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How Much Damage Can 1 Bad Experience Cause a Brand?

By Daniel B. Kline - Updated Apr 22, 2019 at 4:34PM

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Customers' expectations are only getting higher, and retailers may not get a second chance to meet them.

Consumers have more choices about nearly every purchase than they've ever had before. It's no longer necessary to visit a physical store to buy most things, and for the vast majority of products, shoppers can pick from multiple retailers on their phone or computer.

In some measure, the so-called retail apocalypse can be traced back to this explosion of options. Shoppers no longer have any need to put up with poor selection, a lack of in-store personnel, or poor omnichannel support at one retailer when so many other chains are doing those things right.

That creates a market where people don't have to be all that forgiving of a bad customer experience, and it makes every interaction important -- especially with new customers or those who have had limited experience with a company.

Indeed, 63% of consumers said "it only takes one unsatisfactory shopping experience" to make them stop shopping your brand, according to BRP's Keeping Loyal Customers Happy report.

A young woman handing her credit card to a cashier.

It only takes a single bad interaction to scare some consumers away. Image source: Getty Images.

Every visit counts

Customer loyalty is hard to win and easy to lose. One method of delivering a positive experience is by offering a personalized touch -- that's something 44% of survey respondents said would lead to them making repeat visits. And nearly twice that number (79%) indicated that personalized service from in-store personnel would influence their store choice going forward.

"Engaging the customer through personalized and relevant experiences is the key to attracting and keeping your customers happy and continuing to shop your brand," said BRP Senior Vice President Perry Kramer in a press release. 

One challenge for retailers in providing that personalized service is convincing consumers to share their preferences. Among survey respondents, 75% of millennials and Generation Zers said they were fine with being identified via their smartphone when entering a store as long as they got something in return (like a deal or special incentive); for the full survey group, it was 64%.

"Retailers that identify customers when they enter the store and equip their associates with the proper mobile tools can personalize the shopping experience based on customer preferences, purchase history, what's in their closet, online browsing history, time of day, weather and their physical location -- all based on real-time information and personalized to create a bond with these valuable customers," Kramer said.

You may not get a second chance

While it's important to treat all customers well, the BRP report also cited the Pareto Principle, which broadly states that in many cases, 20% of the inputs create 80% of the results. As applied to the business world, what this often means is that 80% of a company's business will come from 20% of its customers. Those are the ones most likely to serve as its brand advocates. That makes it surprising that while 62% of retailers surveyed by BRP said they could identify their most loyal customers, 84% acknowledged that their processes on that front need improvement.

"Most retailers utilize the traditional process of identifying valuable customers through RFM (recency, frequency and monetary value of customer purchases) as the driving method for recognizing customer value, but other methods are growing in popularity like customer profitability and brand advocacy," according to the study. "Retailers should also be measuring lifetime value (LTV) as a means to understand the long-term health and value of the customer relationship."

In sum, consumers won't sit still for a poor experience because, in most cases, they don't have to. That puts a heavy onus on retailers to step up their game and make sure that people get what they want when they want it, and how they want it.

If they don't, there's almost certainly a rival, or maybe a few, ready to step in and give that to them. And once you lose a customer, they may be lost for good.

Check out the latest earnings call transcripts for companies we cover.

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