Accenture Its More Than Just Your Product

8/2/2019 Accenture Its More Than Just Your Product

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Its more than just your productHow service and support influence buying decisionsBy James T. DeVane, Vivek Agarwal and Craig Gottlieb


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What makes a consumer choose aparticular product or service? Mostcompanies wish they knew. Increasingly,those that know the consumer better

are separating themselves from theircompetitors. With an uncertain economicrecovery restraining consumer spending,knowing the consumer is more importantthan ever before.

There are many questions that can beasked about what makes a consumerselect a given product for purchase.A recent Accenture survey sought tounderstand the role that services playin influencing the consumers choice.The results indicate that service and theservice experience throughout the life

cycle of a product can play a pivotalrole in a consumers purchase decision,sometimes even more than the featuresor price of the product. Companies havean opportunity to capitalize on the valuethat consumers place on service and the

service experience by selling on service.


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60

0

20

40

60

80

100

120

140

160

180

71

87

98107

115

96 95

152158

Age 24 & under Age 25 -34 Age 35 - 44 Age 45 - 54 Age 55+

Male Female

NumberofRespondents

Age Ranges

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The voice of the customer

In July 2011, Accenture asked more than1,000 U.S. consumers of all ages (Figure1) about their experiences in makingpurchase decisions across four industries:

Homeappliance,electronicsand consumer technology

Automobiles

Electricandgasutilities

Cable,wirelessandInternetService Providers

Our questions focused on how serviceofferings and service experiencesinfluence a consumers purchasedecisions. We found a strongconnection between a consumers

perception of service throughout thebuying and owning life cycle and thatconsumers decision to purchase ornot purchase a given product. Thesurvey results illustrate not onlyhow service influences a consumerschoice, but also how the perception ofservice is in some cases the primaryfactor in the final purchase decision.

Across all industries, consumersperception of service frompoint of sale through after-sales service and supportdemonstrably influences whatproduct they buy

When we asked consumers whichfactor was most important to them inmaking a purchase decision, serviceexperience ranked highest with 26percent of the respondents identifyingit as most important (Figure 2).Fittingly, brand reputation, whichcan be strongly affected by a good orbad service experience, was secondwith 25 percent of respondentsidentifying it as most important.Responses to other factors, includingprice or value, product features andquality lagged behind these twoservice-focused factors by a rangeof five to over twelve percentagepoints. Increasing competitionand the rapid commoditization ofproducts has decreased the time

that a new innovation retains theadvantage of being differentiatedin features or price. With priceand function decreasing in their

influence, the quality of servicea consumer receives is a keydifferentiator between competingproducts. Our data indicates thatservice can become the decidingfactor in a buy or no-buy decision.

Figure 1. Survey demographics


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0% 5% 10% 15% 20% 25% 30%

Service ExperienceWould I get decent service during or after the purchase?

Brand ReputationHow strong is the brand perceived in the market?

PriceIs the product priced correctly / Value for the money?

Product FeaturesDoes the product have all the technical features?

QualityWould the product live up to my expectations?

Percentage of Respondents

26%

25%

20%

17%

13%

74%

83%

58%

54%

Automobiles

Home Appliances / Electronics /Consumer Technology

Cable / Wireless /Internet Service Providers

Electric & Gas Utilities

In-store Service / Buying Experience (e.g. Friendliness of sales staff, hassle free billing, etc)

Service Offered During the Purchase (e.g. Extended warranty, free installation, financing)

After Sales Service (e.g. Strength of service network, easy availability of parts)

75%

67%

69%

53%

74%

63%

72%

60%

5

Figure 2. What is the most important factor when buying a product?

Figure 3. What service aspects do you consider important when buying a product?


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Looking a bit deeper, we find that theservices that consumers value differbased on the product being considered.More than 80 percent of responding

consumers that are consideringproducts in the home appliance,electronics and consumer technologycategory place a higher value on In-store service or buying experience(Figure 3). Knowledgeable sales staff,clearly indicated features and options,and coordinated sales support throughthe buying process are positiveinfluences on these consumers. Onthe other hand, consumers in theUtilities(Electric&Gas)andServiceProvider (Cable / Wireless / Internet)

categories are more influenced by theirperception of After sales service.Respectively, 60 percent and 72percent of the respondents purchasingthese products indicated that servicewas the most important influence ontheir buying decision.

