Study confirms a lack of win-back strategies

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By: Wise Marketer Staff |

Posted on May 9, 2008

More than half of consumers surveyed by RightNow Technologies and StollzNow Research said they had stopped buying from a company due to poor customer service, and a large number felt that the company didn't even know it had lost their business.

More worryingly, only half of the companies surveyed that were aware of such losses of customers and sales had attempted to win that business back, the survey found.

Impact on profits
The survey of over 1,000 consumers in Australia and New Zealand examined customer experience problems in the telecommunications, utility, insurance, online retail, internet service provider (ISP), travel and hospitality, and finance markets, and concluded that a poor customer experience directly affects a company's bottom line profits.

Despite the high cost of customer acquisition (compared to customer retention), companies appear to be content with a certain amount of customer churn based on poor customer experiences. Two-thirds of respondents in Australia and New Zealand said they had experienced poor customer service at some time during their relationship with companies.

Best and worst sectors
The telecommunications industry was the worst offender with 62% of respondents indicating they had experienced poor service. Next were ISPs with 52%, followed by finance (46%), travel and hospitality (31%), online retail (30%), and insurance and utilities (28%).

A high proportion of respondents (65%) indicated that they had stopped doing business with a telecommunications provider due to poor customer service, and 44% believed their provider hadn't realised they were no longer a customer. The travel and hospitality industry appears to suffer mostly from customer visibility problems, as 78% indicated that once they'd boycotted a company in this sector, the company was unaware of the lost business. This lack of insight may also account for the 90% of travel and hospitality companies that did not attempt to win customers back.

The unhappy churn problem
According to Brett Waters, vice president for Asia Pacific South at RightNow Technologies, "Consumers are much more attuned to what is and what isn't acceptable behaviour when they interact with organisations, and they are increasingly prepared to remove their business because of poor experiences."

The survey also investigated consumer opinions about experiences when shopping online. Consumers were asked what they found to be the most frustrating aspects of the experience, and areas for improvement included transparency about delivery charges before reaching the check-out, as well as better information about products, and the ability to ask questions during the purchasing process.

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