Study: Customers respond more positively to simple apologies than cold cash

Having a problem with a customer? Before you pull out your checkbook in an attempt to rectify the situation, try simply saying "sorry."

New research shows you're likely to get more customer satisfaction by simply apologizing, versus attempting to make financial compensation. And it's a heck of a lot cheaper, too.

A new report from the Nottingham School of Economics’ Center for Decision Research and Experimental Economics suggests that firms that simply say "sorry" to disgruntled customers fare better than those that offer financial compensation.

Academics set out to show whether customers who have been let down continue to do business after being offered an apology. They found people are more than twice as likely to forgive a company that says sorry than one that instead offers them cash.

“You might think that if the apology is costless then customers would ignore it as nothing but cheap talk - which is what it is," says NSE research fellow and study co-author Dr Johannes Abeler. "But this research shows apologies really do influence customers’ behavior – surprisingly, much more so than a cash sweetener."

The researchers worked with a firm responsible for around 10,000 sales a month on eBay, controlling its reaction to neutral or negative feedback. Some customers were offered an apology in return for withdrawing their comments, while others were offered 2.5 or 5 pounds.

The simple apology blamed the manufacturer for a delay in delivery, adding: “We are very sorry and want to apologize for this.” Customers offered money were told: “As a goodwill gesture, we can offer you 5 pounds if you would consider withdrawing your evaluation.”

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

As the researchers put it: “It might be that saying sorry triggers in the customer an instinct to forgive – an instinct that’s hard to overcome rationally."

The Nottingham researchers appeared to have hit upon a truth of human nature -- something many companies try to hard to systemize. There's another element at work as well -- a customer receiving an apology feels there's a human being behind the facade that cares about their business.

This post was originally published on Smartplanet.com