Consumers care more aboutservice and are punishing brandsfor poor service experiences

Of survey respondents, 74 percentindicated that the degree to whichthey consider services in theirpurchase decisions has increased inrecent years (Figure 4). As the Internet,social media and other sources makeinformation on product choicesand options more readily available,consumers are getting more informedand empowered. Looking at differencesacross age categories, the share ofthose who value service climbs over80 percent for consumers 45 years

old and older compared to 68 percentfor those below the age of 45. Onepotential explanation could be thatyounger consumers form strongopinions around product quality andservice prior to the actual serviceexperience through their high use of

social media, online reviews, blogs andother feedback mechanisms. Anotherpossible explanation is that olderconsumers may be more experienced

buyers with a broader definition ofvalueone that includes service morethan that of younger consumers.Whatever the reason, it is clear is thatthe population that places a highervalue on service, both during and afterthe sale, is growing rapidly.

Figure 4. How has the degree to which you consider services in your buyingdecisions changed over the past few years?

0%

5%

10%

15%

20%

25%

30%

26%

74%

35%

Decresed Significantly or

Decreased Somewhat

Incresed Significantly or

Increased Somewhat

Percentage

ofResp

ondents


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18% 15% 37%31%

21% 15% 43%21%

34% 20% 20% 26%

33% 20% 19% 28%

Automobiles

Home Appliances / Electronics /Consumer Technology

Cable / Wireless /Internet Service Providers

Electric & Gas Utilities

Convenience of service when needed

Expected usage of service over lifespan of product

Past experiences / Experience of others

Total cost of ownership

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Consumers care about service formany reasons, but two stand out

When we asked about the primaryreason that consumers value servicewhen making a purchase decision, wereceived clearly defined responsesby industry. When considering homeappliances, electronics and consumertechnology, and automobiles, morethan one third of respondentsindicated that they valued servicein the purchase decision because itaddressed Total cost of ownership(Figure 5). When consideringproducts and services from utilities,cable, wireless, and internet service

providers, approximately the samepercentage of respondents indicatedthat Convenience of service whenneeded was a valuable input into theirpurchase decision.

While we doubt that the averageconsumer is maintaining a detaileddatabase or analytical spreadsheetto precisely calculate total cost of

ownership, the high value respondentsplaced on total cost of ownershiprepresents a victory for commonsense. Considering the potentially highinvestment costs of most products inthe automobile and home appliancecategories, this observation indicatesa desire by the consumer to maintainthe purchased item and extend itslife as long as possible. By choosingmaintenance over the relatively highswitching costs of replacement,consumers of these products place a

greater importance on maintainingthat product over time.

Conversely, when switching costs arerelatively low, as they typically are forthe services of electric and gas utilitiesand of cable, wireless and Internet

providers, consumers focus more onthe uninterrupted use of the product.If and when the product or offeringrequires maintenance or service,consumers want to know how quicklythe problem can be solved. Consumersvalue how quickly potential serviceissues can be resolved and use theirperception of how well a company cankeep them up and running to guidetheir purchases.

Figure 5. What is the primary reason for valuing or not valuing service whenmaking a purchase decision?


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Tight link - service is a key

part of product value

Could consider buying

product & service together

depending on the offering

Separate - prefer buying

service separately

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

41.5%

39.5%

19%

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Actions for Product and Service Providers

Clearly, not every product has a serviceconsideration that the consumer mustweigh. But when pre- and post-sales service is part of the equation,

consumers are increasingly using theservice experience as a key factor intheir purchase decisions. Because ofthis increasing value of service to theconsumer, companies must recognizehow service affects not just the sale ofthe product and the product life cycle,but most importantly whether or not aconsumer becomes a repeat customer.Companies need to take specific stepsto not only use service to attractcustomers, but to integrate serviceinto their market strategies.

Create a consistent end-to-endservice experience

As customers become more educatedon product choices and serviceoptions, companies must be ableto communicate a clear, consistentservice message. Consistent servicepolicies, products, pricing and

messaging across store, online andfield services are critical to helpcustomers connect the product tothe service of that product. This is

especially critical if elements of theservice life cycle of the product areoutsourced to other providers. Manycompanies are bridging the criticalityof a consistent service experience withthe financial benefits of outsourcingby presenting the outsourcing partnerto the consumer as an extension ofthe company itself. This is done eitherovertly, through licensing or approvedservice provider signage for theservice provider to use, or throughmore seamless linkages such as having

outsourced service technicians wearthe uniforms and adopt the practicesof the brand offering the service.Regardless of how it chooses tointeract with its customers througha service provider, any companythat does outsource must make surethat its service policies are appliedconsistently and establish the familiarend-to-end experience that consumerssay they value.

