Hausman Marketing Research Letter

Yesterday, a disgruntled customer took hostages at the Discovery Channel creating a crisis that ended in his death and created chaos for a Washington, DC suburb.  All the media attention probably didn’t do the station’s marketing strategy much good either.  Such an event leads other consumers to wonder what the station did to cause someone to be so passionate they were willing to kill and die for their beliefs.  This doesn’t make either viewers or advertisers very comfortable.

Image: Arvind Balaraman / FreeDigitalPhotos.net

Certainly, not all customers go to such extremes to voice their dissatisfaction, but there are a number of strategies they might employ that cost you time, money, customers, or other valuable components necessary for your business to be successful.  And all of these are perfectly legal, so you have little recourse against them.   The only way to stop such actions is to ensure customers are satisfied with your products and services, handle customer complaints quickly and effectively, and modify processes to reduce the number of complaints in the future – few things have a higher “piss off” quotient than when a customer encounters the same problem that caused their initial complaint.

A word about “piss of quotient”

Over my 20+ years as a marketing professor, I’ve developed a term I call “piss off quotient” to  highlight the importance I attribute to customer dissatisfaction.  Marketing textbooks stress customer satisfaction, and this an important goal of your marketing strategy. But, satisfied customers don’t necessarily recommend your business to others, nor do they always return to patronize your business again.

Meanwhile, dissatisfied customers are likely to create a series of problems for your business and pissed off customers may ultimately sink your business.  Pissed off customers not only complain, they tell anyone who will listen about their poor experience.  This is why negative word of mouth travels 5 times faster (and farther) than positive word of mouth.

So, let’s take a look at what pissed off customers do to cost you.

1. Change vendors

Dissatisfied customers change vendors — they don’t frequent your service or buy your product.  Obviously, this reduces your profits and, if enough customers decide they don’t like your business, your business fails.  While this may sound bad for your business, quietly taking their business elsewhere is probably the LEAST devastating thing disgruntled customers can do.

2. Complain/ receive satisfaction

If you’re lucky customers complain to you and give you a chance to fix the problem.  This gives you a second chance to get it right and may redeem you in the customer’s eyes.  Fast recovery from failure and constant communication are they keys to success here.  I often use a case study of Club Med in presenting this concept to students.  In the case, Club Med is faced with a plane full of unhappy customers and they warded off a lawsuit by meeting the plane and providing extra attention to the passengers.  Many of the unhappy passengers left at the end of the week feeling they had the best vacation of their lives.

3. Complain/ no satisfaction

When customers complain and don’t feel they’re getting satisfaction from the company, they become pissed off and their complaints will likely escalate.  This has 2 negative effects on your business — on your customers and employees.

The effect of a complaining customer on other customers can be very serious. First, customers may see the confrontation and it leads them to be more critical of their own experiences with your firm.  This is particularly common in service venues.  The second effect is that employees can’t serve new customers when they’re handling complaints from existing customers.  This increases the likelihood discontent will spread.

Complaining customers also have a negative effect on employees.  NO ONE likes to be yelled at, especially if they didn’t cause your dissatisfaction in the first place.  Employees who routinely get yelled at are less productive, unhappy with their jobs, more likely to call in sick, and more likely to quit.  So, keeping complaints from happening or handling them quickly also saves on wear and tear on your employees.

4. Negative word of mouth

Unhappy customers tend to tell everyone they are unhappy with a product or service.  This discontent may be remembered for a long time, so they may be recounting the story of their dissatisfaction for years to come.

While negative word of mouth is bad enough, pissed off customers may actively try to sink your operation.  They may host websites or blogs to collect negative word of mouth and fuel discontent with your firm.  They might post their discontent to their social network, which amplifies their experience.  Piss off influential customers and, with their extensive social reach, they can easily have a serious effect on your bottom line.

5. Customer retaliation

Customers have LOTS of ways to retaliate against your firm — all perfectly legal.  They can fail to bus their tables at your fast food restaurant, throw all the toilet paper on the floor of your restrooms and lock stall doors, pay for items in the express lane with pennies, slow loading of your aircraft … With a little creativity and American ingenuity, I’m sure your customers could think of hundreds of ways to retaliate against your company if you piss them off.

Fixing the problem — generate fewer pissed off customers

• Encourage feedback from customers, listen to it, acknowledge it, and fix the problem
• Train front line employees on how to respond to customers who have complaints
• Empower employees to fix problems
• Most problems are process problems, so when complaints arise, search for causes and change processes
• Don’t ignore drops in revenues.  Rather than more advertising, the solution may be creating more satisfaction among existing customers