Anatomy of a Service Failure. How to Lose an Online Customer in 3 Easy Steps

Like a great many working parents, I do as much shopping as I can online.  It saves time and effort and reduces my carbon footprint.  Ok, I admit the last point is a happy coincidence and poor relation to the first two motivations, but I am working on it.

The point is that I and people like me are core customers of all the retailers who sell their wares in what everyone knows is a highly competitive marketplace.  However, I seem to have made the basic school-girl error of thinking that retailers understand that and more importantly that this makes me valuable to them and so every once in a while I am brought down to earth with an eye-opening bump. 

A bump that shocks me out of the inertia effect or “loyalty” so depended upon by banks, utility providers and others to keep us unthinkingly buying our services from the same organisations, despite increasing costs and the quiet downward creep of interest rates and value.  A bump which means I vow never to buy from that company again.  Service failure and no more chance of recovery.

For all the PR huff and puff about providing online ordering and delivery to make life easier and cheaper for us “valued” customers, the reality on the ground is rather different.  And it is pretty easy to lose a customer forever.  A recent experience with a big-name value retailer reminded me that there are 3 simple steps to making sure you don’t get another chance with the customer.

1.  Completely misunderstand the relative value of reliability over any other aspect of your offer;

2.  Ensure that the customer knows they are utterly unimportant and entirely dispensable to your organisation;

3.  Do this more than once – if the fool customer won’t leave the first time.

Can you hear the emotion?  You can?  OK.  Making sure that you engage people’s negative emotions is what will ensure that you don’t get another chance to prove yourself.  And hear that term “yourself”?  That shows that it’s personal: humans still react with personal emotions to the failures of large organisations that they enter into transactional relationships with.  Here’s why.

What does an online retailer have to do to raise this level of ire?

Last week I ordered a gift for my old friend Anna from a huge online retailer.  Anna lives many miles from me and I wanted to send her something special that she could enjoy on her milestone birthday.  I researched the options, chose carefully – champagne seemed perfect – and selected a retailer who would specify a particular delivery time and whom I had ordered from in the past.  I worked out a good time for Anna to take delivery, the day before her birthday, made the order, received confirmation that it would be sent out on time and then texted Anna telling her that there was a surprise on its way.  She was thrilled and I was satisfied.

Big mistake.

The delivery time came and went. I didn’t hear from Anna and didn’t think too much about it.  The next day I delayed my happy birthday text in case she decided to open her present on the big day itself, but was growing uneasy. When I did text and got a reply it became clear that there had been no delivery.  Concerned both that my friend did not have her present and that someone else might be nursing a hangover after receiving an unsolicited gift of a bottle of champagne the previous night, I checked online.   My account read “order cancelled”.  Scrap the concern about someone else’s hangover.

Customer services couldn’t help – not something they were involved in, but they rang the store that the order should have gone out from, which made me feel a little reassured and hopeful that they may be able to make amends and get something to my friend.  At least I would learn why they had cancelled my order and somehow decided it wasn’t worth the effort to let me know.  However, I was told that the home delivery manager wasn’t available but that he or she would definitely get back to me to let me know why a confirmed order had been cancelled without any kind of information being given to me.

Of course, the call never came.

So I thanked my lucky stars that I live in a market economy and made a brand new order with theUK’s consistently leading customer service retailer.  For 2 bottles of champagne this time:  I wanted to make amends for raising Anna’s expectations and then letting her down  And I felt confident that apart from never knowingly underselling to me, this retailer would also endeavour to ensure that I didn’t feel let down by them.  And I vowed never to buy from the first retailer again – in person or online.

Step 1: Online retail is all about trust and that means reliability, reliability, reliability.

Mine is just one story of many disappointed customers.  Anecdotes abound about how stores, some in particular, fail to deliver. And these anecdotes are the start of the end of an individual’s relationship with the store.  One by one, people are deciding never to order online from a particular company again. One by one, these customers have to be replaced by the store, at a much greater cost than keeping the existing ones.

Every person working in the retail organisation that failed me is also customer.  Therefore from the front line to the executive leadership, everyone knows what it feels like to suffer from bad service and non-existent service recovery. Yet by all accounts the organisation delivers poor service repeatedly.  It is hard to understand how the service the organisation delivers falls short of the service they almost certainly expect when they themselves are customers.

Has the leadership lost sight of the fact that reliability really is the single most important factor in any transaction involving customer delivery?  Low price is good but if it doesn’t get to where it is supposed to be, the value of any bargain is zero.  

The time and effort involved in sorting out undelivered goods and cancelled orders negate the value of having the convenience of an online delivery option.  This is the cost that customers will include in any evaluation of how to buy something.  Factoring in the cost of failed deliveries and the associated lack of certainty and peace of mind means that buying something online, or rather, buying something online from a value retailer, will be the more costly option.

What is more, trust is the foundation of online ordering.  In a competitive marketplace customers will order from those retailers they trust.  Failed deliveries = lost trust = no more orders.

A recent report by consumer research specialists Intersperience indicates an 8% drop in people who say they are prepared to order Christmas gifts online this year.  In their research 40% of people who will not be ordering online this year say it’s because they have lost confidence in delivery promises.  Intersperience’s survey of 1000 people reveals that of the Christmas gifts ordered online last year, a staggering one in six failed to arrive.    

No-one’s perfect – won’t mostly delivering successfully be OK?