Compete on the value ofconnecting products and services

Roughly 82 percent of consumerssurveyed responded that they eithersee a tight link between serviceand the product, or that they wouldconsider buying a product andservice together (Figure 6). Service,whether through warranty offerings,spare parts or periodic maintenance,generally has a higher margin for thecompany than the actual product.The consumers that responded to thissurvey value the ability to lower totalcost of ownership and increase accessto service when service is needed.

Companies that can provide existingcustomers with services at the timeof the sale may see not only increasedrevenue, but also a more captive andprofitable revenue stream throughoutthe life cycle of the product. Productbusinesses should assess movingtoward service-dominated modelson a productservice continuumby identifying opportunitiesto offer adjacent or bundledservices with the core product.

Figure 6. Describe your view of service as a portion of the initial purchase.


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Would never consider

buying again from

that brand

If the product is either

technically superior or is

available at a lesser cost

than the comparable

products in the market

If the brand has significantly

improved its service perception

in the marketplace

26% 31%

43%

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Figure 7. If you had a negative service experience/incident with a product brand,would you consider buying that brands product again?

Actively monitor and managethe public perception of serviceeffectiveness

The phrase perception is reality holdstrue for service effectiveness. AsAccenture discovered in our previoussurvey, First impressions count: Whatthe service experience says aboutyour company, service interactionsdemonstrably impact customersdesire to continue doing business witha given company. In this study, welooked deeper and quantified how theperception of service effectivenessaffects both the initial purchasedecision and customer retention.

Our results indicate that 26 percentof those that have a bad serviceexperience with a given companywill cease to purchase its products orservices. Yet interestingly, 43 percentof those consumers would return ifthe company significantly improves itsservice perception in the marketplace(Figure 7). While poor service may drivecustomers away, our results suggest

that companies can win customers backthrough active management of theirperceptions of service ef fectiveness.Consumers have indicated that they

will come back. They just need to seeimprovement first.

Companies that have weatheredcustomer relation issues related toservice can take three steps to improvehow they deliver, and how customersperceive, service.

Address service issues in a timely and

direct manner.

Identify issues quickly, establishand execute a resolution to addressthe issues and follow up with

corrective actions to help preventsimilar issues in the future. Opencommunication with customersprovides a platform for resolvingissues and winning back loyalty.

Communicate and accentuate the

positive aspects of service.

Use positive service interactions andcustomer experiences in marketing notjust the product, but also the service

experience that comes with thatproduct. Highlight the good service,but do not be afraid to air the dirtylaundry. This leads us to our last point.

Be transparent.

Companies that want to emphasizeopen communication with theircustomers should expect and beprepared to use negative reviews.Many companies use websites thatcapture reviews or deliver blogsas effective ways to establishcommunications with their customers.Some have found that an effectiveway to manage the perception ofservice in the marketplace is to

respond and address negative reviewsdirectly. This immediate response tonegative perceptions can be effectivein engaging discontented consumersin a dialogue and even re-establishingtheir loyalty.


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Conclusion

Consumers are more informed and morevocal about their buying decisions and

experiences than ever before. Serviceplays an important part in influencingthose decisions. The concept of service asa purely post-sales activity is no longervalid. Consumers are using their serviceexperiences and the expectations theseexperiences generate to shape theirchoices and interactions with companiesfrom pre-purchase throughout the fulllife of the products they buy. Companiesthat recognize how consumers valueservice will be in a better position to notonly improve initial sales revenue, but

also establish a long term opportunity togenerate additional revenue and highermargins through deeper, genuine servicerelationships with customers throughoutthe life of their products.


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Copyright 2011 AccentureAll rights reserved.

Accenture, its logo, andHigh Performance Delivered

are trademarks of Accenture.

About Accenture

Accenture is a global managementconsulting, technology servicesand outsourcing company, with

more than 223,000 people servingclients in more than 120 countries.Combining unparalleled experience,comprehensive capabilities across allindustries and business functions,and extensive research on the worldsmost successful companies, Accenturecollaborates with clients to helpthem become high-performancebusinesses and governments. Thecompany generated net revenuesof US$21.6 billion for the f iscalyear ended Aug. 31, 2010. Its homepage is www.accenture.com.

11-2201/11-3866

For more information

To learn more about how Accenturecan help you with your service strategyand operations go to www.accenture.com/service, or contact:

Eduardo A. Cunha

Sao Paulo, [email protected]

Matti Kurvinen

Helsinki, [email protected]

James T. DeVane

Atlanta, [email protected]

Craig Gottlieb

Hartford, [email protected]

Erik A. Olson

Atlanta [email protected]

Robert GiacobbeAtlanta, [email protected]

Hundley M. Elliotte

Atlanta, [email protected]

Ganesan Ramachandran

New Delhi, [email protected]

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Accenture Its More Than Just Your Product