Warc, 4 June 2014
LONDON: Fickle consumers are likely to defect to a different
brand when a contract expires or a product needs updating, even if they rate
that brand highly, a new study has said.
According to a global analysis of 40,000 customers by
research consultancy TNS, companies can no longer ensure loyalty and spend just
by providing a reliable, consistent service.
It found that 60% of customers were likely to choose another
brand when buying new electronic products; 57% would replace their car with a
different brand; and 64% would opt for another manufacturer when selecting
white goods like a washing machine.
European mobile network providers were found to have the
most notable 'performance-preference gap': one fifth of customers rated their
provider's performance highly but said they would not necessarily prefer them
over competitors.
Companies could waste millions of pounds trying to improve
their individual performance in the eyes of customers, TNS warned, while
failing to understand the risk posed by other providers how attractive these
competitors are to their customers.
"Good performance," it said, "is only the
entry price that earns you the right to build strong and valuable customer
relationships; it is never enough in itself."
Stefan Schmelcher, global head of customer experience at
TNS, observed that the most successful businesses were able to translate what
was best about their performance into an active customer preference.
"They don't just invest in any service or
promotion," he said, "they get smarter about the customer experiences
that matter and deliver on the bottom line."
In fact, TNS found that customers with the strongest
relationships to their providers were three times more likely to stay loyal,
six times more likely to recommend the brand and five times more likely to buy
additional products and services from the company.
"The reality for today's brands is that best isn't
always right," Schmelcher remarked. "Companies need to uncover the
optimal balance between what customers want and what delivers profitable growth
for the business."
The report noted that the most successful businesses in any
category and market always have the lowest gaps between performance and
preference. "They have been able to close the gap because they understand
what really matters to customers" it said.
Data sourced from TNS; additional content by Warc staff
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