The current credit crunch has had an interesting effect on consumers, according to a study of consumer spending and expectations conducted by Loudhouse Research for RightNow Technologies. While spending is likely to either stagnate or decrease, consumers' expectations of above-average shopping experiences and product offerings are rising.
The survey of 1,000 British adults found that, while 48% said they expected to reduce their spending due to the ongoing economic downturn, almost all (88%) are now likely to take their business elsewhere if they encounter a poor overall customer experience.
The correlation between consumer spending and customer experience was further reinforced when respondents indicated that the two biggest factors likely to influence their spending during the so-called 'credit crunch' are competitive prices (79%) and a combination of good prices and good customer service (72%).
According to RightNow, retailers that simply rely on brand pedigree, uniqueness of products, or their corporate reputation may be in trouble during the coming months, as these factors were listed as the three least influential factors in consumers' spending decisions.
Voice of the customer
More than four out of five consumers (82%) said that, during given the current economic climate, organisations must listen to and act on customer feedback in order to retain their business, with 74% saying there are now less likely to do business with an organisation if their feedback is ignored.
Consumers indicated that they are generally willing to provide useful feedback, with 94% reporting that they had done so within the previous 12 months. Retailers appear to receive the most feedback (64%), followed jointly by banks, insurers and telecommunication companies (26%). However, those sectors need to ensure that feedback is acted upon, as only 34% of banks and insurers, and 31% of telecoms operators had actually made any obvious use of customer feedback.
All about the positives
Interestingly, consumers are not only focused on providing negative feedback. The report found that 27% of respondents said they always or frequently give positive feedback following either a one-off or regular purchase (compared to only 14% who only provide negative feedback). Of course, to what degree these figures are reliable remains to be seen because many unhappy consumers vote with their feet and defect to competitors without providing any feedback at all.
The study also found that, while consumers are intolerant of poor customer experiences, organisations have to make concessions in other areas in order to attract and keep their customers. For example, consumers said they want more offers and discounts (79%), free delivery options (72%), and improved relevance of marketing communications (29%) as incentives to encourage them to increase their spending.
RightNow warned that, as the credit crunch deepens and consumer spending decreases, offering incentives and sweeteners will not be the complete key to success. Consumers will simply not tolerate corners being cut when it comes to customer service, and they are willing to provide genuine feedback about how to improve the overall customer experience. "Work on capturing and using that feedback to build a loyal customer base that will still be loyal once the crunch is over," concluded Joe Brown, RightNow's general manager for EMEA.