One of the worst things about bad customer service is the fact that 96 percent of the time the customer will not file a complaint. At face value this does not seem like a bad thing, less complaints means less for service representatives to deal with. Ninety-one percent of those who don’t complain won’t come back. ^[i] It seems that they just quietly decide to patronize another company. Unfortunately, it is not that easy, the slighted customers are still complaining, they’re just complaining to other customers and prospects.

From previous blog posts, you know that (1) for every poorly served client, you’re handing him/her over to a competitor and (2) the costs of bad customer service can be astronomical.

How ‘herding’ makes a bad situation worse

People prefer individual analysis of a business over advertisements and marketing. Whenever a consumer has uncertain private information, she is likely to be influenced by others because their opinions contain new information^[ii]. In some cases individuals may discard their own private opinions to follow others, this is a marketing phenomenon known as ‘herding’.

Herding is why every instance of bad customer service drives business away at an alarming rate. A typical dissatisfied customer will tell eight to ten people about their problem. One in five will tell twenty. ^[iii] Those told will often choose not do business with the offending company, and often times they will then tell even more people to avoid the business. A single occurrence of bad service is a spark that sets off an uncontrollable word-of-mouth wildfire that has the potential to destroy a business.

How the Internet can take a worse situation and turn it into a disaster.

The herding problem is compounded in the information age, one customer can use the Internet to spread their bad experience to thousands with a click of a mouse.

The internet is riddled with websites where consumers can post about their experiences with companies.

Viewpoints, Rate It All, and Consumer Search are among the top customer driven business reporting and rating sites. Google recently bought out another popular rating site, Deja.com, and now has a massive database of consumer reports.

Hundreds of thousands of people access these sites everyday to receive guidance on businesses and products from all over the world. This can be a serious problem for companies who receive poor ratings because these reports will pop up when a potential customer searches a business.

It is often the 4 percent that do complain that end up posting their bad experience on the web. The number one reason that people post their stories on these consumer complaint web sites is because nobody in the company is willing to resolve the complaint after the error is made. ^[vii] The best way to avoid a bad service wildfire is to train representatives to offer the best service possible, and to resolve all customer issues immediately.

It takes an average of twelve positive service incidents to make up for one negative incident. ^[viii]

There is good news, customers who have superior service experiences are as likely to tell other people as patrons who have had poor experiences.^[ix]

It is the mediocre service representatives that get no mentions. Stellar customer service makes patrons return, tell others about their positive experience, and give the company excellent ratings on consumer web sites. Ideally, the only ratings that pop when a company is searched are positive ones, full of glowing customer service reports.

^[ii] Guodong (Gordon) Gao, University of Maryland, Bin Gu, University of Texas at Austin, Mingfeng Lin, University of Maryland.(2007) THE DYNAMICS OF ONLINE CONSUMER REVIEWS

^[iii] http://www.content4reprint.com/business/management/poor-customer-service-can-kill-your-business.htm

^[vii] http://www.financialsense.com/fsu/editorials/tycoon/2008/0725.html

^[viii] http://www.streetdirectory.com/travel_guide/1144/business_and_finance/tips_for_curing_bad_customer_service.html

^[ix] Guodong (Gordon) Gao, University of Maryland, Bin Gu, University of Texas at Austin, Mingfeng Lin, University of Maryland.(2007) THE DYNAMICS OF ONLINE CONSUMER REVIEWS