The document discusses how customer alienation and sabotage can negatively impact businesses. It defines alienated customers as those who have had a bad experience with a company and will negatively communicate about that experience to friends and family through both offline and online channels. This negative word-of-mouth communication, or "badvocacy", can result in lost customers and business for the company. The rise of the internet and social media has given alienated customers more power to widely share their negative experiences, and research shows that negative reviews online can significantly influence purchase decisions. Left unaddressed, customer alienation poses serious financial risks to businesses from lost revenue over time.

1. WP
Customer Advocacy
28
The Reverse of Advocacy:
Impacts of Customer
Alienation and Sabotage
Dr. Michael Lowenstein, CMC, Executive Vice President, Market Probe
Daiji wa shoji kara: “Serious disasters come from small causes”
Feudal Japanese proverb
The polar opposite of Advocates are Saboteurs (or ‘Badvocates’, as
coined by leading PR firm, Weber Shandwick). Saboteurs are the
extreme of what we label as ‘Alienated’ customers, whose assessment
of a supplier can range from mildly annoyed and disaffected to
outright, revenge-seeking anger.
In B2C situations, more than half of customers report problems with
one or more elements of their transactions with suppliers. These
are customers who, having had a bad experience will a) typically not
tell the company about it (and there are multiple, well-documented
reasons why so few customers actually complain), but b) also typically
tell many of their friends, colleagues, and relatives through offline and
online means. This is ‘badvocacy’, the alienated, flip side of customer
advocacy which may be 20%, or more, of the consuming B2C and B2B
public (as estimated by Weber Shandwick), varying by the product,
service, or supplier.
Alienated customers share many of the same characteristics as
Advocates, just in opposite ways as regards their attitudes and
behaviors. They are individuals who have poor opinions of certain
organizations, brands, and products; and, they speak or act, as
critics and detractors, on behalf of these organizations, brands, and
products. They communicate negatively to friends and families. They
communicate negatively in their neighborhoods. They communicate
negatively at work. They communicate negatively online, through chat
rooms, rating sites, and blogs. Some, the most motivated badvocates
and saboteurs, will go so far as to set up elaborate contra web sites and
encourage open griping from any and all about bad experiences.
©2011 Market Probe, All Rights Reserved

2. Much of customer alienation and sabotage behavior, both B2B and
B2C, has been spawned by frustration and disappointment over service
and product experiences, and the feeling that brands and companies
don’t share their customers’ concerns, leaving them unheard. Poor
customer service experience is often the breeding ground for negative
communication. According to providers and customers, the quality
and competence of service agents, along with their ability to address
customer concerns on the first phone call or e-mail, rank as the
two most important factors in delivering a superior, differentiated
service experience. When these are delivered in a reactive, less-than-
competent or even unqualified manner, the potential for negative post-
experience communication is set in motion.
Customers today are looking to benchmark their experiences against
the greater sophistication of Web 2.0 technologies, and they are
coming to expect multi-channel support and an integrated experience.
Companies have failed to keep pace with these expectations due to
poor customer segmentation and last-generation loyalty metrics,
underinvestment in, or poor design of, technology solutions, silo-
based organizational structures, and poorly designed processes and
agent training. What customers actually want, and what companies
need to deliver, is trust, i.e. a perception that service processes and
technologies are designed to optimize their relationship with the
company and provide value.
Even more serious, in its 2008 customer experience study, customer
service software company RightNow Technologies learned that 84%
of customers who experienced poor service would communicate that
result to others (up from 74% in 2007 and 57% in 2006); and 87%
said they stopped doing business with a company because of a negative
service experience.
The dynamics of expression, both positive and negative, saw a major
change with the rise of the Internet. Initially, people went to web
sites to conduct their own research on brands, products, services,
and organizations. Before too long, web sites like Amazon and Ebags
were offering online customers the opportunity to rate products and
services that they bought and used; and customers were also able
to conduct pricing and performance comparisons, and also to offer
opinions on their own experiences.

