Word-of-Mouth Wildfire: How Customer Service Can Make or Break Your Business

Cause and effect can be brutal, especially in the retail and service industries. Let’s look at the series of events that would have unfolded had the interaction followed this second scenario. First, the client (the pet supply store) would have lost my business, an average of $500 each year. Second, the nine people within hearing distance of the cashier’s rant would potentially take their future business elsewhere. Suppose each of them spent an average of $500 per year as well, that’s a total loss of $5000 in recurring revenue.

And losing those 10 customers is just the beginning. On average, an unhappy customer will tell 9–15 others about their bad experience with any given company. Even worse, 13 percent of dissatisfied customers will tell more than 20 others about their experience.

In this scenario, 10 people left the store with the intention never to return. Those 10 people went back to their lives. They went back to their jobs, their Sunday school classes, and other social gatherings. Over a few weeks, maybe even months, let’s assume they tell 10 others about the horrible experience they had at that pet supply store. Within weeks, 100 people have an intimate, first-hand knowledge of what happened that night at the pet store. Chances are that many of them won’t ever shop there again. Chances are even better that at least half of those 100 people will tell five others about their friend’s experience. This second-hand recounting of a bad customer service experience has now reached more than 350 potential or current customers throughout the community.

The social media effect

The advent of social media outlets has added an additional layer to this rule. Now, thousands of people can hear about poor customer service experiences through sites like Twitter, Facebook and blogs. Let’s say those initial 10 customers in the pet supply store also tweeted about their experience, posted a status update on Facebook, or blogged about it. The potential damage is now unbelievably magnified.

These statistics show word-of-mouth PR at its best … and its worst. In some instances, customer service can literally make or break your business. All it takes is one exceptionally bad experience and you’ve lost tens of thousands of dollars in potential profit and earned yourself a poor reputation. And if we’ve learned one thing about our free-market economy, it’s that reputation is everything.