Why do customers switch brands?

By April 19, 2015 No Comments

It’s an obvious question, that virtually every company will ask at some point (if not many times): Why do customers switch from our brand to our competitors?

The gut reaction of many people internally is “price”, but of course there are many other potential reasons.

Here are 2 useful charts from Econsultancy, gathered as part of a survey they carried out looking into customer experience. The charts are built from answers to a question asking why customers had switched from one brand to another. The exact question wording was “Q: What did your new vendor offer that led you to switch? Which of the following best describes what your old vendor did wrong?” – there were 473 respondents:

The pie charts are a little hard to read at a glance, but if you pay attention to the spread within them, you realise:

  1. 30% said they moved because the old company failed them, vs 59% said they moved because they found a better alternative.
  2. Just 20% say their previous company failed them on price.
  3. 24% say the new company offers them a better price.
  4. ‘Experience’ was the biggest failure, with 51% of responses.
  5. ‘Product’ was the biggest improvement area respondents said improved with the company they switched to.

You could read various things into that, and of course it is just one survey, but here are a few potential takeaways:

  • Customers are more likely to move because they find something better, than because they believe their current brand had failed them.
  • Customers are more likely to actively switch away from you if experience is bad.
  • Customers are more likely to be drawn to you if your product features are better than your competitors.
  • Price is important, and customers actively move based on price, but it is less important in terms of customer churn volume than product and far less important than experience.

And 3 action points that fall out of that may be:

  1. Make sure you measure your customers’ experience, and that they do not consider you to be a failure.
  2. Make sure you know which product features are important to your customers, that your customers are satisfied with them, and that those are visible to potential customers who may choose you over your competitors as a result.
  3. If customers leave, or indicate they may leave, don’t simply assume it’s based on price: find out exactly why, so that you can fix it if it’s a recurring pattern in the experience you present, or in your product.

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