Cutting Loose

Customers Four Times More Likely To Abandon
You After Negative Experience: Study

Customer perception is everything, and when a customer perceives that they have to put more effort into resolving a customer service issue than the company does, they are four times more likely to use that company less frequently, or to stop doing business with them altogether.

That’s the message in a new study from Ipsos which also found that when this happens, they are also twice as likely to complain, tell friends and family about their negative experience, and share the experience on social media, leading to further brand and reputational damage.

Australian companies expect their customers to do too much work when trying to resolve an issue, and companies need to invest more in resolving negative customer experiences, the study found.

Surprisingly the study found that in over one-third of cases the company was not even aware of the complaint or negative experience, and that four out of five complaints didn’t even result in an apology.

Australian companies need to ask the critical question: ‘Are our customers working too hard?’

Customer experiences in eight different sectors were evaluated and the study found that irrespective of sector, around 60 percent of customers perceived that they have had to put in more effort than a company to sort out an issue.

When broken down by sector, the results are particularly damning for the telecommunications industry where 75 percent of customers reported this perception, with utilities at 66 percent and retail at 63 percent. The lowest industry was online retail at 51 percent.

“Australian companies need to ask the critical question: ‘Are our customers working too hard?’” Peter Riley, Ipsos Loyalty Melbourne Director said.

Overall 62 percent of consumers believe they put in a lot of effort when it comes to resolving customer service issues with a company whilst only 28 percent of companies believe they put in a lot of effort to resolve the issue. But what is key is that 60 percent of customers stated that their personal experience has a lot of influence on their brand choices.

Riley went on to argue that whilst many companies had taken steps to use the ‘Customer Effort Score’ to measure satisfaction, loyalty and advocacy, the level of effort a company contributes to resolving issues is also very important.

As part of the study, Ipsos also measured two key areas of complaint – issues with staff and issues of overcharging, and then measured the impact of potential resolutions on the likelihood of the customer using the company again.

The result should come as no surprise: treating the customer with respect was found to be the most effective response for companies dealing with a staffing issue, whilst financial compensation was always the best way to deal with overcharging.

But the study also revealed that companies need to remember that not all customer issues are created equally, and companies should consider the impact of resolutions offered – as there is the potential to invest their time and money into the wrong areas and still lose customers.

Of course, the best way by far to keep a customer is to ensure that you quickly and professionally let your customers know you are taking their issue seriously and doing your best to resolve it.