Home » Customers Four Times More Likely To Cut Ties With Company After Negative Experience: Ipsos

8 November, 2016

Customers Four Times More Likely To Cut Ties With Company After Negative Experience: Ipsos

Customers are four times more likely to use a company less frequently or stop doing business with the company altogether when they perceive that they have to put more effort into resolving an issue than a company does, a new study* from Ipsos has revealed.

The study was released this morning at the International Advertising Association Thought Leadership Forum in Sydney before an audience of more than 80 guests.

In these circumstances, customers are also more than twice as likely to complain (58 per cent vs 26 per cent), tell friends and family about their negative experience with a company (73 per cent vs 34 per cent) and share the poor experience on social media (14 per cent vs 6 per cent).

Australian companies expect their customers to do too much work when trying to resolve an issue, and companies need to invest more in resolving any negative customer experiences. In more than one third of cases, companies were not even aware of a customer complaint or negative experience and in four of five cases, companies did not apologise.

Overall, 62 per cent of customers believe they put in a lot of effort when it comes to resolving issues with a company, while only 28 per cent of companies believe they put in a lot of effort to resolve the issue. In addition, 60 per cent of customers state that their personal experience has a lot of influence on brand choices.

The Ipsos Australia study evaluated customer experiences in eight different sectors that has determined that company effort matters. Irrespective of industry sector, around 60 per cent of customers perceive that they have had to put in more effort than a company to sort out an issue.

In the telecommunications sector, this reaches a high of 75 per cent of customers, followed by utilities (66 per cent) and retail stores (63 per cent), while online shopping, at 51 per cent, is the lowest of the industries covered.

“Australian companies need to ask the critical question: ‘Are our customers working too hard?’” Ipsos Loyalty Melbourne director Peter Riley said.

“While many companies had taken steps to use the ‘Customer Effort Score’, to measure customer satisfaction, advocacy and loyalty, further investigation by Ipsos found that the level of effort a company contributes to resolving issues was also important.

“Ipsos introduced a ‘Customer:Company Effort Ratio’^ as a better predictor of a customer’s propensity to use a company again following a negative experience.”

Ipsos also measured two key areas of complaint – issues with staff and overcharging and measured the potential impact of different types of interventions on the likelihood to use the company in the future.

‘Treating a customer with respect’ was the best response for companies when dealing with a customer issue with staff, while ‘financial compensation’ was found to be the best response for overcharging issues.

“Not all customer issues are equal. It is important for companies to understand the likely impact of interventions. Without an understanding of how best to respond to incidents, companies are potentially investing their resources and money in the wrong areas and still losing customers,” Riley said.

“Companies can improve their Customer:Company Effort Ratio by simply letting their customers know that they are taking their issue seriously and doing their best to resolve it.”

* 5,033 interviews collected via online panels in Australia across 8 sectors including telecommunications, utilities, retail stores, automotive, banking, health insurance, general insurance and online shopping, in October 2016
^ Customer:Company Effort Ratio definition: Ratio between the Customer Effort Score and the Company Effort Score, both measured on a 5-pt scale. A low score means that customers perceive that companies are putting in more effort than them to resolve an issue whilst a high score means that customers feel they are putting in more effort than companies.

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