Just Apologize: The Psychology Behind Churn

Summary

Podcast Summary: Brain Driven Brands – "Just Apologize: The Psychology Behind Churn"

Release Date: March 11, 2025

In the episode titled "Just Apologize: The Psychology Behind Churn," host Sarah Levinger delves into the critical role of apologies in customer retention and brand loyalty. Through an engaging conversation with Nate, also known as Consumer Casey, Sarah explores how a single negative customer experience can significantly impact a brand's reputation and long-term success. This episode underscores the importance of effective customer service strategies, particularly the power of a sincere apology over financial compensation.

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1. Introduction to the Topic

Sarah Levinger sets the stage by introducing the episode's focus: understanding why customers churn and how brands can mitigate this through psychological insights. She references a compelling study that reveals consumers are up to 32% more likely to forgive a service mistake when they receive an apology rather than financial or product compensation.

Notable Quote:

Sarah Levinger [02:03]: "Consumers are up to 32% more likely to forgive a service mistake if the brands do this one thing."

2. Consumer Casey’s Experience with Nike

Sarah welcomes Consumer Casey, a loyal Nike customer who experienced a significant service failure that led to his disengagement from the brand. Nate recounts his long-standing loyalty to Nike, stemming from his teenage years when his parents first introduced him to Nike shoes. His relationship with the brand was cemented over a decade of consistent purchases until a specific incident during his foray into competitive running altered his perception.

Key Points:

• Initial Loyalty: Nate had been purchasing Nike shoes for over 10 years, relying on the brand for both casual and athletic footwear.
• Triggering Event: Upon purchasing a second pair of Nike running shoes for triathlons, Nate discovered a defect—a slightly too long elastic piece on the left shoe's tongue causing discomfort after running a few miles.
• Attempted Resolution: Nate first approached the local running store, which directed him to Nike's customer service. Despite his efforts and thorough explanation, Nike failed to acknowledge the defect, leading to frustration.

Notable Quotes:

Nate [04:07]: "I have no idea. Probably some time in like junior high or high school."
Nate [07:07]: "We don't see this as a problem."
Nate [08:52]: "I did get an apology from the running store. They were like, we're sorry that that happened."
Nate [09:15]: "I want the value of those $150 shoes... I need a pair of running shoes."

3. The Impact of Poor Customer Service

Nate's experience highlights a critical failure in Nike's customer service approach. Despite being a long-term customer, his complaint was dismissed without a genuine apology or solution, leading him to abandon the brand entirely. This not only affected his personal purchasing decisions but also influenced his social circle against Nike.

Key Insights:

• Lack of Apology: Nike's customer service did not offer a sincere apology, which is crucial for customer forgiveness as per the referenced study.
• Brand Trust Erosion: Nate expressed that despite Nike's high-quality products, the inability to resolve his issue led to a complete loss of confidence in the brand's commitment to its customers.
• Ripple Effect: His negative experience extended beyond himself, as he influenced friends and family to avoid Nike, showcasing how individual customer stories can impact broader brand perception.

Notable Quotes:

Nate [12:38]: "I have completely lost confidence that if there is something wrong with a product that I buy from them, that they're going to make it right."
Sarah Levinger [12:52]: "So just replace it and get him, like, a positive experience."

4. Psychological Perspectives on Customer Service

Sarah delves into the psychological dynamics at play during customer service interactions. She emphasizes that both brands and customers bring inherent biases to these interactions, which can either mitigate or exacerbate conflicts.

Key Points:

• Brand Employee Bias: Customer service representatives often adopt a defensive stance when dealing with complaints, anticipating negativity based on prior experiences.
• Customer Expectations: Customers come with high expectations, especially loyal ones, and seek acknowledgment and resolution that goes beyond mere compensation.
• Cost vs. Loyalty: The minimal cost of replacing a defective product pales in comparison to the potential loss of long-term customer loyalty and the negative word-of-mouth that can ensue from unresolved issues.

Notable Quotes:

Sarah Levinger [10:28]: "There's something outside of that done or said in particular that would have made it better for you?" Sarah Levinger [12:37]: "They have completely lost confidence that if there is something wrong with a product that I buy from them, that they're going to make it right."

