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Wednesday, 30 April 2008 15:46

Consumers spurn company 'churn and burn'

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Will companies ever learn that customers will turn elsewhere if subjected to the horrors of ‘churn and burn’?

Consumers yearn for companies with a brain, and happily spurn those whose only true speciality seems to be poor customer service, especially those companies who hadn’t realised they’d lost customer business because of their abominable business practices.

The unsurprising research comes from RightNow Technologies and StollzNow Research, which showed that only half of the companies that had dimly figured out they’d lost customer loyalty had bothered to try and win the customer back!

The research is recent, which is always great to see, coming from 1031 research participants in Australia and New Zealand interviewed during March 2008.

RightNow says the companies that participants were asked about were in the “telecommunications, utilities, insurance, online retail, internet service provider (ISP), travel and hospitality, and finance industries”.

One even more unsurprising finding from the research was that “the report's findings are proof that the impact of a poor customer experience can directly affect a company's bottom line”.

It’s a shame some companies will only wake up to this because of this report, but then I guess I don’t hold out much hope of already useless companies learning anything more than how to further rip off their shrinking customer bases just to prop up earnings.

Apparently “customer acquisition relative to customer retention” has a high cost – as if this wasn’t already evident to everyone but the categories of companies asked about. Yet again, it was unsurprising to discover that those companies were prepared to wear a level of “customer churn”. What a waste!

Confirming the dreadfully horrific trend towards poor customer service in Australia and New Zealand, two thirds of the participants said they had experienced poor customer service from one of the seven different categories of companies listed above.

The biggest non-surprise of all is that telecommunications companies were at the very top of the abysmally poor customer service list with 62% of customers unhappy, in what is the anti-gold medal.

Then  came ISPs, which are often - but not always - owned by telecommunications companies anyway, at 52%. Silver. Ugh.

So, who won the bronze medal, and what did consumers have to say about the inexplicably poor treatment given to them by companies that clearly should know better – and are only in business because of the very people that suffer from the customer handling ineptitude? Please read onto page 2.


Finance companies – the very companies getting sucked into a vortex of bad karma over their dodgy conduct with sub-prime mortgages, poor lending practices and high fees took the bronze medal with 46% of unhappy customers.

The travel and hospitality industry had 31% of dissatisfied customers, online retail had 30% and the insurance and utilities industries had 28% of unhappy customers – the best of a bad, bad bunch when it comes to customer service and its redefinition into customer disservice.

A whopping 65% of participants said they’d “stopped doing business with a telecommunications provider due to poor customer service”, while 44% believed – or probably couldn’t believe – that “their provider hadn't realised they were no longer a customer”.

RightNow says that “other industries also have issues”, too. The travel and hospitality industry appears to “suffer from customer visibility problems” with 78% of participants in the belief that “once they'd boycotted a company in this sector, the company was unaware of the lost business”.

Apparently, this stunning lack of insight “may account for the massive 90% of travel and hospitality companies that did not attempt to win customers back”.

Brett Waters, Vice President Asia Pacific South of RightNow said what should be obvious and “business 101” when he exclaimed that: "Today, the success of every business depends on good customer experiences.”

Waters continued that: “Consumers are much more attuned to what is, and what isn't, acceptable behaviour when they interact with organisations and are increasingly prepared to remove their business because of poor experiences. Companies need to wise-up to the correlation between poor customer experiences and churn – if you can't make it easy and satisfying for people to do business with you, you'll lose them to someone who does – and quickly."

Consumer participants were also quick to share their grievances and frustrations with the online shopping industry, saying they wanted “transparency” about delivery charges before having their hearts temporarily stop when they saw what delivery would cost at the “check out”.

And is it any surprise that participants wanted to know simple stuff like “better information about products” and another no-brainer in wanting to be able to “ask questions during the purchasing process”.

Of course, it’s no surprise, given that RightNow sells customer relationship management software, that RightNow reminds us that “all of these areas of frustration are solvable with technology readily available today”.

Still, there was one bright spot in the entire survey, and funnily enough, it will put a smile on the dial of the dental profession! Apparently nearly 33% of Australians would “rather go to the dentist for a tooth extraction than suffer a poor customer experience!”

Far out. Companies, please, stop being so brain dead and remember, the customer is king. Treat them right, and you’ll not only rarely lose customers, but they’ll love and champion you, not secretly wish your entire organisation burned at the stake.

Ignore this report at your peril, companies of the world. We, your customers, are sick to death of poor customer service. Ye have been warned!

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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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