Report: What Happens After A Good or Bad Experience?
December 18, 2012 2 Comments
We just published a Temkin Group report, What Happens After A Good or Bad Experience? This large-scale consumer study uncovers negatively biased feedback and significant upside from good service recovery. Here’s the executive summary:
We asked 5,000 U.S. consumers about their experiences with 179 companies across 19 industries. More than 60% who had a bad experience with a fast food chain, credit card issuer, rental car agency, or hotel cut back on their spending, and many stopped completely. But service recovery helps. For every level of improvement in how they responded to a bad experience, companies were rewarded with more sales. Unfortunately, firms aren’t very good at service recovery, especially banks and credit card issuers. TV service providers delivered the greatest number of bad experiences while grocery chains had the fewest. At a company level, ING Direct and Holiday Inn had the lowest number of bad experiences, while QVC and Best Buy had the highest. We also examined how consumers share their good and bad experiences, across age groups and income levels, and compared results from last year. This analysis uncovered a negative bias in how consumers give feedback. Motel 6, ING Direct, Albertsons, and RadioShack have the most negative bias in the feedback they get directly from customers; Cox Communications and Symantec have the most negative bias in feedback on Facebook; and Verizon and GE face the most negative bias on Twitter.
The report has 20 graphics full of data on consumer behavior and company ratings. It starts by looking at the prevalence of bad experiences. It turns out that 20% of consumers have had a bad experience with a TV service provider while only 5% have had a bad experience with a grocery store.
- ING Direct (2%), Holiday Inn Express (2%) Whole Foods (3%) and Holiday Inn (3%) had the fewest occurrences of bad experience, while Best Buy (29%), QVC (29%), Gap (28%), and eBay (26%) had the most.
- After a bad experience consumers were most likely to completely stop spending with rental car agencies (40%), credit card issuers (39%), computer makers (35%), and auto dealers (35%), but least likely to stop spending with retailers (9%) and Internet service providers (10%).
- When companies responded very poorly after a bad experience, 47% of consumers stopped spending completely with the company. When they had a very good response, only 6% stopped spending and 37% increased their spending.
- Retailers (46%) most often recovered well from a bad experience while Internet service providers (15%) and health plans (15%) were the worst at recovering.
- 38% of consumers gave feedback directly to the company after a very bad experience, but only 31% gave feedback after a very good experience.
- 14% of consumers gave feedback on a rating site like Yelp after both a very good or a very bad experience.
- The use of twitter to communicate about a very bad experience has grown from 4% to 9% of consumers over the last year.
- 33% of 18- to 24-year-olds have posted about a good experience on Facebook, compared with only 5% of those who are 65 and older.
- 18% of 18- to 24-year-olds have tweeted about a good experience, compared with only about 1% of those who are 55 and older.
- 17% of consumers who earn $100K or more have tweeted about a bad experience, compared with only 7% of those who earn less than $50K.
- Given their customer demographics, Motel 6, ING Direct, Albertsons, and RadioShack are the most likely to receive direct customer feedback that is negatively biased while Cablevision, Avis, Nissan dealers, and Dodge dealers are the most likely to receive positively biased feedback.
- Given their customer demographics, Cox Communications, Symantec, ING Direct, and TracFone are the most likely to have negatively biased comments on Facebook, while Cablevision, AOL, Kaiser Permanente, and Holiday Inn are the most likely to have positively biased comments.
- Given their customer demographics, Verizon and GE are the most likely to have negatively biased comments on Twitter, while Avis and Edward Jones are most likely to have positively biased tweets.
The bottom line: Customer feedback is an under utilized asset.