By John Gaffney, Senior Analyst
Retailers that understand the importance of negative shopping experiences and limit their occurrence have a better chance to optimize the holiday selling season. That’s the key takeaway from Measuring & Improving Customer Experience, a session at the Customer Engagement Conference, which took place earlier this week.
“Retailers need to get their value equation right this holidays season, that’s for sure,” said Stephen Hoch, Director of The Baker Retail Initiative at The Wharton School of Business, and a presenter during the session. “Pricing, discounting, and product value are all important but we cannot lose sight of the fact that customers need to feel welcome in the store and they need to be serviced. In the long-term that service will be just as important as anything else.”
Paula Courtney, President of The Verde Group, joined Hoch in presenting the results of research they conducted on the impact of customer dissatisfaction. According to that research problem shopping experiences are frequent and can have a huge impact on customers. More than half of all shoppers experience at least one problem in any given shopping visit. And when problems occur they come in bunches. A shopper who encounters a problem while shopping will, on average, experience 3.8 problems in that shopping trip. Six percent of the survey respondents said they encountered more than 10 problems in a shopping trip.
The issue is more than an inconvenience. In fact Hoch and Courtney believe it can hit retailer’s right in the pocketbook during the fourth quarter. The biggest impact is in loyalty. 82 percent of the problem customers said they “definitely will not” purchase from the retailer again, and 79 percent would not recommend the retailer to others. The social networking effect from “problem” experiences is potentially huge. Dissatisfied customers told 1.7 people on the average about their experience. But the amount of people they tell via social networks and product review sites is not calculated in the report.
The heart of the problem, and the solution, is the sales associate. Of the top ten most bothersome problems for shoppers, nine are sales associate issues, according to the research. “They annoy the most shoppers, lose the most business and drive the most negative word-of-mouth,” says Courtney. “Loyalty risk is greatest when shoppers need but cannot find a Sales Associate. Inattentiveness to long check-out lines and being ignored by a Sales Associate also account for significant loyalty loss. Being ignored by employees is the single largest driver of negative word-of-mouth.”
The customer value loss and market reputation damage from problem shopping experiences can be overcome, however. Courtney calls the antidote a “wow” experience in which the customer is effectively engaged by an informed, authentic sales associate. At least 50% of shoppers have experienced a “WOW” shopping experience at some point in their shopping history, according to the research. “WOW” shopping experiences are rare, and generate over 4 times more word-of-mouth than problem experiences.
“These are key experiences for a retailer to provide but they can be simple experiences,” she said. “Sometimes it’s just mitigating problems before they occur. Sometimes its resolving a problem to complete satisfaction of the customer.”
The Measuring & Improving Customer Experience session, as well as all web seminars from the Customer Engagement Conference, will be available online for to all registrants for 90 days.