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Positive experience outweighs price sensitivity

By Stacy Straczynski
August 10, 2009

Despite the recession, research shows consumers do not mind paying a higher price for better customer service.

A Strativity Group study released on Aug. 4 found that more than 70 percent of respondents would be willing to spend an additional 10 percent or more if a company exceeded their expectations, with 33 percent willing to pay 25 percent or more.

Survey data represents the responses of 1,994 individuals in the U.S. and Canada from April 13, 2009 through May 4, 2009. Respondents were from a variety of demographics.

"The initial assumption that we had was that customer loyalty is dead, that the only loyalty is to price," Strativity Chief Executive Officer Lior Arussy said in a statement. "But it's not only about price sensitivity. The verdict from the consumers is very clear: If we see an exceptional customer experience, we'll pay more for it, we'll stay longer and we're going to give you more business."

Forty percent of loyal customers who experienced exceptional service were willing to pay 10 percent or more if it meant being able to continue business with a company. Satisfied loyal customers were also three times more likely to repeat their business for at least another 10 years.

Only 9 percent of dissatisfied loyal customers would pay more to continue business with a company, and those who had a negative experience were 10 times more likely to cease doing business with the company within 12 months. 52 percent said they'd only be willing to continue their business if a discount of 5 percent or more was offered.

In addition, the study found that the top drivers contributing to customer experience were centered on employee interaction. Resolving problems effectively, exhibiting common sense and instances where employees exceeded expectations topped the list.

"The one thing that was very clear was how the emotional attribute of the experience played an important role in determining whether one had received an exceptional experience," said Arussy. "This is an area that a lot of companies do not know how to manage--they leave it in the touchy-feely domain. But we are now seeing it come out of the touchy-feely domain and be straight smack in the middle of what differentiates organizations and what allows them to command premium price."

--Nielsen Business Media
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