Even Senior Execs Admit They Do Not Deserve Customers' Loyalty

Even Senior Execs Admit They Do Not Deserve Customers' Loyalty

Consumers who feel they are being taken for granted by businesses may not be so far off base. Companies continue the downward trend of taking their customers for granted, and the overall relationship between company and customer is getting worse, according to the 2004 annual survey and Customer Experience Management (CEM) report from Strativity Group, Inc. in cooperation with CustomerSat, Inc.
 
According to the study, 59 percent of senior executives claim they do not deserve customer loyalty - up from 45 percent in 2003. And less than a third say they have the tools and authority to serve their customers. "These results indicate a major vote of no confidence by executives, an inability to move from intention to execution and an overall failure to deliver successful customer strategies," said company founder Lior Arussy.

According to the 2004 CEM survey conducted with 212 senior executives worldwide, 76 percent of the participants responded that companies have put customer strategies higher on their agenda than they did three years ago.  Highlighting the disconnect between high-level executive strategies and employees' actual ability to execute, only 31 percent of respondents affirmed that they have the tools and authority to actually serve their customers, down from 37 percent the year before.

Despite focused attention from academia and the media directed towards the value of existing customers and the cost inherent in obtaining new customers, companies are ignorant to the costs and revenues associated with their customer relationships.  When asked about the economics associated with managing customer relationships, a large majority of executives did not have access to basic information:  83 percent did not know the average annual value of a customer, 89 percent did not know the cost of a customer complaint, 90 percent did not know the cost of total resolution, and 62 percent did not know the annual customer retention rate.

"Companies continue to pay a great deal of lip-service to their customers and customer strategies yet very few of them can demonstrate long-term success in forming strong, sustainable, and profitable relationships with customers," says Arussy.  "Our study demonstrates that despite the pick up in the economy, companies have not improved their investment in their customer relationships."

Only a quarter of North American execs surveyed said they are investing more in people than in technology - that number is down from 38 percent.  In return, executives are witnessing a diminished commitment on the part of their employees.

Due to their own lack of knowledge regarding the economics of customer relationships, management misunderstands the growing role employees play in the total customer experience, Arussy says.  The emphasis on productivity over quality -- 18.8 percent agreed that their compensation plans emphasize quality over productivity, down from 33 percent in 2003 -- not surprisingly, has resulted in 42 percent of executives who feel that their employers do not deserve their loyalty, up from 27 percent in 2003.

Despite lofty declarations about the importance of the customer, management's commitment is superficial at best.  Only 44 percent of the survey participants agreed that their company is truly committed to the customer (down from 58 percent in 2003).  In Europe, that number dropped from 46 percent to 35 percent.  Other highlights of the survey include:

 -   57 percent agree that their company does not conduct a true dialogue with its customers (up from 55 percent in 2003)
 -   65 percent agree that their executives do not meet frequently with customers (up from 54 percent in 2003)
 -   54 percent agree that the role of the customer is not well defined (down from 60 percent in 2003)

The research was conducted via structured, anonymous, on-line survey for assessment and qualitative insight. Results are based on 212 responses submitted by executives from the United States, Europe, Asia, and Africa, and participating companies represent a wide range of sizes.  For more details, go to: www.strativitygroup.com.