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Blabbing dissatisfied guests

Nothing drains an LBE's profits quicker than negative word-of-mouth. Yet the majority of your guests never tell you about a bad experience at your facility. Instead, they tell their neighbors, friends, co-workers, right on down to third cousins. Read on for startling statistics on how this can impact your business - and what to do about it.

It's a cold, rainy and dreary Saturday, so the Phillips family has decided to visit a local family entertainment center (FEC). They drive into the parking lot, and it's packed, except for a spot over in the corner. As they pull into the space, they find someone has left one of the FEC's rolling trash carts blocking the space. Finally, after circling the parking lot for a few more minutes, they finally find a space.

Inside, the FEC is jammed. It's so noisy, Mr. Phillips has a hard time understanding what his youngest daughter is saying to him. They want to ride the bumper cars but can't find where to purchase tickets. After standing in line for some time at a counter, they learn they are at the redemption counter, not the ticket counter. Finally, after finding the ticket counter, the ticket dispenser is jammed. The staff person rather cavalierly tells them they will have to wait 10 minutes for a manager to show up to fix the machine. And after finally getting the bumper car tickets, one of the family members sat in grease that was on the side of the seat. We will spare you the story of the remainder of the Phillips' visit and tell you only that things didn't get much better.

Stephen J. Hoch, a marketing professor at Wharton University, says guests are bound to talk about these kinds of experiences. And according to new Wharton research, negative word-of-mouth communication should be a big cause of concern for business owners.

In the weeks before Christmas 2005, Wharton and The Verde Group, a Toronto consulting firm, conducted the Retail Customer Dissatisfaction Study 2006. The study showed that only 6% of shoppers who experienced a problem contacted the company, but 31% went on to tell friends, family or colleagues what happened. And of those who told, 8% told one person, another 8% told two people, and 6% told six or more people. Hoch said, "Even though these shoppers don't share their pain with the store, they do share their pain with other people, apparently quite a few other people."

According to the study, 50% of American shoppers say that a negative shopping experience of a friend or colleague will prevent them from setting foot in a store altogether. Furthermore, for every 100 people who have a bad experience, a retailer will lose between 32 and 36 current or potential customers.

The research also found that bad word-of-mouth has an even greater impact as the story spreads and is embellished. Almost half those surveyed, 48%, reported avoiding a store in the past because of someone else's negative experience. That is a higher rate than the 33% who encountered the problem and said they would "definitely not" or "probably not" return. Hoch said, "This storytelling has even more impact on the people the story is told to than on the people who told the story."

According to Paula Courtney, president of The Verde Group, the exponential power of negative word-of-mouth lies in the nature of storytelling. "As people tell the story the negativity is embellished and grows," she said. For example, the first time the story is told, the grease is only on the bumper car seat or the staff member is just nonchalant. By the time the third of fourth person hears the story, the grease got all over the clothing and the staff person was verbally abusive. "To make a story worth telling, there has to be some entertaining value, a shock value," said Courtney. "Storytelling hurts retailers and entertains consumers." The survey found that due to embellishment, negative word-of-mouth has five times the influence on people who hear the story than on the person who originally experienced the problem.

In the case of the Phillips' visit to the FEC, the people who heard their story had a better entertainment experience than the Phillips did.

The 6% of customers the survey found contacted the company about a problem should be treated as a company's best friends. For every one of them, there are 15 other unsatisfied customers, one-third of whom will spread negative word-of-mouth. Many of them, as well as many of those who don't tell anyone about their negative experience, will simply move on and never come back. So when a customer comes forward, the complaint should never be trivialized, as this individual actually represents 16 customers who had a similar experience. A complaining customer gives a business the greatest gift of all: honest feedback on what is going wrong.

The complaint, if acted on, gives the business the opportunity to stop future negative customer experiences, as well as turn that customer into a loyal advocate.

Ed Delia, president of Delia Associates, suggested this approach. When the complaint comes in, "Jump all over it." Ask tons of questions and really listen and pay attention. Show the customer with decisive action that you really heard and understood what he or she told you. "This is how you delight a customer and turn your worst complainer into your most loyal advocate." And, of course, it's how you stop any negative word-of-mouth that will keep away other potential customers.

Location-based entertainment (LBE) operators typically pay great attention in trying to satisfy guests, but have invest little time in trying to find out what makes them dissatisfied. Additionally, business owners are usually reluctant to ask guests what went wrong for fear of stirring up negative thoughts.

LBE owners need to find ways to get guests to share complaints with management instead of with family and friends. When owners survey guests, they typically ask for ratings. This doesn't solicit complaints or suggestions. Ratings don't tell you how to improve the business. It is much more useful to just ask a few open ended questions such as, "Please give us three suggestions of how we could have made your visit to XYC Center more enjoyable," or, "If you were the manager of XYC Center, what would you change?" These types of open-ended questions give guests permission to complain or to tell you what didn't go well.

Businesses should also have a prominent location on their Web sites where customers can contact them via e-mail. Many customers are much more comfortable complaining via e-mail than in person.

Offering a 100% satisfaction guarantee is also a very effective way to learn what isn't going right. The Hampton Inn hotel chain has been giving a 100% guarantee for years. If anything isn't right, you don't pay for the room. In fact, you don't even have to ask for the guarantee. If you let the front desk know about a problem, they will usually indicate you won't be charged for the room. That sure turns potential negative word-of-mouth into positive word-of-mouth.

Most businesses are afraid to give satisfaction guarantees for fear people will take advantage of it. Yes, a very small percentage will. But that is a small price to pay to enable you to identify and correct problems that are causing bad word-of-mouth for your business. As the Retail Customer Dissatisfaction Survey showed, for every 100 people who have a bad experience, the business will lose about 34 current or potential customers. So the way Hampton Inn sees it, giving one room night free to satisfy a guest and prevent more guests from having the same problem gains the company many more room nights of business.

The bottom line is very simple. Dissatisfied LBE guest who experience a problem can become a very destructive force through the negative word-of-mouth they generate. The best investment LBEs can make is in first preventing guests from having bad experiences, and secondly, learning about any problems that occur so they can be corrected before more guests have the same problems and tell their family and friends.

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