Businesses losing customers from bad service
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Companies are losing millions of customers and billions of pounds because of bad customer service according to a new survey.
The study commissioned by lifestyle company WhiteConcierge found that three out of four customers switched at least one product or service in the last two years.
More than one in five blamed bad customer service for switching to other finance, telecoms and utilities brands.
The report says car insurance, electricity and home insurance firms are the worst affected by customers switching providers as a result of poor service.
Firms are losing 20 million customers which costs them around £3.4bn.
Professor Merlin Stone of Oxford Brookes University who conducted the study, says: “Organisations have to work harder than ever to keep their best customers.
Consumers have become increasingly demanding and discerning, and with the rise of price comparison websites for example, it is now much easier to compare and switch products.”
Jonathan Breeze, managing director of WhiteConcierge, said: “Price is undoubtedly one important factor for causing people to change providers but many companies cannot compete on this at the moment.
“As our research findings show, issues surrounding customer service experiences are also key and can be addressed more readily.”
Tighter rules concerning utilities firms doorstop selling have come in to play today following an investigation by utilities watchdog Ofgem.
The rules aim to prevent cases of mis-selling, one of the reasons the sector is often criticised for providing poor customer service.
The new riles state that when customers are sold a new price plan on the doorstep, by phone or in stores, they must be given a written quote before the sale goes through.
Readers' comments (2)
Crispin Manners | Mon, 18 Jan 2010 4:00 pm
It's good to have another survey highlighting that missing service expectations is a source of churn. What's disappointing is that with an estimated 20 million customers switching suppliers, so few organisations have a strategic drive to listen to customers and act on the feedback to improve the customer experience.
Organisations like Virgin Media have transformed their customer experience by doing just that. They use Net Promoter as their prime listening technique and the positive impact on their business has been impressive -http://www.satmetrix.com/satmetrix/pdfs/VirginMedia-CaseStudy.pdf
In my experience price is rarely the main issue driving churn. Missing customer expectations is a much stronger trigger for change. And it not only drives churn but also negative word of mouth.
The fact is loyalty pays but only if as Merlin Stone suggests organisations work hard to keep their best customers.
I believe Net Promoter is an ideal way to identify to segment customers and to underpin a systematic process to create loyal behaviour by listening and involving customers in business and service improvement.
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Matt Fisher, FrontRange Solutions | Thu, 28 Jan 2010 10:22 am
In the recent tough economic times, service may have been one of the many cutbacks made across the breadth of the organisation. However, service is precisely what will keep current customers and continue to attract new ones. When emerging from a downturn, it is essential to capitalise on any sort of competitive edge by instilling the ability to receive feedback and take tangible, proactive action to meet customers’ demands. Much has been made of the birth of “Generation Y”ers – those who multi-task throughout life and communicate with organisations via a multitude of channels. This should strongly underline the need for businesses to reassess their service provision. This young demographic’s demand is for more, not less, personalised and tailored services, fully utilising technology to deliver robust services. Organisations that are providing and delivering robust services win; there is no second place. - Matt Fisher, Director, FrontRange Solutions.
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