One-In-Five U.S. Consumers Say Bad Customer Experience Leads Them to Switch
Brands, According to Satmetrix Study
Billions Spent on Advertising May Be Better Used to Improve the Customer
SAN MATEO, Calif. – March 23, 2011 – Satmetrix, the Net PromoterR company
and leader in customer experience programs, today released additional
findings from its 2011 Net Promoter Industry Benchmarks study. Based on
survey responses from more than 22,000 U.S. consumers nationwide, the study
found that bad customer experience forced 22 percent of consumers to stop
doing business with a provider during the second half of 2010. The study
also found that word-of-mouth endorsements from friends or colleagues are
the most trusted form of information when purchasing products or services,
far more trusted than advertising. A majority of consumers also reported
that they had actively shared their customer experiences with others. These
findings suggest that companies can improve customer retention and
acquisition by reallocating a portion of their advertising budget toward
programs that improve customer experience and increase positive word of
Factors that have an immediate impact on the customer’s personal experience
with a company were the primary reasons consumers gave for defecting.
Interacting with a rude or disinterested employee was cited most frequently
(34 percent), while one in five consumers (20 percent) said they switched
because of unexpected charges or fees and a similar number (20 percent)
listed poor product or service quality as the main reason. Factors with a
less immediate impact caused fewer defections, for example, having an
unfavorable return or refund policy was cited by only about 3 percent of
“Short-sighted tactics such as charging customers unexpected fees or
inadequately training front-line employees have a tremendous negative impact
on customer retention and word of mouth about a company,” said John Abraham,
general manager of Net Promoter programs at Satmetrix. “Companies that
invest more in creating a quality customer experience set themselves up for
long-term success. The problem is that most companies don’t have a handle on
how customer interactions impact individual customer relationships in the
long run, and most don’t understand the impact of word of mouth on customer
acquisition. Online consumer recommendation websites have raised awareness
with many companies, but they still underestimate the overall impact of word
of mouth both online and offline.”
Businesses are expected to spend $214.3 billion on advertising in 2011,
according to SNL Kagan. But only 4 percent of Americans trust advertising
the most as an information source when choosing products or services.
Instead, the Satmetrix study finds that consumers most trust recommendations
from independent sources (83 percent), especially those with whom they have
personal relationships. Half of consumers (50 percent) cited personal
recommendations from friends, family or colleagues as the most trustworthy
source of information. And, approximately four times as many people trusted
product test reviews (18 percent) or consumer opinions posted online (15
percent) as compared to advertising.
“Companies still need to advertise to create market awareness, but market
trends such as the increased use of social media networks and consumer
reviews online are all increasing transparency about the actual experiences
that companies deliver, and what customers think of them,” Abraham added.
“You just can’t hide any longer behind bad quality. Advertising and
marketing messages need to line up with customers’ real experiences. So,
first and foremost, you have to get the experience right.”
The survey also revealed that approximately half of all consumers (49
percent) referred friends or colleagues to a company they had a positive
experience with in the past 12 months, while 10 percent advised against
doing business with a company.
Satmetrix announced the first round of the 2011 Net Promoter Industry
Benchmarks on February 17, 2011, which included ratings for 170 U.S.
consumer brands across 17 specific industry sectors using the company’s Net
Promoter ScoreT customer loyalty measure. The NPS benchmark ratings are
available for purchase on www.satmetrix.com and www.netpromoter.com.
About Net Promoter
Net Promoter is both a customer loyalty metric and a discipline for using
customer feedback to fuel profitable growth in your business. Developed by
Satmetrix, Bain & Company, and Fred Reichheld, the concept was first
popularized through Reichheld’s book The Ultimate Question, and further
explored by Richard Owen and Dr. Laura Brooks in Answering the Ultimate
Question, which takes an in-depth look at how leading companies are using
Net Promoter to drive business improvements around the customer experience.
Net Promoter has been embraced by leading companies worldwide as the
standard for measuring and improving customer loyalty.
Satmetrix is the leading provider of successful customer experience
management programs and the co-developer of Net PromoterR. The company
offers a winning combination of software (SaaS) and best-practices
consulting that deliver actionable customer feedback to drive growth, fuel
innovation and amplify positive word-of-mouth. Satmetrix has a proven track
record of accelerating the success of large-scale, integrated customer
experience programs with more than 700 enterprise deployments in 40
languages. Its clients include some of the world’s most customer-centric
companies, including Experian, Symantec, ING, HP, Lenovo and SONY. In
addition, Satmetrix offers Net Promoter Customer Loyalty Certification for
professionals responsible for customer experience, customer loyalty and
customer feedback and maintains the online community netpromoter.com. For
more information, visit www.satmetrix.com, or call 1-888-800-2313 in the
United States or +44 (0) 845-371-1040 in Europe.
Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix
Systems, Inc., Bain & Company, Inc., and Fred Reichheld.