You know that customer service- outstanding customer service- is the key to customer retention. But, you probably haven’t really considered why that’s true.
It’s because consumers are creatures of habit. That means they are lazy. Oh, wait, I should be politically correct. Consumers are subject to inertial forces. They don’t bother to seek out new vendors- and some don’t know how to do so. So, they stay with their current options.
This is why folks rarely change banks. regardless of the fact that the banks charge them for checks, hold their checks for days, cut the number of tellers, etc. Others stick with their cellular phone carriers, unless they have tons of dropped calls. Which means they can’t really make a call, so they HAVE to switch.
It’s why Geico drives us crazy with their stupid advertising- with only ONE message: 15 minutes to save you 15% or more. Because they hope if they get us to at least consider their insurance program, they know someone will recognize they can save money and will latch onto a Geico program. Another firm knows that it just takes one dissatisfying automobile experience- which helps you understand the approach that Liberty Mutual is using to sell us their car insurance.
These two competing themes exist because most of us stay with the same car insurance for a dozen years or so (Princeton Survey Research Associates International). Plus, some 25% of all drivers have been with the same company for more than 16 years.
Why do you think folks like Comcast (or their “brand” name Xfinity) work hard to maintain a monopoly in their service area? Because with their customer service (sic), you know folks would head for the hills (ok, the competition) at the drop of a hat.
Now, when were you going to be developing metrics to ensure your customer service meets your customers’ desires?
I have to admit, I’m guilty of being loyal to my car insurance company for much longer than the 25%/16 years you cite (USAA – I was thrilled when they added agricultural properties to home owners’ insurance options), but it’s not due to inertia. I would happily pay more (although found them to be less for better coverage on the home) for the customer service and immediate payment policy. The time and headaches involved in dealing with a company that’s difficult (been there too – on a $12,000 roof collapse denial – never would have happened with USAA) is so not worth it when you’re in crisis already.
I quickly switch banks who move customer service to India (one lost my mortgage) or adopt new policies that are no longer small business friendly (and a do a lot of research to find those that are). There are plenty that understand the benefit of attracting businesses when they’re small with no fees to business customers (including credit lines).
I hear you, Roy, but am not so sure one study represents the typical behavior of a business owner. In my experience, most value time and headaches saved over the low-priced provider, comfort of familiarity – or contemporary advertising hype.
Nanette Levin recently posted..Know anyone too loud to be heard?
Actually, Nanette, this was a series of studies- I only quoted the more recent one. They all show inertial response- one was about switching banks, the other car insurance, the other home insurance, another cell phone provider…
But, I’m glad you are willing to switch when the service is abysmal!