Consumers Switch due to Poor Customer Experience

The latest Satmetrix research on customer churn shows that the switching epidemic continues unabated because suppliers have not listened to feedback from British consumers.

In fact, the top three reasons for switching in 2011 are identical to 2010, with unfair fees and charges the number one cause and rude and disinterested employees climbing one spot to number two.

In this report we reveal some of the key findings and take a look at the reasons customers are switching to the competition.
 

Satmetrix Research on Customer Churn: Key Findings

- Almost 10 million consumers switched in the previous six months because of a poor customer experience

- Switchers bad mouth suppliers four times more often than average consumers

- Energy and insurance sectors at the bottom of the loyalty ladder

Switching Unleashes Negative Word of Mouth (WOM) Backlash

The Satmetrix research on customer churn is based on over 13,000 consumer responses in the UK. Not only does it show that suppliers simply haven’t listened to the issues uncovered by the Satmetrix Net Promoter® Benchmarks in 2010, but it also reveals that switching unleashes a tidal wave of negative Word of Mouth (WOM). In fact almost 40% of switchers have advised against using the supplier they left – four times the number for average consumers.

Treat Them Mean to Keep Them Keen Just does Not Work With Consumers

Famous for their sense of fair play, the British don’t like it when they are not treated fairly or well. As a result, almost a quarter of respondents (23%) saw unfair fees or charges as the number one reason for switching and 21% identified rude or disinterested employees as the main cause.

Robert Salvoni, Managing Director International Satmetrix, said:

"I'm amazed that companies haven’t listened to consumers and changed their behaviour. In fact, recent headlines show that a number of organisations are starting to introduce new fees, which will only fuel the switching epidemic. The results also show that companies aren't helping employees to understand the impact of their behaviour. With today's tight economy and pressure on revenue and profit, it makes no sense to drive customers away for reasons that are entirely within companies' control."

Energy Sector Feels the Heat While the Computer Sector is Creating Brand Fans

The Satmetrix research identifies the winners and losers when it comes to consumer loyalty. The clear winners are suppliers of computer products and consumer electronics such as TVs and mobile phones who are creating significant levels of loyalty and positive WOM. In marked contrast, the energy sector has a Net Promoter Score some 62 points lower than the leader, reflecting weak levels of customer engagement and loyalty.

The winning and losing sectors are listed below:

Computer hardware: +27

Television / DVD electronics: +23

Mobile phone handsets: +19

Mobile phone carriers: +8

Banks: 0

Internet service providers: -6

Car insurance: -6

Home insurance: -20

Energy / Utilities: -35

All sectors: +1

2011 NPS®

Love Your Customers and They Will Love You Back

While switchers are four times more likely to advise against using a supplier than average consumers, almost four times as many (38%) consumers in the last six months have positively recommended than negatively recommended (10%). This explodes the myth that people are more likely to spread negative WOM than positive WOM – unless they have been let down by their supplier.

Furthermore, those that have positively referred have a Net Promoter Score of +50, almost double the best performing sector and nearly 50 points higher than the UK average. It is also 94 points higher than those who have switched and have also advised others against doing business with a brand (-44).

This shows that if suppliers create a promoter they will benefit from both increased loyalty and positive WOM and avoid the damage created by switchers.

Robert Salvoni commented:

"This year's churn research reveals the double whammy of delighting customers. Not only will you keep them but you will also benefit from an extremely high level of advocacy. All the indicators prove that it pays to focus on delivering a customer experience that exceeds expectations."

About the Satmetrix Research on Customer Churn

The Satmetrix research is based on over 13,000 responses from UK consumers and covers nine sectors from banking to computer hardware. It covers a wide range of topics, including:

- The percentage of consumers who have stopped buying from a supplier;

- The reasons for stopping buying;

- The likelihood to recommend;

- The likelihood to continue to buy; and

- The rate at which consumers have positively recommended or have advised others against buying

Carried out once a year, it acts as a barometer of the way suppliers treat their customers and identifies the WOM created by supplier behaviour.

Reasons for Switching 2011

Unfair fees or charges: 23%

Rude or disinterested employees: 19%

Poor product or service quality: 21%

Couldn’t get hold of anyone to deal with my problem: 12%

Discounts for new customers but not existing customers: 7%

Out of territory call centres: 5%

Inadequate return or refund policy: 4%

Inadequate environmental policy: 1%

About Satmetrix

Satmetrix is the leading provider of customer experience management software and the co-developer of the Net Promoter loyalty metric. With its Xperience (SaaS) software product and best practices consulting, Satmetrix delivers actionable customer feedback to drive growth through increased customer retention, increased customer lifetime value, and positive Word of Mouth.

Satmetrix has a proven track record of accelerating the success of customer experience programmes with more than 700 enterprise deployments in 40 languages. Satmetrix is headquartered in San Mateo with International offices in London, New York, Paris and India.Info: www.satmetrix.com.

Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld..

 

 

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