Consumers’ patience for bad customer service is thinning, and no sector is bearing the brunt of this heightened intolerance more than retailers.
This story first appeared in the October 22, 2013 issue of WWD. Subscribe Today.
That’s among the conclusions of the ninth annual Global Consumer Pulse Survey conducted by Accenture Inc. and released today.
The study of 12,867 consumers in 32 countries and across 10 different business sectors showed a marked increase in consumers switching the companies they do business with because of poor customer service. Among the 1,256 U.S. adults surveyed, 51 percent had switched companies, up from 46 percent in the 2012 study.
Retailers were the biggest losers in the search for better service, with 27 percent of consumers ending their relationship with a store in favor of another, up from 23 percent last year and more than twice the second most likely target sector, cable and satellite providers, who saw their switch percentage drop one point to 11 percent this year.
Switching is defined as either a partial switch, in which a consumer has added other companies to his or her vendors of choice, or a total one, in which the respondent ceased doing business with a previous provider in favor of another.
However, among U.S. respondents, retailers also led in the complete switch classification, with 14 percent, just above the 12 percent for landline phone companies.
Retailers of consumer goods were also most likely to be left behind, although not by as big a margin, in the global portion of the study, with a 28 percent switch rate — partial and total — exceeding all other categories and followed by retail banks and Internet service providers at 20 and 18 percent, respectively. Retailers had a more modest, but still leading, switch rate of 22 percent in mature markets, but a higher one — 36 percent — in emerging markets. Retail banks had the second highest rate in both kinds of economies with 30 percent in emerging markets and 12 percent in mature ones.
“In a way, this is a good-news, bad-news situation for retailers,” said Robert Wollan, global managing director of Accenture’s sales and customer services practice. “It means the greatest risk of losing customers but also the greatest opportunity for retailers looking for new business.”
He said much of the trouble for retailers can be traced to “problems we could have been talking about in 1990, like being on hold for too long.” But retailers, he noted, were also being subjected to higher expectations as consumers explore the landscape of Web and mobile technologies. The study found that exactly three-quarters of U.S. consumers use online channels to research products and services, while a third of the overall sample use mobile devices to do so.
There’s competition, Wollan explained, not only based on direct competitors but on experiences outside a given sector. “A consumer may go years without having contact with an auto dealership, but once he does, those expectations are transferred over to other sectors,” he said.
The “switching economy,” as Accenture refers to it, represents a large opportunity for retailers in a variety of sectors and places. Accenture estimates that $5.9 trillion is up for grabs globally, with $1.4 trillion in the U.S. and Canada and $1.3 trillion in the U.S. alone.
Among other strategies, he pointed out, retailers need to practice “hyper-relevance. Consumers want to see that companies haven’t just taken information from them but used it in ways that create a more compelling experience and value. Companies have worked hard to get to know customers and improve their internal operations, but they haven’t yet done a good job of turning that to the consumer’s advantage.
“Customers are not, after all, born disloyal,” he said.