The Retail Customer Dissatisfaction Study 2006 - conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm - shows that only 6% of shoppers who experienced a problem with a retailer contacted the company, but 31% went on to tell friends, family or colleagues what happened. Of those, 8% told one person, another 8% told two people, but 6% told six or more people.
Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers, according to the study.
Paula Courtney, president of The Verde Group, said that 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." For example, the first time the story is told, it might be about a customer service representative who was rude. By the time the third or fourth person hears the story, the customer service representative becomes verbally abusive.
"To make a story worth telling, there has to be some entertainment value, a shock value," says Courtney. "Storytelling hurts retailers and entertains consumers."