Tuesday, April 11, 2006

Interview with Paula Courtney about the Methdolology on the Retail Customer Dissatisfaction Study

A couple months ago the Verde Group and the Wharton b-school released a report about how negative word-of-mouth spreads after a dissatisfying shopping experience. I won't summarize the report here since there are already a number of good summaries out there...

Press Release on Study from Verde Group
Church of the Customer Blog Post about study
Customer World Blog Post about study

... but I was especially interested in the study because I'm studying pass-along, or relay, rates among consumers in a variety of contexts, and especially for word-of-mouth marketing programs. So I contacted Paula Courtney, President of the Verde Group, to inquire further about the methodology they used as it relates to my research. Below are the questions I asked her over the phone and my notes from her responses:

1) How was loyalty measured in the study? Was it solely a behavioral measure (such as intent to repurchase? likelihood to tell others, etc.?) or was there also an attidudinal or cognitive measure as well?

Loyalty was solely a behavioral measure based on the following questions: a) willingness to recommend company, b) willingness to recommend product to others, and c) intent to re-purchase over the next year.

2) You were able to assess pass-along rates -- how many people a dissatisfied customer told -- for one generation (dissatisfed customer to their first generation conversational partner). Was there any attempt to determine how many people the first generation conversational partner told?

They didn't look at this in this study (it was only a 9 minute questionnaire) and haven't done multi-generation pass-along studies. But Paula thinks that the number of others told is tiny. She suggests that the reasons people pass-along negative WOM is to get a sense of justification and/or to get a bit of revenge. By sharing the negative story it makes the experience real and factual. Further, it invites sympathy and empathy that was otherwise lacking in the original experience with the company. We're looking for a sense of equilibrium, to close the gap, between our dissatisfied state and our normal state (echoes of cognitive dissonance theory here).

We then discussed the following hypothesis: the less sympathy we get from the first person the more likely we are to tell another one. This would be a fascinating hypothesis to test and suggests that the type of response we get from our friends might moderate how many people we tell about the negative experience. [There's a funny implication of this if it turns out to be true: companies with crappy products and customer service should train the general population to be more empathetic listeners so the negative WOM doesn't spread as far; of course, the company could put that money into making a better product or service but that would just be plain silly!].

3) One finding was that people were 5x more likely to tell their friends rather than the company. Were you able to determine why this was the case (such as too much effort to contact the company? didn't feel like contacting the company would do any good? etc.).

Paula gave five reasons why people don't contact the company: a) not worth their time; b) tried before but had negative experience; c) don't know who or where to contact; d) thought it might negatively affect future service; 5) didn't think it would do any good. She suggested that about 10% of the people who have a negative experience actually contact the retail store (20-30% in consumer sector).

4) Another finding was that friends or colleagues were most likely to hear about a shopper's inability to find an item due to product clutter in stores. I'm interested in the relational types or categories that were included. What were the other categories? Strangers? Acquaintances? Family members? Etc. In my research I use 7 different categories: stranger, acquaintance, friends, best friends, romantic partner/spouse, relative, and co-worker. I'm curious to see how much overlap there might be in our respective category systems.

They didn't measure other relationship types. Their question was worded more generally as how many people outside the company they told and friends and colleagues were just given as examples. We also wondered how significant relationship type was here. For example, do you just tell the first person you come in contact with shortly after experiencing the problem? Or are you more likely to tell a friend versus a spouse versus an acquaintance? I think she felt that a person would just tell the first person they came into contact with, and my feeling is that you would tell someone with whom you have a relational history where talking about such experiences is common.

5) Were there any findings about how many people a customer told who ended up contacting a company and had a satisfying or dissatisfying experience with the company's complaint handling department? I ask because I wanted to see how the findings compared to TARP's study with Coca Cola's consumer affairs department from the early 1980s.

Paula was well aware of the TARP study but the focus of their recent study did not deal with the complaint handling department specifically. Understandably, this would have been a different study to find out that information.
In summary, I think the two most interesting points to come out of our conversation were the social and relationship aspects of sharing dissatisfying experiences.

First, people pass-along negative WOM to get a sense of justification and/or to get a bit of revenge. By sharing the negative story with another it makes the experience real and factual. Further, it invites sympathy and empathy that was otherwise lacking in the original experience with the company.

Second, could it be that our likelihood to pass-along negative WOM to more than one person depends on the level of empathy that we receive from the first person we told?

Thanks for your time Paula!