Despite heavy investment, only 11 percent of U.S. consumers strongly agree companies are effectively converging digital, mobile, social and traditional channels
U.S. companies are struggling to keep pace with their customers' "always on" nature and greater use of digital channels, according to new research from Accenture (NYSE:ACN). As a result, the "Switching Economy" – the potential revenue up for grabs in the U.S. market due to changes in consumer spending patterns and switching rates – has swelled to $1.6 trillion, a 29 percent increase since 2010.
Accenture's "Switching Economy" analysis is part of the company's tenth annual Global Consumer Pulse Research, which gauges the experiences and attitudes of 23,665 customers around the world about marketing, sales and customer service practices. Included in a subset of the sample were 2,021 U.S. consumers.
"There is a $1.6 trillion market in the United States just waiting to be tapped, so one would expect a rush of companies seeking growth from it. Instead, many established companies are reacting too slowly to the needs of today's 'non-stop customers', and consequently, they are seeing both a customer exodus and a decrease in their revenue potential," said Robert Wollan, senior managing director, Accenture Strategy. "While many companies have been chasing the opportunity digital brings, they have not addressed the root causes of the problems that are exposed when they don't execute well. Companies have been focused only on 'doing the same things better' when these issues really require them to 'do things differently'."
More than half of consumers (56 percent) report that the number of brands they consider has increased significantly over the past 10 years, and 46 percent believe they are more likely to switch providers compared to 10 years ago. More than three-quarters (78 percent) surveyed use at least one online channel when looking for a new service provider, and nearly one-quarter (24 percent) want more digital interactions from providers. Only 11 percent of consumers strongly agree companies are effectively converging digital, mobile, social and traditional channels.
"Today's customer's sense of loyalty to an existing provider is often eclipsed by a competitor's personalized and tailored experience," said Kevin Quiring, managing director, Accenture Strategy. "Our research shows that some companies are opening the door to 'non-traditional' competitors who are often more willing to 'do things differently' and offer prospective customers more opportunities for customization."
Just over one-quarter of U.S. consumers (28 percent) feel very loyal toward their providers and only about one in three (31 percent) are willing to recommend them to others, figures that have remained consistent over the past several years. Just over one-third (34 percent) are open to purchasing products and services offered by non-traditional providers and about the same amount (30 percent) will consider making purchases through consumer-to-consumer channels for housing/accommodations, transportation or money lending.
Many of the common consumer complaints and habits identified by the research have been ever-present for a number of years, indicating that many companies are not addressing underlying issues effectively. Failure to quickly resolve an issue continues to drive the switching trend, with little improvement reported over the past six years. The three top U.S. consumer frustrations for customer service – solving an issue during the first interaction (86 percent in 2014 vs. 84 percent in 2009); lengthy hold times (85 percent vs. 84 percent); and interacting with service representatives who cannot answer questions (84 percent vs. 84 percent) – have remained flat.
The Accenture research also highlighted that one-third of U.S. respondents plan to spend less in at least one industry, as compared with just over one-quarter (26 percent) who said the same in 2009.
Despite high switching rates, the survey reveals a potential "switch back" opportunity for companies. Just over one-quarter (27 percent) say they would consider returning to a previous provider. Top drivers of this trend include attractive pricing (56 percent) and a superior product or offering (47 percent).
Analog meets digital to help companies "do things differently"
Satisfaction with online customer service channels, including online text/video chat, mobile applications, third-party review of websites or forums and social media, is relatively solid compared with "traditional" channels with just over half of respondents reporting that they are satisfied with online text or video chat (57 percent and 55 percent, respectively), as compared to just 51 percent that were satisfied with traditional contact center support.
However, despite the relatively high levels of satisfaction with digital channels, adoption of these technologies by consumers as part of the overall channel mix has remained low due to several barriers. These barriers include the lack of the right information provided by the channels, lack of trust in them, and lack of knowledge of how to access and use them.
Further, while most companies are aware of the value that digital brings, many have been slow to develop an overall strategy that incorporates these channels into their existing customer service offering.
"Many companies have suffered from two persistent customer service-related headaches that hindered profitable growth over the past 10 years: chronically high switching rates and decreasing spend by their remaining customers," said Wollan. "Companies that determine the right blend of digital and analog channels to improve the customer experience can reap huge benefits by retaining existing customers while luring more than their fair share of new ones away from competitors."
