Service Recovery Crucial for Customer Retention

Service problems are bound to happen. How do you keep customer service errors turning into lost customers?

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.

Consumers Give Second Chances to Poor Service Providers

Most consumers are forgiving and tolerant of a single poor customer service experience, according to findings of the American Express Global Customer Service Barometer.

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.

Up to 87% of consumers will leave due to poor service

Over eight of every ten consumers in six major markets have vowed never to do business with specific companies due to a poor customer service experience.

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.

L.L. Bean Tops Retailer Customer Service List

L.L. Bean has jumped to the #1 position in customer satisfaction in the USA, according to the third annual National Retail Federation Foundation/American Express Customer Service Survey.

Ranked third last year, L.L. Bean shot past both Amazon and Nordstrom to take the top position. The company was judged the best across all retail formats and is the only “old school” retailer ranked in the top five this year. The other top five included Internet retailing giants Zappos.com in second, followed by Amazon.com in third, Overstock.com in fourth and Newegg.com in fifth.

The survey was conducted amongst 8,877 consumers in September and asked “which retailer delivers the best customer service?”

“Good customer service starts and ends with how the customer feels about their experience with a retailer,” states NRF Foundation Vice President Kathy Mance. “Retailers are especially challenged because of the multiple touch points that exist between the customer and their brand, but these companies have shown that great customer service does exist.”

I would suggest that rising customer expectations is another challenge for retailers, since four of the top ten from last year’s survey (Boscov’s, Kohl’s, REI and Macy’s) have fallen off this year’s list entirely. As we have often written, customers have too many choices to put up with failed or falling service.

One of my favorite quotes is that “life is too short to drink bad wine.” I would also suggest that “life is too short/precious/busy to put up with poor service.”

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Angry Customers

Customer rage is on the increase and, according to an article in The Age here in Melbourne, a team of Sydney academics is now studying the problem.