One-In-Five U.S. Consumers Say Bad Customer Experience Leads Them to Switch Brands, According to Satmetrix Study

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Billions spent on advertising may be better used to improve the customer experience

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Satmetrix, the Net Promoter® 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 mouth.

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 consumers.

“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 within 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 Score™ customer loyalty measure. The NPS benchmark ratings are available for purchase on http://www.satmetrix.com and http://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.

About Satmetrix
Satmetrix is the leading provider of successful customer experience management programs and the co-developer of Net Promoter®. 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 http://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.

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Scott Davila
Satmetrix
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