The negative impact of satisfaction on customer loyalty

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By: Wise Marketer Staff |

Posted on May 30, 2007

Three-quarters of customers who report experiencing 'average customer service' also reported a desire to defect from a supplier, and the situation is not being helped by self-service facilities, according to research by Accenture.

In particular, the study noted, many consumer technology companies are alienating customers with service that is considered "average", and these companies risk losing 73% of their customers to competitors as a result.

Different points of view
The research, based on interviews with senior executives at large consumer-technology companies around the world and a survey of 1,200 technology consumers in North America, Europe and Asia, found a serious disparity in perceptions of customer service between technology companies and their customers.

"Too many of these companies fail to realise the dire long-term repercussions of not making the proper investments in customer service, including missing out on millions of dollars in business opportunities," said Brett Anderson, managing director for CRM in Accenture's Communications & High Tech Practice. "This is a wake-up call that customer service should no longer be relegated to a mere instrument for extracting costs out of the business. Instead, this service should be a powerful and crucial investment target for accelerating full-throttle toward delivering high performance."

Immediate defection ahead
The study also found that more than three-quarters (81%) of customers who rated their service satisfaction as "below average" said they will purchase from a different supplier the next time.

Many companies perceive themselves to be providing much better service than their customers say they are receiving. Although three-quarters (75%) of executives said their company provides "above average" customer care, more than half (58%) of consumers rated their satisfaction with customer service as either "average" or "below average".

Anderson warned: "With so many technology products on a natural path to commoditization, technology companies need to use customer service to differentiate themselves from competitors."

Churn rate predicted
When consumers rate their service satisfaction as merely "average" the likelihood of their buying again from the same company falls by almost half, from 51% to 27%.

Moreover, because nearly half (48%) of consumers surveyed said they share their negative customer-service experiences with friends and family, technology companies risk losing many more customers than just those at the receiving end of poor customer service.

Customer loyalty correlation
"Sharing negative customer-service experiences, both via word of mouth and particularly through the internet, has become a powerful weapon in the hands of consumers to damage companies that provide mediocre or bad customer service," said Anderson. "Accenture has never seen a closer correlation between customer service and consumer loyalty, or the influence that a single customer's opinion can have on the masses."

Accenture's research also exposed several additional areas of poor customer service and consumer dissatisfaction. Among the findings:

  • 42% of customers surveyed said they had to access customer service channels multiple times to solve their problem;
  • 61% said they believe that technology has not improved customer service;
  • 78% said the service they received is "at or below" the level competitors offer;
  • Companies are wasting millions of dollars on customer service initiatives that customers don't view as important - particularly self-service features.

The full research has been made available via Accenture's web site - click here (free registration required).

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