as the estimated annual revenue potential at play by consumers switching providers.

“Changing customer behaviours and low levels of customer satisfaction are fuelling a switching economy that presents opportunities for some companies and threats for others; too many companies are playing not to lose instead of playing to win,” says Rebecca Gilmore, head of Accenture customer and marketing services.

“Growth is harder to come by in many sectors, but the switching economy presents a source of sustainable and profitable growth for companies willing to do what it takes to gain market share. Based on our research, that means creating personalised as well as genuinely engaging customer experiences, which today’s customers are seeking, but not finding, with their current providers.”

Loyalty has also continued to wane, with only 12 per cent now feeling loyal towards providers, compared with 15 per cent 12 months ago.

As in the last survey, retailers are far and away the leaders when it comes to loyalty programmes, with 76 per cent customer participation, down from 81 per cent 12 months ago. Utility companies have moved into second place this year with 27 per cent participation, and hotels remain in third place at 25 per cent.

The main drivers for joining loyalty programmes are that people feel they get the best deals through the programme and because the financial rewards are perceived to be important enough. Conversely, the main reasons programmes are seen as ineffective are that the financial rewards are not important enough and the thresholds for rewards are too high.

“Companies are having to work much harder to impress, win and retain customers. Price is still important when it comes to getting new customers in the door, but keeping them is almost certainly about service satisfaction and meeting expectations, which are only getting higher. Irish consumers are now saying to providers: know me, show me you know me, and then value and delight me if you want keep me,” says Gilmore.

Better online experience

The annual Accenture Global Consumer Pulse research also paints a picture of consumers who are more digitally savvy and in search of a better online experience but concerned about how their personal information might be used.

The power of the web is emphasised by the study, with 90 per cent of all respondents saying they used at least one online source to learn about a company’s products and services.

At least one online source was used by three-quarters of respondents for customer service and support, with 51 per cent using the website, 34 per cent using online text chat and 17 per cent using social media.

While the internet is increasingly important, only 13 per cent of consumers believe Irish companies are effective at aligning new technology with traditional interactions. Spam is the biggest problem – half of all consumers said they would use online channels more if they were guaranteed not to get spammed.

“Success in the age of the digitally savvy customer comes down to how to leverage the on- and offline worlds in a seamlessly integrated way, giving customers the ability to control how they interact with companies. That control extends to their personal information and how companies balance creative use of digital applications with privacy and data security,” says Gilmore.