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Service Invention to Increase Retention
CMO COUNCIL, Aug 2009
Competitive crunch and convergence in the $4 trillion dollar global communications marketplace is fuelling increased customer churn, and testing customer loyalty. Marketers are facing unprecedented challenges in building loyalty and retaining customers as cut-throat competition and new service models undercut pricing, prey on lucrative customers and disrupt established markets. The industry study 'Service Invention to Increase Retention' benchmarks how the communications industry is responding to interactive digital media channels, social networks, mobile messaging devices and online communities, leaving companies scrambling to retain subscribers, induce loyalty, improve customer satisfaction, and deliver appealing revenue producing services.
With more than $1.5 trillion spent on marketing and communications worldwide, there are significant incentives for global marketers to take a hard look at all facets of customer experience in order to optimize acquisition, retention, satisfaction, and revenue generation.
Some notable studies from reputable sources certainly accent this:
- Satisfying and retaining current customers is three to 10 times cheaper than acquiring new customers, and a typical company receives around 65 percent of its business from existing customers. (McKinsey)
- 47 percent of business executives say that customer experience will play a very important role over the next three years. According to the same study, 73 percent of respondents cite a lack of clear experience strategy as a key challenge. (Forrester Research)
- A five percent reduction in the customer defection rate can increase profits by 25 to 80 percent, and seven out of 10 customers who switch to a competitor do so because of poor service. (McKinsey)
- A typical business only hears from four percent of its dissatisfied customers; the other 96 percent leave quietly. Of that 96 percent, 68 percent never reveal their dissatisfaction because they perceive an attitude of indifference in the owner, manager or employee. (University of Pennsylvania)
- Companies that restructure call centers around a customer service strategy often cut their costs by up to 25 percent and boost the revenue they generate by as much as 35 percent. (McKinsey)
- 92 percent of all customer interactions happen via the phone, and 85 percent of consumers are dissatisfied with their phone experience. (Gartner)
Indeed, nowhere are these data points more relevant and profound than the $4 trillion (Plunkett Research) technology-driven, interconnected communications services market, where every part of the industry ecosystem (carriers, wireless operators, Internet service providers, broadcast/ cable/satellite TV networks, device manufacturers, network equipment vendors, application and firmware developers, component suppliers, distribution channels, transaction systems, content creators, and property rights holders) have to be unified and aligned to deliver on brand promises and user experiences.
Disruptive forces in the global service provider market are creating a greater sense of urgency for assuring a more predictive and positive customer experience, as well as building stronger and more profitable customer relationships.
Key shifts that are impacting churn and loyalty rates include:
- Convergence of technology (voice, data, video and wireless) and competing, bundled offerings from multiple providers.
- Advent of new Voice-over-Internet Protocol (VoIP) service providers and web-based social networks and interactive communities.
- Merging of wireless communications with high-speed Internet connections in homes and public access environments.
- The rapid shift to wireless-only households from lucrative wireline accounts (32 percent of U.S. households will have wireless-only services by 2012, from 15 percent today).
- Flat-rate unlimited calling plans from new upstart regional service providers.
- Market embrace of the digital lifestyle and more personalized, on-demand services and experiences.
- Increasingly diversified and fragmented entertainment, information and interactive offerings from niche providers.
- Loss of confidence and attrition of accounts in the financial services industry as consumers and businesses struggle with the economic downturn, credit crunch, huge portfolio losses and net worth declines.
- Digital device dependency and the advent of mobile entertainment, connectivity, banking, payments, remittances and other essential needs.
Key Findings:
Marketers in the $4 trillion global communications industry (Plucket Research) are facing unprecedented challenges and market gyrations. They are embattled to retain customers and staunch defections in a transformative market brimming with disruptive, free or lowcost interactive digital media channels, social networks, mobile messaging devices, online communities and other forms of content-rich engagement.
“Service Invention to Increase Retention” gathers insights from more than 150 international marketers, via online audit and one-on-one qualitative interviews, across all segments of the global communications industry. It provides a comprehensive benchmark of where technology convergence and customer empowerment is bringing rapid and profound change to a once glacial and monopolistic landscape.
Customer Experience Board (CEB) members represent telecommunications; networking; wireless; broadcast, cable and satellite; Internet content and community; Voice-over-IP, and interactive digital media stakeholders worldwide. Sponsored by Amdocs, the global authority leadership group advances new thinking and best practices in customer retention, handling and loyalty building.
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