Switching will cost you more in the digital era

BANGALORE, INDIA: Digital disruption is steadily eroding customer loyalty. Proliferation of digital channels has fundamentally transformed the consumer’s journey which was earlier linear and restricted to a closed ecosystem. Digital channels today enable customers to compare a provider’s promise with its delivery not just within the industry but also outside and switch if the experiences don’t match expectations.

A survey by Accenture reveals that 88 percent of respondents in India switched companies in at least one industry due to poor service—a number significantly higher than the global average of 64 percent.

Customers are more loyal to experiences than to companies, products and brands. This distinct lack of customer loyalty to companies is borne out by customer action: seven in 10 customers said that they are more likely today to switch from one provider to another than 10 years ago. Only 27 percent of respondents feel extremely loyal toward their providers or are willing to buy more products and services from them, while nearly one-quarter of them are evaluating/considering other providers more often.

Switching customers represent a huge potential loss of revenue for companies that fail to retain them, and a huge opportunity for those that can attract them. Accenture estimates that the switching economy in India is currently worth US$331 billion.

Switching due to poor service is more prevalent in service-oriented industries. For example, in banking and Internet service—two of the more service-oriented industries— switching behavior is at 41 percent and 46 percent respectively.