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Firms must invest more in customer experience, less in advertising - report

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8th Jun 2010
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Organisations would be better off diverting some of the £14 billion they spend each year on advertising to boost customer service levels in a bid to increase loyalty and prevent the one in four defections that currently take place.

According to a survey undertaken among 5,100 UK consumers by CRM software supplier Satmetrix, a huge 24% of shoppers – the equivalent of 10 million adults across the country - took their business elsewhere over the last six months due to a bad customer care experience. The study focused on consumers of banking and ISP-based services, mobile phone handsets and services, computer hardware, car insurance and TVs.

The number one gripe among such customers was being made to pay unfair fees or charges (23%), followed by being provided with poor products or service quality (22%). Next on the list of complaints was being on the receiving end of rude or disinterested staff (19%) as well as not being able to get hold of anyone to deal with problems (12%).

Deborah Eastman, Satmetrix’s chief marketing officer, said: "Business choices that seem to make sense from a financial point can negatively impact revenue and reputation if consumers don’t think they’re fair. If companies drop these bad profits, they will likely recoup lost revenue many times over by keeping their customers for longer and acquiring new ones through recommendations."

Such recommendations from family, friends and colleagues are important because almost half of respondents considered them to be the most trustworthy source of information available to them. In comparison, a mere 15% put their faith in consumer opinions posted online, while only 2% trusted advertising messages.

"It seems that many organisations chose to invest in attracting new customers through advertising rather than invest in a good customer experience that creates loyalty," said Eastman. "If companies listened more to their customers, and if employees could understand the impact of their behaviour by seeing customer feedback for themselves, then businesses could significantly reduce churn."

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