TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009.pdf

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TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009.pdf

  1. 1. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 TOTE-M Van Diemenstraat 314 1013 CR Amsterdam, the Netherlands t +3120 420 77 80 e nl.info@tote-m.com Index  Introduction 3  The use of Testimonials 11  Financial Services 15  Consumer Electronics 31  Telecom Operators 47  Conclusions & Recommendations 63 Copyright © 1994-2009 TOTE-M 2 Financial Services, Consumer Electronics and Telecom Operators 1
  2. 2. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Introduction About TOTE-M  An independent management consulting firm in Customer Management founded in 1994  40 consultants, offices in the Netherlands and Belgium  Partners: G-CEM, Smith+co, MarketResponse  50% owner of ?Next! Coaches  The number one partner for designing and implementing personal, memorable and enduring customer interactions  Our clients recommend us because our consultants are competent, independent and involved: NPS +31%  Well known for our results, publications, research, masterclasses, DOC and jury member of CRM Awards, Introduction PON/OM Outsource Awards, Global CEM Awards Copyright © 1994-2009 TOTE-M 4 Financial Services, Consumer Electronics and Telecom Operators 2
  3. 3. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Our mission and vision  Our mission is to create, facilitate and secure valuable encounters. Success of our clients is central in reaching this goal  Our vision:  The future belongs to organizations that are able to create valuable and authentic encounters  They have impassioned customers, employees and shareholders  Valuable encounters are personal, memorable and enduring. The secret is the ‘click’  Connecting the customer and the organization is Introduction fundamental for each valuable encounter Copyright © 1994-2009 TOTE-M 5 Our brand values  Personal  From contact to relationship (CRM)  Know your most important customers  Memorable Gratify  From need to experience (CEM) Satisfy PPG Pain –  Captivate your most important Neutral Pleasur Bad e Gap customers Horrible  Enduring Orientation  From moment to lifecycle (CLM) New needs Purchase  Bind your most important customers Introduction Problems Use Copyright © 1994-2009 TOTE-M 6 Financial Services, Consumer Electronics and Telecom Operators 3
  4. 4. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 About the research  This survey was conducted by MarketResponse among a Dutch nationwide weighted sample (n=1.523). The minimum age of the respondents was 16.  The survey was conducted in accordance with the European research guidelines (Esomar), which state that anonymity must be guaranteed and that personal information may not be passed on to third parties.  The survey was weighted by:  Sex  Age  Household size  Education  Internet usage The research focuses on three branches:  Financial Services: retail banking sector  Consumer Electronics: multimedia product vendors Introduction  Telecom Operators: (mobile) telecom, cable and internet service providers Copyright © 1994-2009 TOTE-M 7 Terminology  Churn: the number of individuals or items moving out of a business over a specific period of time  Loyalty: the number of individuals staying at a business over a specific period of time  Testimonial: a written or spoken statement about the virtue of some product, service or brand  First time right: measure for the due date flawless delivery of a product or service in that specific branche Introduction Copyright © 1994-2009 TOTE-M 8 Financial Services, Consumer Electronics and Telecom Operators 4
  5. 5. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Net Promoter Score (NPS)  The NPS (Reichheld, 2003) is frequently used to gain insight into customer loyalty  The NPS method measures customer loyalty by:  Asking ‘Would you recommend company X to your friends, colleagues and relatives?’  Scoring the answers on a 11-point scale (0 = absolutely not; 10 = yes, absolutely)  Calculating the net score by subtracting the number of 0 to 6 scores (the detractors) from the number of 9 and 10 scores (the promoters) Detractors Passives Promoters   Recommending seems to be obligation-free, but in fact, it is Introduction not. Recommenders put their reputations at stake. Copyright © 1994-2009 TOTE-M 9 Customer life cycle This report is based on the TOTE-M customer life cycle model. This model sequentially describes each step from the start to the extension of the customer relationship and/or churn. This research focuses on loyalty, (potential) churn and the use of testimonials during orientation and (re)purchasing covering all phases. Orientation New needs Purchase Problems Introduction Use Copyright © 1994-2009 TOTE-M 10 Financial Services, Consumer Electronics and Telecom Operators 5
  6. 6. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 The use of testimonials Only a fraction of testimonial users actually write a testimonial Testimonial usage 0% 20% 40% 60% 80% Non-users Users Reads testimonials 66% 45% 55% Gives ratings 45% Testimonials Writes testimonials 6% Copyright © 1994-2009 TOTE-M 12 Financial Services, Consumer Electronics and Telecom Operators 6
