Brands face performance-preference gap

4 June 2014
LONDON: Fickle consumers are likely to defect to a different brand when a contract expires or a product needs updating, even if they rate that brand highly, a new study has said.

According to a global analysis of 40,000 customers by research consultancy TNS, companies can no longer ensure loyalty and spend just by providing a reliable, consistent service.

It found that 60% of customers were likely to choose another brand when buying new electronic products; 57% would replace their car with a different brand; and 64% would opt for another manufacturer when selecting white goods like a washing machine.

European mobile network providers were found to have the most notable 'performance-preference gap': one fifth of customers rated their provider's performance highly but said they would not necessarily prefer them over competitors.

Companies could waste millions of pounds trying to improve their individual performance in the eyes of customers, TNS warned, while failing to understand the risk posed by other providers how attractive these competitors are to their customers.

"Good performance," it said, "is only the entry price that earns you the right to build strong and valuable customer relationships; it is never enough in itself."

Stefan Schmelcher, global head of customer experience at TNS, observed that the most successful businesses were able to translate what was best about their performance into an active customer preference.

"They don't just invest in any service or promotion," he said, "they get smarter about the customer experiences that matter and deliver on the bottom line."

In fact, TNS found that customers with the strongest relationships to their providers were three times more likely to stay loyal, six times more likely to recommend the brand and five times more likely to buy additional products and services from the company.

"The reality for today's brands is that best isn't always right," Schmelcher remarked. "Companies need to uncover the optimal balance between what customers want and what delivers profitable growth for the business."

The report noted that the most successful businesses in any category and market always have the lowest gaps between performance and preference. "They have been able to close the gap because they understand what really matters to customers" it said.

Data sourced from TNS; additional content by Warc staff
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