5. Key Takeaways for Brands

Sarah distills the conversation into actionable insights for brands aiming to reduce churn and foster customer loyalty through effective handling of service mistakes.

Essential Takeaways:

• Prioritize Apologies: A sincere apology can be more effective in retaining customers than financial compensation.
• Understand Customer Impact: Even minor defects or issues can have significant repercussions if not addressed appropriately.
• Empower Customer Service: Equip representatives with the authority and tools to resolve issues effectively, emphasizing empathy and solution-oriented responses.
• Recognize Long-Term Value: The cost of rectifying a single issue is outweighed by the value of maintaining a loyal customer base and positive brand reputation.

Notable Quotes:

Sarah Levinger [16:20]: "The key takeaway, I think, is understanding that a sincere apology can preserve customer loyalty."
Nate [17:08]: "Casey just wants a pair of shoes... a good solution to this problem."

6. Conclusion and Final Thoughts

Wrapping up, Sarah reinforces the episode's central theme: the profound impact of genuine apologies in customer service. She underscores that brands must recognize the psychological underpinnings of customer satisfaction and the pivotal role apologies play in mitigating negative experiences. Nate’s story serves as a cautionary tale for brands to reevaluate their customer service strategies to prevent similar churn scenarios.

Final Remarks:

• Importance of Apology: Brands should adopt a culture where apologies are prioritized as a fundamental response to service failures.
• Customer-Centric Approach: Understanding and addressing the emotional and psychological needs of customers can lead to enhanced loyalty and positive word-of-mouth.
• Proactive Measures: Regularly assess and refine customer service protocols to ensure they align with best practices in customer engagement and satisfaction.

Notable Quotes:

Sarah Levinger [17:09]: "So petty, though. Don't you think that's like, kind of petty being like. No, you're sorry. Really."
Nate [17:25]: "The problem is still not fixed."

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Additional Information:

For listeners interested in applying these insights to their own brands, Sarah directs them to Tether Insights, where consumers' behaviors and emotional needs are studied to provide actionable strategies for businesses aiming to cut costs, boost sales, and captivate the masses through psychological tactics.

Follow-Up:

• Consumer Casey: Follow Nate at Consumer Casey on Instagram to stay updated on his consumer advocacy.
• Brain Driven Brands: Available on YouTube and various podcast platforms for those interested in visual and audio content.
• Sarah Levinger: Connect with Sarah across her social media platforms to engage with more content related to neuromarketing and brand psychology.

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This episode serves as a compelling exploration of how empathy and genuine communication can transform customer relationships, emphasizing that sometimes, a heartfelt apology can go a long way in retaining customer loyalty and safeguarding a brand's reputation.

Transcript

[Nate]

Oh.

[Sarah Levinger]

Welcome to Brain Driven Brands. I'm Sarah Levinger. I'm dying from the black luck. I don't know what's going on. I have this odd cough. And we're gonna try really hard not to clear my throat or cough on recording so that Scotty doesn't have to cut that out. Today Nate is out because it is his birthday. Happy birthday to Nate. He's ripe old age of. What is he, 29? I don't know.

[Nate]

29.

[Sarah Levinger]

29. So we have consumer Casey back on the show today. Welcome. Should I call you Consumer Casey or should I call you Casey, or should I call you Babe? Because that's what I call you at home.

[Nate]

Don't call me Casey. That's just weird.

[Sarah Levinger]

It might be a little weird if I'm like, so, Casey, what do you think of xyz? I'm going to call you Consumer Casey.

[Nate]

That's fine.

[Sarah Levinger]

So today I feel bad. I'm going to bring up a very sore subject with you.

[Nate]

Oh, God.

[Sarah Levinger]

I promise we're not doing.

[Consumer Casey]

What?

[Sarah Levinger]

You got any sort of, like, marital issues? I promise, because that would just be weird. Today we are going to talk about a very sore subject for Casey. A negative experience that he had. You do. Oh, come on. Don't reveal the punch. Negative experience that Casey had with a brand early on in our marriage that caused him to go from basically loyalists, somebody who's like, I'm only gonna shop with his brand, nobody else. This is what I love and what I do. To now. Somebody who, like, actively, like, clicks out of everything that they do because he just doesn't like them anymore. So interestingly enough, I actually found a study that pertains to this. Okay. Yeah, yeah. So. And this is just my jam. I love the study. So consumers are up to 32% more likely to forgive a service mistake if the brands do this one thing. So before we jump into your story, what do you think brands need to do for customers to forgive? 32% increase in forgiveness, which is a lot if you think about it.

