PHILADELPHIA, Feb. 21 /PRNewswire/ – More than 50 per cent of Americans report that a negative shopping experience of a friend or colleague will prevent them from setting foot in a store altogether. The Customer Dissatisfaction Study released today by the Verde Group and Baker Retailing Initiative at Wharton finds that as shopping problems get repeated, they often get embellished and actually become up to five times more damaging to customer retention than the initial negative shopping experience itself.

"This study is unlike anything we've seen before because it shows that for every 100 American shoppers, 64 people will be told about a store's poor products or services and no matter what that store does to entice shoppers - sales, promotions, advertising, marketing - those people will not set foot in their store," says Paula Courtney, President, The Verde Group. Nearly one- third of all U.S. retail customers who have a bad shopping experience will tell four people in such a way that those four people will be more negatively impacted than the person who initially had the problem.

Stephen J. Hoch, the Patty and Jay H. Baker Professor and Chair of the Marketing Department of the Wharton School of the University of Pennsylvania adds that another risk identified by the study is that customers who have a problem are happy to tell their friends in a very powerful way but they don't bother to tell the company. In fact, shoppers experiencing problems are five times more likely to tell a friend about it than contact the company.

"If businesses want to stop the bleeding from negative word of mouth, it's clear that they need to invest in ensuring that each customer experience is first rate - from adequate parking, to trained front line staff, to the right product mix, both in stock and on the shelves," says Dr. Hoch.

The study was conducted by the Verde Group, together with Consumer Contact, and analyzed with the help of the Jay H. Baker Retailing Initiative at the Wharton School of the University of Pennsylvania. It represents 1200 responses from U.S. consumers who made purchases under $2,500.00 in the four weeks leading up to Christmas. The average purchase price was $163 (results are accurate to within +/- 2.8 per cent.)

Customer Dissatisfaction Study Key Findings

* 50 per cent of consumers experience a problem. Those who have a problem, experience three problems on average.

* 31 per cent of consumers tell one or more friends about their problem. On average, shoppers tell four people about their negative shopping experience.

* Almost half of shoppers have avoided a particular store in the past because of someone else's negative experience.

* Negative word of mouth influences future patronage up to five times more than the person who experienced the problem first-hand as a result of:

* Problem embellishment – each time someone tells the story it is exaggerated

* Risk aversion - why shop at a store with problems? There are many other choices for consumers.

* Location, exit barriers or general convenience – potential shoppers have no previous relationship with store because it is not close to home, they are not a part of an awards program and so on

* Top problems consumers experience are related to the following three areas:

* Time – can't find parking and too long to get in or out of store

* Merchandising – ease of finding product, store layout and product information displays

* Front line staff – poor product knowledge and lack of courtesy

Other findings:

* The bigger the store, the more likely consumers are to experience problems

* Category killers are suppose to be experts, but don't always meet customers' expectations about information and product availability

* Department stores and mass merchandisers have more issues related to time and/or accessibility

* Men are less loyal than women

* Men and women are remarkably similar in the problems they experience AND their tolerance levels - men are, however, less likely to return to a store if the product they were looking for is out of stock

"U.S. businesses should take note - every instance of customer dissatisfaction has the potential to negatively impact loyalty and ultimately, the bottom line. With this latest study, we now know that negative word of mouth is so powerful that it can deter potential customers from ever shopping at that store," says Ms. Courtney. "But there is hope - by taking steps to better understand the problems their customers experience, retailers can begin to immunize themselves against negative word of mouth."

The Verde Group specializes in helping North American organizations measure the cost of customer dissatisfaction, prioritize the issues based on ROI, and quickly fix them for improved retention and profitability. With offices in Canada and the United States and affiliates in the United Kingdom, The Verde Group has consulted internationally to clients including AGF Mutual Funds, Toyota, Levi Strauss, Allstate Insurance, Honeywell and Eli Lilly. The company's new Boulder office is located at 4370 Walnut Street. Visit http://www.verdegroup.ca for more information.

The Jay H. Baker Retailing Initiative at the Wharton School of the University of Pennsylvania is an education "industry center" created with a $10 million gift from Patty and Jay H. Baker, Wharton Undergraduate 1956, and former president of Kohl's, with the sole focus of exposing students to the dynamic opportunities of a retail career. Visit http://bakerretail.wharton.upenn.edu for more information.

Consumer Contact is one of North America's largest quantitative data collection suppliers. With more than 1,000 interviewers and 30 years experience, Consumer Contact completes in excess of 700,000 consumer and business interviews each year. Visit http://www.consumercontact.com for more information.

SOURCE  Baker Retailing Initiative at Wharton
CONTACT: Melissa M. Krantz of Krantz & Co for Baker 
Retailing Initiative at Wharton, +1-917-653-6716, 
or Krantzandco@aol.com

Web Site: http://bakerretail.wharton.upenn.edu
                    http://www.verdegroup.ca
                 http://www.consumercontact.com/