A new study on the impact of customer service experiences shows how much a company’s reputation and customer loyalty hang in the balance with each individual experience—positive or negative—and how little it takes for a customer to abandon a company or brand.
The Customer Experience Tipping Point study by customer experience management specialist Medallia in partnership with Ipsos finds that customers’ top factor for repeat business and loyalty is whether the individual was satisfied with their personal experience of the brand.
The study surveyed 8,002 consumers in four markets (2,002 US; 2,000 UK; 2,000 France; 2,000 Germany) with demographics by age matching the share of each generation in the population of that country. Their answers should alarm, or at least wake up, companies
What Matters Most to Consumers
Half of respondents cited a positive personal experience as their main reason for purchasing from a company. The second highest factor—the experience of friends, families and peers—influenced 20% of participants. Brand reputation, meanwhile, only influenced 16% of the consumers surveyed.
All other factors (including online opinions of other consumers and experts, communication from the company, expert opinions in traditional media, the opinion of thought leaders and those of influencers) had a marginal impact on the decision to become a repeat customer.
Of these other factors, the online options of other consumers performed best, influencing 9% of respondents. The opinions of celebrities—a cautionary note for brands investing heavily in social media influencer marketing—only influenced 3% of respondents.
Experiences matter more than ever (even more than brand reputation).
We partnered with @Ipsos and surveyed over 8k consumers in 4 countries across 6 industries to learn how you can meet or exceed customer expectations. Download study: https://t.co/YHrtPqURtj pic.twitter.com/MEnBNk2dAg
— Medallia (@Medallia) June 21, 2018
The Cost of Disappointment
Disappointing a customer with one bad experience can cost a brand dearly. Nearly half (46%) of U.S. mobile customers, for example, said they are likely to switch brands after having one bad experience. 64% of UK consumers say they have avoided a brand, whether telco, online retail, banking or hospitality, because of a bad experience in the past year.
Consumers expect a personalized experience, with 30% of respondents saying they expect call center agents to be instantly familiar with their contact history. 40% of the respondents expect to be offered personalized experiences based on their interests, buying behavior, demographics and psychographics.
What’s more, every touchpoint matters. Customers expect their experience to be seamless and efficient, online and offline. For instance, 56% of online retail shoppers and 49% of retail offline shoppers expect consistent levels of service across physical and digital channels.
Customers who have a positive emotional experience with a brand are 15 times more likely to recommend, 8 times more likely to trust and 7 times more likely to purchase.
The Social Media Soapbox
What makes customer experience so critical is that customers are far more likely to share and amplify their experiences on social media if they judge the experience to be negative.
Almost two-thirds (64% of those surveyed) have avoided a brand following what they consider to be their own negative experience in the past year. What’s more, 47% of respondents said they avoided a brand that had earned a negative online reputation or negative reviews.
On the bright side, a personal positive customer experience with a brand will influence 77% of consumers to return. Of consumers surveyed, 59% said they would purchase from a company because they heard or read about someone else’s good experience.
Talkin’ ’bout My Generation
Brands may be overlooking an important group of buyers: Many companies tailor to younger generations, but the 55+ age group is the fastest growing adult demographic in the U.S. and (according to the United Nations) most other markets. This group of consumers indicated their expectations were exceeded in the last 12 months at a lower rate than any other group surveyed.
Women and younger generations are more likely to avoid a brand because of a bad experience: 66% of women (vs. 62% of men) globally have avoided a brand because of a bad experience (with 64% being the global average for both men and women). In addition, this behavior is even more pronounced for millennials and Gen Z, with 70% and 68% respectively avoiding a brand because of a bad experience.
In demographic terms, millennials are most influenced by their own negative experiences, with 70% avoiding brands following a bad experience in the past year. The influence of negative experience is also high among Boomers (60%), GenX (65%) and GenZ (68%).
The Silent Generation (73-90 years old) is the least influenced by negative experience, with 50% still saying they would avoid a brand after a bad experience. They are also least likely to be on, or influenced by, social media.
The bad experiences of other consumers, meanwhile, has the greatest influence over younger generations (55% of Millennials and 58% of GenZ), while still affecting older cohorts (40% of Boomers and 33% of Silents).
Consumers are less likely to be less satisfied as they get older, while respondents under the age of 55 are more satisfied than those 55 or older. Younger generations also were twice as likely to report that brands exceeded their expectations as those who are 55 or older.
Hell Hath No Fury…
Negative, particularly angry, sentiment spreads on social media like wildfire. Up to 40% of consumers said they will actively promote negative messaging to warn others following their own bad experience, whether that’s telling family, friends or strangers to boycott a brand.
33% said they would permanently boycott a company as a result of a negative experience. A significantly lower number of people said they would notify the “offending” company of what they considered to be egregious treatment or customer service. How that breaks down:
—21% will tell local staff at a shop or branch know that they are dissatisfied
—19% won’t do anything to notify the company
—18% will complain to a customer or call center
—15% will complain via the company’s website
—11% will write a letter of complaint
—8% will share a bad experience on social media
—4% will contact a consumer advocacy organization.
“Your Call Is Very Important to Us”
70% of consumers report that they expect an immediate response when they submit a complaint. And don’t want to be responsible for fixing a company’s mistake.
While how quickly a company responds to negative experiences matters, respondents said, but 29% of them said that companies had done nothing to actively address their complaint.
In the U.S., online retail brands were most likely to satisfy customer needs, with 96% percent of respondents saying that their needs were met or exceeded.
When customers believe they have put in more effort than a company to resolve an issue, they are twice as likely to tell friends, family or colleagues about the bad experience, and four times more likely to stop purchasing from the company, switch brands, or use the company less frequently.
“Consumers today are sophisticated and do their research before making a purchase. They expect to have a seamless and positive experience and if those aren’t met, consumers know they have options,” stated Rachel Lane, solution principal at Medallia. “For companies looking to create a competitive edge, having a strong brand recognition, or even stellar product isn’t enough. Customer experience is the tipping point, and without a strong plan to create and maintain a positive experience, businesses will lose out.”
“Acknowledgement of customer experience as a driver of business performance is at an all-time high. Failure to properly understand customer needs leads to wasted money, time and energy,” added Jean-Francois Damais, chief research officer at Ipsos. “When it comes to dealing with customer issues, the key is to reduce perceptions of unfairness. That’s all about getting the balance of effort right. It’s a time-critical case of reacting intelligently, being mindful of your customer and knowing when it’s enough to say sorry. And perhaps more importantly, when it isn’t.”
— Ipsos Loyalty (@ipsosloyalty) July 2, 2018