A frequently touted claim is that when customers have positive experiences, they tell 3 (or 4 or 5) other people, and when they have negative experiences, they tell 11 (or 13 or 16) others. Or the unhappy customer posts the experience on the Web, alerting millions. Clearly, if you're a service provider, negative customer experiences can seriously damage your reputation.

But an even bigger problem than how many people hear about a negative experience is the nature of the experience they hear. When people relate a situation that angered or displeased them, they tend to embellish. They add details. They focus on fine points. They stress certain parts of the story out of proportion to the role these parts played in the actual incident. And that makes the provider seem even worse.

And you'll never believe what happened next!

Furthermore, the amount and intensity of embellishment often grow with each retelling. During a morning break in one of my Managing Customer Expectations seminars, Julia, a project manager in the group, told another participant about an upsetting experience she'd had as a customer.

During subsequent breaks, three people ask her about the incident, and each time she described it, she incorporated some new wrinkles. Each repetition of the story became longer, more dramatic, and more negative. Each time Julia told it, she became a more aggrieved customer. Woe to the provider whose misdeeds she was describing.

Embellishment as Performance Art

But there's more. Observe carefully, and you'll see that when people describe negative experiences, they don't just embellish, they perform: They display a certain pained look on their face and a "you'll never believe this" tone of voice. And if the situation described is negative enough, listeners who relate it to their own friends and colleagues add their own embellishments and tweaks and personal touches. With word-of-mouth and word-of-Internet at work, there goes your reputation - and your business - if the story concerns your service.

Two lessons here: First, strive to create compellingly positive experiences for your customers, mindful that they'll eagerly tell others. Second, when the negative stuff happens - and it will - strive to turn it into a positive outcome for the customer. People love to relate negative experiences that have been transformed into happy endings. And when that happens, embellishment isn't a risk at all; it's a benefit and you're the beneficiary.