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Saying sorry helps firms retain customers

world Updated: Sep 24, 2009 15:51 IST

IANS
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Firms that simply say sorry to aggrieved customers do better than those that offer cash compensation, new research has said.

The ploy works even though the recipient of the apology seldom gets it from the person who made it necessary in the first place.

Researchers found people are more than twice as likely to forgive a company that says sorry than one that instead offers them cash.

Johannes Abele, researcher at Nottingham School of Economics (NSE), who conducted the study, said the results proved apologies were both powerful and cheap.

“We know firms often employ professional apologists whose job is to say sorry to customers who have a grievance," he said.

“People don't seem to realise they're dealing with an expert apologist rather than an individual who feels genuine shame.

“It might be that saying sorry triggers in the customer an instinct to forgive - an instinct that's hard to overcome rationally," Abele said.

“You might think that if the apology is costless then customers would ignore it as nothing but cheap talk - which is what it is. But this research shows apologies really do influence customers' behaviour - surprisingly, much more so than a cash sweetener," Abele added.

Researchers worked with a firm responsible for around 10,000 sales a month on e-Bay.

Some customers were offered an apology in return for withdrawing their comments, while others were offered 2.5 Euros or five Euros.

The simple apology blamed the manufacturer for a delay in delivery, adding: “We are very sorry and want to apologise for this”.

Customers offered money were told: “As a goodwill gesture, we can offer you five Euros if you would consider withdrawing your evaluation.”

Because customers had no inkling they were taking part in the experiment, their behaviour was completely natural and unaffected.

Some 45 percent of participants withdrew their evaluation in light of the apology, while only 23 percent agreed in return for compensation.

“The apology was delivered by a large, anonymous firm and wasn't face-to-face, and the firm had a clear incentive to apologise," said Abeler, an expert in behavioural economics.

“All of this meant the apology should have been regarded by the customers as calculated, insincere and just cheap talk. Yet it still yielded much better outcomes than offering cash compensation - and our results might even underestimate its effects.”