It’s true.  Guaranteed reliability takes a lot of money.  Not least because the compensation required to maintain a reputation when you fail is much higher.  Perhaps, in order to cut costs, the value retailer I ordered from is aiming for an 80% success rate with deliveries – the 80/20 rule of thumb suggests that the last 20% of successful deliveries will be disproportionately costly to make and so efficiency might suggest not worrying too much about the relatively small proportion of failures. 

Leaving aside the new power of social media to harm a brand with a relatively small number of complaints, this approach would be to ignore the reality behind the statistics.  A simple example will demonstrate why.  Suppose repeat customers order online ten times a year:  the random nature of delivery failures would suggest not that 20% of these customers experience repeated failed delivery, but that every customer will have two failed deliveries in the year –  and 100% of customer would then be dissatisfied. Result!

How does emotion come into it?

You ordered something, it didn’t get delivered, you think twice about ordering from the same people next time, right?  If they are the best option, all things considered, then you will order again from them if necessary, though perhaps not for a gift.  Calm and rational.

Well no, actually.  And if you, value online retailer, want to understand why, here it is in gory detail. 

You betrayed me.  I trusted you.   Yes, you: my human-sized mental representation of the mammoth organisation “you” are.  I ordered from you, something special for a dear friend.  I had a vested interest in surprising and delighting her and basking in the warm glow of that knowledge.  My expectations were of a positive emotional outcome.  I got a confirmation – you promised to deliver. 

You didn’t deliver: you betrayed your promise and breached my trust.  My embarrassment and frustration were in stark contrast to my expectations of a happy outcome and intended demonstration of my appreciation of Anna and our long-standing friendship.   These things matter to me – I feel really unhappy now. And to add insult to injury, I have to spend less time with the children this evening to sort it out and order with another company:  they also lose out and I feel bad about that too.

What is more, this feels like an unrepentant betrayal. You cancelled the order and then, it seems, couldn’t be bothered to tell me.   Now I am angry with you too.  You are the cause of my bad feeling and for me letting down my friend and my children.  Maybe Anna will trust me a little less now.  Maybe my children will be less happy. 

Like I said, lurid detail, but nonetheless an honest exposure of the type of emotions that in reality underpin the decision not to buy from you again and which no doubt I shall explain in calm and rational terms to other people.   Can you see my perspective and understand my feelings? 

No.  In fact, you can’t even be bothered to come to the phone or to ring me back to explain when I ring up to complain.  You clearly don’t care about me.  I can only think that I am worthless to you or you would have made some effort, any effort at all, to let me know what happened.  You don’t value my custom and more importantly you couldn’t give two figs about how I feel.  Your non-action demonstrates that I am no more than a number to your organisation and anything that happens to me is just the way the cookie crumbles.  The loss of me as a repeat customer has been written off as insignificant – in fact not worth the strenuous effort of picking up a phone.

Understood. 

Now, it’s unlikely that I am going to shift my view of myself based on a failed delivery and an unsuccessful complaint – no matter what cognitive dissonance might say about the matter.  What sort of an eejit would I be to have anything to do with your brand again? 

Why would I risk the frustration and embarrassment and anger and disappointment and extra effort and banging my head against a brick wall to give money to your company again? 

Step 3  Repeat?  There will be no second chance, surely?

Oh, did I happen to mention that you have done this to me before?  Well now I have to add in to the negative emotions I already associate with your brand the humiliating and irritating knowledge that I have allowed you to repeat the same blasé indifference to our contract and my needs for a second time. .  This is how it feels to be a customer of yours and I don’t like it.

So consider us finished.  It took a bit of repeating on your part but now I understand how the land lies and I am gone.

But the big name, value brand, grocery retailer that saves me money every day is not listening.  Why would they?  I am just one insignificant customer. My refusal to buy their products again won’t make any difference to their bottom line, and nor will the people I tell about my experiences of their failure of delivery and service.   

But despite all this boiling resentment, it isn’t really about me, is it.  I said, IT’S NOT ALL ABOUT ME. Point taken. It is about the bigger picture.  The important message for retailers who do want to understand how what they do impacts on their customers is that emotions matter.  

Recognising and accepting customer emotions is fundamental to really understanding how to deliver service that engenders positive emotions and creates lasting relationships that sustain economic viability in the long term.  Not everyone may want to unpack the emotions in such a raw and fundamental way, but we all respond emotionally and personally to our interactions with large organisations and we all take action on the basis of irrational and emotional judgements, rather than dispassionate and objective logic and analysis.

Cutting prices is easy but it isn’t the be all and end all. It is necessary to understand more about your customers than the low prices they want to pay, especially when online retail is the battleground. 

The effort taken to deliver on promises, sustain trust and make customers happy is considerable.  Understanding and managing customers’ emotions costs more, requires strength of vision from the leadership and depends on genuine engagement from the employees.  

But the effort made will mean that we customers are prepared to pay more for the same offering, to speak more highly of the brand, to repeat our purchases more often and forgive occasional mistakes more readily.  These are the ways to build the lasting relationships that organisations say they want.   And not to put too flowery and personal a point on it, to increase the sum total of happiness in the customer experience world.

Links and further information

1. Intersperience survey:  http://www.intersperience.com/news_more.asp?news_id=44

2. More on Cognitive Dissonance: Leon Festinger’s many books and articles or the book “Mistakes were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad decisions and Hurtful Acts) by Carol Tavris and Elliot Aronson, 2008

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