Accenture report finds $1.3 trillion of revenue at play in today’s ‘switching economy’
New York – Despite having more data and insights into consumer desires and preferences, companies in the U.S. have failed to meaningfully improve customer satisfaction or reverse rising switching rates among their customers. As a result, there is a potential $1.3 trillion of revenue at play in the U.S. market represented by the ‘switching economy’, according to new research released by Accenture.
The research revealed that 51% of U.S. consumers switched service providers in the past year due to poor customer service experiences, up 5% from 2012. Switching rates were highest among retailers, cable and satellite providers and retail banks, making companies in these sectors the most vulnerable, but also giving them potentially the most to gain.
The survey found that customers are increasingly frustrated with the level of services they experience: 91% of respondents are frustrated that they have to contact a company multiple times for the same reason; 90% by being put on hold for a long time; and 89% by having to repeat their issue to multiple representatives. There are also frustrations with marketing and sales practices: 85% of customers are frustrated by dealing with a company that does not make it easy to do business with them; 84% by companies promising one thing, but delivering another; and 58% are frustrated with inconsistent experiences from channel to channel.
Other findings include:
- Overall customer satisfaction fell by 1% since 2012, while customer loyalty rose 1% and willingness to recommend a company rose 2%.
- 81% of customers who switched providers in the past year said the company could have done something differently to prevent them from switching, with customer service equally important as price.
- 48% of U.S. customers use third-party online sources, such as official review sites, and 25% use customer reviews and comments from social media sites, to find out information about a company’s products and services.
- 71% of customers use word-of-mouth.
- 75% of respondents now use one or more online channels when researching companies’ products and services and 33% use mobile devices to access these online channels.
- 82% of customers say they feel companies they buy from cannot be trusted on how they use personal information provided to them.
“Changing customer behaviors in the digital marketplace and low levels of customer satisfaction are fueling a switching economy that presents opportunities as well as threats. But too many companies are playing not to lose instead of playing to win in this switching economy,” said Robert Wollan, global managing director, Accenture Sales & Customer Services. “Growth is harder to come by in many sectors but the switching economy presents a source of new, sustainable, profitable growth for companies that are playing to win and gain market share. To win requires an aggressive approach that goes beyond implementing technology to creating genuinely engaging customer experiences that today’s nonstop customers are seeking but obviously not finding with their current providers.”
Report: Seven-in-10 Americans holding back on spending
New York – Almost three-in-four Americans are holding back on spending, according to a new Bankrate.com report, with stagnant income the most frequent reason (32%), followed by the need to save more (24%) and worries about the economy (20%). Just 27% of Americans say they are not holding back spending at all.
- Every age and income bracket is feeling less comfortable with the savings they have now compared to one year ago.
- Among 50-64 year olds, those less comfortable with their savings outnumber those more comfortable by a three-to-one margin.
- Every age and income bracket reports higher net worth than one year ago, except households with income under $30,000.
- Americans younger than age 50 are more likely to say their overall financial situation is better now than one year ago, while those 50 and older typically say it is now worse.
“With hundreds of thousands of government employees furloughed and many government contractors reeling from the shutdown, feelings of job security plummeted to the lowest level in nearly two years,” says Greg McBride, CFA, Bankrate.com’s senior financial analyst. “Seventy percent of the economy relies on consumer spending, so when this many consumers are cutting back, it’s going to be hard for the economy to get out of first gear.”
RadioShack bolsters leadership as Q3 loss widens
RadioShack posted a net loss of $112 million during the third quarter of fiscal 2013, compared to a net loss of $47 million in the year-ago period. It was the retailer’s seventh straight quarter posting a net loss.
The company also named Paul Rutenis, formerly senior VP, general merchandising manager for the home division of J.C. Penney Company, as its new chief merchant.
RadioShack said its total net sales for the quarter were $805 million, a 10% drop from $898 million a year earlier. The chain attributed the decline to an 8.4% drop in same-store sales due to reduced sales for each of the company’s product platforms.
Joseph C. Magnacca, CEO of RadioShack, said the retailer is currently undergoing a process of reinvigorating and modernizing stores that will affect nearly all of its 4,300 locations. He also said RadioShack is improving its assortment.
"We are moving forward quickly and as planned with our turnaround efforts,” said Magnacca. “As we have said, we expect our work to take several quarters and during that time our results will vary quarter to quarter as we make strategic changes to improve our long-term financial performance. This quarter reflects our strategic decision to accelerate the improvements to the product assortment in our stores by removing duplicate and unproductive inventory."
RadioShack has secured a financial boost from GE Capital, securing a loan of about $835 million. The loan, backed by inventory and other existing assets, will help the chain refinance the company’s outstanding bank debt and free up cash for its ongoing revamp. RadioShack says it has strong balance sheets moving forward.
In announcing the appointment of Rutenis as senior VP, chief merchandising officer, RadioShack said he will be responsible for leading all retail categories, covering well known global brands as well as private branded products, and will work with the company’s executive leadership team to drive a clear merchant strategy and alignment with the retailer’s sales, marketing and operations divisions. Prior to J.C. Penney, Rutenis served in senior positions at Dick’s Sporting Goods and Foley’s Department Stores in a career spanning 22 years in merchandising.
RadioShack also announced the appointment of Janet Fox as senior VP of global sourcing. Fox has spent almost 30 years in retail sourcing, most recently as senior VP, sourcing, quality, materials and technical design at Under Armour.
"We are very happy to have Paul and Janet join our company at a critical point in our turnaround, Magnacca said. “They bring with them a demonstrated track record of success and will contribute to the execution of our strategic initiatives. Since the beginning of the year, we have brought on board six new members of our management team as we rebuild and enhance the strength of our executive leadership."
The company also announced today that Martin Moad, VP and controller, has decided to retire after 34 years with RadioShack, effective Dec. 27. RadioShack’s William R. Russum has been named VP and corporate controller and will serve as the company’s principal accounting officer.