• by Dawn Palmer , July 31, 2013

Your relationship with your customers is in some ways no different from your relationships with your friends or family. They hold you to your word and expect you to keep your promises, whether you're aware you made one or not.

And that's the dilemma for many companies today -- from telecom to banking, to the auto industry. A majority of customers are expressing disappointment over what they perceive as broken promises. But many times, companies are unaware they even made a promise in the first place.

Somewhere in the disconnect between these tacit consumer expectations and company guarantees is a way for today’s smartest companies to seize the moment, win greater customer loyalty and repair the foundation of their brand image.

The data

We surveyed more than 3,000 U.S. consumers to quantify this broken promise syndrome. According to the data, nearly 70 percent of American consumers say a company has made some kind of promise to them, and 40 percent say they’ve had a promise broken. What’s more, a majority of consumers -- 90 percent -- say they would switch (or consider switching) vendors because of a broken promise.

One-third of those who switched had been a provider’s customer for two or more years. That shows just how tenuous long-term customer loyalty is today.

The biggest promises and breakers

The most common types of promises made -- the survey reports -- are on-time delivery of products and services (55 percent), no hidden or unexpected costs (51 percent) and quick resolution of complaints (45 percent.) Hidden fees and costs were cited as the most frequently broken promise, with 24 percent of respondents saying they have encountered this issue.

Of the eight industries the survey explored, telecommunications was cited the most as breaking promises. More than 22 percent of people identified telecoms as a promise-breaker, while only 11 percent said retailers -- the second-most-cited -- broke promises the most. In other words, twice as many people were disappointed with their telecom providers as they were with their retailers.

Despite telecom’s reputation, however, people are less likely to switch providers immediately because of a broken promise. In fact, telecom ranked seventh out of the eight industries in which people would most likely switch. People are much more likely to switch providers in the automotive industry -- 65 percent of respondents said they would find a new vendor after a broken promise. (Only 30 percent said they would switch telecom providers.) The reasons for this may have something to do with the number of providers available in each industry -- telecom has far fewer providers than auto.

Among the key indicators of broken promises, customer service inefficiencies and unresolved billing disputes rank among the top. Almost 45 percent of respondents said they had to repeat their issues multiple times with different agents or personnel. Another 33 percent said the company’s customer service representatives lacked knowledge or didn’t fully understand the problem. Tied to that, 33 percent said companies did not resolve their service or product problems satisfactorily.

What’s more, problems tend to pile up for customers. More than two-thirds of consumers in the survey say companies broke multiple promises. In fact, about a third said companies have broken three promises. Almost 10 percent said companies have broken five promises.

A shot at redemption

Despite all the seeming gloom, there is some bright news for companies. Most consumers said they would give providers a chance to redeem themselves. Nearly 80 percent said they would complain about the service issues at least once before switching providers. Most -- 55 percent -- said they would give providers two chances at redemption.

For many who experience a broken promise, the solution is as simple as fixing the problem or resolving the issue. However, nearly half said they want accountability that the promise was broken and an apology from the company before they would reconsider switching.

Gifts and rewards for the inconvenience also have a place (albeit a smaller one) in the recovery equation. In addition, consumers say they want a general recognition of their value and a reward for their loyalty.

Clearly, part of the problem is perception. Half of consumers with a broken promise didn’t think the company was even aware they were breaking it. With the barrier to switching to new providers precipitously low, companies that are aware of the expectations they are not meeting will win the day by preventing issues before they happen.