By Rob Starr, Big4.com Content Manager.
According to new research from Accenture, U.S. companies are struggling to keep pace with their customers’ “always on” nature and greater use of digital channels. In fact, this U.S. “Switching Economy” is up 29 percent since 2010. Big4.com asked Robert Wollan, Global Managing Director – Accenture Strategy, Sales & Customer Services, a few questions about the research via email.
Can you supply a quick explanation of the term switching economy?
The switching economy is Accenture’s annual calculation of the total amount of consumer spending that changes hands every year in each country included in our survey. It is measured by the rate at which consumers switch providers as captured in the 2014 Global Consumer Pulse Research multiplied by the 2014 reports of consumer spending in the industries surveyed. Accenture has been monitoring changes in consumer behaviors and
measuring consumer switching, channel preferences, customer satisfaction drivers and other consumer behaviors around the globe for over a decade.
Why has it swelled to $1.6 trillion representing a 29 percent increase since 2010?
In many industries, the barriers for customers to move between providers are coming down, making it easier than ever for customers to switch when they don’t get the experience they want or need. The continuously rising sets of customer expectations and expanded options available in the digital marketplace, coupled with lower levels of customer satisfaction, have fueled a switching economy. More than half of consumers (56 percent) report that the number of brands they consider has increased significantly over the past ten years, and 46 percent believe they are more likely to switch providers compared to ten years ago. Many companies have been inviting customers to switch by not solving some of the more basic areas that frustrate customers as much today as they did five years ago. The top complaints include: solving an issue during the first interaction (86 percent in 2014 vs. 84 percent in 2009); lengthy hold times (85 percent vs. 84 percent); and interacting with service representatives who cannot answer questions (84 percent vs. 84 percent). Is it really a surprise that customers are choosing to take their business elsewhere?
Why are some companies lagging behind the opportunity?
Keeping pace with an expanded set of customer demands has remained a top challenge for many companies. The “nonstop customer” is a term we use to describe the pace and dynamics of how different customer segments today choose to discover, evaluate, purchase and use the products/services of the providers – and it is obvious that many companies have been unable to adapt from a linear model full of internal handoffs of the old Sales & Marketing funnels of the ‘90s into more dynamic customer needs today. These customers’ needs are more immediate, with greater expectation to customize services to meet those needs.
We also see that some companies are struggling to adapt to a world where every customer is a digital customer, although they operate at different speeds and with distinct needs. Our 10 years of consumer research shows that while many companies have been admiring the opportunity digital brings, they have not addressed the root causes of the problems that accompany it. Companies have been focused only on ‘doing things better’ to fix surface issues when these customers really require them to ‘do things differently.’
What’s the story around online customer service channels?
Satisfaction with online customer service channels, including online text/video chat, mobile applications, third party review websites or forums and social media, is relatively strong compared with “traditional” channels. Just over half of respondents report being satisfied with online text or video chat (57 percent and 55 percent, respectively), as compared to just 51 percent that were satisfied with traditional phone support.
Despite this, consumers’ adoption of digital channels as part of the overall channel mix is still relatively low due to several barriers companies have not addressed completely – including the lack of the right information provided by the channels, lack of trust in them and lack of knowledge of how to access and use them.
While the benefits of digital capabilities are apparent, our research and analysis show that traditional contact channels (contact centers, stores/branches, etc.) remain relevant to many customers. Companies must determine the right blend of digital and analog channels to improve the customer experience.
What are the other big takeaways?
Loyalty is down: Only 28 percent of consumers feel very loyal toward their providers, and only about one in three (31 percent) are willing to recommend them to others. Customers are considering different types of providers and value personalization over loyalty. Just over one-third (34 percent) are open to purchasing products and services offered by non-traditional providers. The new reality is that nonstop customers remain loyal to experiences, not to providers.
Convergence is still a challenge: Despite significant investments by companies, only 10 percent of consumers strongly agree companies are effectively converging digital, mobile, social and traditional channels.
Top customer frustrations remain stagnant: Top complaints including solving an issue during the first interaction (86 percent in 2014 vs. 84 percent in 2009); lengthy hold times (85 percent vs. 84 percent); and interacting with service representatives who cannot answer questions (84 percent vs. 84 percent) – have remained largely unchanged.
What’s in the future?
Companies that want to capitalize on the Switching Economy and attract the large numbers of customers that are searching for new providers will strive for targeted digital experiences, not simply scale. Instead of bolstering their digital efforts, companies should instead work to improve how they interact with customers. The key is understanding the right mix of channels for each customer profile and developing a new operating model based on customers’ expanded set of needs and preferences.
The good news is that although switching rates are high, our research shows that there is potential for customers to create a “switch back economy.” One in four U.S. customers (27 percent) say they would consider returning to a previous provider. Top drivers of this trend include attractive pricing (56 percent) and a superior product or offering (47 percent).
In short, companies must adopt new customer-centric practices that can help them become a multispeed customer organization, one that acts at the same pace as consumers now act.