The long road to building loyalty

Joseph Waring
20 Jun 2012

Seems the harder we try to improve customer service, or the customer experience as everyone in telecoms is now calling it, the further we fall behind. According to a global consumer survey by IBM released earlier in the year, three out of five customers have negative opinions about their communications providers.

The survey found that only 18% of customers are advocates while some 60% are antagonistic toward their telecom operator. An IBM report on the findings noted that this contrasts sharply with industries such as retail and banking, where the level of advocacy is twice that of the telecom industry.

One industry that parallels telecoms in many respects, particularly customer service, is the airline business. The US airline industry's annual report card on passenger satisfaction was released last week and it didn't fare very well. J.D. Powers and Associate reported that traditional carriers' customer satisfaction level dropped to 681 from 683 a year ago (1,000 point scale) while the budget airlines rating rose 3 points to 754.

The report, based on a survey of 13,500 passengers, found that those who paid for checked baggage gave a rating 85 points lower than those that hadn't. The company also said that factors such as processes and people often had more impact than price on a passenger's decision to fly an airline again in the future.

It's interesting that in recent years the incumbent airlines have consistently been ranked far behind the budget carriers. Similar to our industry, legacy processes, IT systems, employees and infrastructure are certainly a hindrance, giving the startups the opportunity to not only beat incumbents on price but also on convenience and customer service.

So what are the incumbents doing wrong?

To start with, the consumer has changed and most companies aren't keeping up. It's no secret that consumers are extremely demanding, because they have more choice as well as almost instant access to information about competitive products and services.

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