Fewer Consumers switch service providers despite decreasing satisfaction.

For the first time in six years, the number of consumers who switched service providers as a result of poor customer service declined in 2010, according to the latest edition of an annual consumer behavior study released by Accenture. This occurred even as consumers continue to expect more from customer service and their satisfaction with customer service has been decreasing. In fact, the study shows that consumer satisfaction is down across the board – in each of the 11 service characteristics survey respondents were asked to rate. Their satisfaction declined in areas ranging from having customer service available at convenient times to being able to access service through multiple channels.

The most recent Accenture Global Consumer Survey found that 64 percent of consumers switched from at least one service provider–a bank, utility or wireless carrier, for example–due to poor customer service in 2010. This reverses a trend identified in previous surveys in which the number of consumers making a switch had steadily risen from a low of 49 percent in 2005 to a high of 69 percent in 2009. In the latest survey, retailers (26 percent) and banks (22 percent) demonstrated the highest rates of consumer defection, followed by internet service providers (19 percent), wireless carriers (17 percent) and landline providers (16 percent).

The survey, which assessed consumer attitudes toward customer service and marketing and sales practices in 10 industries among more than 5,800 people in 17 countries, also found that more than two-thirds (67 percent) of global consumers are not willing to compromise on levels of product quality in exchange for lower prices and more than half (54 percent) are not willing to compromise on levels of customer service. And, according to the survey, the percentage of consumers who identified price as the reason for selecting a new provider declined from 75 percent in 2009 to 57 percent in 2010.

“As the global economy recovers, we’ve identified some telling shifts in consumer attitudes,” said Robert Wollan, global managing director, Accenture Customer Relationship Management. “The unexpected reversal in switching rates indicates that despite the decline in satisfaction with service, other factors, including loyalty programs and the use of technology, are influencing consumers’ decision to stay with or leave their providers.”

Technology Boosts Customer Experience, but Word of Mouth is Still Critical

Consumers report that the increased use of technology has improved their awareness of products and services as well as their experience with customer service issues. More than three-quarters (77 percent) of global consumers reported that the use of technology in the pre-sales phase – such as e-mail advertisements, online banners, product comparison tools and online ordering – has improved their experience when deciding to purchase a service provider’s offerings.

More than two thirds (66 percent) say their growing use of technology for customer service through such channels as automated phone attendants, live Internet chats and self-service options on a website has improved the level of service over the past five years. In each Accenture survey since 2007, that number has increased, from 50 percent in 2007 to 53 percent in 2008 and 61 percent in 2009.

Still, however, word of mouth is the source of information respondents use most (76 percent) and consider most important (56 percent) when deciding whether to do business with a service provider. Word of mouth extends to postings on social media sites, where one in four respondents say they trust the comments about companies and brands posted online by people they know.

“Offering customers a variety of interaction points for learning about a company’s offerings and obtaining service has never been so important to an organization’s success,” said Wollan. “Customers are clearly voting with their precious dollars and responding to newer communication channels such as social networking sites, online self-service and online chats in addition to traditional phone and in-person encounters.”

The Growing Role of Trust and Loyalty

The survey also identified trust between a company and its customers and loyalty programs as strong influencers of consumer behavior in 2010. Just over one in four (27 percent) of consumers indicate they trust the companies with which they do business. Nearly one-fifth (18 percent) of consumers switched retail banks as a result of loss of trust, the highest rate across all industries studied. As compared with a year ago, loss of trust increased as a reason for consumers switching their consumer goods retailers (from 7 percent of consumers in 2009 to 15 percent in 2010), travel and tourism providers (from 11 percent in 2009 to 17 percent in 2010) and consumer electronics manufacturers (from 14 percent in 2009 to 17 percent in 2010).

Across the 10 industries assessed in the study, the percentage of consumers who participated in at least one loyalty program increased in 2010 as compared with 2009. For example, participation in retail loyalty programs grew from 45 percent of consumers in 2009 to 52 percent of consumers in 2010. Participation in hotel loyalty programs grew from 18 percent to 24 percent, and for wireless service providers, consumer participation grew from 19 percent to 31 percent.

Similarly, the percentage of consumers who were persuaded to remain a customer as a result of loyalty programs increased in 2010 as compared with 2009: from 49 percent to 54 percent among retail consumers; 45 percent to 53 percent among wireless service provider consumers and 49 percent to 51 percent among hotel customers.

“At a time when consumers expect more but think they’re getting less, loyalty programs can be an effective way to set expectations earlier in the customer relationship, and ultimately improve trust and satisfaction, said Wollan. “Effective programs go beyond transactional rewards–they value and strengthen the overall emotional connection with consumers through tailored experiences.”

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