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Exit Or Voice: What Are Your Customers Doing?

Every business wants repeat customers and enthusiastic fans — they want their customers to love them. The obvious way to accomplish this is to provide customers with a great experience. But even the best businesses can’t do this 100% of the time.

It’s not a question of whether you will fail — but what happens when you do.

Albert O. Hirschman addressed this question in his seminal work Exit, Voice, and Loyalty. When customers have a less than stellar experience, they have two choices: exit and voice. Exit occurs when you toss out the mediocre product and abandon the company that produced it; voice, on the other hand, involves expressing your dissatisfaction to your network, as well as to the company itself.

In 1970, when Hirschman wrote Exit, Voice, and Loyalty, exit was the customer’s most important response to a bad experience. Back then, if we didn’t like one company’s product, we would just switch over to that of another company. Our voices could only reach a very limited number of people, which meant that companies didn’t have to take much notice. Companies also didn’t have the technology to allow customers to provide constructive feedback at a large scale.  They could only be responsive to customer exit and the associated loss of revenue.

The world has changed substantially since then — technology has amplified the power of voice. Now, when we have a bad experience with a business, we can easily broadcast our opinions to a wide and receptive audience through social media, whether TripAdvisor, Google+, Amazon reviews, Facebook and Twitter. Conversely, when we’re determining which product or service to choose, we go to those same review and social media sites before making an informed decision.

In fact, there’s now a powerful third option for dissatisfied customers – combining exit and voice. Upset customers — who previously would have just quietly found one of your competitors — now have the potential to seriously damage your ability to attract new customers even as they exit. They can air their grievances through a huge number of online social channels; and future customers, when doing their research, see all of it.

How do we limit the likelihood that customers will publicly voice their dissatisfaction?  Counterintuitively, the best way is to enhance the power of the customer’s voice itself.

It’s true that the voice of an angry customer can wreak a lot of PR damage, but voice does not have to be public. Consumers have the option of directing their voice at the business itself. When they do this, rather than damaging the business, they’re offering it an opportunity to improve — and save customer relationships.

To illustrate these different aspects of voice, think of having a poor experience at the Department of Motor Vehicles. Do you provide your local DMV with suggestions for improvement? If you’re like me, then probably not. We don’t necessarily know how to provide these suggestions; and even if we did, we feel that the DMV will ignore us and that the effort would be wasted. Instead, without the possibility of exit, we resort to sharing DMV horror stories.

Compare this to a company like Nordstrom. While we know that the service will be great almost all the time, when it’s not, we know that they will do something to resolve it. Our dissatisfaction will be heard and because of that, we feel that we can spend our effort asking the company to fix the problem, rather than complaining to our friends and family, or broadcasting on social media.  We choose voice over exit; and we voice our complaint to the company rather than to the public.

Companies like this create loyalty. We’re willing to give them a second chance, and we don’t immediately exit. They don’t just consistently deliver an excellent customer experience; they actively listen to us when things don’t go well.

But it’s hard work. On top of having an easy channel of communication from the customer to the company, the company also needs to act on that communication. Think about how different things would be if people knew that their comments could change the DMV for the better — a lot more of us would offer suggestions to the organization rather than complaints to friends.

It’s uncomfortable for companies to hear the dissatisfaction of their customers, but as difficult as it is, the alternative is much worse: angry, publicly vocal ex-customers.

Photo credit: Fabio Penna

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