Consumer Sentiments are Turning Heads to Online in Australia

Before the latest publicity appeared in advertisements regarding GST in major newspapers, and before Christmas, Competitive Edge had surveyed consumers nationally to a 99% confidence level, and found that 69% of Australian consumers believed that there should not be a GST on online purchases when purchasing from overseas. A further 16.5% of consumers surveyed were undecided, and 14.5% were in favour of charging GST on online purchases.

The reaction of retailers, while placing pressure on government, may not, in view of these results, create favourable consumer opinion and sentiments, given that a large number of consumers are already dissatisfied with organizations with which they deal in any three month period, according to a national unbiased study of consumer sentiments undertaken by Competitive Edge.

In 2009, Competitive Edge conducted a national study into Consumer Sentiments, Emotions and Advocacy. The results of this study were presented at a conference at the Society of Consumer Affairs & Professionals in Sydney in August 2009.

(See http://www.consumersentiments.com.au/ )

The independent nationwide study was the first to look at national consumer sentiments in regard to consumer complaints and complaint handling across the major sectors in the Australian economy.

The study results reveal that complaint handling is a major area of consumer dissatisfaction and that it was not well handled by all major segments, especially in retailing, banking and government and utility sectors.
Consumer sentiment results showed that many consumers would switch brand readily and engage in telling others directly and online, rather than taking direct complaints to organisations which they felt often treated them “like idiots”, were indifferent, and generally made complaining about products and services which did not perform to their satisfaction, a waste of time.

In December 17-20, 2010 Competitive Edge undertook another independent consumer sentiment study on a nationwide basis examining the same sectors of the economy, and complaint handling for products and services. This study sought to determine if there was a decrease in consumer dissatisfaction with the way complaints were handled by organizations and examined the impact of the Internet and social media on complaint rates in the last three months of the year, consumer reaction to complaint handling and resolution, organizational and government response rates, and overall consumer reactions to non-performing products and services.

This comprehensive study of consumer sentiments found that consumer dissatisfaction was still leading to negative views, which frequently resulted in brand switching and to increased boycotting of products and services for many organizations with approximately 50% of all complainants taking this action and/ or telling colleagues and spreading the word” online.

This is a very serious state of affairs, and indicates that organizations are losing customers at an unprecedented rate without having effective strategies to return most complainants to loyal customer status and bottom line profitability. This churn factor, like the churn factor created by “over-cooked” sales promotions before and after Christmas, must be having a serious effect on organizational performance in the private sector where customers are not “captive” as with many utilities, government programs and selected banking, insurance and finance products and services.

While it has been shown that customers who complain and are given a satisfactory resolution, not always directly in their favour, return to the organization with greater trust and loyalty, it seems that most Australian organisations including government departments and instrumentalities, are unable to execute the necessary strategies and organizational approach to achieve this desired outcome.

In the case of consumer goods, face-to-face performance can easily be replaced by online performance if the face-to-face experience is negative and can lead to complaints and confrontation which consumers generally wish to avoid. In such cases, the GST may not be the real determinant of return to “normal retailing”, and may result in consumer resentment without reward further increasing sales for retailers or decreasing online sales activity

The advertising may have the opposite effect of driving more consumers to try buying online and at competitive prices, given that direct sales are not providing additional shopping pleasure or the level of desired of service before, during, or after the sale.

In this same study recently conducted in late December, Competitive Edge asked a number of questions about important social issues to explore in depth the strength of current national Australian consumer sentiments. This followed questions regarding use of the Ombudsman, the impact of the global financial crisis, and the impact of organizations sponsoring sporting organizations which were asked in the 2009 study.

Apart from the recent results from the study demonstrating that consumers were very much against GST being added to purchases under $1,000 when they purchased online it also revealed that they had a strong resentment to the Big 4 banking dominance in the Australian market, and had firm opinions on taxes on superannuation, support for Julian Assange and Wikileaks, and were very decisive on other key issues.

Could consumers in Australia, like in many other parts of the world , be finding in the Internet a new found freedom of choice and service, as well as the opportunity to exercise more consumer power that our retail industry leaders and sections of government are slow to recognize and appreciate?

Further information can be obtained by contacting Competitive Edge, an established marketing consulting, and market research firm with over 30 years continuous experience in the Australian market.

Email contact can be made by: comedge@comedge.com.au
Release Date: January 4, 2011

Contact: David Higginbottom, Competitive Edge – 613 9853 1899

Reference: Consumer Sentiments & GST Reaction