The "Switching Economy" and What It Means for Marketers

Share:
The switching economy presents an enormous opportunity for brands to grow market share in an increasingly competitive environment.
Customer Experience

Brands that don't value customers enough to put them at the center of their business models can no longer hide this shortcoming. Consumers are shouting about poor customer service from the rooftops via social media, online reviews, and good old-fashioned word-of-mouth, and the world is listening.

Why should businesses care? Because brand loyalty is diminishing and dissatisfied customers leave and take their money with them. In 2013, 51 percent of U.S. consumers ditched brands that weren't up to par, and in doing so, put a staggering $1.3 trillion up for grabs for other brands to potentially benefit from.

Welcome to the "switching economy"

The "switching economy" is a term coined by Accenture to describe the increasing number of consumers switching to different brands due to dissatisfaction of some sort. It should be enlightening for marketers to note that not only are customer service issues and cost the top two reasons that consumers switch, but they are equally important to consumers, according to the Accenture study. Who's switching? Customer loyalty is typically more volatile in certain sectors, including retail, cable, and satellite providers, and retail banks. Some of the top reasons for switching cited by Accenture include frustration with a company that doesn't make it easy to do business (85 percent), promising one thing and delivering another (84 percent), and inconsistent experiences from channel to channel (58 percent).

Customer expectations rising

In our on-demand, instant-gratification world, customers expect more when it comes to service. Companies with outstanding reputations for customer service, like Amazon and Zappos, have "ruined" it for the rest of us. As a result, more than half of U.S. consumers have much higher expectations than they had the previous year of getting specialized treatment for being a "good" customer. And nearly one-third of customers today expect that a company should know their preferences and customer histories. Consumers expect customer service to be more convenient, with more options for how to contact a company. Also, Millennials expect their feedback to matter to brands, with 52 percent saying brands should be willing to change based on consumer opinion, according to an Adroit Digital survey.

What the switching economy means for marketers

Delivering an omnichannel, personalized and consistent customer experience should be marketers' number one priority today. Not only does this aid customer retention (this is important because it's estimated that reducing customer turnover by 5 percent can increase profits by 25-95 percent), doing omnichannel well puts brands in a good position for customer acquisition as unhappy customers look to spend their dollars with a competitor.

A good omnichannel customer experience hinges on marketers' ability to collect and use customer data to personalize experiences in real time. In addition to maximizing the ROI of traditional customer channels, marketers need to explore other channels to communicate with customers. For example, social media is becoming more important for customer service support, with many Millennials preferring social media to any other channel for customer service.

The switching economy presents an enormous opportunity for brands to grow market share in an increasingly competitive environment. Taking advantage of this boils down to providing personalized customer experiences. The brands that transform themselves into customer-centric organizations and put the technology tools in place to support an omnichannel strategy will be the ones that pull ahead of the pack.

EXPERT OPINION
EXPERT OPINION