Customers voting with their feet when organisations fail to listen

Switching epidemic continues unabated as latest Satmetrix Churn Index suggests many service and supplier organisations are still not listening to customers as close on 10 million have switched in past six months

The top three reasons for switching in 2011 are identical to 2010, with unfair fees and charges the number one cause, and rude and disinterested employees climbing one spot to number two and now equal with poor product and service policy.

The Satmetrix Churn Index 2011 is based on over 13,000 consumer responses in the UK.  Not only does it show that suppliers simply haven’t listened to the issues uncovered by the Satmetrix Loyalty benchmarks in 2010, but it also reveals that switching unleashes a tidal wave of negative Word of Mouth (WOM). In fact almost 40% of switchers have advised against using the supplier they left - four times the number for average consumers. Key findings from the survey include.

• Almost 10 million consumers have switched in last six months because of a poor customer experience.
• Switchers bad mouth suppliers four times more often than average consumers.
• Energy and insurance sectors at the bottom of the loyalty ladder.

Famous for their sense of fair play, the British don’t like it when they are not treated fairly or well. As a result, almost a quarter of respondents (23%) saw unfair fees or charges as the number one reason for switching and 21% identified rude or disinterested employees as the main cause. 

Robert Salvoni, Managing Director International at Satmetrix said: “I’m amazed that companies haven’t listened to consumers and changed their behaviour. In fact, recent headlines show that a number of organisations are starting to introduce new fees, which will only fuel the switching epidemic. The results also show that companies aren’t helping employees to understand the impact of their behaviour. With today’s tight economy and pressure on revenue and profit, it makes no sense to drive customers away for reasons that are entirely within companies ‘control.”

The Satmetrix Churn Index identifies the winners and losers when it comes to consumer loyalty. The clear winners are suppliers of computer products and consumer electronics such as TVs and mobile phones who are creating significant levels of positive WOM.  In marked contrast, the energy sector has a Net Promoter® Score some 62 points lower than the leader and is creating significant negative WOM. The winning and losing sectors are listed in the chart below.

Sector	2011 NPS
Computer hardware and software	+27
TVs, DVD, mobile phones	+21
Internet service providers, mobile phone carriers	+1
Banks, credit cards	-1
Insurance – home, car, life	-11
Energy – gas, electric	-35
All sectors	+1

 

 

 

 

 

 

 

 

 

 

 

 While switchers are four times more likely to advise against using a supplier than average consumers, almost four times as many (38%) consumers in the past six months have positively recommended than negatively recommended (10%).

This explodes the myth that people are more likely to spread negative WOM than positive WOM – unless they have been let down by their supplier. Furthermore, those that have positively referred have a Net Promoter Score of +50 – double the best performing sector and 50 points higher than the UK average. It is also some 94 points higher than those who have switched and who negatively recommended (-44). This shows that if suppliers create a promoter they will benefit from both increased loyalty and positive WOM and avoid the damage created by switchers.

Robert Salvoni commented: “This year’s churn index reveals the double whammy of delighting customers. Not only will you keep them but you will also benefit from an extremely high level of advocacy. All the indicators prove that it pays to focus on delivering a customer experience that exceeds expectations.”

The Satmetrix Churn Index is based on over 13,000 responses from UK consumers and covers six sectors from financial services to consumer electronics.

It covers a wide range of topics, including:
• The rate at which consumers have stopped buying from a supplier;
• The reasons for stopping buying;
• The likelihood to recommend;
• The likelihood to continue to buy; and
• The rate at which consumers have positively recommended and have advised against buying.

Carried out once a year, it acts as a barometer of the way suppliers treat their customers and identifies the WOM created by supplier behaviour.

Reasons for switching	2011	2010
Unfair fees or charges	23%	23%
Rude or disinterested employees	21%	19%
Poor product or service policy	21%	21%
Couldn’t get hold of anyone to deal with my problem	11%	12%
Discounts for new customers but not existing customers	8%	7%
Out of territory call centres	5%	5%
Inadequate return or refund policy	3%	4%
Inadequate environmental policy	1%	1%

   
   

 

 

 

 

 

 

 

 

 

 

  • Satmetrix is launching an innovative new product suite Xperience 2.0 that can be used by companies of all sizes to address the issues uncovered by the Satmetrix Churn Index. The software enables businesses to get customer experience management programmes up and running in as little as four weeks and provides key benefits including: identifying how to deliver a customer experience that reduces churn; enabling employees to adapt their behaviour based on customer feedback; and increasing positive Word of Mouth (WOM) and recommendations.