For every customer failure, brands lose 65 percent of revenue from the impacted customer in the following year, according to new global survey
Wakefield, MA and Maidenhead, UK – May 12, 2015 – SDL (LSE: SDL) today revealed the results from a new research study, examining 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. Based on a survey of 2,784 consumers across nine countries and three generations about their most major CX failure in the last 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 less than the cost of lunch to navigate – and in the U.S., this jumps to 32 percent.
While organizations may perceive this type of CX break-down as a minor misstep in the customer relationship, the consumer sees this as a major failure. 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.
There are of course financial implications too, 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.
“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.”
While one-third of customers that experience a horrible CX are never coming back, 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. 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
SDL (LSE: SDL) is the leader in global customer experience. With a completely integrated cloud solution for content management, analytics, language and documentation, SDL solves the complexity of managing your brand’s digital footprint as it grows across multiple languages, cultures, websites, devices and channels. Seventy-nine of the top 100 global companies trust SDL to help them create authentic, in-context customer experiences that drive demand and loyalty. SDL brings your brand to the world, and the world to your brand. Learn more at SDL.com. Follow SDL on Facebook andTwitter.