American consumers are mad. About 50 million of us experienced at least one problem with a product or service in the last year, and it really got our blood boiling. That customer rage may cost American businesses more than $58 billion in lost future sales of goods and services. But here’s the good news: customers aren’t actually asking for much. An “I’m sorry” or “Thanks for your business” can make a surprisingly significant difference in assuaging customer rage -- and increasing brand loyalty.
That’s all according to the recently-released 2011 National Customer Rage Study, which showed that consumers have more problems than ever before. In 1976, 32 percent of survey respondents reported having a problem with a product or service in the past 12 months. By 2011, that number had risen to 45 percent. And among those unhappy customers, 60 percent are extremely upset or very upset (i.e., enraged).
The study, conducted by Customer Care Management and Consulting (CCMC) in collaboration with the Center for Services Leadership at the W. P. Carey School of Business, lends insight into why customers are so angry, what that rage means for businesses, and what companies can do about it.
Why are customers so angry?
The study asked a representative sample of 1,000 households about the most serious problem that they’ve experienced with a product or service over the past year. The majority of those problems were with cable TV or satellite products and services, telephone products and services, non-computer consumer electronics, retailers, and automobiles.
It’s easy to guess that customers have more serious problems with products and services because the quality of those products and services is worse now than in 1976. But that’s simply not true, said W. P. Carey School professor Mary Jo Bitner , who is also executive director of the Center for Services Leadership. “We have increased quality in a lot of our products and services, and we’ve invested in that quality over the last 35 years,” Bitner said.
Marc Grainer, chairman of Customer Care Management and Consulting, suggested that one reason customers have more problems is that we own more products that are more complex than ever before. “The more products we own, the greater the likelihood that we’ll experience a problem with one. Plus, products and services are more complex -- cable in particular has more functionality than many of us know how to use. It’s a lot easier to have a problem because you’ve got a lot more things that can go wrong.”
What’s more, Grainer said, customer service outsourcing done wrong can be blamed for many enraged customers. “Lots of companies are outsourcing customer service. If you do it the wrong way, you lose control. Do it the right way, it’s seamless and customers don’t even know it’s outsourced.”
What are customers so mad about? More than anything, they’re mad about the time that these problems cost them. Of course, lost money, physical injury, and other damages made the respondents mad too, but in a world where there’s never enough time, losing six hours as a result of their most serious problem really made their blood boil (and enraged consumers’ perceptions of time lost has increased -- from four hours in previous studies).
To add insult to injury, when consumers do complain about a serious problem with a product or service, rarely do they get what they want. In fact, 47 percent of respondents felt they got absolutely nothing when they complained about their most serious problem.
What did complaining customers want? Of the top 10 remedies that customers wanted, six are non-monetary. The top, “To be treated with dignity” was a desired remedy of 90 percent of survey respondents. Only 40 percent got it. 73 percent wanted “An explanation of why the problem occurred” but only 23 percent got that. 70 percent wanted “A thank you for my business” but only 32 percent got one.
Overall, only 21 percent of respondents who complained about the problem were completely satisfied with how their complaint was handled. “This is really remarkable when you think about the amount of money that businesses spend on customer service,” Bitner said. “We aren’t seeing the results.”
Why is complainant satisfaction so low? “One major reason is what we have labeled ping-ponging,” explained Bitner. “This is one of the major reasons why people are dissatisfied. They call a company, and they have to call back, and then they have to explain the problem to someone else, and they keep going on and on and pretty soon they’re very, very dissatisfied and they still don’t have their problem resolved.”
For customers who got their problem resolved in one contact, 49 percent were satisfied. Among people who had to make three or more calls, only 11 percent were ultimately satisfied. The average number of contacts people had to make in 2011 to get their problems solved: 4.4. And 21 percent of respondents had to contact the company seven times or more. The result: a lot of really mad customers.
So what does all this mean for businesses?
Grainer said that the study results “definitely” paint a negative picture of the state of customer service in the U.S. And the downside effect for companies is huge. “When the study’s results are extrapolated to the U.S. population, we find that more than 50 million households experienced problems in the last year, and almost $60 billion worth of future sales of goods and services are at risk.”
Grainer added, “And these numbers only apply to customer’s most serious problems. So I think we can all agree that unless companies significantly improve their complaint handling practices -- and the data show they haven’t improved in the last 35 years -- we’re talking about something that can have a big impact on corporate profits.”
Some companies have rushed to the World Wide Web to save the day, but Grainer said that it is actually still good old fashioned means of communication that customers prefer for resolving their problems -- as well as for making purchase decisions. 69 percent of customers resolved their problems by phone, compared to just 9 percent online. When making purchase decisions, consumers relied on traditional sources of information (personal experiences, word of mouth with people known personally, articles in newspapers/magazines, information from TV/radio, customer satisfaction surveys, and ads) more heavily than on Internet sources.
