Accenture-Global-Consumer-Research-New-Realities

The New Realities of “Dating” in the Digital Age: Are Customers Really Cheating, or Are You Just Not Paying Enough Attention? Accenture 2011 Global Consumer Research Study Page 2 | Accenture 2011 Global Consumer Research Study Five critical points of engagement can impact whether or not customers—and their money—stay with a provider, yet most companies appear to be unaware of these relationship junctures. Page 3 The rise of the tech-savvy generation, unstable economic conditions, and the impacts of globalization make attracting and keeping customers increasingly complex. But adapting your tactics to keep digital- age customers in a relationship with you is even more challenging. In fact, as the results of Accenture’s 2011 Global Consumer Research Study show, consumers around the world are giving off mixed signals at a time when keeping consumer relationships strong is more critical than ever to providers. On the one hand, consumers claim they are more satisfied with the companies they do business with. Yet on the other, they feel less loyal to companies, increasingly switch providers and shop for better deals as their expectations continue to rise. In other words, as consumers continually reevaluate their choices of providers takes yet another puzzling turn, the rules of customer acquisition and retention are changing again. Satisfying customers, providing more competitive pricing, offering more compelling products, or even delivering better service are no longer sure-fire ways to gain and lock in customers. Today’s unstable economic conditions only add to this complex picture as almost half of consumers profess that in the current context, they find themselves much more likely to be shopping around for the best deal—even if it means leaving current providers. What then, is the key to sustainable, profitable growth from a customer base that becomes harder to understand and is more inclined to “cheat” on their current providers with each passing year? Our study suggests some specific ways companies could change the tide. In particular, we found that five critical points of customer engagement could have a major impact—positive or negative—on a customer’s continued business with a company. We also found that most companies appear to be unaware of these relationship junctures and how their own actions are affecting customers. By pointing today’s analytic capabilities at yourself, you can help identify these blind spots and develop an understanding of the behaviors, needs and expectations of individual customers at these vital points in the relationship. In the following report, Accenture provides a roadmap for change. We have divided the strategy into three steps to help companies tip the balance of customer spending significantly in their favor, on their journey to high performance. Page 4 | Accenture 2011 Global Consumer Research Study Admitting There is a Problem: Under the Surface, a Relationship in Trouble. Accenture has studied global consumer behavior and attitudes via this study for seven years. In late 2011, we surveyed more than 10,000 consumers in 27 different countries between September and October. To better understand these behaviors across industries, we asked respondents to evaluate 10 industry sectors (up to four industries per respondent) on issues ranging from expectations and purchasing intentions to loyalty, satisfaction, and switching. Our study revealed that, on the surface, providers’ relationships with customers appear to be on a solid footing. In fact one of the study’s most significant findings is that customer satisfaction actually slightly increased in 2011. However, a closer look reveals consumers’ wandering eyes, as expectations and provider switching are also on the rise: • Consumers reported increased satisfaction across each of 10 service characteristics evaluated. In fact, satisfaction rates on three customer service characteristics jumped by more than five percentage points from 2010 (Figure 1). • But despite rising satisfaction, only an average of one in four consumers feels “very loyal” to his or her providers across industries and just as many profess no loyalty at all. Furthermore, two-thirds of consumers switched providers in at least one industry in the past year due to poor customer service. • And the satisfaction bar keeps rising: Forty-four percent of consumers said their expectations today are higher than they were just a year ago (Figure 2). Such contradictions are even more pronounced in emerging markets. In these countries, consumers reported greater customer satisfaction than their mature-market peers across all service characteristics. But consumers in emerging markets more often switched providers due to poor service across all industries (in some cases by a 2:1 ratio over mature markets), especially within the Retail, Internet service providers (ISPs), Wireless/cell phone providers and Banking industries. Adding to the paradox, 59 percent of consumers in emerging markets (compared with 31 percent of those in mature markets) said their expectations had increased in the past year, and this rise was seen across more customer service characteristics in emerging markets than in mature ones. While these results are troubling, companies shouldn’t blame the customer. As we probed more deeply into the research, we found the rise in satisfaction was driven primarily by basic operational improvement—for instance, reducing hold times on the phone—and not by elements that really stand out to customers. In other words, companies rightly are improving things that, if not fixed, will drive customers away. But they’re not attending to the things that keep customers engaged, which is key to sustained growth. Our results reinforce what many consumer businesses are increasingly discovering: that stated satisfaction doesn’t equal loyalty; and even willingness to recommend a product or service to peers doesn’t in itself equate to growth in a customer’s business. In fact, our research found that in every single industry category, recommenders are more likely to shop around for better deals than non-recommenders. Therefore, while keeping satisfaction high remains important—no company can be successful with customers who are actively dissatisfied—it is not the only, or the ultimate, way to increase customer revenue. The apparent contradictions among