For every customer failure, brands lose 65 percent of revenue from the impacted customer in the following year, according to new global survey from SDL.
The new survey examined how, why, and when customer experience (CX) failures happen, the implications for brands, and how they can win back a customer should a failure occur. Customer experience is so vital in brand differentiation these days, and when brands falter in this area, it never goes unnoticed.
“Consumers have high expectations for brands today and little patience for a break-down in experience,” said Paige O’Neill, CMO, 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.”
Based on a survey of 2,784 consumers across nine countries and three generations about their most major CX failure in the past 10 years, the findings show that it doesn’t take much for a failure to take place. In fact, 24 percent of “horrible” failures required less than an hour’s time, and in the U.S., that figure rises to 32 percent.
Once a customer experiences what they consider a major CX failure, the brand risks serious consequences. Specifically, 64 percent will stop recommending the organization, start looking for an alternative brand, or actively disparage the company via word of mouth, social media, or other online channels.
What’s more, there are financial implications as 90 percent of those experiencing a failure spend the same or less with the brand during the following year. The 10 percent who spend more say they have no choice, being locked into a contract or have no other alternative. Additionally, during the year after a failure, brands will lose 65 percent of the revenue previously contributed from those customers who had experienced the failure.
While one-third of customers that experience a horrible CX are never coming back, the survey says there are still several customers that will re-establish a relationship with the brand.
“There is often a discrepancy between what consumers say will bring them back as a customer versus what will actually work,” the survey says. “For instance, while 30 percent of consumers say showing them how the business has improved as a result of their failure will bring them back to the brand, this only works for 8 percent. The research found that the top three steps brands can take to truly bring a customer back after a failure include: offer a genuine and personal apology, admit the failure and offer discounts/credits related to the failure.”
Additional findings from the study reveal:
When things go wrong, customers place blame on people – whether it is warranted or not, four of five blame people for CX failures
Twenty-one percent of major CX failures happen before a customer even buys
Sixteen percent of major CX failures happen during the shopping journey, or “at the register”
Younger generations are less willing to resolve a failure and will move on: 27 percent of young millennials will not try to resolve the failure, as compared to 13 percent of baby boomers
More than 40 percent of consumers’ “worst CX experiences” have occurred in digital industries, including communications, electronics and online retail
Consumers are more likely to remember a negative experience over a positive: of those consumers that can recall a major negative customer experience that occurred in the past 10 years, only 55 percent can recall a major positive customer experience occurring in the same timeframe