Customer retention: Brave new world of consumer dynamics

Companies are losing loyal customers at an alarming rate because of poor customer service and rewards, finds new research.

Sky Broadband set up a Switch Squad to demystify switching providers

A high number of people say that companies could have done more to keep them as customers, according to exclusive research by Accenture.

Eighty-five per cent of those surveyed agree that their loyalty could have been retained if a company had acted. Of those, 69 per cent would have stayed if their problem had been resolved the first time they contacted a brand, and 55 per cent if they had been offered preferential treatment and rewards for doing more business with a company.

The study also reveals that 48 per cent of consumers have changed providers – of any type of brand in the past year – because of poor customer service.

Retail is the most volatile sector, with 20 per cent of people switching, followed by banks, internet service providers and utility companies, all with 12 per cent. These are all higher than the global average in the survey, which questioned more than 12,000 consumers in 32 countries, including 3,500 in the UK.

Rachel Barton, managing director for CRM at Accenture UK & Ireland, says that this is an ongoing trend and is surprised that marketers and customer services personnel have not been reacting to it adequately.

“There is incredible churn taking place at the moment. The fact is that companies could have retained 85 per cent of consumers who switched just by getting some of the basics right.



“What is surprising is the fact that companies are still not getting this right. The frustration points that consumers are citing are not that different from those they were talking about two or three years ago – first-time resolution or the [need for] knowledgeable customer service agents, none of that is new stuff.”

Other sectors that are suffering from high churn rates in the UK are landline phone providers, with a 9 per cent rate, cable or satellite TV services at 7 per cent and mobile phone networks at 5 per cent. Although people globally are reducing the number of companies they switch from and to, switching because of poor service in the UK remains steady.

Most people (80 per cent) say that skilled and polite customer service staff are most important, followed by fast resolution and delivering the brand promise.

But it is that brand promise, used heavily when trying to acquire new people to a brand, which existing customers turn to when evaluating a service provider. Nearly 40 per cent of people are satisfied with their existing providers and 18 per cent profess strong loyalty to them. But given all of the marketing efforts made by brands, people feel that there may be a better deal elsewhere.

“As the data shows, people are quite satisfied with their provider, but they still feel there is something better on the horizon,” says Barton.

“That is partly the successful nature of the marketing messages. The investment is clearly going into an acquisition engine to constantly pull customers away from their current provider. What that does is lead us into a mindset of the grass is always greener on the other side.”

She suggests that sales, marketing and customer services departments need to work together more closely to make sure that brand promises are kept, which is a day-in, day-out process.

“To do that well you have got to be working seamlessly with your sales and service department. And that is why it is far more complex to get the retention right than the acquisition. But clearly that investment and focus does need to shift slightly in order to stop this continuous cycle of churn.

“The risk is that marketing will simply end up being an acquisition engine that keeps reacquiring customers that have just churned.”

Added to this, nearly three-quarters (74 per cent) of respondents say they are evaluating who they do business with more than they did two years ago, making it difficult for marketers to keep people loyal.

“We are less loyal than other mature markets but interestingly, we are still far more satisfied than dissatisfied with providers. So it seems that UK consumers are in this constant state of low commitment because we are expecting a better offer to come along.”

People in the UK are also likely to tell others about poor experiences, with 78 per cent saying they have done this in person and 20 per cent having posted something online. This is in contrast to Ireland, where 92 per cent of people have complained to friends, and in Japan where only 50 per cent have done so.

Regarding what influences people when deciding what to buy and from which company, the study finds that social media is less of an influence than other channels. Twenty-six per cent of people say they look at Facebook, Twitter or blogs when learning about a company, compared with 70 per cent who ask family, friends or colleagues.

However, online media in general is important, with 66 per cent looking at review or price comparison sites and 64 per cent going to a company’s own website.

Barton says it is interesting to see social media so low down the list of influences. “This is surprising, because the influence of social media hasn’t decreased. They are still talking about companies online but there is a separation emerging between the use of social for chat and interaction with friends and sharing views that might lead to direct purchasing decisions.