satisfaction, switching, loyalty and expectations are clear indicators that providers must dig below their performance across their aggregate customer base. The digital age is actually making relationships more personal, and companies should work to deeply understand individual customer segments: what motivates them, what’s important to them, and what they really want from the relationship with their providers. Failure to do so can make companies vulnerable to overlooking the critical interactions that matter most to consumers. These blind spots represent lost opportunities for providers to drive greater loyalty, engagement and ultimately revenue from current and potential customers. Many companies are not attending to the things that keep customers engaged, which is key to sustained growth. Today’s contradiction: the digital age is actually making relationships more personal. Page 5 31% 28% 32% 31% 27% 29% 25% 23% 36% 29% 26% 23% 14% 10% 14% 14% 11% 11% 10% 9% 18% 15% 13% 12% *Having the service experience match the promise a company makes to me upfront *The number of choices I have to receive service the way I want it Having customer service available at convenient times Being able to access customer service using multiple channels Being able to resolve questions/issues on my own, without speaking to a service agent The amount of time it takes to read and understand information the company sends me The amount of time it takes to completely resolve my issue or problem The amount of time I have to wait to be served Having employees who are polite and friendly Having employees who are knowledgeable and well-informed Having customer service people who can deal with my issue without having to refer me to another person Having customer service people who know my history based on information I have previously provided, so I don’t have to repeat myself each time I talk to someone *New items included in 2011 survey G en er al C ha ra ct er is tic s Co m pa ny R ep re se nt at iv es (+0%) (+0%) (+3%) (+1%) (+2%) (+3%) (+2%) (+2%) (+3%) (+3%) (+3%) (+3%) (+2%) (+2%) (+2%) (+2%) (+5%) (+4%) (+4%) (+3%) Extremely satisfiedVery satisfied Very satisfied % change from 2010 Extremely satisfied % change from 2010 8% 49% 32% 8% 9% 13% 12% 51% 53% 56% 56% 30% 30% 26% 27% 12% 10% 8% 2007 6% 2008 5% 2009 2010 2011 9% 36% 60% 43% 23% 16% Mature8% Emerging6% 2011—Emerging vs. Mature MarketsChange in Expectations—Global Sample Much/slightly lower The same Slightly higher Much higher Figure 1: Customer Satisfaction with Specific Service Characteristics Figure 2: Change in Customer Service Expectations as Compared to 12 Months Ago 34% 36% 31% 33% 41% 66% 64% 69% 67% 59% Global 2011 Global 2007 Global 2008 Global 2009 Global 2010 Did not switch Switched Percentage who switched any provider in any industries due to poor customer service Page 6 | Accenture 2011 Global Consumer Research Study Start Paying Attention to Things that Really Matter: The Blind Spots That Are Likely Undermining Your Relationship Our study identified five potential blind spots over the course of the provider- customer relationship that could predispose customers to be more open to switching providers if given the right incentive. This tenuous loyalty could inhibit customer spending and impede company growth. What’s even more troubling is the fact that these blind spots exist despite companies’ significant efforts in the past decade to improve customer satisfaction and their understanding of what consumers want: • Nice to Meet You—Missing the chance to set the right expectations at the onset of a customer relationship. • You Don’t Know Me Anymore—Not noticing more subtle changes that matter in customers’ need for recognition, special treatment and reward. • Cheating Heart—Overlooking signs customers are itching to switch. • Are you Listening?—Failure to offer consumers opportunities to engage with a provider. • Trinkets Won’t Save Me—Relying on point solutions to satisfy and keep customers. Our research and experience tell us that companies that recognize and eliminate, or at least dramatically minimize, these blind spots are more likely to attract and retain customers and sustain business growth. Nice to Meet You Companies are missing the chance to set the right expectations at the onset of the customer relationship. Industry-specific switching behavior remains considerable, especially in emerging markets. In aggregate, two in three consumers switched companies in the past year in at least one of the industries covered by the survey due to poor customer service (Figure 3). The moment of acquisition should be a more significant event in the customer relationship for providers. The promise made to customers at the onset of their relationship sets the stage for their future satisfaction and interest in staying with the provider. In fact, “having the service experience match the promise a company makes to me up front” rated as one of the most important areas of customer service (Figure 4). And yet the greatest service frustration consumers cited is a provider’s failure to deliver on the service experience promised up front. Companies are either consciously or, more likely, subconsciously making promises in prospecting and customer set-up they are unable to deliver consistently on throughout the duration of the relationship. Figure 3: Switching Due to Poor Customer Service Page 7 Figure 4: Importance of, and Satisfaction with, Various Customer Service Areas 4.5 4.5 4.4 4.3 4.3 4.3 4.1 4.1 4.0 3.9 4.4 4.0 3.4 3.6 3.3 3.2 3.2 3.1 3.6 3.5 3.4 3.5 3.6 3.4 0 1 2 3 4 5 A B C D E F G H I J K L A. Having employees who are knowledgeable and well-informed B. Having employees who are polite and friendly C. Having customer service people who can deal with my issue without having to refer me to another person D. The amount of time it takes to completely resolve my issue or problem E. Having customer service people who know my history based on information I have previously provided, so I don’t have to repeat myself each time I talk to someone F. The amount of time I have to wait to be served G. Having customer service available at convenient times H. Being able to access customer service using multiple channels I. The amount of time it takes to read and understand information the company sends me J. Being able to resolve questions/issues on my own, without speaking to a service agent K. Having