  7. 7. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Testimonials about consumer electronics and holidays are most popular % of respondents who stated that they had recently read testimonials about: 60% 51% 50% 45% 40% 34% 30% 20% 15% 10% Testimonials 0% Consumer electronics Holidays Films, books & music Financial products & services Copyright © 1994-2009 TOTE-M 13 Testimonials: use, credibility, effect  More than 30% of all testimonial users make a buying decision based on testimonials  Testimonials influence the higher educated almost twice as much in their buying decision (44% vs 25%)  Interest driven testimonial visitors (browsers) have almost the same sales conversion (e.g. 38%) as visitors who use testimonials for purchase orientation (seekers) (44%)  Most popular sites: comparison sites, consumer organization sites and online communities (telecom)  Lower educated people give more online testimonies than higher educated (24% vs 20%), but are more sceptical about the independence of testimonials. They think that most Testimonials testimonials are written by manufacturers (56% vs 40%). Copyright © 1994-2009 TOTE-M 14 Financial Services, Consumer Electronics and Telecom Operators 7
  8. 8. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Financial Services Orientation New needs Purchase Main drivers of customer loyalty are: Problems 90% of customers Use were loyal to their financial service provider First time right 90% Web testimonials 80% Customer service 70% 60% Offer to new customers 50% Positive experiences 40% 30% 20% 10% Personal Product features (e.g. 0% recommendations the interest rate) Company authority Company image Financial Services Brand experience Company PR Involvement with company Copyright © 1994-2009 TOTE-M 16 Financial Services, Consumer Electronics and Telecom Operators 8
  9. 9. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Customers do not recommend their Purchase Problems financial service providers: NPS = -47% Use Researched 53% brands include: 41% Postbank Rabobank ING 6% ABN AMRO Detractors Passives Promoters RBS SNS Fortis AEGON DSB Financial Services Copyright © 1994-2009 TOTE-M 17 Orientation New needs Purchase Main drivers of potential churn are: Problems Use Complaints 70% Welcome offer for 60% Product features (e.g. new customers the interest rate) 50% 40% 30% Brand experience 20% Customer service 10% 0% Involvement with First time right company Financial Services Recommendations Company PR Company image Copyright © 1994-2009 TOTE-M 18 Financial Services, Consumer Electronics and Telecom Operators 9
  10. 10. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Potentially churning customers verify many Purchase Problems characteristics: Use 0% 10% 20% 30% 40% 50% 60% 70% 80% Product features (e.g. the interest rate) 80% First time right 78% Customer service 76% Previous experiences with the company 76% Complaints 76% Personal recommendations 74% Company PR 73% Company image 69% Financial Services Company authority 62% Brand experience 61% Involvement with the company 58% Welcome offer for new customers 57% Copyright © 1994-2009 TOTE-M 19 Orientation The most frequently quoted sources of New needs Purchase information when potentially churning are Problems internet and personal recommendations Use Company authority Customers get 40% their information Offer to new customers Company PR 35% from all sources, but prefer the 30% internet. Each 25% source has it’s Other users' complaints 20% Customer service own goals 15% 10% 5% Involvement with company 0% First time right Brand experience Product features Television Financial Services Print Previous experiences with the Internet Price company Personal recommendations Company image In-Store - face to face Copyright © 1994-2009 TOTE-M 20 Financial Services, Consumer Electronics and Telecom Operators 10
  11. 11. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Both usage and perceived reliability of online Purchase Problems communities are low Consumer Use organization sites 100% 80% 60% 40% 20% Online 0% Comparison sites communities Consumer organization sites are deemed very reliable but comparison sites Financial Services and company sites are used as Company sites well Use Reliability Copyright © 1994-2009 TOTE-M 21 Orientation New needs Purchase I use testimonials: Problems Only 15% of testimonial Use users read testimonials about financial services 0% 20% 40% 60% 80% to find information about product quality 78% to find the best product offer 75% before I purchase the product 75% to verify my preference 72% to find price information 65% to keep up to date 63% to get new ideas 61% to get more information about a purchased product 60% to get more information about after-sales service 42% when there are problems after product purchase 40% during product purchase 39% Financial Services to base my product choice on 34% after product purchase 21% to get in touch with other users 5% Copyright © 1994-2009 TOTE-M 22 Financial Services, Consumer Electronics and Telecom Operators 11
  12. 12. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Purchase Main drivers of testimonial reliability are: Problems Use 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% actuality 85% Independency 76% positive vs. negative reviews 71% average review score 67% length and detail of testimonial 59% # of reviews 58% language spelling 56% site look and feel 41% how I got there 34% identification with author 33% Financial Services know who the author is 31% Copyright © 1994-2009 TOTE-M 23 Orientation Cost of change prevents switching between New needs Purchase financial services. Therefore churn ratio is Problems low (10%) and mostly related to savings accounts Use Postbank (19%), 0% 10% 20% 30% 40% Rabobank (11%) and Interest rate 35% ABN AMRO (10%) have the highest churn rates Other 9% users'complaints Involvement with 7% the company Service 6% Churned customers Company PR 6% are more Welcome offer for new customers 6% price Personal sensitive than 4% Financial Services Recommendations loyal Brand experience 4% customers No choice 3% Copyright © 1994-2009 TOTE-M 24 Financial Services, Consumer Electronics and Telecom Operators 12
