Almost forty years ago, long before the internet gave consumers a voice, the White House Office of Consumer Affairs began conducting TARP ( Technical Assistance Research Program) studies of consumer behavior. They proved for the first time, what many business owners suspected: There is a direct link between customer service / complaint resolution and customer loyalty.
With followup studies conducted over the next twenty years, in both consumer and business to business environments, the following data was confirmed over and over again:
- On average, consumers are twice as likely to share bad experiences than they are to share when they have a good experience with a product or service.
- Less then half the consumers experiencing issues ever bothered to report it at all. Only 5% were likely to continue to escalate the issue all the way to the executive suite, thus isolating senior management from real issues in their business
- It is significantly more expensive to win a new customer then it is to keep a current one. (The ratio ranged anywhere from 2:1 to 20:1)
Most partnerships don’t end up in court. Most friendships don’t end in a fight. Most customers don’t leave in a huff. Instead, when one party feels under-appreciated, or perhaps taken advantage of, she stops showing up as often. Stops investing. Begins to move on.