[Nate]

I don't know, give them free product or. Oh, okay, replace the product. That.

[Sarah Levinger]

I don't know. Interesting. I mean, good guess. I feel like that's the guess that everyone would give. That is incorrect. Sorry. No. So according to this study, consumers are 32% more likely to forgive a service mistake when they receive an apology instead of financial or product compensation. I find this study really interesting because obviously, like, your default. My default is to. Okay. If we make a mistake, we need to just replace it. We need to do better and give some sort of compensation. Right, right. However, according to this particular study, people want apologies, which I'm like, like humans really like to be seen. So this is really interesting though. They did four different experiments and the researchers found that when they were given a sincere apology, like, dang, we're really sorry that we messed up, guys. Not just like a sorry that happened to you, but like an actual apology, 32.1% were more likely to forgive a missing reservation at a hotel, 32% were more likely to forgive slow service at fast food restaurants, 13% were more likely to forgive a flight delay, and 9% were more likely to forgive a shipping delay for an online clothing shopping store just by giving a sincere apology instead of offering compensation or product up front. So I want to talk about what happened. Let's break it out, honey. We need to talk about what happened. And I think it's very important for brands to understand why this situation happened. So explain who you were before the brand that you were like super involved in, super loyalist to, was Nike. How big of a Nike fan were you? I don't think I've ever asked you this.

[Nate]

I don't think that I was like a huge Nike fan, but like, no, no, it was when I walked into a store to buy shoes. Right. Be it running shoes, like normal everyday shoes, cleats, whatever. I would just automatically go to Nike because that's who I had used for, for probably 10, 15 years. Right.

[Sarah Levinger]

When did you first get into Nike?

[Nate]

I have no idea. Probably some time in like junior high or high school.

[Sarah Levinger]

Oh man.

[Nate]

I got a pair of Nike shoe. Like my parents bought me a pair of Nike shoes and that's just what I used.

[Sarah Levinger]

Yeah. So you've been buying Nike since you were like a teenager and then you just like kept buying it. Yeah. See, people behavior, very interesting how much consumers just default to the behavior they've been doing for the last decade just because it's good shoes and I know which one I want and I don't have to do the work to try and figure out who else in the ecosystem exists. So, okay, fast forward. You're a Nike guy. You've been buying these shoes for years and years. Then what happened?

[Nate]

So I get into triathlons and then I'm buying my second pair of Nike running shoes. Like specifically running shoes. Right. So before I had usually just bought like their tennis shoes or whatever, just walking around. But this was like, oh, I'm now in a sport.

[Sarah Levinger]

Yeah.

[Nate]

So I buy this pair of Nike shoes and I Don't know the best way to describe it. Basically, the tongue is connected to the body of the shoe with this little piece of elastic, right?

[Sarah Levinger]

Okay. Yeah.

[Nate]

And the elastic piece on the left shoe is ever so slightly too long. So instead of sitting flat, it, like, folds like this.

[Sarah Levinger]

Yeah.

[Nate]

And it's not something that you would, like. Like, when you put it on and walk around in the store or even if, like. Because I went to a running store to buy them. Even running in them for, you know, a quarter mile, you don't feel it. But then after, like, three miles, this one little piece of elastic is just punching into your.

[Sarah Levinger]

Okay.

[Nate]

Yeah.

[Sarah Levinger]

So.

[Nate]

So first I tried to return them to the running store that I bought them at, and they were like, no, you've already used them. You can't return them. I was like, okay. So then I call. And they said, call Nike. So I call Nike. And I was like, hey, this is what's happening, right? Like, it's not an obvious defect.

[Sarah Levinger]

Yeah.

[Nate]

But if you, like, if you're a runner. And the right shoe was like, the. The other thing that bothered me was the right shoe was, like, the most comfortable running shoe I'd ever had.

[Sarah Levinger]

Oh. It was just the left. So you couldn't feel that. You could only feel on the. Okay. Weird.