“The Internet has not replaced the telephone (i.e., call centers) as the primary channel for delivering customer care,” Grainer explained. At the same time, though, Web 2.0 cannot be ignored. For one, the potential for social networking word of mouth is about eleven times greater than traditional word of mouth. “Today, both disgruntled and satisfied customers can instantly communicate with hundreds or thousands of people in the marketplaces.” That’s why companies need to pay attention to both traditional customer service channels like call centers and Web 2.0 channels like social networks.
Customers aren’t asking for a lot
It shouldn’t be so difficult for companies to do the right thing the right way. “In most industries, if you’re mediocre -- and I mean mediocre -- that’s all you have to be to be number one,” Grainer said. “Expectations now are so low, especially in service industries, that if you do even a half decent job, you exceed expectations.” That should be a powerful driver for companies to work to improve their customer service, even if by just a bit.
And customers aren’t making it particularly hard on businesses to do customer service well. A lot of what customers want most is non-monetary. More than anything, many simply want an apology. “You don’t have to admit blame, but saying ‘I’m sorry you’re unhappy’ can go a long way to turning an enraged complainant into a satisfied one,” Grainer said.
Grainer said the study demonstrates a fact that is ignored by just about every business: when companies apologize, customer satisfaction goes up. “If you give customers the non-monetary remedies you move people from dissatisfied to mollified and from mollified to satisfied.”
That increased satisfaction translates into what Grainer called “massive amounts” of additional brand loyalty. “The people who are satisfied are the most brand loyal and people who are mollified are more loyal than people who are dissatisfied.” And, it doesn’t cost the company anything -- in fact, when an apology allows the customer service agent to diffuse the customer’s anger, it can actually lead to a speedier resolution, and less cost to the company overall.
Here’s the proof: among customers who reported being dissatisfied with the action taken (or lack thereof) to resolve their problem, only 5 percent said they would recommend the company to others. But among mollified customers -- really just one step up -- 16 percent would recommend it to others. Among satisfied complainants, 58 percent would recommend it.
If all businesses changed was to treat customers with dignity and thank them for their business, customer rage would subside by a big margin. “The good news is, if you satisfy complainants in a timely manner, that will lead to higher brand loyalty and lower costs -- higher overall ROI,” Grainer said. The bad news? “Companies are spending billions trying to keep customers happy. But most companies don’t do it right. Our conclusion is to do it right or don’t do it at all.”
Grainer gave an example of a company that would have been better off doing nothing at all: “A major auto company had a problem with one of its models, so they hired an outside company to call up these owners. Then the auto company hired us to interview customers who had been called. What we found was that when customers reported experiencing problems, the caller would say someone would get back to them, but most often no one did. So customers just ended up mad that the company didn’t do what they said they would. The auto company figured out that this cost them at least a half a billion dollars in sales -- and that’s probably a gross underestimation.”
Since its first iteration in 1976 for the White House Office of Consumer Affairs, the National Customer Rage Study has shown that the ROI that comes from good customer care is generally higher than any kind of advertising or marketing a company would do. “Satisfied complainants are often more loyal than customers who never had complaints,” Grainer said. “And they tell other people about it.”
• In 1976, 32 percent of survey respondents reported having a problem with a product or service. By 2011, that number had risen to 45 percent.
• Why do customers have more problems than 35 years ago? It’s not about quality, but rather the increasing number of goods and services in our lives, and their increasing complexity. Outsourcing done wrong plays a role as well.
• More than anything, customers are mad about the precious time they lose as a result of their most serious problem (a median of six hours)
• 47 percent of respondents got absolutely nothing when they complained about their most serious problem. Among remedies that customers sought, six of the top ten are non-monetary.
• Overall, only 21 percent of complainants were satisfied with how their complaint was handled. Ping-ponging -- having to call back, having to explain and re-explain the problem -- is one major reason why. The average number of contacts customers had to make in 2011 to get their problems solved was 4.4.
• This is a big deal for businesses. When the study results are extrapolated to the U.S. population as a whole, about 50 million households experienced problems in the last year, and almost $60 billion worth of future sales of goods and services are at risk.
• While Web 2.0 has an increasingly important role, it is actually still good old fashioned means of communication that customers prefer for resolving their problems as well as for influencing their purchase decisions.
• The study demonstrates a fact that is ignored by just about every business: when companies apologize, customer satisfaction goes up. That increased satisfaction translates into additional brand loyalty.
• “The good news is, if you satisfy complainants in a timely manner, that will lead to higher brand loyalty and lower costs -- higher overall ROI.”
• “The bad news is, most companies handle complaints poorly, leading to lower brand loyalty and higher costs – lower overall ROI.”