Study: Customers pay more for better service; retailers slow to catch on

July 6, 2010

A majority (61 percent) of Americans report that quality customer service is more important to them in today’s economic environment, and will spend an average of 9 percent more when they believe a company provides excellent service, according to the American Express Global Customer Service Barometer. The survey was conducted in the U.S. and 11 other countries exploring attitudes and preferences toward customer service.

However, the survey also found that customers are underwhelmed with the current quality of service at retailers such as restaurants: Only a little more than a third of Americans (37 percent) believe that companies have increased their focus on providing quality service, with 27 percent saying businesses have not changed their attitude toward customer service in these volatile times, and 28 percent reporting the belief that companies are now paying less attention to good service.

“Many consumers say companies haven’t done enough to improve their approach to service in this economy, and yet it’s clear they’re willing to spend more with those that deliver excellent service – suggesting substantial growth opportunities for businesses that get customer service right,” said Jim Bush, executive vice president of World Service at American Express. “It’s important to see customer service as an investment, not a cost.”

Customer service has been an increasing point of scrutiny in the current recovery: Last month, Corporate Research International (CRI) released a study that suggested receiving better customer service equated to customers’ perceiving better food quality at a given restaurant.

Bad experiences are especially damaging online

Importantly, customers are spreading the word willingly and widely when they experience good service. In fact, contrary to conventional wisdom, customers are more inclined to talk about a positive experience than complain about a negative one. Three-quarters (75 percent) are very likely to speak positively about a company after a good service experience in contrast with 59 percent who are very likely to speak negatively about a company after poor service.

Good service experiences also carry more weight than bad ones when Americans make future spending decisions.  Consumers are far more likely to give a company repeat business after a good service experience (81 percent) than they are to never do business with a company again after a poor experience (52 percent).

On the contrary, nearly half (48 percent) of consumers report always or often using an online posting or blog to get others’ opinions about a company’s customer service reputation. But when consumers go online they’re looking for “watch outs,” saying they put greater credence in negative reviews on blogs and social networking sites than on positive ones (57 percent and 48 percent, respectively).

“The Internet has made service quality more transparent than ever before,” Bush said. “In the online space, positive recommendations are important, but people often give more weight to the negative. Because consumers can broadcast their views so widely online, each and every service interaction a company has with its customers becomes even more crucial. Developing relationships with customers, listening to them, anticipating their needs, and resolving any issues quickly and courteously can help make the difference.”

How bad is bad?

When asked how many poor experiences they allow, half of all Americans (50%) reported it takes two poor service experiences before they stop doing business with a company.

Importantly, consumers are far more forgiving if a company has earned their trust over time.  Almost nine in 10 consumers (86 percent) report they’re willing to give a company a second chance after a bad experience if they’ve historically experienced great customer service with that company. 

But companies who get it wrong should realize it’s at a cost: Half of consumers  expect something in return after a poor customer service experience, beyond resolving the problem. Most consumers (70 percent) want an apology or some form of reimbursement.






Topics: Customer Service / Experience , Food & Beverage , Online / Mobile / Social , Trends / Statistics

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