Dissatisfied buyers spread word;
Retailers: Bad experiences often made worse in their retelling
Cleveland Plain Dealer
By Bill Lubinger
SIMPLE SOLUTIONS
Businesses boast of word-of- mouth success. But what about word-of-mouth
failures? Just as customers spread talk of a hot new restaurant
or the great selection and service at the corner boutique, a poor
experience echoes even louder.
A recent study of customer dissatisfaction by the University
of Pennsylvania's Wharton School found that consumers might not
complain to the retailer about their dissatisfaction, but they
sure spread the word.
Less than one in 10 contacted the company about their problem,
but nearly a third told a friend, family member or colleague.
And as the story spreads, it gets embellished, the study found.
The fallout: Almost half of the 1,200 shoppers surveyed said
they avoided a store because of someone else's negative experience.
Marie McCullough, 27, of Elyria, said she might let 10 co-workers
know about a bad experience with a service or a product.
And Bryant Graham, 37, of Cleveland, said he typically relies
on word-of-mouth for major purchases.
"Certain things I won't buy unless I talk to someone else about
it," he said.
So it's not surprising, then, to find that the study concludes,
"If 100 people have a bad experience, a retailer stands to lose
between 32 and 36 current or potential customers."
Separately, more than 3,500 mystery shoppers recently surveyed
by the Mystery Shopping Providers Association reported an obvious
inconsistency in employee courtesy and knowledge. Nearly four
in 10 gave companies low marks in these two critical areas.
Yet the amount of money invested in employee training continues
to slide. Go figure.
Bike season: Where in the country are motorcycles crashed or
stolen most often? For the answer, Mayfield-based Progressive
Insurance tracked claims on more than 2 million motorcycles insured
in the last three years.
The most likely cities for bike crashes: New York, the Norfolk-Virginia
Beach, Va., area and Baton Rouge, La. Least likely? Four Ohio
cities ranked in the bottom 10. Cleveland was 82nd of the 89 cities
examined.
The most likely cities for bikes to be stolen: Honolulu, Miami
and San Diego. Least likely: Grand Rapids, Mich., Harrisburg,
Pa., and Syracuse, N.Y.
My sense was that warm-weather cities were naturally more likely
to have higher bike accident and theft rates because of more bike
use, but a Progressive spokeswoman said climate had nothing to
do with it.
Bottom line: Based on these stats, bike insurance should cost
much less in Ohio than in many other states. Bikers, it's definitely
worth taking the time to compare. The difference in price could
be hundreds a year.
Cash back?
Speaking of coverage, the insurance industry is so competitive
these days that at least one national company offers refunds for
customers who stay claim-free.
As an incentive to discourage customers from filing smaller claims,
American National Insurance repays part of the policy on homeowners
and auto insurance.
The cash-back program works like this: Make no claims on either
policy for three years, and you get 25 percent of the annual premium
back in year four. Go another year claim-free and you get 25 percent
back again in year five. As long as you keep the three-year string
intact, the refund continues.
Say you pay $1,600 a year to cover your house and two cars. The
refund would be $400.
"I've had people receive checks 10, 11 years in a row," said
Mike Incorvaia, an American National agent in Strongsville.
Statewide, the insurer has paid out $11.4 million since the program
began more than 10 years ago.
Incorvaia insists the company doesn't charge more to give back,
like those "sales" that aren't really sales. And he freely concedes
that consumers can find lower rates than his.
The company uses credit scores to determine rates: Those with
the best credit get the cheaper rates.
But there's "an insurance war," he said, so his company decided
a cash-back program was one way to compete.
I didn't understand how a company could afford to do this. He
explained that business retention and a reduction in handling
smaller claims (under $1,000 was his definition) make the economics
work.
