Archive for March, 2007|Monthly archive page

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.”