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The price of failing the customer: study

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Putting the customer at the heart of retail is the starting point of multichannel commerce. Two new studies aim to quantify what happens when retailers or brands fail to do that.

A study from customer experience specialists SDL suggests that every time a brand fails a customer, the income they can hope to gain from that shopper in the coming year falls by 65%.

SDL questioned 2,784 customers across nine countries, including the UK, about their biggest customer experience fail over the past decade. Almost a quarter (24%) of the experiences described as “horrible failures” took less than an hour and cost less than lunch to resolve. This may, say researchers, seem more of a minor problem to retailers – but for the consumer it’s a serious failing. For 64% of customers, that means they will stop recommending the brand, look for an alternative or even actively disparage the company through word of mouth, social media, or elsewhere online.

Almost all (90%) of those experiencing a failure went on to spend the same or less with the brand during the following year. The 10% who spent more said they had no choice because they were locked into a contract or had no other alternative. In the year after a failure, brands will lose 65% of the revenue previously contributed from those customers who had experienced the failure.

It found 40% of consumers said their worst failures had been online, including retail. It also found 21% of customer experience failures were before the customer had bought, while 16% were during the shopping journey or at the point of payment.

It seems younger shoppers are less forgiving, with 27% of millennials [aged between 18 and 24] not prepared to try to resolve the problem, compared to 13% of baby boomers.

“Consumers have high expectations for brands today and little patience for a break-down in experience,” said Paige O’Neill, chief marketing officer at SDL. “While the good is expected, the bad will go viral. Keeping this in mind, organizations must have an integrated strategy in place that caters to each individual consumer and empowers employees to meet customers’ needs.”

Meanwhile, research from MetaPack also throws light on customer expectations, and the implications when customer service – in the form of delivery – fails. It questioned consumers aged between 18 and 24 who said they expected fast and cheap deliveries. Some 55% said they most valued free delivery, while 33% are looking for speed. Most (82%) are looking forward to trying same-day delivery over the next year. As with the SDL research, shoppers are willing to go negative: 40% said they would tell the world about a bad delivery experience on social media.

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