Customer Experience (Good and Bad) Affects Brand Loyalty

customer satisfaction linked to brand loyaltyIt used to be the rule of thumb. If consumer had a good experience with your company, they told 5 people. If they had a bad experience, they told 10 people. This statistic was supported by multiple research studies, commercial and academic, with the same result: consumers told twice as many people when you screwed up as they did when you executed to expectations. This finding was even supported by research completed for the White House Office of Consumer Affairs!

Once again, commonly accepted wisdom is turned on its head.

As reported in Quirk’s Daily News Queue on February 18, 2016, a recent survey from Ipsos Loyalty found that 52% of consumers who had a bad experience with a brand told their friends, families, and colleagues about it. However, 56% of consumers who had a good experience told people about it as well.

The study, which included more than 10,000 “critical brand incidents” (defined as moments of truth) across seven market sectors, also found:

  • About the same percentage of consumers with bad and good experiences shared their views on social media (12% and 10%, respectively)
  • Personal experience has a lot of influence on decisions about brands for 66% of consumers

Importantly, in spite of fairly equal word-of-mouth, negative experiences have a greater impact on future purchase than do positive experiences. The research found that, following a negative experience, 24% of consumers used the brand less or stopped using it, while 17% of consumers started using the brand more after a good experience.

There certainly needs to be more research into this behavior, but with changes in technology, extensive access to social media, and the ability to publicly rate and review all types of consumer experiences, it is not surprising that good news and bad news is being shared more equally than previously. The take-away is still the same: people talk and what they say is up to you.

As Kristin Smaby said in “Being Human is Good Business”, “When customers share their story, they’re not just sharing pain points. They’re actually teaching you how to make your product, service, and business better. Your customer service organization should be designed to efficiently communicate those issues.” Whether they are saying good things, or bad things, in social media, or person-to-person, we all need to pay attention.

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