How brand loyalty can vanish in a single click

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By: Wise Marketer Staff |

Posted on December 22, 2005

The internet is making it easier than ever for consumers to research companies' products and services and take their business to different companies and try different brands when their expectations are not met, according to a loyalty study by Accenture.

The study of customer loyalty, based on a survey of more than 1,000 US consumers, found that the majority of consumers believe that the internet makes it easier to change service providers. For example, when asked why this is so, 61% of respondents said it was because the internet gives them access to information about companies, their services and their competition online, and half (50%) said it was because the internet enables them to actually purchase the products or services they want on the spot.

Negative ripples
According to Woodruff Driggs, managing partner for Accenture's CRM practice, "It's more important than ever that companies get their customer relationships right because - with the internet - breaking up is easier to do. Businesses that fail to meet customer expectations will likely find that losing disgruntled customers will have ripple effects as they share their experiences with others."

While 63% of respondents said they would complain directly to a company about a service or product problem, a worrying 68% of consumers said they would also tell family and friends about their negative experiences with those companies, and the same number said they would switch to a competing company following a bad experience.

Main defection drivers
The survey results suggest that the desire for a consistent balance between price, service, and product quality also significantly influences consumers' decisions. When asked to identify the main reasons why they would change the company with which they do business, the most popular response (at 80%) was "lower prices", followed by "providing better service" (58%) and "better products" (48%).

Driggs added: "Creating a loyal customer base requires an intricate balancing act that companies need to perfect to sustain their business in a fiercely competitive market."

Profits from loyalty
The study also confirmed the benefit of managing to sustain true customer loyalty: When asked about businesses to which they are genuinely loyal, consumers said they would continue to make purchases from the company (82%), recommend the company to others (74%) and purchase even more goods or services from the same company (48%).

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