“Certainly, how active a company is in a social media environment has little importance on whether a consumer is deciding to select an organisation’s products or services.”

What is surprising is that it is not only the price that drives whether someone is satisfied with a company. Ease of doing business comes top, with 34 per cent saying that is what they like about dealing with companies, followed by high quality products and a broad range both at 29 per cent. Competitive pricing comes fourth with 28 per cent, just ahead of trustworthiness with 27 per cent.

All of this culminates in what Accenture calls the ‘nonstop consumer’ – someone who is constantly evaluating what to buy and who from, is shopping around because technology allows it and expects service from a brand in whatever channel they choose.

Barton says: “There is a power shift taking place from organisation to individual: we are no longer living in a world of a linear customer journey but one where consumers want a relationship that is dynamic, accessible and continuous.

“This non-stop consumer wants to interact on their terms. Very few companies are adequately responding to this.”

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The Frontline

We ask marketers whether our ‘trends’ research matches our experience on the ground

Andy Mqueen

Andy McQueen
Divisional director, customer strategy and marketing

I’m not surprised by these findings: the only one that is slightly different from ours is that we would say fast, one-stop resolution is the most important thing [in customer service], rather than skilled and polite staff – that comes second.

That is why we carry out our recent events tracker. We phone 10,000 customers a month and complete 5,000 online surveys. We ask our customers to rate their recent transactions with us, and then that feedback goes directly back to that team within 48 hours.

Each team will get specific feedback on their own activity. They then have the choice whether to take that detail and either amend their behaviour or try and work their way through the problem.

We get feedback from 15,000 people a month who say ‘yes, you have matched my expectations’ or ‘no, you haven’t done’ and

I believe that is why we are doing quite well in the current climate. We are on an upward trend across all of our channels; we take what customers say to us and incorporate it into our systems.

We are very keen on customer retention, so for example we have products that are only for existing customers. We have a range of products for our 10 million savers and there are certain things you can only get if you are an existing customer.

We try to treat our existing customers better than new customers rather than the other way round, which is quite a different strategy to many institutions.

claire harper

Claire Harper

These figures don’t surprise me. I think companies and brands should be trying harder to retain their customers.

I have worked for a number of retailers and some do it much better than others. What is important is to engage customers and keep coming up with innovative ideas so the customer thinks about you all the time.

Customer service has to be at the heart of a brand’s strategy, not just to acquire a customer but also retain them. It is not just about throwing a set of values at a customer – the difficult part is delivering.

I have been in boardrooms of organisations that say they are customer-focused but in reality that is not the case. If it is not a reality from the senior leadership team, it is not going to get to the customer service teams on the phone or emails to customers.

Customer focus has to be at the core of the business and everyone has to believe in it, not just a department that is on its own, especially with the rise of social media. If anything, customer service is becoming more of a priority because people won’t necessarily give you a second chance; you’ve got to do it right first time.

You can flip it and make it seem like customers are coming up with new ideas for your brand. We are recruiting a small panel of existing customers and we want them to help us get a bit bigger and tell us what we are doing right and wrong.


Lyssa McGowan
Brand director, communications products
Sky Broadband

Accenture’s research underlines how high-quality customer service continues to become more significant, especially at a time when purse-strings are tightening and they are becoming less tolerant of brands that don’t treat them as VIPs.

The other statistic that gets our attention is that 12 per cent of people have switched their internet service provider in the past year. Our own research, however, suggests that over half the adult population have never switched. Often they’re put off by myths about how complex the switching process is.

This prompted us to set up a Broadband Switch Squad to bust some of these myths and reassure customers that they’ll get a high-quality service throughout the process. That also means updating customers proactively in ways that suit them, such as through texts, emails and phone calls, to ensure they know at all times that progress was being made. 

The economic downturn means the customers aren’t just kings, they’re emperors. Especially in a world where social media provides a convenient outlet for frustration, they are baffled when companies don’t seem to want their custom or make it difficult for them to get their hard-earned money.

Accenture’s study is a timely reminder that the companies that acquire and retain customers the most effectively often make every service experience as easy as possible.



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