Dysfunctional Customer Experiences Risk Billions in Retail Losses: Survey

More than eight in 10 shoppers don’t give retailers the chance to fix a poor customer experience, says a new study.

Approximately half of 2,500 U.S. consumers polled in March reported experiencing a problem on their last shopping trip, according to a collaborative survey of dysfunctional retail touchpoints by LoyaltyOne and Verde Group with Professor of Marketing and Psychology, Dr. Deborah Small, at the Wharton School of the University of Pennsylvania.

Of those polled customers, 81 percent decided not to contact the retailer about the issue. Among these silent shoppers, 32 percent said they were unlikely to recommend the retailer to friends and family, putting these shoppers at-risk of decreasing their spending with the retailer.

By comparison, the study shows that shoppers who did notify retailers of their poor experience and had their problem completely resolved were 84 percent less likely than silent shoppers to be at risk of decreasing their spending.

Grocery retailers are putting 11 percent of potential revenue at risk, according to the research. Mass merchandisers top the list of retail channels with 25 percent of potential revenue at risk, followed by apparel (16 percent), department stores (15 percent) and drugstores (12 percent).  

“The results are a resounding confirmation that poor customer experiences have a considerable negative impact on shopper spend and attrition which can run into the billions,” says Dennis Armbruster, LoyaltyOne Consulting VP and managing partner. “We’re ushering in a new era of customer experience measurement vital to retailers looking to make even more informed decisions.”

“Our methodology precisely measures the impact of ineffective customer touch points. Insight around the effects of poor customer touch points can help retailers reduce the risk of negative customer experiences, while also enabling them to proactively design experiences that positively influence spend, visit frequency and basket size,” says Paula Courtney, president of Verde Group.