The Bad Experience Threshold

While chatting with a pal the other day, we discussed a tenant of interpersonal relationship management we had both heard. It asserts that, for every negative thing you say to another individual, you must say (something like) three (some say seven or even ten) positive things to counteract the interpersonal impacts of the negative comment or criticism you said.

I've been trying to find this rule or principle on the internet, without success. When/if I do, I'll correct myself or cite the resource. If you've heard it, feel free to post a comment with the correct "rule".

This got me thinking about the impact of negative customer experience on the individual. How many negative experiences will a customer endure before they walk away? How many good experiences do you have to offer in order to right a wrong? When does customer relationship damage caused by experience pitfalls become irreparable? The answers to these questions are definitely not straight forward. They'll also vary with the customer and business dynamics.

If you're say, the DMV, or the airport, a public bathroom, or a cable company, your monopoloy on service creates a higher tolerance threshold for bad experience. For those types of companies, the "preturbed masses" will tolerate bad or faulty experience because they simply have no choice. Dulles Airport, anyone?

In highly competitive markets, it's fair to say, there's a much smaller threshold within which to get it right. If you, for example, are interested in purchasing a car and have an unfortunate encounter with "Edgardo, the snake oil salesman" you can always cross the street to visit Billy Bob ... or have dealers compete for your business through the internet.

If you're fortunate enough to build a brand that has a secure fan base -- I'm not talking just a customer base - but customers who are frothing fans -- you may have a much higher threshold for experience hiccups. Apple Computer is one such company. My last Experience File Post about the Tysons Corner Apple store yielded more than a few emails and comments from dedicated Apple fans.(It wasn't an attack folks - just constructive criticism).

Perhaps we can illustrate the delicate balance on the tolerance scale like this...


... or maybe not. The beef I have with the graphic above is that it doesn't show one other critical dynamic that will tip the tolerance scale might be tipped. The best way I know how to describe it is "number of times you've disappointed the customer before" dynamic...

Figuring out what the tolerance thresholds are for your customers, and coming up with customer satisfaction policy and plans that mitigate risk in a cost-efficient manner is a really important exercise today. To do this effectively, it's necessary to be able to properly evaluate:

1. The true quality of the end-to-end, cross channel experience
2. How, when and why customer experience goes wrong
3. Key areas that present the most opportunity and/or cause the most damage
4. Customer Lifetime Value (CLV) or profitabilty of each customer segment
5. The quantifiable cost of customer loss

When companies have the ability to measure the items above effectively, they can properly allocate investment dollars to refine and tailor customer experiences. Unfortunately, so many companies today get caught up in driving innovation (experiential marketing; flashy campaigns) they forget that delivering the experience fundamentals is a crucial element for base-level customer loyalty.

Success requires a three fold approach: First, companies must carry a focus on maintaining and perfecting the delivery of the experience fundmentals. The fundamentals support all customer segments and create a strong foundation for individualized experiences that can foster unique loyalty. They create cohesion. Second, allocating spend for the enhancement, customization and improvement customer experience (e.g. developing loyalty programs; tiered service offerings; etc.) is also important. This is best managed by aligning dollars against prioritized customer segments based CLV, profitability -- even word-of-mouth scores. Finally, we have to test experiences, measure outcomes and refine them in a more disciplined, quantifiable way.

This is all stuff we know, right? The problem is that many of us are still struggling hard with cohesively creating, measuring and managing cross-channel experiences and customer value. Until we get better at this, we're going to continue to struggle with the mystery of the threshold. Until we get better at it, we have to work from what we do know:

Experiences that are cumulatively, positive, generally yield brand recognition that is cumulatively positive.
  • There’s no magic formula for success
  • Customers tend to remember “what you’ve done for them lately”
  • Negative experiences carry more “weight” in the minds of consumers
  • Every customer will have a different threshold for bad experience
             -->Higher for companies with a monopoly on service
             -->Higher where they have fewer choices
             -->Lower in highly competitive markets

    Just thinking out loud...
  • 1 comments:

    Damian said...

    Interesting topic. I'd say that this is very dependant upon the context. For example, I'm a Chelsea fan (UK Soccer Club) and I often have bad bad bad experiences with them, the ticket buying process sucks, the membership department are useless and I generally get treated pretty badly. Now, if they were a bank, and not a football club i would have left them years ago. However, there is so much more to being a fan of a sports team than there is being a member of a bank. Theres a lot of social identity stuff going on there because I like to belong to a bigger group of supporters and so on.

    So, its dependend upon the brand and context but a person's tolerance level is also dependant upon the person as well. I know people who walk out of the only restaurant in town just because their glass is dirty. Some people have such a low tolerance that they will break off all ties with a company even if it makes their lives more difficult to do so.

    Anyway, thats enough rambling from me, but I like the idea.

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    LEIGH DURST

    LEIGH DURST
    I’m Leigh Durst, a 20 year veteran in business, operations, customer strategy, ecommerce, digital & social media and marketing. Simply put, I’m a strategist that helps companies (start-up to blue chip) achieve business shift, create more compelling online and offline experiences. I also write, speak and teach about experience design and next-generation business. I’m a futurist, visionary, strategist, doer and connector with a passion for people and helping others. When I’m not on the road, you’ll find me in the San Francisco bay area, working, beaching it and hanging out with my family and dog.

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