UK: Over 40% of Customers Switch Supplier Each Year, Claims New Research

Last Updated: 4 August 2000

Consulting

Lifetime customer loyalty is disappearing – 44% of UK customers changed at least one of their suppliers over the last year, while almost half of customers made a complaint, according to a new research report* from KPMG Consulting. Consumers are also setting a tough task for retailers and other suppliers - they expect suppliers to understand their individual needs, but after years of enduring junk mail, are wary of parting with personal information. And web buyers who have difficulties completing a purchase are likely to give e-tailers the Big E - if the transaction fulfilment fails, they don't try again. The report, "Customer Management – Who Manages Whom?", shows that utility companies are at greatest risk of defection, with a quarter of respondents having changed their gas or electricity provider in the last 12 months. 16% and 14% of respondents respectively have changed their supermarket and phone company. At the other end of the scale are banks – only 6% of respondents were found to have changed their current account or credit card supplier in the last year. Louise Fletcher, Partner in charge of Customer Management at KPMG Consulting, commented: "This research shows that customer loyalty cannot be taken for granted and that companies need to take urgent action, as customers are very willing to switch to alternative suppliers. While customer loyalty is vital for commercial success, companies must take action to promote it, for example by devising strategies to give customers a compelling reason to retain the same supplier." The report also found that while customers were unwilling to provide companies with information about themselves, they still expected organisations to have a detailed understanding of them as individuals. Half of respondents fully expected companies to have details of why they have contacted them in the past and their customer history, while 51% also agreed strongly with the viewpoint "I find it annoying when I am asked for the same information every time I contact a company". Yet, 35% were unhappy for companies to collect personal details on them, even if this helped the company in question provide a better service. Furthermore, most customers dislike unsolicited contact, particularly from companies that are not their existing suppliers, for example 40% of respondents would be unhappy if the contact introduced a product they found attractive. Even when it comes to existing suppliers, almost a third of respondents would be unhappy to be informed about new or other products they offer. Louise Fletcher believes that customers wish to be in control of the relationship with suppliers: "Customers seem unwilling to provide personal information and to accept unsolicited contact from companies. This is undoubtedly because many companies have been clumsy in the past – not only has their use of customer data been unsophisticated, but their methods of contacting potential customers have been intrusive. This survey shows that companies need to shift the focus away from outbound contact campaigns - such as direct mail or unsolicited phone calls –and instead concentrate on making the most of the approaches customers make to them. If a customer contacts a company with a service request or enquiry, this may be an opportunity to sell them other products, inform them of new offerings or subtly gain information, without jeopardising the relationship." Other key findings of the survey include: Customers rely on their friends – "talk to friends" was the most important source of information for customers considering changing supplier and was, generally, more popular than looking at brochures or advertising, reading newspapers or magazines, calling the company directly or looking on the internet. Customer complaints – almost half of respondents have contacted at least one supplier at least once to complain in the last year. These complaints may offer a valuable and frequent source of interaction with customers, as well as important information. Companies have one chance to get it right – when asked what they would do if a purchase made on the internet fails, the most popular option was 'cancel and refund'. * Research was carried out by Simpson Carpenter during May 2000 among adults in the UK. 750 people answered a range of questions about their dealings with companies in the following sectors: utilities (gas and electricity), telecoms (including mobiles), banking and grocery retail.

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