It has been almost a year since Qualified Remodeler published the results of its consumer study of attitudes toward remodelers. In it, we showed that negative consumer attitudes were out-of-whack with the actual level of satisfaction experienced. Now comes a Wharton Business School study that quantifies the effect of bad customer experiences.
During the ’05 holiday season, shoppers were asked about their in-store buying experiences, particularly whether they experienced good service or bad. Those that had bad experiences were then asked what they did about it. Only 6 percent contacted the actual store to complain, but 31 percent went on to tell friends, family and colleagues about the experience. And this is where the research hit pay dirt. Of those, 8 percent said they had told one person. Six percent said they had told two people. But another 6 percent said they had told six or more people about their negative experiences. And people being people, as the story was retold, the researchers found, it was embellished for shock value and better effect.
“As people tell the story, the negativity is embellished and grows,” says Paula Courtney, president of Toronto-based Verde Group, which partnered with Wharton on the research. “For example, the first time the story is told, it might be about a customer service representative who was rude. By the time the third or fourth person hears the story, the customer service representative becomes verbally abusive. Storytelling hurts retailers and entertains consumers.”
The net effect of the “storytelling” was that those who had only heard about the bad experience were less likely to do business with the retailer in question than those who had actually experienced the problem. In the survey of 1,100 consumers almost half, 48 percent, said they had avoided stores in the past as a result of someone else’s negative experience. For those who had directly experienced a problem, only 33 percent said they would probably not return.
Even though this research was conducted in a retailing environment, its lessons are easily correlated to other industries, like ours. The implications for remodeling have been evident for quite some time. Not only does the individual remodeler suffer, but negative storytelling can cast a cloud over the entire remodeling and home improvement industry.
There is no easy way to limit negative storytelling. The key, the researchers conclude, is to be proactive. Survey your customers and track their willingness to refer you to others. In the process, give those customers who say they have had a bad experience a chance to vent. And do whatever it takes (within reason) to make them feel as if you have worked hard to make them happy. This research shows pretty clearly that it really pays to limit their storytelling.