Thursday, November 17, 2005

Unto Death Do Us Part

In this article, Computing Business columnist Bryan Glick got it wrong. Unfortunately, he's not alone.

Here's the traditional view of loyalty creation: Find out what the customers expect and give it to them. Sounds simple. But, let me paint two pictures. First, this assumes the expectations are economically possible to exceed. Second, that exceed those expectations will result in sustained loyalty.

The problem is neither of these assumptions are necessarily true. For example, cell phone performance is up 174 times over the last 20 years, yet customer loyalty is extremely low. Walker Information did a study recently that found 31% of wireless buyers are at risk of switching. Obviously, something is amiss. The problem is customers expect land-line performance from their cell phones - which is economically and politically (cell towers, etc) challenging to deliver. That is why the INDUSTRY, not just one company is facing the problem.

The second assumption is exceeding expectations will result in sustained loyalty. The problem with this idea is it presumes customer expectations are static. They aren't. In the study we just completed, we found that improvements in performance don’t always lead to loyalty and retention. We learned that half of those people who expect to switch IT outsourcing brands in the next three years currently believe their service is staying the same or getting better. Moreover, we found that 13% of those customers who expect they will switch vendors if performance stays the same over the next two years are from customers who are satisfied with their vendor’s current performance.

Forcing people onto what we call The New Feature Treadmill (to be discussed at a later date), will only lead to fatigue and frustration. Sound like how you feel? Well, now you know why.


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