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March 09, 2006

Negative word of mouth hurts retailers

(Posted by francois to: marketing | word of mouth )

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According to a new research study from Wharton and the Verde Group - published in the Results of The Retail Customer Dissatisfaction Study 2006 (PDF) - of those shoppers who experienced problems with a retailer, only 6% contacted the company, but 31% went on to tell friends and family. Of those, 8% told one person, 8% told two people, and 6% told six or more people. The study further found that out of 100 dissatisfied customers a retailer stands to lose between 32 and 36 current or potential customers.

While this is less than the old rule of thumb which said that you typically only hear from 1 out of 10 dissatisfied customers - the impact of negative word of mouth can be more devastating as the tools that amplify word of mouth are getting increasingly powerful.

The study truly illustrates the power of negative word of mouth and the retelling of stories. Indeed, and according to the study, "the complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished. Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience."

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Posted by francois at March 9, 2006 05:53 AM | Bookmark This

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» Silence is NOT Golden. from Mary's Blog
This seems to be my day for “simply” sending you along to links. But, this one, Negative word of mouth hurts retailers speaks to one of the blind spots I see with clients in discussing WOM (Word-of-Mouth) viral, grassroots, guerilla (pick... [Read More]

Tracked on March 9, 2006 11:02 AM


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