TNS

Customers defect to competition even when companies perform well

London: 4 June 2014 - More than half of customers are likely to defect to a competitor brand when a product needs updating or their contract expires, according to a new study from global research consultancy TNS. Almost two thirds (60%) of customers are likely to defect to another brand when buying new electronic products; 57% would replace their car with a different brand; and 64% would opt for another manufacturer when selecting white goods like a washing machine.

According to TNS’s global analysis of 40,000 customers, companies can no longer ensure loyalty and spend just by providing a reliable, consistent service. In fact, many of those who defected to a competitor actually felt their current provider was performing well.

Looking across the banking, utility and telecoms industries, TNS identified that more than 50% of companies are failing to translate good performance in terms of product and service delivery into customer preference for their brand. According to TNS’s proprietary TRI*M tool, European mobile network providers were found to have the most notable ‘performance-preference gap’. One fifth of customers rate their provider’s performance highly but admit they still would not necessarily prefer them over competitors.  

Companies that fail to address this gap are wasting millions of pounds trying to improve their individual performance in the eyes of customers, while failing to understand the risk posed by other providers, and more importantly, how attractive these competitors are to their customers.

Stefan Schmelcher, Global Head of Customer Experience at TNS, said: “Given the fierce competition in many markets, securing valuable customer relationships requires a deep understanding of what drives your customers’ behaviour.

“The most successful businesses are able to translate what’s best about their performance into an active customer preference. They don’t just invest in any service or promotion; they get smarter about the customer experiences that matter and deliver on the bottom line. Simply throwing resources at different touchpoints – without understanding how to build a personalised service – will only undermine long-term credibility.”

TNS found that customers with the strongest relationships to their providers are three times more likely to stay loyal, six times more likely to recommend the brand and five times more likely to buy additional products and services from the company.

Schmelcher continued: “In each case, companies need to uncover the optimal balance between what customers want and what delivers profitable growth for the business. The reality for today’s brands is that best isn’t always right. The most successful companies permanently question their investment in different customer experiences. They know where they gain the most advantage and build their proposition around customers who love and advocate their brands. At TNS we call this the ‘Customer Code’. Understanding the hierarchy of importance for customer needs, and questioning the level of investment in different experiences is the essential starting point for this.”

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Notes to editors

About TRI*M

TRI*M Customer Relationship Assessment recognises the complexity of the modern world, the uniqueness of individual customers and the increased threat of competition. It unlocks the insights needed to help clients identify and deliver the ‘optimal’ customer experience – understanding their customers’ needs and how to make a genuine asset of their customer relationships.

About TNS

TNS advises clients on specific growth strategies around new market entry, innovation, brand switching and customer and employee relationships, based on long-established expertise and market-leading solutions. With a presence in over 80 countries, TNS has more conversations with the world’s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world.

TNS is part of Kantar, the data investment management division of WPP and one of the world's largest insight, information and consultancy groups. Please visit www.tnsglobal.be for more information.

About Kantar

Kantar is the data investment management division of WPP and one of the world's largest insight, information and consultancy groups. By connecting the diverse talents of its 12 specialist companies, the group aims to become the pre-eminent provider of compelling and inspirational insights for the global business community. Its 27,000 employees work across 100 countries and across the whole spectrum of research and consultancy disciplines, enabling the group to offer clients business insights at every point of the consumer cycle. The group’s services are employed by over half of the Fortune Top 500 companies.  For further information, please visit us at www.kantar.com.