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Avoid Costly Customer Frustration with an Early Warning System

March 10, 2010

An article in this weekend’s New York Times titled “Capturing the Moments of Customer Frustration” caught my attention. As someone who spends every day thinking about customer loyalty and satisfaction issues for our clients, articles like this always pique my interest. The story appeared in The Haggler’s column and describes a customer’s difficulties in resolving a manufacturing problem with a newly purchased video camera. Many calls to customer service are detailed and what emerges is an all-too-common experience with poor information being provided and generally inadequate communication apparent across the department.

What struck me about this (among other things) was how these issues could have been dealt with earlier on to avoid the customer writing to the NY Times and getting The Haggler involved. Apparently this manufacturing problem was well known and a policy was in place for replacement of the camera. So the company moved quickly to put a fix in place that seems like it would have been palatable to most customers. But somehow this policy was not clear to the customer service team, and therefore was not offered to this customer.

This situation provides a good example, I think, for the utility of on-going Customer Satisfaction programs. A good tracking program has strong tactical uses including being an early warning system for breakdowns such as the one that occurred here. While these programs can be a significant investment, avoiding this kind of negative press argues for an ROI in its own right. Finding out as early as possible that something is not going well and customers are frustrated as a result allows a fix to be put in place quickly before a groundswell of negative word of mouth develops.

Taking a quick look at GfK’s Loyalty Benchmark studies shows the dramatic impact negative word of mouth can have. Across a number of industries such as banking, wireless telecom and credit cards, we see a consistent story. Customers who claim they have told others about problems they have had with a company are between 30 and 50 times more likely to say they would not recommend the company.

The same folks state between 14 and 26 times more often that they will not continue to use this company (depending on the industry). Thirty nine percent of wireless customers who have shared problems are likely to switch carriers, and 54% of credit card customers who have done so are likely to decrease usage of their card.

What does this all mean? Once customers get to the point of sharing a negative experience with others, many are already on the way out. Word of mouth matters, and it’s important to learn of customer service issues as soon as possible. You won’t always get a ‘heads up’ from the NY Times.

Have a similar story? A success story? We would love to hear from you.

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