Are Companies Finally Figuring Out That Bad Behavior Loses Customers?

A new market research study of over 3600 consumers has confirmed that there are some key things that will quickly erode any trust a customer has in a company: unethical behavior, bad customer service, and outdated products and services. The bad news is that the study was conducted in Europe, which makes us wonder if U.S. companies will pay any attention.

One interesting finding is those same conditions don’t build trust for consumers as quickly, “suggesting that they have now come to expect these attributes in day-to-day business.”

However, their trust can be severely eroded when these baseline requirements are not met, with potentially dramatic consequences for business. For example, a massive 63% of European consumers would be concerned about buying a product or service if a company was unethical; 56% would lose trust with bad customer service, and 59% would react negatively to outdated products and services.

The same holds true for issues of security—the study found that customers are willing to move to a competitor if they offer higher security, but they don’t feel it should be treated as an “added value” that justifies higher fees.

As an aside, it’s interesting to compare industry reputations across the pond: banks are among the most trusted in Europe, while telecommunications and airlines are the least trusted.

We wonder how much longer it will be before shareholders start to realize that a healthy company is dependent upon meeting these requirements as much as meeting quarterly sales goals—perhaps it’s already begun with the recent shareholder suit against Mattel.

“Unisys study reveals what erodes consumer trust” [Computing SA]
(Photo: Getty)

Comments

Edit Your Comment

  1. PinkBox says:

    This reminds me of what Lunarpages recently tried to pull. They made their customer’s 404 pages into adfarms, then deleted any questions/posts questioning them about it on their forums.

    They even banned people from their forums for asking about it.

    Of course they changed their minds and removed them a few days later, but the damage was done.

  2. etinterrapax says:

    Terrific. Now if they’ll just figure out that people need jobs to be able to afford to support a consumer economy, all that’ll be left is hunger and world peace.

  3. ry81984 says:

    Until we change businesses from being about the shareholder to being about their stakeholders things will just keep getting worse.

    The way things are probably will not be changed until a new generation of managers that were taught at competent schools enter the workforce and run companies the right way.

    Whats scarry is many in the next generation of leaders are being taught to think the old way. Manager students at my school are taught to be marketers and accountants and creating value for the stockeholders and not for the customers.

    If colleges do not get it, then we have a long time before companies will get it.

  4. Sirened says:

    Yeah people also need decent wages to support a consumer economy too. Our Mexican and Chinese indentured servants will only take our economy so far before the bubble busts.

  5. starrion says:

    We’ll see if Verizon, BofA, Chase and U-Haul suddenly turn around.

  6. royal72 says:

    the simple answer, is to stop feeding bad business’ our money. i posted the following a lil while ago about one of the at&t stories and it’s just as appropriate here…

    “i know we are all hopelessly addicted to our technologies of communication, but the only way companies like at&t are ever gonna change, is if you stop feeding them money.

    not like it would ever happen, but imagine if everyone who’s fed up with this garbage agreed on a specific date (1-1-08) to cancel any and all of their services from or related to at&t. furthermore, don’t pay them their cancellation fee(s), because of their breach of contract (take your pick from the stories on consumerist). be sure to explain that when canceling and pay your final bill sans early termination fees right then and there.

    you may not hear much about it immediately, but if they lose even 10% of their customer base in a single day, come a few months later it will be a much different story when reports to stock holders and other public information is available.”

  7. ShortBus says:

    Nope, won’t matter here. In America, the only two questions most citizens ask before a purchase: “Is it cheap?” and “What colors does it come in?”

  8. HumanSockPuppet says:

    You cannot have reasonable expectations of building a viable, longterm profitable business model if you do not establish a good reputation with consumers.

    The first thing people ask themselves (usually unconsciously) when considering a purchase is “do I trust this company/manufacturer/retailer?”

  9. bohemian says:

    Yea like finding out VERIZON is giving away my data without a warrant and wants to give pretty much any of it to third parties.

    Anyone know of a cell phone company that takes unlocked phones and does not suck like a bad recurring nightmare?

  10. Chicago7 says:

    Are cab drivers ever going to figure out that the people they are trying to run down on the street are their customers?

    /I doubt it.

  11. marsneedsrabbits says:

    I’m waiting to see if companies have figured out that the smallest problem becomes the biggest pain in the butt when the story hits the internet.
    Then the 28 cents that they illegally overcharged some little old lady in Pennsylvania; or the service calls they repeatedly blew off, leaving people without phone service; or requiring people to pay a service call when the product is under warranty and the fix if simple and obvious just come off as petty and money-grabbing behaviour.
    Those three examples (K-Mart, Comcast, and Sears) are three I would have never known about but for the internet, but once they hit the web, they get a permanent life of their own and end up costing those companies a lot more than the few dollars it would have if they had done it right the first time.
    The internet has changed the way companies *should* do business.
    Whether it changes the was they *actually* do business remains to be seen.

  12. Chicago7 says:

    I have to say that Amazon.com has always had the greatest customer service for me. They really know how to do it.

    /Note that this is Amazon itself, not Amazon’s storefronts, which I have had nothing but trouble with. I wish there was some way to only get Amazon itself and no storefronts when you search for something on Amazon.com.

  13. amoeba says:

    @Chicago7: I also have to point out that amazon.com does a great job with email messages as well by phone. In England, the customer service is bad most of the time. l.

  14. amoeba says:

    oops… the I. is a nothing :-)

  15. Snakeophelia says:

    It’s not like there aren’t examples of great customer service out there. Amazon, Zappos, Saturn, and Lands End come to mind. Somehow, those companies manage to do millions of dollars’ worth of business without screwing over everyone on customer service. Maybe all the bad guys with the incomprehensible CSRs, long waits, and “stick it to the customer” rules think we don’t notice these things.

    But boy, we sure do.

  16. As an aside, it’s interesting to compare industry reputations across the pond: banks are among the most trusted in Europe, while telecommunications and airlines are the least trusted.

    Now where have I seen that before?
    (Comcast truck drives by and an American Airlines jet flys by overhead)

  17. @Chicago7: Depends, what city?