Beware of dissatisfied consumers

According to a recent customer dissatisfaction study at University of Pennsylvania’s Wharton School, if 100 customers have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers. A business can lose a third of its customers by not paying attention to customer needs. This should scare all companies with poor customer service.

The study showed 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.” 

Even more interesting is that the “complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished. [This] exponential power of negative word-of-mouth lies in the nature of storytelling. To make a story worth telling, there has to be some entertainment value, a shock value. Storytelling hurts retailers and entertains consumers.”

Now, since this study was conducted in the US, is it applicable to Germany? Based on my living experience in the US and Germany, I don’t see any reasons but one why it shouldn’t be applicable to Germany. Due to human nature, we all want to get the frustration out after a bad experience by telling it to others and we all like to make it sound as dramatic as possible. 

The only reason the percentage of lost customers may be smaller in Germany than in the US is the general acceptance of poor customer service in Germany. I have addressed that in the post on low service expectations.

Still, companies in Germany should beware of the business lost due poor customer service. Let’s see how many people I have told about my recent bad shopping experience.

I was recently shopping with my family at Obletter, a toy store. My two boys, 5 and 2, were touching some toys and toy boxes. A store clerk was hovering around us and told my son that he shouldn’t hit the toy box. When I pointed out to the store clerk that my son was only touching the toy box like all kids do, she ignored my comments, even after I mentioned that this is a toy store, not a porcelain store, after all. Instead she insisted to criticize my son. 

I had to escalate this to the store manager. Although the store manager was a little more understanding, she tried to explain the behavior of the store clerk with the policy they have to avoid damages to toys. I can understand this policy in particular with my kids who have been known to go wild, to say it bluntly. In this case, however, this was a boy touching a toy box.

My discussion with the store manager revealed that she had only limited idea of what drives store profit. Although she knew that damaged toys that cannot be sold will drive up costs, she didn’t get that dissatisfied customers will not come again, which will reduce future revenues.

Instead of realizing that a customer is reporting a customer experience problem to be addressed, she treated the conversation as annoyance. No apologies, only “this is our policy”, basically a take or leave it approach. So, we left without buying anything. And we won’t be shopping there anymore. 

How many times have we told other potential customer about this bad shopping experience? We told it to our families, two friends, a neighbor and the kindergarten teacher. And this topic will for sure come up again when shopping for birthday or Christmas gifts. 

There is then of course this blog, which now has exponentially increased the knowledge about the bad customer service at Obletter. As the Wharton study suggests at the end, if a retailer refuses to respond to dissatisfied customers, don’t tell five people, tell 35 people. “Retailers need to know that if they don’t listen, it will hurt their bottom line.”

Online customer support

With the growth of online shopping, which is even in Germany turning into a normal way of doing business, it’s becoming important for businesses to satisfy customer needs as they do (or at least should do) in the offline world. This applies of course to customer support.

Some companies in Germany, however, seem to think that doing business online is a blessing to its customers in itself and ignore online customer service. This is an opportunity for foreign companies that have been doing business online for much longer to provide better service to German consumers.

This also an opportunity for smart German companies that realize the importance of customer satisfaction, whether online or offline. The following two examples show opposite responses from online customer support by German companies. 

The first one is the English Book Service, which sells English language books. One time I was searching for a book on their Website, which was identified as “in stock”. Hence, I placed the order assuming that I will get it in the next few days, so I can take it with me on a weekend trip the following week.

Few days later, however, I got an email from the company that the book is on order and it will take few days before it’s shipped. This was an unpleasant surprise since I could have ordered the book somewhere else where it really was in stock. I still hoped though to receive it on time for my trip.

My hope didn’t materialize. Few more days later I emailed the customer service asking where my book is and got a response that it could be up to two weeks until the book can be shipped. There was no apology in the email for this screw-up and no options given to cancel the order or an offer of a voucher for future purchases as a sign of “we are sorry”.

I had to email the customer service again to demand cancellation of the order and a confirmation of that cancellation. I never received a confirmation that the order was cancelled. That was now almost half a year ago. The only way I know that the order must have been cancelled is that I was never charged for this book. 

Unfortunately, it’s still common in Germany that one has to demand better service, both online and offline, instead of good customer service being standard. That it is possible for German companies to provide great online service shows the following example.

My wife was shopping for cosmetics at the PARFUMCHANNEL and ordered several items online. Few days later they arrived but it turned out that company shipped one wrong item. My wife sent an email explaining the problem and requesting a replacement. 

Believe it or not, ten minutes after my wife sent that email the phone rang and a customer service representative from PARFUMCHANNEL was apologizing on the phone for the mistake and gave my wife options to solve this problem. They shipped the correct item the same day and included several samples as a token of apology. They also provided clear instructions on how to return the wrong item free of charge.

We were both amazed about this exceptional customer service that apparently is possible in Germany. How great would it be if other companies took an example from PARFUMCHANNEL?

Business model: customer friendly taxi service

Since one objective of this blog is to encourage companies to provide better customer service in Germany and help them identify business opportunities resulting from good customer service, I will occasionally describe business models based on excellent customer service. Here is the first installment. 

Wouldn’t it be great if there was a customer friendly taxi company that doesn’t only get you from point A to B but also provides a friendly and pleasant experience along the way?  

It would start with ordering the cab. You could order the taxi by phone, SMS, or online. And if you called, the friendly customer representative would immediately recognize you and greet you by name. After initial registration, the company would know your preferences of let’s say non-smoking car or payment method to allow for a quick ordering process.

When the taxi arrives, you would be greeted by name by a friendly taxi driver who helps you with your luggage and then opens the car door for you. Inside the cab he or she would offer you newspapers and magazines to read. And maybe as a nice gesture for the kids, the driver would have some small candy for them.  

During the ride the taxi driver would initiate a friendly small talk and continue with it if you are interested.  

At the end of the ride the taxi driver would help you get out of the car and would have your luggage ready waiting for you. He or she would wish you then a nice day. 

That the business basics – like clean car, safe driving, being on time, asking the customer about preferred route, and accepting all typical payment methods (cash, credit card, etc.) – are covered goes without saying.

Let’s do now a cost-benefit analysis of such a customer-friendly taxi company.

Incremental costs:
- newspaper and magazines: ~10-30¢ per ride
- candy for the kids: ~30-50¢ per ride
- friendly taxi drivers: 0 (The taxi company should be able to sign up only taxi drivers who are deemed fitted for this role.)

Incremental benefits:
- higher tips for the driver: ~50¢-2€ per ride
- increased customer satisfaction, which leads then to higher preference, which in turn leads to higher market share and hence higher revenues for the taxi company

This customer friendly taxi company could build its brand name through word-of-mouth and/or targeted advertising. And its consistently friendly service would increase preference among its frequent customers. The company could leverage its online ordering system in cooperation with airlines and train companies, offering their customers an easy way to order a taxi together with the airplane or train ticket, which would increase revenues for the taxi company even more.

Overall, a customer friendly taxi service would benefit financially both the drivers and the taxi company itself. And its customer focus would of course benefit customers too.

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