[Nate]

And, like. Like I said, I was able to, like, get down in there and, like, poke around and be like, okay, I know exactly what this is because it hurts right here. And here's the thing that's different on the left shoe than the right shoe.

[Sarah Levinger]

Yeah.

[Nate]

So they were. So Nike was like, send them in and we'll check them for defects. And I said, like, if this is exactly what it is. Oh, but it's going to be really hard to deduce because it did. It's not obvious. And so they. I sent them back.

[Consumer Casey]

I can't remember if I paid shipping. They paid shipping. I think they paid shipping. And then I got an email or a call, like, a couple days later, which was, hey, we don't find any defect in the shoe. And I called customer service again, and I was like, did you. Like, this is exactly what it is. How do you guys not see this? And they're like, we don't see this as a problem.

[Nate]

Blah, blah, blah.

[Consumer Casey]

And I said, listen, like, I have.

[Nate]

Bought a pair of Nike shoes every year for the past 10 years, and you're telling me that. I'm telling you as an athlete that this shoe is not correct and you refuse to fix it? And they said, yeah, sorry.

[Consumer Casey]

And I remember I went as high as I could in that customer service chain and I finally got to the.

[Nate]

Point where I said, listen, if you replace this shoe, I will continue to buy Nike product. But I promise you, if you don't replace this shoe, I will never purchase a Nike product again in my life. And she was like, sorry. So she sent the shoes back to me and I luckily.

[Consumer Casey]

So there's a good part of the store which I went back to the local running shop, Runners Roofs, and I told them the whole story and they're like, give them back to us, we'll figure it out. And so I bought New Balance.

[Sarah Levinger]

And I was going to say, you've been to Runners Roof since then? Like we've purchased because they made it right?

[Nate]

Right? Yeah, like, yeah, they made it right. But Nike. So now I won't buy Nike for me. I won't buy it for my kids.

[Sarah Levinger]

I know this is the funny part that came out of it is like this is just a regular story of a customer who just wasn't satisfied with a brand. However, the long term effects of it is just because I know my husband, he's going to tell our kids, like, don't buy Nike, go buy New Balance. He probably won't go into the whole story unless like they ask dad, why are you so hyped on Nike? But in general you're a customer that was dissatisfied, that basically persuaded three other customers, potential customers, not to shop at this place specifically for one instance that you had, that happened to be like a negative experience. Now my question to you is, according to this study, more people are happier, right? They have a higher chance of forgiving these companies if they get an apology. So I want to know, did you get an apology from either the running store or Nike at any point?

[Nate]

I did get an apology from the running store. They were like, we're sorry that that happened. Right. Obviously, like they don't make the shoe and it was a manufacturing defect. So like I don't hold it against them.

[Sarah Levinger]

Did you, do you remember getting like an apology from Nike at all now?

[Nate]

They, they were like, I mean, you know, the chick was like, sorry, I'm not going to do anything for you. But there was no, like, I'm sorry.

[Sarah Levinger]

Yeah, I find this really interesting. Just because Nike is the bigger brand. Runners Roost is a local like running brick and mortar company that just sells shoes from all these other brands. Nike had like a pretty decent, like level of customer service entities in place that they could have very easily just replaced the shoe. That's where like What I understand, it's.

[Nate]

Like, yeah, it's got to cost them $15 to replace the shoe.

[Sarah Levinger]

And this was what, like a decade ago? Like, it wasn't more than that. Yeah, it wasn't recent.

[Nate]

Probably 12, 13 years ago.

[Sarah Levinger]

We've gone so long without buying Nike products. Like, it's been a long time and we probably never will again. So, like, key takeaway, I think here, which is pretty important for everybody. Apologize. Like, just apologize. It doesn't really cost you anything as a brand to just say, like, I'm so sorry you're experiencing that. Like, that is strange. It's something that shouldn't be happening to you. Like, you. You really shouldn't be experiencing this. The other thing is, even if you can't find a defect in your product, one customer has the ability to affect more customers within your ecosystem. So, again, you were able to influence three people, but it's very possible that you told other people, like, your bros or whoever.

[Nate]

I've told anybody who will listen, like, anybody I know.

