Consumers still seek better services for more money

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By: Wise Marketer Staff |

Posted on August 16, 2004

Two-thirds of American consumers are willing to pay more for selected services in exchange for better service, despite lower prices being a primary reason for switching service providers, according to a new survey by Accenture.

The survey of 1,000 US adults aimed to determine levels of customer satisfaction and loyalty across 17 industries, resulting in an industry ranking on the basis of general satisfaction levels. It found that nearly two-thirds (65%) of the consumers surveyed are willing to pay more for better services from some industries, including managed healthcare, airlines and hotels.

However, only a small proportion of consumers seem willing to pay more for any individual service, as 20% represented the greatest portion of surveyed consumers who were willing to pay more to any one industry for better service. Not surprisingly, the survey also found that consumers are not willing to pay more for services with which they are the least satisfied.

Motives for switching
In terms of better service, 27% said they would switch providers to gain access to a live customer service representative rather than being forced to use an automated voice response system or web site - a reason for switching that was more frequently given by women than men.

When asked about factors that would lead them to switch providers, 16% said they wanted more reliable or better service, and 24% emphasized lower prices. The least frequently identified reason for switching service providers was "an advertising message".

"Clearly, a correlation exists between the services that consumers value and what they're willing to pay. Not all things are equal, and consumers may be willing to make trade-offs for low-value services," explained John Freeland, global managing partner for Accenture's CRM practice. "Successful businesses harness the principles of customer relationship management (CRM) to segment and understand their customers, making convenient, low-cost electronic services available while steering their best customers to more compelling, personalised services."

Service ranking
The research also generated a customer service industry ranking, based on the percentage of consumers who said they are generally satisfied with the service they receive from the industries examined. Postal services, banks and utilities ranked the highest, with 44%, 42% and 41% of respondents respectively. Consumers, it seems, are generally satisfied with the level of service they receive from organisations in these industries. However, travel agencies (16%), car rental companies (19%) and online retailers (19%) ranked the lowest for satisfaction with the customer service provided.

"As these industries work to improve customer satisfaction, marketers need to research their customer base to mine data that will help them define their best customers, identify revenue opportunities and create services packages with the potential to appeal to consumer segments," said Freeland, who concludes that such targeted marketing packages could help generate higher levels of customer satisfaction, encourage loyalty, and generate more revenues from best customers.

Working on behalf of Accenture, TNS conducted telephone interviews with 1,000 US adults between June 16th and June 22nd, 2004, to examine their attitudes toward customer service provided by various industries.

The 17 industries included in the study were: airlines; banks; cable/satellite TV; car rental companies; government agencies; home telephone service providers; wireless telephone service providers; hotels; Internet service providers; life insurance providers; managed healthcare providers; the postal service; utilities; store-base retailers; online retailers; shipping companies and travel agencies.

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