The internet, computer and technology in general can bring consumers closer to retailers. However, at the same time, the easier access to different retailers can reduce customer loyalty. A recent study of online and in-store consumers reveals some detail on how consumers choose which businesses they remain loyal to, and how business owners can use this knowledge to craft better marketing campaigns. The study shows that customer service matters more than ever in modern markets.
The data from the research comes from an international study by Verint Systems, whose data found that online consumers may be less loyal than customers to a physical store. As one writer described the research, "those in the digital space are more likely to switch providers than people who shop or do business is 'real world' settings".
Verint's research notes that consumers who prefer to engage with organizations digitally are more prone to switching providers. Just under half (49 percent) of those who prefer to engage with organizations via digital channels have been with providers for more than three years, compared with 58 percent who prefer to pick up the phone and 57 percent who prefer to go in-store.
This may be surprising when someone first hears it, but it makes sense. When people choose a physical retailer to shop from, they have a much more limited pool of retailers to choose from, since they're limited by location. To illustrate, though there are probably dozens of grocery stores within most cities, a person is only going to shop at one of the stores that are relatively close to their home. Online shoppers have fewer limitations on location, so consumers are more likely to switch to a different online retailer.
According to the Verint data, retailers saw a 7 percent drop in retention over the past year. However, there were some indications on how retailers can keep customers happy and coming back for more. The key is good customer service. More than a third (38 percent) of those surveyed who have had 'positive customer service' interactions chose to remain with that provider.
Good customer service can also be used as a way to convince customers to join other forms of marketing channels by signing up for emails. According to the Verint report, 27 percent of consumers surveyed who had 'positive customer service' were more likely to sign up with that brand's loyalty program.
"What's clear is that a more personal touch in customer service helps drive retention and loyalty. This is a wake-up call for many organizations looking to introduce more digital channels with the aim of reducing costs and improving customer convenience," notes Rachel Lane, director of customer analytics, EMEA at Verint, according to a press release. "As our research shows, consumers feel more positive about a brand when they interact directly with a person, so organizations need to consider how to make the digital experience more personal to avoid increased customer churn."
The study also showed that good customer service still involves some level of human interaction, whether people are engaging with in-store retailers or online merchants. Overall, 79% of consumers want the human touch to remain a part of customer service.
This preference for human interaction when necessary shows in other ways. According to the report, nearly three out of four (74 percent) of consumer don't like dealing with a business that doesn't list a phone number on their website and nearly two out of three (65 percent) believe they get better customer service when speaking to someone whether over the phone or in-person. So business can't be try to replace all their customer service reps with online chatbots just yet.
Customer service is the key to happy customers and repeat business, whether that business is online or in-store. For more valuable, recent research about consumer behavior, read this article on consumers feel about business with sustainable business practices.