3. One key result of this online information accessibility was the
realization that customers now had significantly more influence and
power over product and service choice behavior (their own as well as
the behavior of others) than ever before. In fact, the pendulum for
B2B and B2C customer decision-making influence had shifted away
from the companies. Consumers owned the influence and could now
endorse or criticize companies, and their products and services, both
offline and through online virtual soapboxes, such as contra web sites,
podcasts, blogs and communities. And, as will also be discussed in this
chapter, sabotaging employees used many of these same online media
to virally undermine their employers.
Potential Business Impact of Negative Word-of-Mouth
Studies conducted by academics and research organizations around the
world have determined that negative social word of mouth, though less
frequent than positive word of mouth, is at least as impactful on brand
choice. For example, a 2006 retail customer study among close to
1,200 adult shoppers by University of Pennsylvania’s Wharton School
and The Verde Group, a Toronto consulting company, showed that of
those experiencing problems, only 6% contacted the company (in part
because 46% of those who had a problem felt they would experience
the same issue in the future), but 31% went on to tell friends and
family. Of those, 8% told one person, 8% told two people, and 6%
told six or more people.

4. Further, the study found that of 100 dissatisfied customers,
a retailer would lose between 32 and 36 current or potential
customers. Companies, as a result, will need to monitor all negative
communication, whether it appears online or offline, and take steps
to manage it. Otherwise, they can see financial consequences such as
appear in the figure below.
Negative Customer Behavior Can Be Expensive
Lost Customer $2400
ONE unhappy customer who spends $200/month revenue lost/year
Lost Business Due to Negative Word of Mouth
ONE unhappy customer 1
ONE unhappy customer tells on average 11 other people 11
Add: these 11 people each tell 5 others 55
Total Number of People Now Negative 67
Less: Assume 25% of those 66 people will not
do business with you
17
Amount of lost opportunity from 17 people
who spend $200/month
$40,800
revenue lost/year
Total Business Forfeited $43,200
revenue lost/year
Due to ONE lost customer and associated negative
brand perceptionand communication $432,000
revenue lost over 10 years
In Market Probe’s 2010 Retail Bank Customer Advocacy Monitor, of
the fifteen national and major regional banks studied, it was found that
the best-performing banks had about three times the level of customer
advocacy as the worst-performing banks:
Bank #1 37%
Bank #2 35%
Bank #3 27%
Bank #4 27%
Bank #5 25%
Bank #6 25%
Bank #7 24%
Bank #8 23%
Bank #9 23%
Bank #10 22%
Bank #11 22%
Bank #12 19%
Bank #13 18%
Bank #14 13%
Bank #15 11%

5. Study results also generated multiple key financial advantages of
customer advocacy, such as the fact that 50% of bank customer
advocates were likely to consider new products from their primary
bank, compared to only 5% among alienated customers.
What wasn’t presented as actively at the time was the fact that the
worst-performing banks had customer alienation levels of 23% to
25%, compared to only 10% for the best-performing banks. Alienated
customers reported having very little interaction with their primary
bank, and much of the interaction they did have tended to be negative.
They encountered problems, or had complaints, at rates almost
ten times that of advocates (49% to 5%, most of which were either
unsatisfactorily resolved or not resolved at all). Perhaps most telling,
only 11% of the alienated bank customers said they had 50%, or more,
of their investible assets at their primary bank, compared to 28% of the
customers who were identified as advocates.
Figures like these will get the attention of anyone in marketing,
customer service, sales, or corporate management. Negative word-
of-mouth, a principal component of alienated advocacy, can have
powerful bottom line impact. This plays out, for instance, in further
study results of Wharton School and The Verde Group. In addition to
the negative communication resulting from bad experiences, almost
half of those surveyed (48%) said they have avoided a store after
learning of someone else’s problems there. For those who had had a
problem themselves, about one third said they would ‘definitely not’ or
‘probably not’ return; and half felt they would probably experience the
same problem or problems in the future.
Toyota Motor Corporation directly experienced the consequences
of poor, and reactive, communication following the parade of recalls
(over 8.5 million vehicles, worldwide) and public airing of its quality
problems (accelerator gas pedals and braking systems) during 2009.
This included a 1 percent share decline of the U.S. market (to
16.45%, according to Edmonds); and Kelley Blue Book stated that
Toyota’s resale value had declined $200 to $500, for those models that
were recalled (a decline of 1% to 3%). A 2010 U.S. national quality
perception study among prospective buyers showed that Toyota had
fallen to 7th position among 36 brands, from 2nd position in 2009. In
the meantime, Ford has moved to 6th position in quality perception,
and has moved into second place in U.S. market share, at 16.57%
of the market (behind General Motors’ 18.12%), as identified by
Edmonds’ research.

