Tuesday, August 7, 2007

Revenge of the Neglected Customer

Revenge of the neglected customer


“He who laughs last . . .” anonymous humorist-critic-spurned customer

In this column I have often harped upon the lack of customer service that exists in the world and the all-too-present and persistent notion that chopping a few cents off a product gives a provider the right to offer poor or non-existent service. Well, it is time to discuss this topic once again. And I will continue to wail until I am blue in the face. It appears, like most prophets, the truth I speak may be heard but it is not soaking in. New evidence both indicates the continued presence of poor service and its ominous repercussions if continued. All those businesspersons out there who wish to remain in business for the long-term, ignore at your own peril.

The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005 illustrates my point. When consumers have a bad shopping experience, they are likely to spread the word, not to the store manager or salesperson, but to friends, family and colleagues. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers. The biggest source of consumer dissatisfaction? Parking lots

The Results show that only 6% of shoppers who experienced a problem with a retailer contacted the company, but 31% went on to tell friends, family or colleagues what happened. Of those, 8% told one person, another 8% told two people, but 6% told six or more people (This result duplicates other studies where the average number of contacts for a dissatisfied customer is five or more, and respondents indicating they told up to twenty people were not unusual). "Even though these shoppers don't share their pain with the store, they do share their pain with other people, apparently quite a few other people," says the researcher. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers, according to the study.

The complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished, researchers found. Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience. For those who had encountered a problem themselves, 33% said they would "definitely not" or "probably not" return. This storytelling has even more impact on the people the story is told to than the people who told the story. One reason tends to be that the tales of annoyance tend to increase with each telling (remember the game of telephone you used to play as a child and the considerable differences the message at the end turned out to be from that at the onset? Same principle applies here.) The unresponsive sales clerk by the end of the chain has become abusive and almost life-threatening. the exponential power of negative word-of-mouth lies in the nature of storytelling As people tell the story the negativity is embellished and grows Psychologists indicate that to make a story worth telling, some entertainment value must be present, a shock effect to keep the other party’s attention. Basically, this storytelling of bad encounters by customers entertainments their friends and families to the detriment of businesses.

Big Box retailers were rated particularly poor in the survey. Customers of Wal-mart and its ilk shared their negative experiences with an average of six people, double to triple the audience given those who shopped and had negative experiences at other retailers. The biggest gripe? Locating merchandise in the many acres of retailing fun that exists.

Moral of the story: cents off and miles of merchandise does not a happy shopper make. Cut the complaint off at the time it occurs and satisfactorily resolve the issue . . . then and there. Otherwise you are not faced with one unhappy customer but many.

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