And she told five friends, and so on, and so on...

New study proves negative word of mouth influences the majority of Canadian consumers

January 25, 2005, TORONTO - More than 50 per cent of Canadians say they will not even walk into a store if they have heard something bad about it from friends or family, according to a new consumer research study conducted in December. In fact, the study not only proves that negative word of mouth has become one of the deadliest business killers in Canada, it also shows that consumers are more likely to complain to friends and family about know-nothing customer service reps than any other problem.

"While we know intuitively that negative word of mouth is damaging for retailers, this study shows that certain problems generate more negativity than others," says Paula Courtney who is president of the Verde Group, a company that helps organizations measure the cost of customer dissatisfaction. "For example, while only five per cent cited a customer service representative's 'lack of knowledge about a product or service' as their most important problem, this issue generated the greatest amount of negative word of mouth. That means a business can have limited parking, slim pickings on the shelves and an unattractive store front, but if their CSRs don't know the products and services, each disgruntled customer will tell five others and so on and so on."

According to the study, shoppers in Ontario are significantly more likely to experience problems than those in Quebec (43 per cent vs. 34 per cent). Additionally, customer service reps in Ontario are amongst the worst in the country, as shoppers reported the province's CSRs were not helpful, did not treat them with courtesy and respect, did not appreciate their business and did not properly explain charges and other details of the purchase.

The study was conducted by the Verde Group, together with Consumer Contact, and represents 1,014 responses from Canadians who made purchases under $2,500 in the four weeks leading up to Christmas. The average purchase price was $160 (results are accurate to within +/- 3.1 per cent, 19 times out of 20).

Study highlights:

• Approximately 40 per cent of Canadians experience problems when they shop for items valued at $200 or less.
• Canadian consumers hate to wait. Most problems experienced relate to having to wait to be served or to pay.
• Most consumers who experience problems with their retail experience do not complain - instead they take their business elsewhere.
• The top problem driving customers away is lack of courtesy and respect from CSRs. This problem will detract 60 per cent of potential shoppers. And for females, this is even more of an issue.
• Consumers in Ontario, Alberta and British Columbia are more likely to experience problems related to front line staff than consumers in Quebec.
• Customers who experience problems are three times less loyal than those who experience no problems.