Most mid-market businesses in the UK (89%) with 100 - 1,000 employees see "educating customers" as a critical part of any anti-churn marketing strategy, according to a Loudhouse Research survey conducted for Microsoft.
The research cites "edu-selling" as a top priority, defined as "the priority of information and relationships over incentives and price". New techniques for customer retention are always welcome - a view supported by the 84% of respondents who agreed that "it's become harder to market products and services successfully in the current climate".
Customers are fickle
As customers are increasingly fickle, thanks largely to the ease with which consumers can compare products and prices on the internet, the survey found that it has already become a priority for many companies to retain existing customers and build long-term relationships, rather than relying on new customer acquisition.
But, despite this finding, only 12% of the businesses surveyed had witnessed any reduction in customer churn over the past 24 months, with 34% actually reporting an increase in churn.
Customers demand service
Customer intolerance for poor service is also having an impact on the supply chain, with 70% of companies surveyed stating they would terminate a first time supplier contract if expectations weren't met.
According to Phillip Cullum, deputy chief executive for the National Consumer Council, "Microsoft's research reinforces the National Consumer Council's view that companies pay a high price for providing inadequate levels of customer service. Customers repeatedly tell us that quality of service is what matters to them most. So, if companies wish to achieve steady growth and hold on to their customer base, it would pay to listen and give them the attention they deserve, or risk losing their hard-won loyalty."
What customers really want
According to the survey, customers' top priorities influencing their everyday purchasing decisions include:
- Quality of service: 94%;
- Quality of relationship: 84%;
- Quality of information: 82%.
Perhaps surprisingly, entries from much further down the list included traditional retail focuses such as price (65%) and purchasing incentives (only 32%). Other factors that are growing in importance included business flexibility (77%) and business ethics (60%).
Quality of information
Possibly due to the increasing ease with which consumers can find information online, 69% of B2C company respondents said that "quality of information" has increased in importance over the past three years. In fact, its growth in importance is significantly higher than other key trends such as "an ethical approach" (46%), "flexibility" (56%), and "channel to market" (48%).
But, according to Microsoft, despite commercial enthusiasm to teach customers, the ability to learn from them is often blocked by poor customer relationship management and poor marketing initiatives. Many businesses engage primarily through e-mail or a web site, while few use more sophisticated methods of communicating such as highly personalised communications. Some 30% of companies who have the ability to sell online said they could not accurately track what impact the web site has on sales.
Simon Hughes, head of Microsoft UK's mid-market division, said: "Companies are having to think long and hard about what makes them stand out from the competition and use this to their advantage. Technology can help with this but it's not the only answer. Most mid-market businesses understand the competitive landscape they are in but aren't doing enough to enable their people to respond to these demands and drive success in customer attraction and retention."
But the survey also suggested that "clumsy marketing" is also taking its toll on businesses, with 30% saying they mail their customers every day with news or updates, and 54% doing so every week. Worryingly, only 22% said they ever record customer feedback or satisfaction levels.
Most customer data, beyond the most simple of metrics, is being neglected, as only 27% of the companies surveyed said they had "a sophisticated CRM system" to help them manage customer processes, and only 19% felt that their marketing was ahead of customer demand.
The survey was conducted in May 2006 among 250 mid-market businesses in the UK, of which 50% were B2B sellers and 50% were B2C sellers
For additional information:
· Visit Loudhouse at http://www.loudhouse.co.uk
· Visit Microsoft at http://www.microsoft.com