The most important factor is trust. According to the American Express Global Customer Service Barometer of 12,000 consumers in 12 countries, 70% of customers state they are willing to give companies a second chance after a bad service experience if there has been a history of previously received good customer service.

Even without a history of prior service excellence, up to 75% of consumers will still put up with two or more customer service experiences before taking their business elsewhere. As we noted previously, this tendency for consumers to give second chances to poor service providers was remarkably strong across all 12 markets surveyed.

What should you do when your employees create a bad service experience for customers? Two key service recover points stand out in this survey:

1) Over half (52%) of customers expect something in return after a poor customer service experience, above and beyond resolution of the problem they have encountered.

2) The vast majority of customers (over 63% in all but one market) want an apology, while roughly half want a credit to their account or some form of reimbursement such as a discount, coupon, or the provision of free products and services.

Providing rewards points was an unattractive compensation option chosen by less than one-third of respondents in each market.

Significantly, 70% indicated a discount would motivate them to return after a poor customer service experience, but this can be a costly way to retain their business. While the average discount that would motivate returning business was low in Japan (7%), it was a hefty 19% to 23% in nine markets.

A more cost effective way to maintain customer loyalty and ensure customer retention would be to simply create a series of positive customer experiences. That beats having to buy repeat business through discounts and free offers any day.

Read our most recent Monday Morning Marketing Memo newsletters for more thoughts on Customer Retention Marketing, or what I call the art of keeping good customers.

China catapulted past Japan to become the world’s second largest economy in the second quarter this year. Amazingly, just five years ago the Chinese economy was roughly one-half the size of Japan’s.

I am not sure which is more surprising, the continuous rapid growth rates in China or Japan’s long struggle to propel its economic engine above tepid levels. While China hurls along with 8% to 10% annual growth rates, it seems like Japan struggles to hurdle the 1% barrier in most years.

Some 20 years ago there was talk that Japan’s economy would become larger than the U.S. (remember the jokes about bread in the U.S. being priced in Yen?). Now it won’t be long before Japan falls to fourth place, behind China, the U.S. and India.

China also second largest luxury market

Meanwhile, China has now passed the U.S. as the world’s second largest consumer of luxury goods. With expenditure in the luxury goods category of US$9.4 billion last year, Chinese consumers account for over one-fourth of the global market for luxury goods. According to a study by the Chinese Academy of Social Sciences, this figure will reach US$14.6 billion in five years, enough to surpass Japan for the number one slot in luxury goods consumption.

China has also slipped past Japan for the number two position in purchases of diamonds, with diamond sales up 92% in the first six months of this year according to the Shanghai Diamond Exchange.

In another indication of the growing Chinese consumer market Audi now sells more cars in China than in its home market of Germany. With sales up 64% in the first half of this year, Audi is now targeting over 200,000 car sales this year.

Meanwhile, BMW has sold over 71,000 cars in China in the first six months of this year, almost double the same period last year. Likewise, the Mercedes Benz sales of 58,600 vehicles in the first half of this year was double their total in the first six months of 2009.

Here comes Harrods

I read a newspaper report last month that said the famed British retail Harrods is currently in talks with the Shanghai municipal government. Apparently the executives at Harrods want to open the first Harrods store outside the U.K. in the famed Bund area of Shanghai. I can just picture Chairman Mao and Sir Winston Churchill rolling over in their graves on hearing this news.

According to the results of this 12-country study of more than 12,000 consumers, between 50% and 75% of consumers will put up with two or more poor customer service experiences before discontinuing business with a company. This ranges from a low of 49% in France to a remarkably high 77% in India.

Of course, those of us who have visited India are well aware of the infrastructure problems that often lead to bad customer service situations, so perhaps it is not so surprising that Indian consumers are more understanding and forgiving.

There is no doubt that consumers stop purchasing from companies that give them poor customer service. As we noted in yesterday’s blog post, up to 87% of consumers have vowed never to do business again with specific companies due to poor customer service experiences.

Over one-third of consumers in France (38%), Germany (33%), and the UK (33%) are unwilling to forgive even a single episode of poor customer service and are more prone to quit doing business with an organization after just one bad experience.

On the other hand, consumers in India (38%), Mexico (28%), Spain (24%) and Italy (22%) are more inclined to give companies three or more tries.

Significantly, 70% of consumers in this study claimed they will allow an organization a second chance after a poor customer service experience if they have generally had a history of good customer service from that company.

Consumers in Mexico (89%), Canada (88%), the U.S., Australia, and India (86% each) are significantly more likely to include prior service experiences in deciding whether to keep or drop their relationships with selling organizations.

This study confirms what we often tell our clients and workshop participants — creating a series of positive customer experiences is one of the best ways to ensure customer retention.

Read our most recent Monday Morning Marketing Memos for more thoughts on Customer Retention Marketing, or what I call the art of keeping good customers.

Consumers in Mexico, Australia, and Canada are the most likely to walk away and find other service providers when receiving poor or bad service, followed closely by consumers in Spain, the United States and the United Kingdom.

These findings come from the American Express Global Customer Service Barometer, a 12 country study of attitudes and preferences toward customer service released earlier this month.

At a minimum, across all 12 markets, six in ten consumers report they have decided never to do business with a company as a result of a poor customer service experience. The specific findings were:

Mexico — 87%

Australia — 86%

Canada — 85%

Spain — 82%

United States — 81%

United Kingdom — 80%

Germany — 77%

India — 77%

France — 76%

Italy — 73%

Netherlands — 62%

Japan — 61%

This research study was conducted with over 1000 adults 18+ in each of the 12 countries between mid April and early May this year.

In a story on Friday on their Australian web site, Newscorp reports that BP has been caught doctoring photos of its response to the worst oil spill in U.S. history.

