27 per cent of customers have switched supermarkets in the last six months because of cost. The same percentage have ditched a clothing brand because they have found the equivalent goods from an alternative supplier.
In its announcement of these figures, the Institute of Customer Service (ICS) stresses how customers are now far choosier and price sensitive, inferring that service quality has been relegated beneath cost in customer minds as their main influencer of loyalty.
Having discussed this at the Calcom offices, we have drawn a very different conclusion from the figures. Firstly, we must view this data in its unavoidable context. The majority of people today have less money to spend meaning they have no choice but to shop around for bargains. Service quality, in these instances, does not influence a brand switch because customers simply buy what they can afford. Secondly, if we turn these figures around, 73 per cent of supermarket shoppers have remained loyal to their favourite store. Clearly there are many factors involved in where people shop; location, range of goods, price etc, but the ICS research tells us that the service experience is one of the prime motivators.
This fact has been confirmed by our biggest retailer, Tesco, which admits that its poor Christmas was in part caused by lack of investment in stores, and most importantly, staff. In other words, Tesco has realised that price wars are not enough to bring shoppers back and has therefore echoed the findings of the ICS survey - the customer experience is the biggest influencer on repeat business.
Proving the value of investment in service has always been imprecise and, because the effects of a change are not immediately felt, easy to overlook. But as the Tesco example shows, a short term reduction in staff numbers and training might deliver a pleasing reduction in costs, but in the long term causes much more damage to the bottom line. Customers, it seems, love a bargain but they also want to be treated well and shop in a pleasant environment, or they will shop elsewhere.
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