IBM Survey: Less Than One in Five Business Leaders Admit to Understanding Consumer Needs

Consumers Cite Dignified Treatment as Important as Price

ARMONK, NY - 01 May 2006: An IBM survey of over 700 consumers and business leaders in North America and Europe has revealed consumers think companies are increasingly acting without understanding them -- and some companies admit this. Of more than 100 business leaders questioned, 79 percent admitted to taking significant marketing and promotional actions without clearly understanding consumer expectations.
For example, less than half of retail banking consumers surveyed had experiences that exceeded their expectations. Banking consumers surveyed stated higher-order emotive characteristics such as "dignity" and "empathy" as top preferences. Characteristics such as "friendly" and "informed" are less important.
However, only 17 percent of business leaders as a whole said that they consider emotional factors at all when making consumer-related decisions. These survey results suggest that in-depth consumer understanding and proactive management of key interactions represent a significant opportunity for differentiation in today’s fiercely competitive and price-driven marketplaces.
The IBM Global Business Services Consumer Experience Survey found 74 percent of business leaders surveyed act on an operational basis, e.g. "what can be made faster or more efficient" rather than focusing on an in-depth understanding of what the consumer may value most. Also, companies continue to put inspirational and emotional brand messages into the market, but often fail to deliver on emotional promises when they interact with consumers.
"How a company builds and sustains a competitive advantage would depend on how well it delivers on the total consumer experience -- cognitive, emotional and behavioral, as desired by the consumer, while meeting its own corporate goals" said Joby John, Professor and Chair of Marketing at Bentley College, Boston, Massachusetts. "This report clearly shows that failing to collect and analyze consumer information that highlights key emotive factors present during key interactions is throwing away the opportunity to increase the value of the service and take market share"
Business leaders reported being twice as likely to prioritize improving internal call center operations, rather than investing in forward-looking goals such as predicting loyalty, face-to face interactions or measuring business outcomes to provide fact-based information that drives improved business decision making. This can result in business leaders having little or no insight into how consumers rate in-store customer service or ticket kiosks etc that arguably can have a huge impact on customer experience. The survey investigated key consumer experiences in the US, Canada, UK, France and Germany, as well as business leaders responsible for marketing, service and sales.
The emotional characteristics that mattered most in retail banking purchase decisions varied across countries, but the findings clearly demonstrate consumers want respect and their feelings to be taken into account. In every country, apart from the US, being treated with dignity and empathy was rated as the most important factor in banking product purchasing decisions. German consumers rated being treated with dignity the highest, closely followed by France, UK and Canada. However, ranked least important by all retail banking consumers surveyed were the typically operational functions of "welcomed and informed interaction" and "professional and friendly employees"
"To remain competitive, companies must integrate consumer information from across disconnected business processes and outside sources, including emotive and tactile attributes associated with key interactions to provide a company-wide view of what the consumer really wants" said Steve LaValle, global strategy leader, of IBM Global Business Services Customer Relationship Management practice. "This enables a company to innovate their business model by spotting patterns that are not immediately obvious and making impactful changes during very valuable customer interactions, for example, redesigning a face-to-face sales process to incorporate both the emotional as well as product specific aspects of a mortgage application process"
Note to Editors:
A copy of the report can be downloaded from http://www.ibm.com/services/cfestudy
About the Research:
IBM conducted extensive research on consumer experiences, reaching out to both consumer shoppers across a number of industries and executive decisions makers in CRM organizations. A three phase research project was conducted in late 2005 that addressed consumer behaviors and CRM operations in multiple industries. The first phase was a qualitative consumer interview that probed and analyzed the nature of customer experience requirements during product and service interactions including purchase and consumption. 59 consumers were interviewed via telephone from the UK and US. The second research phase was built upon insights discovered during the consumer qualitative survey and was a quantitative consumer research study. This was used to further identify and quantify key emotive and tactile attributes identified during customer experiences. Research was conducted about consumers in the US, Canada, UK, France and Germany using 631 telephone surveys. The third phase consisted of qualitative executive decision-maker research captured during detailed telephone interviews and was carried out with more than 100 executives with CRM roles in the US, France, Germany and UK. The interviews addressed competitive factors, customer knowledge and experience, CRM operations and initiatives.


About IBM Global Business Services
With consultants and professional staff in more than 160 countries globally, IBM Global Business Services is the world’s largest consulting services organization. IBM Global Business Services provides clients with business transformation and industry expertise, and the ability to translate that expertise into integrated, responsive, innovative business solutions and services that deliver bottom-line business value. IBM Global Business Services provides leading transformation consulting across a range of industries as well as in the following key business function areas: Strategy and Change; Applied Technologies; Application Services; Financial Management; Human Capital Management; Customer Relationship Management - Marketing; Sales & Service; and Supply Chain and Procurement.

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