6. Advocacy and Alienation Buzz
It should be understood that companies can be criticized – both online
and offline – very quickly after a customer endures what is perceived
as a negative experience. In Weber Shandwick’s 2007 study, The New
Wave of Advocacy, one of the key findings was that, on average, nearly
one out of two adults (45%) will express their dissatisfaction within
one week, or less, after the experience. This is particularly important
because, in the same study, Weber Shandwick found that, globally, 63%
of consumers were making brand, product, and service decisions more
quickly than a few years ago, with the U.S. consumers taking slightly
longer. This puts more pressure on companies to monitor buzz and
be prepared with measures to either quickly counter or leverage it,
depending on its negative or positive nature.
As an example of the impact of viral communications speed, in mid-
November, 2010, a Qantas pilot safely landed a jet in Asia, after an
engine had caught on fire. Close to 500 passengers were on board.
Unlike the story of the ‘miracle on the Hudson’ in 2009, when US
Airways pilot Chesley “Sully” Sullenberger gained fame after landing his
A320 in the river on the west side of Manhattan, Qantas didn’t begin
getting its story out for 12 to 18 hours after the incident. This wasn’t
enough time to overtake the negative reports on Twitter that there had
been a crash; and Qantas was forced into damage control rather than
basking in the glory it really deserved.
The Internet as Customer Alienation and Sabotage Enabler
Although the majority of influence of B2B and B2C purchase and
relationship decision influence continues to come from offline informal
sources, the Internet has had an undeniable, pivotal role in creating,
or undermining, consumer trust. For example the 2010 Decision
Influence Index, an international study co-generated by Fleishman-
Hillard and Harris Interactive, showed that, in some countries,
consumers trust the Internet more than friends, family and print
media.
This study, conducted in France, Germany, the United Kingdom,
Canada, China, Japan, and the United States (representing 48% of
the global online population), found that the Internet is becoming a
critical medium for decision-making support, in addition to being a
reliable research and communication tool. Internet users will tend
to look at many sources – search engines, corporate sites, blogs,
review sites, chat rooms and forums, online communities, etc. - when
seeking information, suggesting that truth and trust come as a result of
distilling material from multiple locations and perspectives.