The story actually originated with the publishing of two altered photos taken from the BP web site by tech web site Gizmodo.

For other examples of BP’s PR approach to this disaster, see our previous post BP: Brand Perfidious.

I suspect that the expected resignation this week of BP CEO Tony Hayward is unlikely to halt the current freefall in the BP corporate brand image.

Let me know if you agree or disagree.

Perfidious is the word that leaped to my mind when I read this opening paragraph in a post on the Fast Company web site:

“There’s no question that BP has lied extensively over the past few months about the growing Gulf oil disaster. The company has bullied journalists, fudged numbers, and even deployed fake journalists to the Gulf to write about how everything is fine. Now BP may be literally trying to cover up oiled beaches by dumping sand on top of them.”

Over the weekend, the Financial Times (FT) and CNN were reporting that BP is bracing for a shake-up at the top, with both the Chairman and the CEO expected to be replaced within weeks.

However, unbelievably, the CNN story reports that the Chairman is being “singled out for criticism by shareholders for his perceived lack of decisive leadership during the crisis and his failure to support Tony Hayward, the embattled chief executive.”

I guess these shareholders have their heads stuck in the same sand that BP apparently is using to cover up the oil-stained beaches in Louisiana.

Mr. Hayward’s performance before the U.S. Congress, in which he tried to handball blame for this disaster to BP’s subcontractors, did nothing to enhance trust in the BP brand or its leadership. Neither did early reports that soon after this disaster BP was offering US$5000 payments to residents affected by the oil spill if they waived their rights to sue for any damages.

The high-powered institutional investors in the UK that own the majority of the BP shares apparently do not have a clue about Corporate Image Management and the impact of the corporate image on share prices.

Both these investors and the BP Board need to understand this finding from the PriceWaterhouseCoopers report Reputation Assurance: The Value of a Good Name:

A single-minded focus that seeks only to satisfy shareholders may ultimately lead to crises and erosion of shareholder value.

Looks like an updated definition of the word perfidious might need to include “can lead to crises and erosion of shareholder value.”

The two-day conference is jointly organized by the Office of Environmental Sustainability at the National University of Singapore and the Workplace Research Centre at the University of Sydney.

All registered delegates will receive a complimentary copy of Ken Hickson’s iconic book The ABC of Carbon.  Hickson is one of the keynote speakers at the conference and has become a leading consultant on climate change and sustainability in the workplace.

Details on the program and registration are found on the National Sustainability Conference web site.

The new slogan Make the Change replaces the previous Anything Is Possible, though the latter phrase is being kept in storage by the company for potential tactical use in the future.

According to the company, the new logo ”displays a modern interpretation of the iconic attributes of the original logo in a modern design language that spells out a global perspective.”

New Li Ning logo

The company has long been criticized for having a logo with too much resemblance to the Nike Swoosh and for a slogan too similar to the Adidas tagline “Impossible Is Nothing.”

Well known in its home market of China for its strong distribution system and competitively priced products, Li Ning has started expanding into numerous overseas markets in Southeast Asia and the USA. It has also begun sponsorship of a handful of western athletes, including a couple of NBA basketball players and European track and field and tennis stars.

The company was founded 20 years ago by Olympian athlete Li Ning, who became an immediate Chinese sporting hero when he captured three Gold Medals in the 1984 Los Angeles Olympic Games.

As we wrote in this blog back in November (see Li Ning: First Chinese Global Brand? under the categories Branding and Marketing), Li Ning wants to build the first truly global brand to emanate from China.

With this new logo and slogan, he may very well be on track to accomplishing this dream.

Into the “Beyond Petroleum” branding void steps Shell Oil.

This multi-national major oil industry player now has an aggressive new ad campaign, in which Shell is claiming to “unlock” a future world powered by new and numerous energy sources and cleaner fossil fuels.

Now where have we heard that one before?

The campaign, which launched just about a month ago, includes television commercials, print ads, online advertising, outdoor executions and two web sites — www.energygalaxy.com and www.shell.us/letsgo.

In the campaign, Shell informs us that the wolrd will soon be on the road to sustainable mobility and that the good guys and gals at Shell are “ready to help tackle the challenges of the new energy future.”

Not one to kick a fellow petroleum dog when it’s down, Shell’s spokesperson told Advertising Age that the campaign had been in the pipeline for almost a year and that the company felt releasing it now was “the right thing to do.”

According to The Power Grid column in yesterday’s New York magazine, BP’s investment in hydrogen, wind, solar, and biofuels amounts to just 6 percent of its overall capital expenditures.

While this is certainly a significant amount in terms of dollars (or pounds) spent, it pales in comparison to what BP spends annually on oil exploration and production.

And this does not include, writes John Heilemann, “the tens of millions of dollars that BP has spent on lobbying against safety regulations, even as it’s compiled the most abysmal safety record of any major oil company.”

One key point in the article: safety violations by BP over the past five years totaled 760, as compared to only one for Exxon Mobil.

As we wrote yesterday, media monitoring firm General sentiment calculates that BP has lost $1 billion in brand value since the Gulf Oil spill.

It’s not the fact that BP had an accident that makes this brand suspect; it’s the manner in which they have tried to pass off blame and responsibility that bothers most.

Add to the above the 700,000 “friends” who have signed on to one of the three Boycott BP pages on Facebook, and you have a brand that is approaching free fall.

Sadly, the BP Board doesn’t seem to get this yet. By the time they do, it will be too late. (Another reason why Marketing needs to be brought into Corporate Boardrooms.)

The tombstone for the BP brand is being readied, and the graveyard of Enron, WorldCom, HIH Insurance, and myriad others awaits.