For every customer experience failure, brands lose an average of 65% of the revenue they would have earned from the affected customer during the following year, according to a global survey by SDL.
Based on the survey of 2,784 consumers across nine countries and three generations about their most major CX failure in the last 10 years, the findings show that it doesn’t take much for a failure to take place. In fact, 24% of “horrible” failures required less than an hour’s time and less than the cost of lunch to navigate – and in the US, this jumps to 32%.
While organisations may perceive this type of CX break-down as a minor misstep in the customer relationship, the consumer sees this as a major failure. Once a customer experiences what they consider a major CX failure, the brand risks serious consequences. Specifically, 64% will stop recommending the organisation, start looking for an alternative brand or actively disparage the company via word of mouth, social media or other online channels.
There are of course financial implications too, as 90% of those experiencing a failure spend the same or less with the brand during the following year. The 10% who spend more say they have no choice, being locked into a contract or have no other alternative. Additionally, during the year after a failure, brands will lose 65% of the revenue previously contributed from those customers who had experienced the failure.
“Consumers have high expectations for brands today and little patience for a break-down in experience,” said Paige O’Neill, CMO for SDL. “While the good is expected, the bad will go viral. Keeping this in mind, organisations must have an integrated strategy in place that caters to each individual consumer and empowers employees to meet customers’ needs.”
While one-third of customers that experience a horrible CX are never coming back, there are still several customers that will re-establish a relationship with the brand. There is often a discrepancy between what consumers say will bring them back as a customer versus what will actually work. For instance, while 30% of consumers say showing them how the business has improved as a result of their failure will bring them back to the brand, this only works for 8%.
The research found that the top three steps brands can take to truly bring a customer back after a failure include: offer a genuine and personal apology, admit the failure and offer discounts/credits related to the failure.
Additional highlights from the study include:
- When things go wrong, customers place blame on people – whether it is warranted or not, four of five blame people for CX failures.
- 21% of major CX failures happen before a customer even buys.
- 16% of major CX failures happen during the shopping journey, or “at the register”.
- Younger generations are less willing to resolve a failure and will move on: 27% of young millennials will not try to resolve the failure, as compared to 13% of baby boomers.
- More than 40% of consumers’ “worst CX experiences” have occurred in digital industries, including communications, electronics and online retail.
- Consumers are more likely to remember a negative experience than a positive one: of those consumers that can recall a major negative customer experience that occurred in the past 10 years, only 55% can recall a major positive customer experience occurring in the same timeframe.