Customer Service Sadly Lacking

Mike McLaughlin over at Geurrilla Marketing blog commented on the Sad State of Customer Satisfaction saying,

For the third year in a row, customer service ratings are taking a beating. According to researchers at Accenture, almost half of the 3,500 consumers surveyed said that their service experience with companies was fair, poor, or terrible.

Making matters worse, consumers aren’t just complaining about poor service. Most respondents (59 percent) reported that they switched to a new provider in the past year, specifically due to service failures.

The report, titled “Customer Satisfaction in the Multi-Polar World: Accenture 2007 Global Customer Service Satisfaction Survey Report”, studied more than 3,500 consumers in 2007 across 5 continents. They found that even though overall service satisfaction was highest in the US, only 7 percent of U.S. respondents rated it “excellent,” and 28 percent said it was “poor/terrible” to “fair.”

Interestingly, 33% said their service expectations had increased over the last year. Particularly damning was the insight that globally, 47% of survey respondents said their expectations were met only “sometimes,” “rarely” or “never.”

Customers aren’t just complaining, they are leaving. The hardest hit are retail, banks, and Internet service providers, with ~20% of customers in each of these segments indicating they’ve terminated a relationship because of poor service.  The number of defections is much worse in developed and emerging economies, with 59% reporting that they quit doing business with a company due to poor service; Customers in China and Brazil were even more fickle with 85 percent and 75 percent, respectively, indicating they’ve left companies that aren’t treating them well.

So what to do? The Accenture report recommends that organizations “incorporate the customer’s perspective, values and actions into their business and operations strategy, and into their capability development and execution.”  What does this mean?  It means that companies, now more than ever, MUST do the following:

  1. Differentiate their best customers from their worst.  The Accenture report said that 71% of respondents said they expect “much” or “somewhat” better service when in exchange for spending or purchasing more frequently from a company.  Clearly, some customers have higher expectations and if they are truly more valuable to the company, then it is worth working to meet their needs.
  2. Spend the time and the money to understand what their best customers truly value and find ways of delivering it to them.  Without understanding customers’ critical purchase & retention drivers, anything you do will be pure guesswork and won’t move the customer loyalty needle.  Improvement efforts not grounded in explicit customer research may, in fact, even damage loyalty.
  3. Tier their service levels to profitably offer the levels of service their customers value and are willing to pay for. Some customers are willing to pay for significantly greater levels of service.  If they are, you owe it to them–and to your shareholders to provide it.