There are primarily two drivers of customer loyalty. One, an organization’s ability to create value with it’s products and services. The other — loyalty by default. The unwillingness of a customer to switch between brands, or service providers, because the psychological costs are not worth the trouble.
Case in point, I am not particularly fond of Verizon, but the time involved in shifting contracts and carriers is not worth my effort. As a ‘lazy’ customer, my patronage is not based on loyalty in the conventional sense. I will switch at some point – as soon as the switching costs are manageable.
Where do companies fail? The want to reduce price as a default tactic. Instead they should focus on reducing access costs and giving customers a reason to stay — not reasons not to leave. In the second scenario, once they do leave, they never come back…..
About Hemant Rustogi