Customer experience now the top reason consumers choose a brand

by | Jun 28, 2018 | Public Relations

How important is the “experience” for customers considering your brand? New research reveals that consumers value the quality of their customer experience so much that they choose brands and make purchases based on the experience factor above all other considerations—including brand recognition and product quality.

A newly released report from customer experience management firm Medallia, together with market researchers Ipsos, reveals that customer experience is the top reason consumers cite for choosing a particular brand when making a purchase.

The data show that consumers are quick to both penalize and reward a brand based on their experience

In fact, 77 percent of respondents claim to have chosen a product or service from a company because of good experiences they had with it, while 64 percent of respondents said they have avoided a brand because of a bad experience they had within the last year.

“Consumers today are sophisticated and do their research before making a purchase. They expect to have a seamless and positive experience and if those aren’t met, consumers know they have options,” said Rachel Lane, solution principal at Medallia, in a news release. “For companies looking to create a competitive edge, having a strong brand recognition, or even stellar product isn’t enough. Customer experience is the tipping point, and without a strong plan to create and maintain a positive experience, businesses will lose out.”

How much does each of these influence your decision to choose or continue using brands in the future?

Customer experience now the top reason consumers choose a brand

The demand for a positive customer experience is especially high in the United States

According to the new Customer Experience Tipping Point survey, while loyalty is on the decline, expectations are on the rise, particularly among younger groups of consumers. For example, in banking and online retail, 30 percent of Gen Z and 22 percent of Millennials surveyed indicated that their expectations of customer experience are higher today than they were two years ago. The survey shows expectations have risen in the U.S. across all six industries examined, and U.S. respondents reported significantly higher expectations than European consumers for personalized experiences, real-time response, and ability to chat with a live agent.

Percent of customers who avoided a brand because of a bad experience, by generation:

Customer experience now the top reason consumers choose a brand

“Acknowledgement of customer experience as a driver of business performance is at an all-time high. Failure to properly understand customer needs leads to wasted money, time, and energy,” said Jean-Francois Damais, chief research officer at Ipsos, in the release. “Ipsos’ extensive research has shown that when it comes to dealing with customer issues, the key is to reduce perceptions of unfairness. That’s all about getting the balance of effort right. It’s a time-critical case of reacting intelligently, being mindful of your customer and knowing when it’s enough to say sorry. And perhaps more importantly, when it isn’t.”

After writing an online review, how quickly do you expect to be contacted by the company?

Customer experience now the top reason consumers choose a brand

The study also revealed that:

A single bad experience can cost a brand a customer

Nearly half (46 percent) of U.S. mobile network customers said they are likely to switch brands after having one bad experience.

Every touchpoint matters

Customers expect their experience to be seamless and efficient on and offline. For instance, 56 percent of online retail shoppers and 49 percent of retail offline shoppers expect consistent levels of service across physical and digital channels.

Customers don’t want to be responsible for fixing a company’s mistake

According to the study, 70 percent of consumers report that they expect an immediate response when they submit a complaint. Further, when customers believe they have put in more effort than a company to resolve an issue, they are twice as likely to tell friends, family or colleagues about the bad experience, and four times more likely to stop purchasing from the company, switch brands, or use the company less frequently.

Consumers expect a personalized experience

Thirty percent of customers expect call center agents to be instantly familiar with their contact history, and 40 percent, on average, expect to be offered personalized experiences based on their interests, buying behavior, demographics and psychographics.

Brands may be forgetting an important group of buyers

Many companies tailor to younger generations, but the 55+ age group is the fastest growing adult demographic in the US. This group of consumers indicated their expectations were exceeded in the last 12 months at a lower rate than any other group surveyed.

Women and younger generations are more likely to avoid a brand because of a bad experience

Sixty-six percent of women (vs. 62 percent of men) globally have avoided a brand because of a bad experience (with 64 percent being the global average for both men and women). In addition, this behavior is even more pronounced for millennials and Gen Z, with 70 percent and 68 percent respectively avoiding a brand because of a bad experience.

Percent of customers who reported putting in more effort than the company to resolve a problem:

Customer experience now the top reason consumers choose a brand

Download the complete report here.

Medallia partnered with Ipsos to conduct a panel survey of 8,002 consumers from four countries — US (2,002), UK (2,000), France (2,000), and Germany (2,000) — across six industry sectors: online retail, offline retail, banking, insurance, mobile network providers and hotels. The collected sample was approximately matched to the census of each country on age and gender. The research was conducted online, in the local language for each country, and respondents were incentivized to participate.

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Richard Carufel
Richard Carufel is editor of Bulldog Reporter and the Daily ’Dog, one of the web’s leading sources of PR and marketing communications news and opinions. He has been reporting on the PR and communications industry for over 12 years, and has interviewed hundreds of journalists and PR industry leaders. Reach him at richardc@bulldogreporter.com; @BulldogReporter

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