Customer Service, Not Price, Remains Top Cause of Customer Churn, Accenture Study Finds

NEW YORK; Nov. 18, 2008 – Service again ranked above price as a global driver of customer churn, according to Accenture’s fourth annual study on customer service satisfaction, titled “High Performance in the Age of Customer Centricity.”

The study is based on a survey of more than 4,100 consumers in eight countries across five continents. Through the survey, consumers provided feedback about customer service across the full range of customer service channels, including use of the telephone, e-mail, corporate websites, mail, online chat and on-premise services.

In total, two-thirds (67 percent) of respondents reported moving their business to other companies as a result of poor service in a variety of industry sectors, up from 59 percent of respondents in last year’s survey. Underscoring the sharp increase in consumers switching business providers is an overall erosion of customer loyalty. Half (50 percent) of respondents in this year’s survey reported that they switched providers in multiple industry sectors during the year, taking an average of $4,000 worth of business with them, by their own estimate, each time they took business elsewhere.

“While the survey found increased customer turnover, this situation may provide an opportunity for companies—especially in tough economic times,” said Woody Driggs, managing director of Accenture’s Customer Relationship Management practice. “Doing the hard work to deliver the right customer experience --- including service that meets rising customer expectations --- can set a company apart and help it hold on to customers.”

For the fourth straight year, the Accenture study also found that the number of consumers who left because of poor customer experience was significantly higher than the number of those who left a business because they found a lower price elsewhere — 68 percent versus 53 percent. Among respondents in the United States, the discrepancy was even greater, with 73 percent of respondents saying they switched service providers due to poor service, compared with 47 percent who switched providers because of lower prices.

The findings also revealed that consumer expectations continued to increase. Nearly one-third (31 percent) of those surveyed described their service expectations as higher now than one year ago, and 52 percent described them as higher now than they were five years ago. Expectations were even higher in the developing markets of China, India and Brazil, where many companies now look to for growth. Significantly more than half (60 percent) of respondents in those countries said that their expectations are higher now than they were a year ago, and 84 percent said their expectations are higher now than five years ago.

Additionally, Accenture found that consumers are becoming less forgiving of companies that fail to satisfy their expectations. Twenty percent of respondents reported that they would immediately leave a company because of a poor service experience, up from 13 percent in last year’s survey.

“Service is no longer just a cost of doing business — it’s at the forefront of the battle for the consumer, whether the business is in Beijing, Boston or Berlin,” said Robert Wollan, managing director of Accenture’s CRM Service Transformation practice. “Consumers around the world are deserting companies in record numbers when they encounter experiences that don’t meet their expectations. The upside of our findings is that companies that can leverage sophisticated analytical capabilities to isolate what really matters to their consumers have the opportunity to quickly differentiate their service experience from that of competitors and grab market share.”

Among the survey’s other findings:

• Consumers were most likely to switch providers when they were dissatisfied with four key aspects of customer service, including:

- whether service representatives were polite and friendly;
- whether their issues were resolved in a timely manner;
- whether service representatives took ownership for resolving the customer’s issue; and
- whether customer service was available at convenient times.

Additionally, consumers were most likely to switch companies when they became frustrated by being forced to wait for a response after requesting customer service or when they encountered business policies that impeded the ability of customer

• Consumer expectations were met least often in the emerging markets. In China, there was a particularly notable decline in companies’ ability to meet consumer expectations, with only 32 percent of Chinese respondents in this year’s survey saying that their expectations were met frequently or always, down from 70 percent in 2007.
• Consumers in emerging markets were most likely to say that the increased use of technology has improved customer service. Nearly nine in 10 respondents (87 percent) in emerging markets said technology has improved customer service, compared with only 44 percent in mature markets.
• Consumer use of the full range of service channels has increased in the past year. While the vast majority of consumers still prefer to use the telephone to seek assistance (selected by 85 percent of respondents), use of other service channels — including e-mail, speaking with representatives at places of business, corporate Web sites, sending a letter and online chats — has increased across the board. However, satisfaction with service declined across most channels, with the exception being live online chat -- 43 percent of consumers reported that they were satisfied with chat services, up from 30 percent a year earlier. Even so, satisfaction remained highest when service was delivered on premise, with the largest number of respondents – 55 percent – expressing satisfaction with on-premise customer service.

Methodology

The Web-based survey of 4,189 consumers in Australia, Brazil, Canada, China, France, Germany, India, the United Kingdom and the United States was fielded in July and August 2008. Accenture has fielded similar customer service satisfaction surveys annually since 2005, expanding the study in 2008 to include Germany and India.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With more than 186,000 people serving clients in over 120 countries, the company generated net revenues of US$23.39 billion for the fiscal year ended Aug. 31, 2008. Its home page is www.accenture.com.

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Contact:

Barbara Lyon
Accenture
+1 (703) 947-1838
barbara.d.lyon@accenture.com