Will consumers really put up with poor service?

Baltimore Sun columnist Jay Hancock writes a provocative piece today on "The high cost of savings" where he states that providing great customer service simply isn’t enough of an incentive for consumers to stick with a brand, and that most businesses realize this and choose not to deliver quality service as a result.  He writes, "What shoppers really want is a low price, and they’re prepared to put up with huge amounts of grief to get it. In the language of economics, the marginal utility of more, cheap stuff is greater for the average American than gracious service in obtaining it. Yet we reserve the right to whine."

Hancock makes an interesting argument, but there’s no shortage of evidence contradicting his main thesis.  Consumers, according to a number of surveys, are in fact concerned about more than just price.  And, customer service goes a long way towards securing the long-term loyalty and value of an individual.

Just yesterday, Nielsen Online released a study that finds convenience trumps price for online holiday shoppers, while a recent Harris Interactive poll found that 80 percent of U.S. adults who have had a negative experience with a company say they will never go back to that company again, up from 68 percent in 2006.

However, as Hancock points out, customer intent and customer action aren’t always the same.  According to Hancock, customers often say they’ll abandon a brand after a poor service experience, only to be drawn back by low prices or promotions.  Seventy percent of people keep patronizing a brand or store even after they have had a bad experience, says Richard Feinberg, director of Purdue University’s Center for Customer-Driven Quality.

Does this mean that companies should forget about even trying to provide good service?  Presumably, only if they’re not concerned about the other 30 percent of consumers.

Interestingly enough, while Feinberg mentions consumer apathy as a main contributor to why companies continue to get away with poor service, his own organization cites several sources that find poor service is indeed an influencer in consumers switching their shopping behavior.

Some of the highlights include:

Seventy-two percent of the consumers who switch to a competitor did so because of customer service problems.
A study by The Forum Corporation

Only two percent of unhappy customers complain, while thirty-four percent of all dissatisfied customers penalized the manufacturer by quietly switching brands.
The study by The A.C. Nielsen Company

Sixty-eight percent of customers switch suppliers because of the indifference shown them by customer service personnel.
Tom Peters, U.S. News and World Report

Other industries have also found that there is a tie between profitability and customer satisfaction.

While there are various sides of this argument, the question remains, even if consumers don’t initially act on their impulses to abandon a brand after a poor service experience, how long can companies continue to get away with poor service before consumers actually do something about it?

And, if and/or when that happens, which companies will be in the best position to capitalize on that revolt?  Those that have consistently offered quality service, or those that have taken their customers for granted by not offering good service?

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