  13. 13. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Purchase Customers that churned are deal-sensitive Problems Use 0% 10% 20% 30% 40% 50% I switch whenever I can get a 42% better offer for the same price I switch only if conditions get 28% really bad I switch based on price only 12% Spreading the None of the above applies to me 19% word: 30% of churned Financial Services customers share their experience Copyright © 1994-2009 TOTE-M 25 Orientation New needs New customers were strongly attracted by the Purchase Problems interest rate (savings account) Use 0% 10% 20% 30% 40% 50% 60% 70% Interest rate 59% Company image 16% Positive experiences 15% Personal recommendations 14% First time right 12% Brand experience 12% Company PR 11% Involvement with the company 10% Financial Services Customer service 9% Welcome offer 9% Positive web testimonials 2% Copyright © 1994-2009 TOTE-M 26 Financial Services, Consumer Electronics and Telecom Operators 13
  14. 14. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs New customers mainly made their decision Purchase Problems based on: Use 0% 10% 20% 30% 40% 50% 60% Product features (e.g. the interest rate) 56% Company PR 42% Company image 42% Customer service 42% First time right 42% Personal recommendations 36% Company authority 36% Brand experience 35% Previous experiences with the company 34% Financial Services Welcome offer for new customers 29% Involvement with the company 28% Complaints of other users 26% Copyright © 1994-2009 TOTE-M 27 Orientation Internet was the channel most often New needs Purchase used to verify information to support the new Problems choice, especially on price and product features Use Company authority 40% Welcome offer 35% Company PR 30% 25% Users' complaints 20% Customer service 15% 10% 5% Involvement with 0% Reliability of service company Brand experience Product features The Internet is mostly Financial Services Television used for finding price and product info Print Previous experiences with Price the company Internet Company image Personal In-Store Copyright © 1994-2009 TOTE-M 28 Financial Services, Consumer Electronics and Telecom Operators 14
  15. 15. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation Recently switched customers are slightly New needs Purchase better promoters than loyal customers: Problems NPS = -17% Use 59% 29% 12% Detractors Passives Promoters Financial Services Copyright © 1994-2009 TOTE-M 29 Loyalty and churn have different drivers Potential churn drivers Loyalty drivers Churn drivers New choice drivers 89% First time right 12% -26% 88% Customer service -37% -6% 15% 87% Positive experiences 75% Product features -40% 59% -35% 62% Company image -15% 16% -6% 59% Company PR 11% -19% -6% 10% 55% Involvement with company -12%-7% 12% 52% Brand experience -11% -4% 50% Company authority 9% 47% Personal recommendation -14% 14% -4% 29% Welcome offer to new customers 9% -9% -6% Financial Services 2% 24% Webtestimonials Complaints -63% -9% Forced switch -4% Copyright © 1994-2009 TOTE-M 30 Financial Services, Consumer Electronics and Telecom Operators 15
  16. 16. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Consumer Electronics Orientation New needs Purchase Main drivers of customer loyalty are: Problems Use 75% of customers reported that they are loyal to their consumer electronics brands Customer service 90% Web testimonials 80% Positive experiences 70% 60% Company authority 50% Price 40% 30% Involvement with the 20% 10% First time right company 0% Consumer Electronics Brand experience Product features Welcome offer to new Personal consumers recommendations Company PR Company image Copyright © 1994-2009 TOTE-M 32 Financial Services, Consumer Electronics and Telecom Operators 16
  17. 17. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Customers do not recommend their Purchase Problems consumer electronics brand: NPS = -35% Use Researched brands include: 57% Nokia 39% Philips Samsung 4% Sony JVC Detractors Passives Promoters LG Siemens Dell Consumer Electronics Compaq HP Panasonic Apple Copyright © 1994-2009 TOTE-M 33 Orientation New needs Main drivers of potential churn are: Purchase Problems Use Complaints 60% Welcome offer to 50% Product features new consumers 40% 30% Brand experience 20% Customer service 10% 0% Company image First time right Consumer Electronics Personal Company PR recommendations Price Copyright © 1994-2009 TOTE-M 34 Financial Services, Consumer Electronics and Telecom Operators 17
