The growing “switching” economy

PS_0770W_ELEMENT_SURPRISE_tFive years ago, 78 percent of consumers used at least one online channel when prospecting. Today, 88 percent do—and four in 10 want even more digital interactions than what companies are providing. Two-thirds said the number of companies or brands they consider for purchase has increased significantly compared with 10 years ago.  Digital has become more important to consumers across the board. Some consumers have completely “gone digital”—they prefer to interact with their providers via online channels at every opportunity and are loathe to be forced into conversations with humans.

Accenture’s research shows that consumers between18 and 34 years, those who have grown up immersed in digital technologies, are two to three times more likely than consumers older than 55 to want use more digital interactions than companies currently support. Yet our experience shows that the older group is surprisingly open to adding other channels to their portfolio and is experimenting with online interactions, using a wider variety of contact channels in specific industries and to meet select needs. So, by focusing on millennials, most companies are missing an important opportunity.

The point is, the rise of digital has given consumers, many more options for interacting with companies they patronize. But companies have been slow to recognize when and how these channels fit the preferences of different groups of consumers in developing or mature markets and then change their operations and strategies accordingly. As a result, they continue to fall short of consumers’ expectations and, consequently, miss out on substantial revenue growth opportunities.

Unknown

The Switching Economy Has Swelled in the Past Decade

One of the most compelling findings of their research is that digital disruption has caused a steady erosion in customer loyalty. In fact, many established companies have been experiencing an ongoing exodus of customers who represent an ever-expanding amount of revenue ripe for the taking.

Two-thirds (64 percent) of consumers in our study in 2014 said they switched provider in at least one industry due to poor customer service— a figure that hasn’t changed materially in the past five years—and six in 10 said they are more likely to switch from one provider to another compared with 10 years ago.

screenshot_172

The research also finds that partial switching, whereby consumers add new providers to complement existing ones, has remained a strong trend across most industries in the past several years, making it all the more difficult for companies to detect customer defection.  Last year alone, about half of the customers who encountered a poor service experience shifted a portion of their spend from existing to new providers.

Nontraditional” competitors are gaining ground with consumers

Globally, 44 percent of consumers would be open to consider products and services from companies that are not generally considered part of traditional industry definitions. Take Google, as an example, other Accenture research recently showed that 23 percent would consider buying purchasing insurance products from this online service provider1 and 35 percent would consider the company as provider of in-home broadband services, should these be available.

About richmeyer

Rich is a passionate marketer who is able to quickly understand what turns a prospect into a customer. He challenges the status quo and always asks "what can we do better"? He knows how to take analytics and turn them into opportunities and he is a great communicator.

View all posts by richmeyer →

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.