Customers to Companies: Just “OK” Service isn’t Good Enough – Interview with Dr. Mary Jo Bitner
Click Here to Listen to the Audio Podcast with Dr. Mary Jo Bitner
Transcript: Customer rage decreased in the past two years, but negative emotions about interactions with firms about problems with products and services continue to simmer, costing companies billions in lost brand loyalty. The 2017 Customer Rage Study showed that a high number of people who had complaints were left feeling frustrated, angry and generally bad about their experience with the company. Professor Mary Jo Bitner, co-executive director of the Center for Services Leadership, explained the numbers during an interview at the center’s Compete Through Service Symposium. The biennial customer rage study was conducted by Customer Care Measurement & Consulting in collaboration with the center.
Center for Services Leadership (CSL) So the results of the 2017 Customer Rage Study are in, and customers are experiencing problems at a slightly higher rate, but it appears that they are experiencing less rage over it. Can you summarize the top line for us?
Mary Jo Bitner What we found, and this has been true for the last seven rounds of the Customer Rage Study, is an increase in the number of people who experienced a significant problem with a product or service. This year it’s up to 56 percent of the people surveyed, and this was a 1,000-person random sample survey.
CSL I understand, however, that the rage quotient, which has been so alarming in the past, is actually down.
Bitner Yes, it is down! People who experienced rage is down from 66 percent of the sample in 2015, which was the highest of any time we’d ever done the study, to 56 percent. We define rage as being very upset or very dissatisfied with the product or service. So, that’s good to see, but not all of the news is good.
CSL Yes, I heard that underlying the rage number is a rather large amount of negative emotion. Could you tell us a little more about what we mean by negative emotions?
Bitner It’s very interesting, and in fact this is the first year that we’ve measured some of these other emotions. Even though rage was down a bit, it was revealing to see that negative emotions are still very significant in how customers feel about these incidents, where they complain about an important problem. And we found that 91 percent of the people who experienced a problem were frustrated, 84 percent of them were really disappointed and many of them didn’t feel good about the experience at all. These are very significant numbers, and not a good thing for companies.
CSL So we can conclude that companies have a lot of work to do. What kind of measures should companies be looking at the improve the customer experience?
Bitner There are many things we find over and over again, so it seems that, unfortunately, companies are not really learning. They’re doing a lot of the right things, but they are not doing them well. For example, people really don’t like a lot of the automated phone lines. People don’t like it when they have to call back, and we find every year, that most people, to get their problem solved or not solved, have to call back or talk to somebody four times. This gets people frustrated and disappointed. Companies really need to look at first call resolution. How can we set up a system that really does that? How can we motivate our employees to do that effectively, to incentivize them to solve those problems on the front line, and give them the tools they need to do that? A lot of things that customers don’t like – such as repeating information – are fairly easy to fix, but they are not fixed year after year.
CSL I notice that you mention the telephone. We believe that the Internet is the go-to, to solve any problem, to find any information. However, people still call companies. What’s that all about?
Bitner When people have a significant problem and want to get a complaint solved, they still turn to the telephone. People always say, “oh yeah, it’s the older population that just uses the phone and the young people are clearly going to go on the internet,” but it’s the young people too. When they have a significant problem, people in large percentages go to the telephone. The primary channel for both younger people and older people is still go to the telephone. Sixty percent of people 18-34 prefer using the telephone to complain, and 78 percent of people 55 and older prefer the telephone. So, while the internet is being used more than it was in the past, it’s still a smaller number of complaints are lodged that way.
CSL I find it interesting that sometimes you can’t even find a phone number on a company web page. You’ll come across a form that you have to fil out, but there’s no phone number in sight.
Bitner That’s very frustrating to people, especially when they prefer to use the telephone, so now they are searching. Really good companies have figured that out, and the ones that are doing well do make their phone number available.
A lot of companies still don’t recognize the tremendous negative impact that poor handling of complaints, or non-handling of complaints, can have on their bottom line.
CSL So what about the financial cost of doing complaint resolution poorly? I understand those numbers are pretty high.
Bitner There’s some real bottom line cost to companies not handling complaints effectively. One thing we see in this research — and we have the data on this — is that 68 percent of customers who are satisfied or very satisfied with how their complaints are handled are likely to purchase again from the company. So, if you can handle their complaints well, they’re still going to come back to you. That’s good.
But if you just mollify them (we use the word mollify to represent when you do just ok, and customers go away saying you did just well enough in handling my complaint) the repeat purchase number drops from 68 percent to 11 percent. So you’ve lost 57 percent of people by just barely satisfying their complaint.
And then if you truly dissatisfy them when they complain, the number drops to three percent of repurchase intentions. So there’s some real obvious costs.
We tried to quantify those costs at a higher level. We looked at the number of households that experienced a problem, took the number of households that experienced rage, and looked at the number of those that posted information online. We multiplied by the value of the business that they were complaining about. Now, not all of those customers would be lost, but if you took all of those customers and the value of their business, the revenue at risk overall to business, is over $313 billion.
CSL Billion.
Bitner Yes, billions of dollars lost because of failing to satisfy those complaints, if you lost all of the business as a result. If you say, not all of that business would go away and some people will still buy, you could cut that number to a third, and it would still be over $100 billion.
So whatever way you want to look at it, this is significant revenue at risk to business overall. And as I mentioned a minute ago, that repeat business for an individual business really goes down if you don’t satisfy their complaint. So there’s a real ROI for good complaint handling.
CSL What role does word of mouth play?
Bitner Word of mouth is what customers say when they’ve had a really good or very poor product or service. We know that people spread negative word of mouth much more than positive. If we have a good experience we tell a few people, but if we have a bad experience we tell a lot more people. And in the old days that was face-to-face, over the telephone, tell your friends, tell your family. Today, word of mouth is spread through social media as well. We know that word of mouth can have a huge impact, and a lot of that is coming through social media, and the numbers are really astounding.
CSL There’s a lot to be learned here, and woe to the company that’s not paying attention.
Bitner Yes! And I think the interesting thing is that companies think they are paying attention, but they really need to look at how they are executing on their complaint handling and really try to do a good job there, because the bottom line is affected directly.