  18. 18. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Potentially churning customers verify many Purchase Problems characteristics: Use 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Product features 84% Price 84% Customer service 81% First time right 80% Other users' complaints 79% Personal recommendations 76% Consumer Electronics Previous experiences 74% Welcome offer for new customers 71% Company image 65% Company PR 64% Company authority 59% Brand experience 56% Involvement with the company 55% Copyright © 1994-2009 TOTE-M 35 Orientation Customers considering churn New needs Purchase mainly base their decisions on online Problems information and the in-store service they receive Use Consumers use many sources, mainly internet, Company authority recommendations and 35% in-store are very Welcome offer Company PR 30% important. 25% Users' complaints 20% Customer service 15% 10% 5% Involvement with the company 0% Reliability of service Consumer Electronics Television Brand experience Product features Print Internet Previous experiences with the Price company Personal recommandations Company image In-Store Copyright © 1994-2009 TOTE-M 36 Financial Services, Consumer Electronics and Telecom Operators 18
  19. 19. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation Both usage and perceived reliability of online New needs Purchase communities are low. Problems Comparison sites are most frequently used Use Consumer organization sites 100% 80% 60% 40% Video sites Comparison sites 20% 0% Comparison sites are widely used, but consumer Consumer Electronics sites are Online communities Company sites perceived as more reliable Use Reliability (very reliable) Copyright © 1994-2009 TOTE-M 37 Orientation New needs Purchase I use testimonials: Problems Use 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% to find information about product quality 92% before I purchase the product 90% to find the best product offer 75% to find price information 74% to verify my preference 71% to get more information about a purchased product 68% to get new ideas 59% during product purchase 54% to base my product choice on 45% Consumer Electronics to keep up to date 44% to get more information about after-sales service 43% when there are problems after product purchase 43% after product purchase 22% to get in touch with other users 7% Copyright © 1994-2009 TOTE-M 38 Financial Services, Consumer Electronics and Telecom Operators 19
  20. 20. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Purchase Main drivers of testimonial reliability are: Problems Use 0% 10% 20% 30% 40% 50% 60% 70% 80% actuality 78% independence 75% # of reviews 71% positive vs. negative reviews 66% average review score 65% language / spelling 61% length and detail of testimonial 55% Consumer Electronics identification with author 33% look and feel of the site 32% how I got there 31% know who the author is 29% Copyright © 1994-2009 TOTE-M 39 Orientation Actual churn is mainly driven by obsolete New needs Purchase product features Problems Use 0% 20% 40% 60% Product features 66% Price of last choice 14% Complaints 14% Personal recommendations 9% Customer service 7% Company image 4% Lack of involvement with the 3% company Consumer Electronics Welcome offer for new 3% customers Complaints play Brand experience 3% a far smaller role in actual Provided by employer 3% churn than in potential churn Copyright © 1994-2009 TOTE-M 40 Financial Services, Consumer Electronics and Telecom Operators 20
  21. 21. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs Customers that churned are deal-sensitive. Purchase Problems They want a better product for the same price. Use 0% 10% 20% 30% 40% 50% I switch whenever I can get a better offer for the same price 45% I switch only if conditions get Young people share their really bad 21% experiences with family and friends during switches. Company image also plays a important role in My switching is based on price switching. alone 14% None of the above applies to me 20% Consumer Electronics Spreading the word: 40% of churned customers share their experience Copyright © 1994-2009 TOTE-M 41 Orientation New needs New customers were mainly attracted by Purchase Problems product features and price Use 0% 20% 40% 60% Product features 56% Price 40% Personal recommendations 21% Welcome offer 20% Positive experiences 19% Company image 14% Web testimonials 12% Customer service 11% First time right 8% Brand experience 8% Consumer Electronics Low-income consumers rely more on friends and relatives than do consumers with a higher income (27% vs. 6 %) Copyright © 1994-2009 TOTE-M 42 Financial Services, Consumer Electronics and Telecom Operators 21
  22. 22. © TOTE-M 1994-2009 June 2009 TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009 Orientation New needs New customers mainly made their decision Purchase Problems based on: Use 0% 10% 20% 30% 40% 50% 60% 70% 80% Product features 79% Price 78% Personal recommendations 59% Previous experiences 52% Company image 52% First time right 51% Customer service 51% Brand experience 48% Welcome offer for new customers 47% Consumer Electronics Company PR 40% Company authority 40% Other users' complaints 36% Involvement with the company 33% Copyright © 1994-2009 TOTE-M 43 Orientation New needs Internet and In-store were the primary sources Purchase Problems of information for new customers Company authority Use 35% Welcome offer Company PR 30% 25% 20% Users' complaints Customer service 15% 10% 5% Involvement with company 0% Reliability of service Brand experience Product features Consumer Electronics Television Previous experiences with the Price Print company Internet Company image Personal In-Store Copyright © 1994-2009 TOTE-M 44 Financial Services, Consumer Electronics and Telecom Operators 22

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