More than 50% of American shoppers say that a negative shopping experience of a friend or colleague will prevent them from setting foot in a store altogether, according to the 'Customer Dissatisfaction Study' by The Verde Group and the Baker Retailing Initiative at Wharton.
The survey found that, as shopping problems are repeated, they often get embellished and actually become up to five times more damaging to customer retention than the initial negative shopping experience itself.
Consumers take revenge
According to Paula Courtney, president for The Verde Group, "This study is unlike anything we've seen before because it shows that for every 100 American shoppers, 64 people will be told about a store's poor products or services and - no matter what that store does to entice shoppers (such as sales, promotions, advertising, or marketing) - those people will not set foot in the store."
The study revealed that nearly one-third of all US retail customers who have a bad shopping experience will tell four people in such a way that those four people will be more negatively impacted than the person who initially had the problem.
Damage limitation
Stephen J. Hoch (the Patty and Jay H. Baker Professor and Chair of the Marketing Department of the Wharton School of the University of Pennsylvania), explained that another major risk identified by the study is that customers who have a problem are happy to tell their friends in a very powerful way, but they don't often bother to tell the company itself. In fact, shoppers experiencing problems are five times more likely to tell a friend about it than contact the company.
Hoch suggests that businesses that want to limit the damage from negative word of mouth should invest in ensuring that every customer experience is first rate: from adequate parking, to trained front line staff, to the right product mix, and with products in stock.
Top 3 retail store problems
Top problems consumers experience are related to the following three areas:
- Time: the customer can't find parking, or it takes too long to get in or out of the store;
- Merchandising: Consumers felt it was hard to find the right product, and had problems with store layout and product information displays;
- Front-line staff: Consumers had problems with front-line staff's poor product knowledge and a lack of courtesy.
Other findings
The study, which was conducted by the Verde Group together with Consumer Contact, and analysed with the help of the Jay H. Baker Retailing Initiative at Wharton, represented 1,200 responses from US consumers who made purchases under US$2,500 in the four weeks leading up to Christmas 2005. The average purchase price was US$163. Key findings from the study include:
- 50% of consumers experience a problem. Those who have a problem experience three problems on average;
- 31% of consumers tell one or more friends about their problem. On average, shoppers tell four people about their negative shopping experience;
- Almost half of shoppers have avoided a particular store in the past because of someone else's negative experience;
- Negative word of mouth influences future patronage up to five times more than the person who experienced the problem first-hand, as a result of embellishment (each time someone tells the story it is exaggerated) and aversion (why shop at a store with problems when here are many other choices available?);
- The bigger the store, the more likely consumers are to experience problems;
- Department stores and mass merchandisers have more issues related to time and/or accessibility than other stores;
- Men are less loyal than women;
- Men and women are remarkably similar in the problems they experience, as well as in their tolerance levels. Men are, however, less likely to return to a store if the product they were looking for is out of stock.
According to Courtney, "Every instance of customer dissatisfaction has the potential to negatively impact loyalty and, ultimately, the bottom line. With this latest study, we now know that negative word of mouth is so powerful that it can deter potential customers from ever shopping at a store."
For additional information:
· Visit Verde Group at http://www.verdegroup.ca
· Visit Wharton at http://www.wharton.upenn.edu
· Visit Consumer Contact at http://www.consumercontact.com