PHILADELPHIA - A new study has found that hearing about a negative experience at a retailer may create a worse impression among consumers than actually having the bad experience themselves.
The Customer Dissatisfaction Study, recently released by the Verde Group, Boulder, Colo., and the Jay H. Baker Retailing Initiative at the Wharton School, part of the University of Pennsylvania here, found that as customers tell each other stories about shopping problems, they often embellish them, making such stories up to five times more damaging than the initial negative shopping experience.
"This study is unlike anything we've seen before because it shows that for every 100 American shoppers, 64 will be told about a store's poor products or services, and no matter what that store does to entice shoppers - sales, promotions, advertising, marketing - those people will not set foot in their store," said Paula Courtney, president, the Verde Group.
Nearly one-third of all U.S. retail customers who have a bad shopping experience will tell four people in such a way that those four people will be more negatively impacted than the person who initially had the problem, the survey found.
Another risk identified by the study is that customers who have a problem often tell other consumers in a powerful way, but do not tell the company, said Stephen J. Hoch, chairman of the marketing department of Wharton. In fact, shoppers experiencing problems are five times more likely to tell a friend about it than contact the company, the study found.
"If businesses want to stop the bleeding from negative word of mouth, it's clear that they need to invest in ensuring that each customer experience is first rate - from adequate parking, to trained front-line staff, to the right product mix, both in stock and on the shelves," Hoch said.
The study was conducted by the Verde Group, together with Consumer Contact, and analyzed with the help of Wharton. It represents 1,200 responses from U.S. consumers in the four weeks leading up to Christmas.