Customer churn costs NZ$320m a year, says study

The biggest motive for changing supplier is perceived poor service, says survey

New Zealand customers show the highest rates of market churn of any country in the Asia-Pacific region across a range of services, according to a survey conducted by software company BMC.

Ninety-three percent of New Zealand customers have changed from one supplier to another for some service at some time in their lives, with 54% having done so in the 12 months prior to the survey.

The highest churn rates are in banking, insurance and electricity supply.

BMC estimates that churn costs New Zealand businesses $320m a year, from the cost of bringing in new customers to replace those who leave and the impact of “bad mouthing” of the supplier by the dissatisfied customer.

The cost of churn impacts on overall productivity in financial terms – and New Zealand’s poor productivity is an area where government expects intelligent use of ICT to produce improvement.

So where does ICT come into the churn picture? Apart from the bugbear of price, the biggest motive for changing supplier, BMC finds, is perceived poor service. Customers surveyed specifically identify the call-centre staffer who does not have a history of the customer’s previous interactions available as a key problem.

Supplier staff could also be more proactive, surveyed customers say, anticipating the customer’s needs without waiting for the call.

Seventy-five percent of New Zealand customers identify the lack of a service history as a factor in their churning — 12% above the Asia-Pacific average, says BMC.

Next comes a desire for more proactive service, mentioned by 68%. The third driver of churn, confirming anecdotal evidence, is the wish to deal with a call-centre operator based in New Zealand (51%).

Online self-service would improve the service situation say 43% of NZ customers.

The reason for BMC conducting the survey is, naturally, that it provides software to handle service support, which it calls business service management.

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