Customers Bail When Transactions Fail

Just as the Internet reached its one-billionth user last year, recent consumer research indicates that online transaction failures can have a huge detrimental effect on businesses.The vast majority of consumers (89%) say they experience problems when conducting online transactions, and 41% of all online shoppers say they'll turn to a competitor, either online (27%) or offline (14%), when that happens.

This information comes from a Harris Interactive survey commissioned by TeaLeaf Technology, a San Francisco-based provider of online customer experience management software.

"Companies don't realize how transaction failures affect their brand," says Geoff Galat, vice president of marketing and product strategy at TeaLeaf. "They say, 'It's the Web, so people understand there can be technical problems.'" But not according to this survey. "Consumers expect the Web to work," he says.

In fact, 83% of consumers surveyed say they are unwilling to accept a lower level of customer service when comparing online and offline transactions, while a whopping 94% of insurance shoppers say they had experienced problems when conducting an online transaction on an insurance-related Web site.

"I wasn't completely surprised by the pervasiveness of the problems people are having with online transactions," says Galat. "But I was surprised at consumers' willingness to switch away to another company when they have a problem. I thought there was more 'stickiness.'"

The rate of switching was higher among online banking and insurance consumers than it was for online retail shopping, he adds, and transaction failures are not less prevalent for large companies versus smaller ones.

Harris Interactive fielded the online survey in October, among a nationwide sample of 1,859 online U.S. adults, who have conducted an online transaction in the past year.

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