Dissatisfied customers damage all types of businesses
80% of shoppers don’t give retailers the chance to fix a poor customer experience
It may seem counter-intuitive, but retailers should welcome the irate shopper who vents her frustration in an animated scene on the sales floor. That’s because it’s the mistreated customer who walks out the door in a silent huff who places the most revenue at risk, according to a collaborative study of dysfunctional retail touchpoints conducted by LoyaltyOne and Verde Group with Professor of Marketing and Psychology, Dr. Deborah Small, at the Wharton School of the University of Pennsylvania.
Half of US consumers had problems from their last shopping trip
The 2015 survey shows about half of 2,500 U.S. consumers polled reported experiencing a problem on their last shopping trip. Of those customers, 81% decided not to contact the retailer about the issue. Among these silent shoppers, 32% said they were unlikely to recommend the retailer to friends and family, putting these shoppers at-risk of decreasing their spend with the retailer.
By comparison, the study shows that shoppers who did notify retailers of their poor experience and had their problem completely resolved were 84% less likely than silent shoppers to be at risk of decreasing their spend.
“The results are a resounding confirmation that poor customer experiences have a considerable negative impact on shopper spend and attrition which can run into the billions,” said Dennis Armbruster, LoyaltyOne Consulting Vice President and Managing Partner. “We’re ushering in a new era of customer experience measurement vital to retailers looking to make even more informed decisions.”
Retailers should take note of the importance in identifying specific customer experiences most damaging to customer loyalty as billions of dollars are at risk:
- Mass merchandisers are putting 25% of potential revenue at risk
- Apparel retailers are putting 16% of potential revenue at risk
- Department stores are putting 15% of potential revenue at risk
- Drugstores are putting 12% of potential revenue at risk
- Grocers are putting 11% of potential revenue at risk
“Our methodology precisely measures the impact of ineffective customer touch points. Insight around the effects of poor customer touch points can help retailers reduce the risk of negative customer experiences, while also enabling them to proactively design experiences that positively influence spend, visit frequency and basket size,” said Paula Courtney, President of Verde Group.
The survey also revealed that big spenders within a category disproportionately experience certain problems:
- Mass retail “check out” risk: Shoppers frustrated by check out wait times reported spending 23% more than the average mass retail customer ($545 vs. $446 a quarter)
- Department stores “not-my-department” staff attitude: Shoppers troubled by an associate’s not-my-department attitude reported spending twice as much as the average department store customer ($543 vs. $261 a quarter)
- Apparel retailers “ship date”: Particularly in their online channel, customers who cited their inability to obtain a specific date or time to receive an online order reported spending 66% more in the category ($416 vs. $250 a quarter)
“In a very robust platform, these partners have taken the psychology of shopping and married it with the economics of shopping. Insights around the impact of the silent customer could prove to be valuable tools for retailers looking to minimize the risk of attrition created from weak customer experiences,” said Dr. Deborah Small, from The Wharton School of the University of Pennsylvania.
Shoppers won’t confront the retailer directly
Why don’t shoppers confront the retailer directly? “If they were really angry, they would complain to management during the store visit or maybe after, but they don’t do that very often,” said Wharton Marketing Professor, Stephen Hoch. “Some people think it’s going to happen again and they can’t do anything about it. They are resigned to it. But the main reason they don’t complain is it’s too time consuming to get it fixed.”
Indeed, the survey showed that 46% of those who had a problem expect they would definitely or probably experience the same problem in future.
Worth finding dissatisfied customers so problems can be fixed in unsatisfactory customer touchpoints
Retailers have historically paid a lot of attention to how to satisfy the customer, but have not done much work on what makes them dissatisfied. In retail, it’s hard to focus on the dissatisfied because most customers are anonymous, unlike direct marketing or a business-to-business relationship. And retailers are reluctant to ask customers their views on what they do wrong because the fear they may be stirring up negative thoughts.
But how do you get retailers to find ways to get customers to bring complaints effectively? We are all very familiar with experiences we have had in trying to get through by telephone to a live person in many organizations. Writing a letter is time consuming. What about the company website? And what about consumer review sites like Epinions, Trip Advisor etc? If all else fails, social media is at hand…