[Sarah Levinger]

Yeah, you've told everybody. Like, don't buy from Nike. Which, again, this is one customer anecdotal side story. But there are millions of cases that exist. Like, millions of consumer cases that exist in your ecosystem who are all having, like, odd experiences with your product in ways that we just can't predict. However, each and every one of them want at least something from the brand that's going to help them recognize that the brand actually cares. The interesting part that I find is you went up. You went far up into the system and as far as I could.

[Nate]

Yeah.

[Sarah Levinger]

Okay, so how many people do you think you talk to?

[Nate]

I talked to three levels of escalation. Like, I talked to the first person who I talked to, then I talked to one more, and then I talked to that person's manager, and she was like, this is the highest you can go.

[Sarah Levinger]

That's crazy. And they also writing a letter.

[Nate]

And I was like, I'm not going to write a letter.

[Sarah Levinger]

That's too much.

[Nate]

They all said the same. Well, I mean, they essentially all said the same thing. Yeah, we don't find a defect with the product, and so we're not going to give. And like, here's the crazy thing. It's not like I was asking for a refund. I wasn't asking for a different shoe. Like, I literally wanted those shoes. I was like, send me another pair of these shoes without this one crazy defect in it. And I don't know, what do you. What do you talk about all the time? It's like lifetime ltv. Yeah. Lifetime value. Like.

[Sarah Levinger]

Yep.

[Nate]

Over a pair of shoes that probably cost them 30 bucks. They're going to lose a pair of shoes a year for.

[Sarah Levinger]

Yes.

[Nate]

60 years.

[Sarah Levinger]

At least one pair of shoes, possibly more. Because you were wearing normal, everyday sneaker shoes, just like, walking around shoes. And you were buying running shoes as well. And running shoes you got to replace pretty often. And I would say the walking shoes you replaced every two years. So, yeah, that's a lot of shoes that they are.

[Nate]

And, like, I won't buy. I won't buy their clothing. I won't buy their backpacks. None of that. Like, Sorry.

[Sarah Levinger]

Okay. Which, like, I find that really interesting that you won't even buy anything that they make, not just their shoes.

[Nate]

No, because I don't.

[Sarah Levinger]

I don't.

[Nate]

Because here's why. Because I have completely lost confidence that if there is something wrong with a product that I buy from them, that they're going to make it. Right.

[Sarah Levinger]

They're going to make.

[Nate]

Has nothing to do with their products. Honestly, their products are really good.

[Sarah Levinger]

Dang.

[Nate]

Like, they're running shirts, they're running shoes. Except for the pair that I got their pants. Like, all of that stuff is really good. And it's a. It's a pain because I want to buy it because they are a good athletic brand, but I have zero confidence that they're going to fix something if I, as an athlete, tell them there's something wrong with their product.

[Sarah Levinger]

Yeah. Okay. So. Ooh. Now I have a question. What would you rather them have, like, done or said to make this right? Obviously, like, you wanted a shoe. We understand that, but is there anything outside of that done or said in particular that would have made it better for you?

[Nate]

No.

[Sarah Levinger]

Like, nothing at all?

[Nate]

No. I mean, it's $150 pair of shoes.

[Sarah Levinger]

Yeah.

[Nate]

And they're saying, hey, you've run in these for, like, it's $150 pair of shoes. And I ran in them for maybe 30 miles, which, like, if you don't know anything about running, a pair of running shoes should last you between three and 500 miles.

[Sarah Levinger]

Yeah.

[Nate]

And they're. They were like, yeah, you can't. We can't do anything. Like, I want. I want the value of those $150 shoes. And, like, I don't need the money back. I need a pair of running shoes.

[Sarah Levinger]

