A new study on the impact of positive or negative customer service experiences shows something we may already have suspected: a company’s reputation and customer loyalty hang in the balance with each individual experience.
The study, from customer experience management specialist Medallia, finds the predominant consideration for repeat business is whether the individual was satisfied with their personal experience of the brand.
Half of respondents said a positive personal experience as their main reason for purchasing from a company. By comparison, the second highest factor—the experience of friends, families and peers—only influenced 20% of participants. Brand reputation only influenced 16% of consumers.
All other factors including online opinions of other consumers and experts, communication from the company, expert opinions in traditional media, the opinion of thought leaders and those of influencers had a marginal impact on consumers’ decision to return. Online options of other consumers performed best, but only influencing 9% of respondents. The opinions of celebrities only influenced 3% of respondents.
What makes customer experience so critical is that customers are far more likely to amplify messages on negative experiences and negative sentiment is far more influential than positive sentiment.
Almost two-thirds, (64%), of consumers surveyed say they have avoided a brand because they had a negative experience over the past year. Additionally, 47% of consumers say they have avoided a brand that has earned a negative online reputation or negative reviews on social media.
This dynamic plays out across generations. The Silent Generation (73-90 years old) is the least influenced by negative experience, with 50% still saying they would avoid a brand after a bad experience. Millennials are most influenced by the negative experiences with 70% avoiding brands after having a bad experience. The influence of negative experience is also high among Boomers (60% would avoid a brand), GenX (65%), GenZ (68%).
The bad experiences of others influence younger generations more (55% of Millennials and 58% of GenZ), but still affect older generations considerably (40% of Boomers and 33% of Silents).
As one might suspect, angry sentiment spreads with wild abandon. As much as 40% of consumers will actively promote negative messaging about their bad experience, telling family, friends and even strangers about it, and 33% will quit the company entirely as a result of a negative experience. But a significantly lower number of people will notify the “offending” company of what they did wrong.
- Only 21% will let local staff at the shop or branch know that they are dissatisfied
- 19% won’t do anything to notify the company
- 18% will complain to a call centre;
- 15% will complain on the company’s website
- 11% will write a letter of complaint
- 8% will share a bad experience on social media and
- 4% will contact a customer advocate association.
A personal positive customer experience with a brand will influence 77% of consumers to return, and 59% will purchase from a company because they heard or read about someone else’s good experience.
Because things are bound to go wrong, company response to negative experiences is critical but 29% of consumers surveyed said that companies had done nothing to actively address the problem.
In the US online retail is most likely to satisfy customer needs—with 96% percent of respondents saying that their needs were met or exceeded. Only 3% said the experience of online retail had failed to live up to their expectations.
Don’t ignore the grey
Across generations and all retail sectors, respondents under the age of 55 are more satisfied than those 55 or older. The younger generations also were twice as likely to report that brands exceeded their expectations as those who are 55 or older. However, demographic trends are moving in favour of older generations which makes addressing their needs critical. In the U.S., the 55+ generation is the only adult demographic expected to grow over then next twelve years.
The United Nations reports that, in nearly every country around the world, the proportion of older persons is growing. The number of persons aged 60 or over is expected to double by 2050 and more than triple by 2100, rising from 962 million persons aged 60 or over around the world in 2017 to 2.1 billion persons in 2050 and 3.1 billion in 2100. The global population of over 60s is also growing faster than all younger age groups.
While we spend a lot of time in the travel sector discussing the expectations of younger travelers, there are huge gaps in satisfying accessibility needs, making facilities more accommodating for people with a broad range of mobility needs and disabilities. We have largely designed travel for young persons when, in fact, those most likely to travel in future will be young at heart.
Addressing the needs of the older generations, and ensuring that they remain satisfied with the service they receive, will be critical. After all, every customer demographic will age. That is guaranteed. The high expectations of today’s younger generations will carry-on as they transition to grey, and the travel product and service infrastructure must be able to rise to the challenge.
The study was conducted for Medallia by Ipsos and took into account feedback from 8,002 consumers (2,002 US/2,000 UK/2,000 France/2,000 Germany) with demographics by age matching the share of each generation in the population of that country. For the full report, see here.