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Survey: Corporations Don't Deserve Consumer Loyalty

February 20, 2006
There is growing sentiment that businesses don't understand their customers very well and don't deserve their loyalty. That's not the opinion of consumers -- according to an industry study, that's how business managers themselves feel.

The annual global Customer Experience Management 2005 study, conducted by the Strativity Group, finds 54 percent of senior executives claim they do not deserve consumers' loyalty.

According to the study, 67 percent of executives do not meet often with customers and only 33 percent say they have the tools and authority they need to serve their customers.

Overall the Global 2005 Customer Experience Management Study indicates that corporations remained consistent in their weak approach to customers.

Results related to understanding the economics of relationships worsened as did the value of the customer relationship. Because of that, the Strativity Group said it titled the report "No Money, No Love."

In the absence of understanding customer value, companies fail to deliver the love and the relationships required to maximize this value. The result is that overall execution of customer strategies remains far from desirable.

"Based on the study, we concluded that companies remained self-centric, transaction-based and product-focused. They failed to capture the financial rewards associated with successful, value-based customer strategies," the authors reported.

According to the report, only 46.1 percent of the respondents said their company deserves their customers' loyalty. Nearly 60 percent said their relationship with the customer is not well defined.

The survey found that 42 percent of executives said their company will take any customer that is willing to pay, whether or not the product or service actually meets their needs.

The study, conducted throughout 2005, concludes that the company-customer relationship is deteriorating. It says the economic upsurge in 2005 did not translate into better customer relationships or more effective execution of customer strategies.

Executives surveyed indicate that do not understand the basic financial drivers behind effective customer strategies. Over 90 percent of the respondents said they were unaware of the cost of a complaint, cost of a new customer or the annual value of a customer.

As a result, the report concludes it was not surprising to see that over 50 percent of the respondents did not consider their company committed to customers or believe that they conduct a true dialogue with customers.

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