Yeah. Yeah. So just got his point. I love that Scotty brought this up, because this is what I was going to go into. The psychology behind this is really interesting. So for A brand. We get obviously a lot of, like, negative feedback from customers just throughout the year, just depending on how people use it, if they're using it incorrectly or if they are using it correctly and something about their feet just doesn't feel right. With something in the shoe that we can't do anything about. Like, that's just their experience. But psychologically, it's really interesting because we're basically fighting two psychological problems here. The first one is coming from the brand are like, just biases as humans are coming into play. This customer is coming on customer support, meaning he's coming in for a negative thing. Customer support is interesting because if you've never been a customer support before, I used to work in hotels, so I know how this works. If you ever see anybody come up and, like, ask you, I need to talk to a supervisor, your bias switch over to, like, I'm not going to be nice to this person because I know for a fact they're just going to, like, complain the entire time. So poor customer service individuals are biased towards being a little defensive on purpose because their entire job is to deal with negative customers. Then you also have a customer coming in who is. Has high expectation and wants something in particular and needs to have their problem solved. But the toughest part is, like, you guys were fighting two different, like, conversations you had running them for 30 miles. That's a decent amount of miles on a piece of, like, equipment, shoes. Before somebody, like, was able to say, well, I don't like, should we take these back? You've already put a lot of miles into them, so we can't do anything with these shoes. We can't resell them or anything. However, I mean, I kind of side. We could see what Casey here, like, it doesn't matter how many miles you put on it, the shoes, the cost to replace that shoe is little to none. So just replace it and get him, like, a positive experience. Fascinating stuff, though. You're fighting two different, like, psychology, bias, whatever. So interesting stuff. Okay, so this is gonna be a shorter episode mostly because, again, I just wanted to come online and talk about your. Your Nike bias, which I just think is funny. But in general, for takeaways, I think it's important that brands understand. In Casey's experience, there's a couple different key things that I want to point out. He actually had a couple triggering events. He had been a Nike person for a very long time, since his teens. His triggering event was he started running and running competitively because you were going into, like, triathlons and stuff. So you bought these. These shoes. And it's not like this is the first time you had ever bought a running shoe. You had bought a few running shoes before that. And you were. Your triggering event after that was the fact that you tried to go to the place that you purchased the shoe, didn't get the actual, like, fix that you wanted, so then tried to take it somewhere else. And you were the type of customer that took it up several levels, trying to get your problem solved when all you really wanted was just to say, I'm really sorry that's happening. And for someone to fix it that I. Yeah, now I feel bad for your.

[Nate]

Which, to be fair, they can still fix it. If. If Nike wants to reach out to me.

[Sarah Levinger]

Whoa, really?

[Nate]

Brand new pair of shoes and say they're sorry, I will continue buying their product.

[Sarah Levinger]

Oh, my God. So petty, though. Don't you think that's like, kind of petty being like. No, you're sorry. Really.

[Nate]

The problem is still not fixed. The problem, to me is still not fixed.

[Sarah Levinger]

Okay, so Nike, if you're listening to this, Casey just wants a pair of shoes, apparently shoes that don't poke his feet when he runs. Which, agreed, like, that's. That's a good solution to this problem. Okay. Where could people find you if they want to follow you? Consumer Casey and all the consumer things.

[Nate]

You do at Consumer Casey on Instagram.

[Sarah Levinger]

Yes. Okay. Consumer Casey.

[Nate]

That's all I've got.

[Sarah Levinger]

He has one post. Go, go look at the one post that he has, which is amazing post. Follow me at Sarah Lovinger. Everywhere you consume content and then go. If you want to watch this episode on YouTube. If you are currently a podcaster YouTube podcast, you can also watch us on YouTube as you bike and vice versa. You're currently on YouTube. You can also listen to this on your way to work or wherever you go on podcast. Check out tetherinsights IO if you guys would like more information on how to actually use psychology to apply to situations just like this. Over at Tether Insights, we are studying consumers, all of their behaviors, their emotional and psychographic needs, so that you can apply it to your brand and cut cost, boost sales, captivate the masses. That's my stick. That's my spiel. I do that spiel every time. Go to tetherinsights IO. Thanks for coming. It was so nice to see you.

[Nate]

Yeah, of course. Brain Driven Brands is part of the Learn and Laugh series on the Quickfire podcast network and is presented by Tether Insights. For more information, go to tetherinsights IO.

[Sarah Levinger]

It's looking great.

[Nate]

Is it?

[Sarah Levinger]

We're doing really well. I'm fine.

[Nate]

What's wrong with you?

[Sarah Levinger]

I don't know. Okay? Like, all of a sudden, right before I got on this episode, it just, like, exploded. And now I'm dying from the black lung.

[Nate]

We gotta go because I have to actually leave at 11:30.

[Sarah Levinger]

All right. Okay. Okay. Here we go. Here we go.