the service experience match the promise a company makes to me up front L. The number of choices I have to receive service the way I want it Level of Importance vs. Satisfaction—Global Sample Importance 2011 Satisfaction 2011 Consumers cited their greatest frustration as when the experience does not match the promise a company made to them up front. I like it when a company recognizes me for doing more business with them I like it when companies provide me with special treatment when I do more business with them Agreement with the following statements: Not at all (1, 2, 3) Neutral (4, 5, 6, 7) Strongly agree (8, 9, 10) Global Emerging Markets Mature Markets 31% 30% 64% 65% 60% 62% 5% 5% 71% 67% 6% 8% 5% 4% Figure 5: Consumer Desire for Recognition and Rewards You Don’t Know Me Anymore Providers are not noticing more subtle changes that matter in customers’ need for recognition and reward. Our research shows a significant increase in the extent to which consumers want to be rewarded for being loyal and want specialized treatment for that loyalty (Figure 5). For example, two-thirds of consumers said they like it when they are recognized for increased business. An equal percentage like it when companies provide special treatment for doing more business with them. This is especially true in emerging markets, where more than 70 percent of consumers like it when companies provide them with special treatment for doing more business with the company. Expectations for specialized service as a reward for being a good customer has rapidly grown since 2009. Furthermore, customers increasingly expect customer service representatives to know more about them—a 14-point rise from 2009 to 2011. Consistent with consumers’ desire to be recognized and rewarded for their business, participation in loyalty programs across most industries has steadily increased from 2009 to 2011 (Figure 6). And yet only about half of loyalty program participants across industries said their participation persuades them to stick with the companies that provide the programs. The problem is that most companies only recognize major increments on their terms (i.e., increments they predetermine for their loyalty programs), not the minor increments that matter to customers. Herein lies the blind spot. Companies are failing to identify when a business pattern with a customer changes and respond accordingly—whether via their loyalty programs or some other mechanism. Such changes may be subtle to the company (not necessarily translating in short-term value) but meaningful in the customers’ eyes. Yet they go unrecognized and unrewarded, leaving customers feeling as if the company doesn’t really care about their business. Companies would do well to pay attention to “tremors” as much as they attend to “earthquakes”. Page 8 | Accenture 2011 Global Consumer Research Study Only about half of loyalty program members across industries said their participation persuades them to stay with those companies providing the programs. Page 9 Loyalty program participation (at least 1 program) 14% 16% 19% 21% 20% 21% 25% 23% 24% 23% 24% 23% 29% 31% 29% 31% 31% 34% 52% 53% 9% 13% 11% 22% 18% 14% 18% 26% 19% 45% 20102011 2009 Persuasiveness of loyalty program to stick with provider (much & very much) Retailers Wireless/cell phone companies Internet service providers Banks Airlines Hotels Home telephone service providers Utility companies Cable/satellite television service providers Life insurance providers 49% 51% 49% 49% 51% 50% 47% 48% 51% 53% 52% 51% 50% 53% 53% 55% 53% 57% 54% 57% 44% 41% 40% 41% 49% 43% 43% 46% 45% 49% Figure 6: Adoption and Effectiveness of Loyalty Programs Figure 7: Industry-Specific Partial SwitchingCheating Heart Companies are overlooking signs customers are itching to switch. Aggregate measures of customer retention are an important metric for providers in any industry. After all, such measures offer a pulse on the effectiveness of investments in customer acquisition, customer relationship management, and more. However, our research shows companies that rest on their laurels with stable to declining customer defection rates may be missing important early warning signs of customer retention issues. One such sign is partial switching, which means a customer has stayed with companies he or she does business with but has added another provider. Partial switching is up in each of the 10 industries we surveyed (Figure 7). Some of those with the greatest change in partial switching year over year include wireless phone companies and retail banking and financial services—each up three percentage points from 2010 levels. For some consumers, working with a portfolio of providers within an industry may become the norm and not necessarily result in their defection from a current provider. For instance, retail banking experienced a one-point drop (from 16 percent to 15 percent) in complete switching—where the customer stopped doing business with a provider in favor of another—from 2010 to 2011. Yet, partial switching was up three points (from 24 percent to 27 percent). But, in many industries, an analysis of a partial switching paints a different picture of customer movement from company to company as it provides early warning signs for customers who are about to switch away completely. It is important to note that complete and partial switching rates do vary largely by country, impacted by local market contexts such as regulations and competition levels. Companies that rely on their overall retention rate as a key measure of effectiveness may remain unaware of customers who have partially switched, potentially leaving the company unable to respond until it is too late. On the other hand, companies that use analytics to identify switching trigger points increase the likelihood of being able to address those issues and mitigate the risk of partial switching. Agile companies also use analytics for more than just customer retention by identifying opportunities for growth through expansion. Companies that look only to customer retention are likely missing important cues from partial- switching behavior. “I have stayed with companies I do business with but added another provider” (Partial Switch) Travel & Tourism Life Insurance Providers Consumer Goods Retailers Consumer Electronics Manufacturers Retail Banking/Financial Services Providers ISP Cable/Satellite Companies Landline P