Would you pay more for a better customer experience?

Yes, you would. That’s the conclusion of the fifth annual Customer Experience Report from Harris Interactive.

An overwhelming majority — 85 percent — said they would be willing to pay more than the standard price of a good or service to ensure a superior customer experience.

Before I continue, a warning to any business reading this: That doesn’t mean your customers are stupid.

For example, my Honda dealership in Orlando recently decided to become like Saturn and refuses to negotiate with customers on the price of its cars. It thinks if it can provide better service, customers will be happy to pay the manufacturer’s suggested retail price, which is wildly inflated.

Well, you know what P.T. Barnum said? What he should have added was that there was a finite number of suckers out there.

And we all know what happened to Saturn.

So the real question is: How much more?

• 55 percent would pay 10 percent or more
• 27 percent would pay 15 percent or more
• 10 percent would pay 25 percent or more

This applies to companies like Southwest Airlines and Virgin America, which offer a premium product (better in-flight entertainment or luggage flies free) in exchange for a modest markup.

Got that? A modest markup.

Among some of the other findings …

✓ Nearly all consumers (82 percent) have stopped doing business with an organization as a result of negative experience and most (75 percent) do not return.

✓ Almost all consumers (95 percent) have taken action as a result of a negative experience and 75 percent told others about it.

✓ 55 percent of consumers became customers of a company based on its reputation for great customer service, and 40 percent of consumers have switched to a competitive brand simply because of its reputation for exceptional service.

Greg Gianforte, the chief executive officer of RightNow, which commissioned the study, sums it up:

By focusing on delivering exceptional experiences, businesses have the opportunity to grow their customer base, improve brand loyalty and increase overall revenue.

Truer words were never spoken. But remember: Customers aren’t dummies, when it comes to service and price.

The good people at Saturn, who wind down their operations this month, already know that.

  • Joe R

    My big concern would be that a company would take advantage of this to offer *inferior* service unless you opt to pay more. There should still be a reasonable level of customer service for the base fee. I shouldn’t have to pay extra to get what should be considered acceptable customer service.

    If I pay more, I expect it to be worth the extra amount. Hopefully companies will work on that, rather than using it as an excuse to gouge more money out of customers.

  • Ed

    The problem here is the kind of business that one would be willing to pay more for….It the business was in the service industry, then perhaps it would be worth it to pay more…or if it’s a convenience thing…yeah…but I don’t think it’s my job to pay the person serving me…if the service person wants more money to do their job, that’s gotta come down from corporate…take some money away from the fat-cat C-whatever-O’s and filter it down to the people who actually do the jobs on the front line…
    I’m getting sick of paying more and more money for worse and worse service, yet seeing CEOs pulling record profits and lining their pockets with my money! *THIS* is the problem. With corporate stuff shirts walking away with millions or billions of dollars, we still pay and pay like sheep being led to slaughter!

  • Mary Graham

    Ya know, I guess I really AM getting old. I’m so old I remember when good customer service was a given, regardless of price. Businesses based their reputations on a great product backed up by great service. They truly CARED about their customers and it showed. And yes we did tell everyone we met. A business that didn’t treat their customers well, NEVER lasted. So what’s wrong with us these days? Come on, let’s get back to demanding good customer service for our hard earned money! If we get laughed at and/or ignored, we go to the competitors and don’t go back! Nothing hurts a business more than in the pocketbook (Oh that’s old fashioned for “purse” ha!). Here’s another old fashioned truth: “Customers are NOT an inconvenience, they are the reason we are in business!” Oh and “Nobody can take advantage of you unless you let them”. So I say let’s STOP letting the travel industry etc. pull our strings, let’s stop taking all crap. Just don’t give them your business!

  • http://www.facebook.com/profile.php?id=530479200 Dana Scheider

    I know this article is old and this comment is unlikely to get read. I’d like to add some thoughts on paying MSRP for cars. I worked in auto sales at a Nissan dealership, and the big takeaway for me was that dealerships, like other businesses, have to make their money somewhere. If it’s not immediately apparent where the company is making its profits, that’s something to worry about. MSRP is usually less than $1000 above invoice.

    If I were in the market for a new car and didn’t work at a dealership, I would be quite willing to pay MSRP to a dealership I trusted. The reason is that not only is the dealership making its money somewhere, but the sales department adds enough value to exist. If the dealership is losing money on a car, where does the money come from? In many cases it comes from hidden fees, grievously overpriced back-end products (warranties, etc.), and overpriced service appointments that customers must agree to. Of course, ads don’t mention any of this.

    My dealership struggled to keep up with dealerships that were willing to sell cars at or below invoice, but we also got a fair number of customers who had had horrible experiences elsewhere. (One customer said she had gone to another dealership who advertised an Altima for $2,500 less than MSRP, which is our starting point. When she got to that dealership, she waited for over an hour and still no one helped her. She ended up buying our Altima at MSRP because we respected her time and didn’t jerk her around.)

    I think car dealerships get a lot of undeserved negative rap, and ironically, the reason for that is because reputable dealerships are more transparent than other businesses. You’d never walk into Nordstrom and demand to know what they paid for the Dior pumps you’re looking at, and if you did, the salesperson probably wouldn’t even know the answer. But dealerships DO give customers this information and then are subjected to criticism for audaciously attempting to profit from this transaction.

    Just food for thought. I didn’t work there long (not because of conflicts with the job), but I really got a radically different perspective on the car industry while I was there.