Would you pay less for a poor customer experience?

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The classic research question asks ‘would you be prepared to pay more for…’

…a better customer experience or another factor such as, a brand that acts in a socially responsible way. In fact, this very question was asked by a recent Purpose Pulse survey (https://www.thepurposepulse.com/). They report that 40% of respondents said they would be willing to pay extra for a product or service from a business that acted in a socially responsible way during the COVID-19 crisis. Of those willing to pay more, 43% said they would be willing to pay 5-9% extra, while 39% said they would be willing to pay 1-4% extra. Another 8% said they would be willing to pay 10% or more extra.

This, of course, is utter bollocks.

I’m not saying that some people won’t be prepared to pay more, it’s just that what people say they will pay more for and what they will actually pay more for, are not the same. At the moment in time of the buying decision for any product/service, the decision is influenced by many different factors salient at that specific moment, many of which firmly sit in our unconscious. Pretending that this survey question relates to some kind of reality without better insight into actual behaviour is farcical.

Strange that we don’t see the reverse question asked; would you pay less for a poor customer experience. Surely this is equally as important to understand? It may be that offering a lower level of service at a lower price point is more profitable for you and the customer. Ryanair has done pretty well with this model and it was the basis of the original success of the discount supermarkets like Aldi and Lidl as anyone who experienced their checkouts can testify. The important things to know are which of the factors in your experience do customers value and are willing to pay for, and how much more are they willing to pay, when they have to reach for their debit card.

Understand Buying Decisions

Although this appears a highly complex question to answer, we have done so on a number of occasions. In the airline sector, for example, we were able to help one airline reduce their costs by identifying what customers value the least. Our approach, using behavioural research, was able to demonstrate (where traditional research couldn’t) the value placed on each element of the customer experience. By removing the lowest valued element, we were able to save the airline £10m per year with no negative impact on the number of passengers carried.

In the insurance sector, we worked with one car and home insurance brand on their renewal experience. Through behavioural science, we were able to demonstrate the optimal price range for the acceptance of renewals that did not trigger the usual shop around on comparison sites by existing customers. Online behavioural experiments and testing solutions were created that the improved uptake of renewals – reducing renewal anxiety and increasing customer retention.

When it comes to what people will pay more for, or indeed an understanding of any kind of customer decision-making, businesses must go beyond naive surveys and self-report data. We should not be blinded by the hype and simplistic headlines. We have to use science to uncover the unconscious drivers of real-world behaviour and get closer to the truth.

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