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Consumer insights: Strike three, you're out!

How many times will a customer tolerate a problem before he leaves? Ever watch a baseball game? You can pass Customer Service 101 by knowing one thing: Treat customers poorly, and they'll leave you for the competition. It's not an especially tough one to remember, and the depressing truth of it abounds in every restaurant with soaped-up windows and a padlock on the front door.

But here's a question: How much wiggle room do you think you have? How many times can you try a guest's patience before he or she walks out, drives past your drive-thru, or rips up your takeout menu for good?

Surprisingly or not, companies in many different industries have spent millions of dollars to arrive at this number. In an attempt to figure out how much to invest in personnel, in training, in that new call-in center, they need to know their customers' tolerance threshold—how many times they can piss them off before they lose them—in order to provide service that gets close to that line without crossing it. And the exact number, often taken to the hundredth decimal place, varies according to industry and type of service being provided.

But suppose you don't happen to have several million to spend on such a study? Well, here's the key data, gleaned, sifted, and analyzed just for you:

Three.

According to a wealth of customer-service studies, the number of times you can tick off a customer works a lot like baseball: You get two misses. Bungle the third one, and you're out.

The most recent evidence comes from a 2004 survey of 1,000 customers in the banking, cable, and retail industries. It demonstrated that while there are those Americans who will allow themselves to be batted around and still return again and again, there aren't many. While 7% of respondents said they'd tolerate 10 bad experiences with a provider before leaving them and 36% said they'd put up with five slaps, the largest group of survey participants—46% —said that two was their limit. (The study also stated that over 80% of Americans said they'd rather visit their dentist, pay taxes, or sit in a traffic jam than deal with an unhelpful rep.)

In fact, a quick look around among all industries and disciplines reveals that three is a magic number when it comes to achieving stellar customer service.

Research conducted by a telecommunications firm found that when customers call in with a complaint, they'll generally tolerate being transferred once, from the person who took their call to another who can help solve their specific problem. Transfer them again and they get angry—that's three strikes, if you're scoring at home. (This paradigm was adopted as a goal by the U.S. Social Security Administration when it overhauled its toll-free phone system.)

A customer survey by an online-media company discovered that the majority of internet users (60.9%) will tolerate one or two ads on the web pages they visit. Put up more than two, and they'll take their mouses elsewhere.

For years, several blue-chip companies have employed a complex statistical quality-control model designed to streamline production and reduce error to the lowest margins, called Six Sigma. It means that if you manufacture 1,000 products or deliver 1,000 services, perfection is defined as no more than 3.4 mistakes in the batch.

But if study after study shows that the three-strikes rule applies to most all areas of customer service, the question arises: Would it not be better to avoid mistakes altogether? It's nice to know you've got some leeway with guests, but why take any?

Curiously, there's evidence that handling a customer's problem effectively can actually make for a more loyal customer than attempting to insure no problems arise (which is nearly impossible, anyway). Management consultants Jeff Maszal and Donna Nogay have written that if a customer calls with a question or problem that's solved in one contact, they often emerge happier with the service provider than if they'd had no trouble to begin with. (These consultants also parrot the three-strikes rule, maintaining that if a customer has to phone three or more times to resolve a problem, he's gone for good after that.)

Other research shows that a service provider—be he a restaurateur or someone selling widgets—need not break his leg in haste to resolve a customer complaint, either; a reasonable amount of time will suffice. A study by the Edison Electric Institute has demonstrated that if a customer's complaint is handled within 30 seconds, the satisfaction level is the same as if it were handled within 15. Only after a minute of waiting do customers begin to perceive progressively poorer levels of customer service.

Moreover, nobody's certain why the three-strikes rule is so universal and so consistently proven. It could have something to do with what the researchers Berry and Parasuraman have termed the "zone of tolerance." They found that customers form certain assumptions of the kind of service they expect to get, allowing for missteps. So long as the service falls within the realm subconsciously sketched out by the customer, all is fine. For whatever reason, most customers seem to settle on three mistakes as their boundary line.

Finally, whether you take the three-strikes rule to heart or not, consider that much research has demonstrated that it costs from five to 30 times more to acquire a new customer than keep an existing one. It's also been proven that companies which focus on customer satisfaction over cost savings reach profitability sooner. And when it comes to reasons why guests walk out the door, the pecking order goes like this: Only 9% leave for better prices, 13% leave over dissatisfaction with the product, and 69% leave over poor customer service.

Which means quite a lot is riding on the three-strikes rule, including this: If the third mistake causes guests to walk, then the magic number isn't three at all, it's two. So allow yourself (and your staff) to be human: Guests will tolerate one error and even a second. But if you have to count to three, chances are your customers already have.

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