Organizations want customers to have relationships with their brands without the expense of the brands having actual relationships with customers.
A sure sign that a behavior is disappearing is that there are new buzzwords and lots of talk about it. Now, we’re supposed to be in the age of customer engagement, experience, relationships and loyalty. The impression is given that these things matter when in fact they don’t.
Loyalty for most organizations is a one-way street. The customer is expected to be loyal to the brand. The idea of loyalty to the customer is not even considered. A survey by Kitewheel found that 73 percent of customers felt a loyalty program is for brands to reward loyal consumers. However, 66 percent of marketers surveyed believed that loyalty programs are for consumers to show loyalty to brands.
Real human relationships take time and effort. Becoming a good and loyal friend does not happen quickly. Loyalty and caring are powerful human emotions but brands seem to want to get them on the cheap.
Technology has been used to replace expensive human-to-human, face-to-face relationships, because these relationships are the most expensive of all. A 2013 Gallup study of banking customers found that “a typical customer call to a call center in the United States costs $7.50 on average. The same call handled by an overseas agent costs less than one-third of that — $2.35. But placing that call into an automated or interactive voice response system reduces the cost to just 32 cents. It's hard to argue against numbers like that.”
But what is the true cost? “Our analysis suggests that migrating customers from channels they prefer to use to channels they don't may lower their engagement with their bank,” Gallup stated. “Banking executives may be less concerned about this drop in engagement among customers who are less profitable to the bank. But they may be seriously concerned about more valuable customer segments, where channel migration and the consequent declines in satisfaction and engagement could result in loss of revenue, profitability and customer retention.”
A 2015 presentation by Stefan Dieffenbacher at the UX STRAT Europe conference stated that one of Europe’s largest banks found that for every minute a typical customer spent at a bank branch, they spent 99 minutes online. However, branches made nine times more sales than digital channels.
A 2013 study by Accenture estimated “that the 'Switching Economy' puts up to $5.9 trillion of revenue up for grabs for companies globally.” It is common knowledge that it is 5 to 7 times more expensive to get a new customer than to keep an existing one. So, organizations are saving on their relationship costs with customers but in the process are making customers less loyal and more likely to switch.
The Accenture survey “found that customers are increasingly frustrated with the level of services they experience: 91 percent of respondents are frustrated that they have to contact a company multiple times for the same reason and 90 percent by being put on hold for a long time.”
How are many organizations currently dealing with these annoyed and frustrated customers? By telling them, as they wait impatiently on the phone that, “Your call is important to us.” With thinking like that the Switching Economy is only likely to grow and grow and grow.