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RightNow Summit: Credit crunch gives added elbow to customer clout

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15th Oct 2008
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The credit crunch is tipping the balance of power ever more in the favour of consumers. And a new study reveals that customers are more likely than ever to take their business elsewhere if they experience poor customer service.

By Stuart Lauchlan, news and analysis editor

There are precious few upsides to the credit crunch, but one tiny grain of comfort is the increased power of the customer. With companies ever more desperate to retain customers' business, consumers have the 'elbow' to be increasingly intolerant of poor customer service.

According to a new study from RightNow Technologies - conducted by Harris Interactive – that's just what's happening. Outstanding service remains the top reason consumers will recommend a company. But consumers are more likely to tell others about poor treatment following a negative customer experience, with nearly three quarters of respondents saying that they have done this in the past.

Photo of Joe Brown"Against the current economic backdrop, more than ever before businesses need to understand the significance of delivering good customer experiences."
Joe Brown, RightNow

 

For the third year in a row, there is a growing trend for consumers to stop doing business with a company following a negative customer experience. This year, 81% of consumers say they will take their business elsewhere following a poor experience versus 76% in 2007 and 65% in 2006. However, despite a tough UK economy, the survey also found one in two consumers (50%) are willing to always or often pay more for a better customer experience.

The survey found that consumers are fighting back against poor treatment in a number of ways, many of which could directly influence a company’s bottom line. While some 81% will stop doing business with a company because of a negative customer experience, 69% insist they will never use that company again. Viral detraction is becoming a major issue with 74% of consumers ready to tell others about their poor treatment. The internet has given these people additional clout with 20% posting negative feedback online or to a blog.

“Against the current economic backdrop, more than ever before businesses need to understand the significance of delivering good customer experiences,” said Joe Brown, RightNow’s UK and EMEA general manager. “Emphasis has to be placed on retaining existing customers by fostering loyalty through satisfying interactions. The risk of not doing so exposes businesses to heightened customer attrition and will make it tougher to acquire new customers.”

Corporate advantage?

For the third consecutive year, consumers voted ‘waiting on hold’ as the most frustrating aspect when contacting a company for assistance. When engaging with a company, British consumers also want quick access to a live agent. More than half found ‘automated menus that don’t provide an option to speak to a live agent’ and ‘being unable to reach a human being’ - cited by 49% - frustrating. When interacting with a company online 36% of consumers want the option of a live web chat with an agent.

"Two years ago when we started this survey, consumers said they wanted better customer service. In 2008, it's clear that now they demand it."
Greg Gianforte, RightNow

 

Of course, this situation can be reversed and turned to corporate advantage. The survey also found that consumers are willing to reward companies for the provision of good customer experiences with some 53% ready to recommend a company to someone else because it provides outstanding service while 52% of consumers would feel encouraged to spend more with a company if it were to improve its overall customer experience.

The findings mirror a similar study in the US where 87% of consumers have stopped doing business with an organisation after a bad customer experience, up from 80% in 2007. Some 58% of US consumers said that in a down economy, they will always or often pay more for a better customer experience. The US study also found that when recommending a company, outstanding customer service is more important than low prices and top quality products. The Americans are even more trigger-happy when it comes to making their displeasure widely known with 84% of consumers ready to tell others about a bad experience, up from 74% last year.

"Two years ago when we started this survey, consumers said they wanted better customer service. In 2008, it's clear that now they demand it,” noted Greg Gianforte, CEO and founder of RightNow

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