7. The Decision Influence Index study found that, while there is some
concern about too much information sharing on the Internet (by about
one-fifth of Internet users), consumers generally are able to find blogs,
sites, and boards that are credible and linked to their interest. An
average of 39% believe it is safe to communicate with others online, or
twice the rate of those who expressed concern about this.
Note: It must be recognized that, for those seeking information online,
or communicating themselves, the lack of authentication and validation
of individuals on social networking sites can be an issue. For example,
in 2008, two researchers successfully impersonated Marcus Ranum, a
security expert, on LinkedIn (who did not have his own profile there).
Within 12 hours, they had 42 connections to the phony profile, and
then joined several LinkedIn security networking communities to build
credibility. Connection requests came in from the CSO of a security
firm, then a former CSO of a Fortune 100 company, and Ranum’s own
sister! The point here is that social networking sites like LinkedIn,
MySpace, Facebook, Plaxo, and HighFive are all vulnerable, because
they are open, ‘blind trust’ social networking sites.
There is a tendency for Internet users to use multiple sources of
information – credibility and trust in information is largely a function
of the ability to locate and retrieve information from a variety of
trustworthy sources, and cross-check among them. They place
strong trust in conversations with people they know, and they are also
relatively trusting of comments posted by others. However, though
the information may not be completely reliable, users will reference
postings from others when making a decision. As an example, only
21% of Internet users in the U.S. trust the comments of others, but
46% find the comments useful. This pattern – the gap between trust
and usefulness – is also seen in Germany, France, and Canada.
Many of these comments occur on blogs and microblogs.
Microblogging, on sites such as Twitter, has high awareness as an online
communications medium (78%), and the Decision Influence Study
found that one-third of aware consumers have a microblog account.
When making purchasing decisions, an average of 64% of internet
users in the study consider online research to be either essential or very
important in making decisions. Though most users said the Internet
helped by giving them information to compare options, finding advice
or support from other people, acting faster, saving money, and acting
with more confidence were also prominently cited. Search engines
were most frequently cited as a starting point; but decision aids on
some products, such as those for children and packaged goods, were
often from comments given by other people (about 70%). Other
sources actively referenced were blogs and social networks, as well as
company-sponsored web sites and product/price comparison sites.

8. Overall, close to 40% of study respondents felt the Internet would
become more important and influential as a communication over
the next several years. In China, this opinion was given by 85% of
Internet users. Certainly, in all countries included in the research,
consumers are already spending an average of 12 to 15 hours per week
on the Internet, about as much time as they spend watching television
(except for China, where hours on the Internet were twice as high as
watching television). Excluding email, a key study finding was that the
Internet has been growing as a recognized information source, rapidly
catching up to offline advice from friends, family, and colleagues; and
it also dramatically overshadowed information received through mass
electronic and print media. For example:
• In the U.S., 42% of those using the B2C do not read magazines
and 40% do not read a printed newspaper.
• In Canada, 42% of those using the B2C do not read magazines and
28% do not read a printed newspaper.
• In the U.K, 36% of those using the B2C do not read magazines
and 33% do not read a printed newspaper.
These results were similar for France, Japan, and Germany. While
few Chinese Internet users did not read magazines or newspapers,
the Chinese are much more active and advanced users, particularly
in mobile communication (although much of informal peer-to-peer
communication in China continues to be both local and offline).
The Future of Customer Alienation and Sabotage
Open access and freedom of speech on the Internet has bred
"reputation snipers", individuals who will set up contra web sites,
post webcasts on YouTube, and give extremely negative ratings and
reasons. The root causes of what can cause them to act with powerful
emotion-based messaging can typically be found in poor product or
service experiences, or undesirable outcome of a registered problem
or complaint. Increasingly, companies have to proactively monitor
and prepare for brand perception and image attacks which can create
negative advocacy (alienation and sabotage) within the customer base
and among potential customers and the general public as well.

9. One fact is growing obvious, the Internet will make protecting and
managing reputations exponentially more challenging. As noted by
TechCrunch’s Michael Arrington, in an early 2010 blog post:
“Trying to control, or even manage, your online reputation is becoming
increasingly difficult. And much like the fight by big labels against the
illegal sharing of music, it will soon become pointless to even try.The
skeletons are coming out of the closet and onto the front porch. We’ll look
back on the good old days when your reputation was really only on the line
with eBay via confirmed, actual transactions and LinkedIn, where you can
simply reject anyone who leaves bad feedback on your professional life.
Today we have quick fire and semi or completely anonymous attacks on
people, brands, businesses and just about everything else. And it is becoming
increasingly findable on the search engines.Twitter,Yelp, Facebook, etc. are
the new printing presses, and absolutely everyone, even the random wingnuts,
have access.”
In sum, companies would be wise to give as much attention to the
power of customer alienation and sabotage as they do to leveraging
customer advocacy behavior.