Forrester Finds Customer Service More Important Than Price

You could get a good argument in the communications business about whether consumers buy primarily based on price or some other attributes of a product. The question is a bit complicated because there always is a base set of values that any product has to have before any consumer would consider buying it.

That said, how many operating executives really believe attributes such as customer service actually are more important than price, once value is established?

Perhaps more should rethink what they believe to be true. Forrester Research asked nearly 4,600 consumers how they choose the companies they do business with. "Across all 12 industries we examined, good customer service was more important than low prices," says Bruce Temkin, Forrester Research analyst.

While customer service is a critical element across industries, Gen Y consumers (18 to 28) were the least enamored with good service, and Younger Boomers (43 to 52) were the most interested in low prices, Temkin notes.

When it comes to the difference between the need for customer service and the need for low prices, seven industries are more likely to be sensitive to service attributes. Among them: banks (31%), investment firms (26%), and health insurance plans (18%). In other words, though "lowest price" is seen as important, "good customer service" is relatively more important.

Four industries had the lowest spread:  TV service providers, airlines, credit card providers, and retailers. In those four industries, in other words, the relative importance of price was higher. In fact, says Timkin, retailers are "expected" to offer low prices. In these businesses, low price and customer service are relatively evenly ranked in importance.

Internet service and wireless service were in the middle: service is viewed as more important than when buying TV service.

One might question whether what people tell pollsters and what they do is congruent. In other words, people might say one attribute is important, but then act as though some other attribute was the key driver of behavior. Lots of telecom executives are likely to take the findings with a grain of salt.

But most of us probably can recite instances where poor customer service did, in fact, outweigh price, in our own purchasing of products and services. Perhaps the key take away is that both price and customer service quality must be within some acceptable range. But it is striking that in every industry studied, customer service was deemed more important than price.

That tends always to be the case for enterprise buyers. What is significant is that even consumers report similar attitudes.

-- Gary Kim