Thursday, June 21, 2018

Customer Loyalty or Customer Apathy?

In my research into customer loyalty, I’ve come across an interesting paradox: that customers who state that they are not loyal to a brand and even those who feel dissatisfied with its products intend to purchase the same brand the next time they have a need.    It’s not just an unusual few who respond this way: the majority of those who are dissatisfied intend to repurchase the very brand with which they are not satisfied. The percentages vary by product, but it tends to range between 65% and 85%.

In some instances, switching costs can be prohibitive.    There are financial costs, the need to learn to use a slightly different product, the effort and time of identifying a replacement, added difficulty to obtain it, and so on.    Even a less expensive brand may be more costly to use when the fully-loaded costs of acquisition and utilization are considered.

There are also the psychological costs of switching, not the least of which is the humiliation of admitting that the previous decision to purchase an existing brand was a terrible mistake.   Many people will doggedly pursue a course of action they know to be wrong, or repeat it, simply to defend their self-esteem for having made the decision to pursue it in the first place – and the magnitude of this humiliation is even greater when it is an item that is conspicuously consumed, such that others will recognize the change and take it as an admission of a poor decision.

There are also matters of prioritization: rare and lucky is the man who only has one problem to solve and everything else in his life is absolutely wonderful.   So a person may recognize the need to switch brands, and even have the desire to do so, but there are other things that are of greater priority for them – addressing their dissatisfaction with this particular purchase is not the most pressing matter they have to deal with, so they continue to accept partial success while they devote their time and resources to dealing with bigger problems.

There is also the threshold and tolerance for pain, both physical and psychological: a person may recognize something as a problem, but consider it to be a mere nuisance and not worth the time to deal with it.  Because it is not causing them enough pain, it is not worth dealing with.   As a rule, people don’t seek to fix small problems – they may complain, but unless the problem is serious, they are not motivated to invest effort to address the issue.

There is also the fear of change in general.   Even an unsatisfactory product experience is a familiar one, and there is doubt that a different product will actually yield an improvement.   What is unknown is unproven, and arouses suspicion – that it may be no better and possibly worse that the known imperfect solution.   And so, it’s more comfortable to deal with the devil you know rather than face the risk of making matters worse by changing routines.

I expect the precise reasons for “loyalty” to brands varies greatly by the product and its use – but the factors I’ve considered likely come into play to some degree for any dissatisfied customer.  But most importantly is that the statistics and these supporting reasons make it clear that loyalty cannot be taken for granted – or more precisely, apparent loyalty cannot be taken for genuine loyalty.   It may simply be apathy.

Thursday, June 14, 2018

The Pseudoscience of Irrationalism

In my studies of economics, I find myself stuck in the industrial era: the foundational works, which were generally written in the mid-nineteenth to mid-twentieth century.  I keep looking for more current information, considering the economics of the present day, and I am constantly disappointed by the quality of modern “scholarship,” which seems takes the opposite approach, giving further testament to the utter wrongness of the binary fallacy.

Specifically, there seem to be many unqualified scholars who play upon the obvious flaw of classical economics: that it is optimistic.  The classical economists took as a premise that men act intelligently at all times, with full awareness of circumstances and their own long-term self-interest in mind.    So the present-day economists switches to the opposite extreme, taking as a premise that men act unintelligently at all times, with no awareness of circumstances and no consideration of their long-term self-interest.

The problem with both schools of thought is that they suffer from binary thinking: all or nothing, always or never, black or white, with nothing in between.    The presumption is that if something is false, then its exact opposite must be true – which is childish, primitive, and utterly wrong.

Of the two camps, I still gravitate toward the classical – they are not perfectly correct, but they are mostly so.   Man is not a perfectly logical creature with flawless perception – but he is a generally logical creature with fairly accurate perception, in the modern day more so than a century ago because of the accessibility of information.  He is not a hapless fool, but can be fooled.

When an individual is seeking to pursue a personal goal, he tends to act consciously and deliberately, applying his reasoning to the best of his perception and intellect.   Very little is accomplished accidentally – though much is done imprecisely, with imperfect knowledge and imperfect reasoning.

The more challenging the circumstances, the less chance that imprecision will result in success.  If a person is to succeed in high-stakes situations, and to do so routinely, it must be by the application of his best knowledge and reasoning.   And for those who do not think for themselves, they are more likely to mindlessly emulate the success rather than the failure of others.

On a societal scale, the success or failure of a society is merely the aggregation of the success or failure of those individuals of which it is composed.   Hence a culture that fails to apply knowledge and reasoning is not sustainable, and will invariably fall to one that is superior in those regards.  But again, these are generalizations: we can recognize that imprecise or even improper action may sometimes lead to success, and the intelligent man recognizes that this is an exceptional situation whose occurrence is improbable.

And this is likely the proper reaction to the black swan: to recognize that it is an exception, an unusual occurrence that cannot be denied – its truth must be accepted.  But this does not mean that the appearance of an exception disproves a theorem, and it should certainly not serve as the foundation for a diametrically opposed school of thought, or an approach that is based on unusual circumstances.  

Such things are best relegated to the side-show: a curious novelty of no particular significance in the long run.    And this, I expect, is the fate not only of the theories, but the theorists as well.

Thursday, June 7, 2018

UI vs. UX vs. CX

At first, it may seem a good thing that user experience (UX) has become a popular trend - if done well, there is the potential to make significant improvements to a broad range of products and services that are currently rather inadequate and unsatisfying.    The problem is, it's not being done well, which not only makes things worse instead of better, but threatens to discredit the legitimate practice.

The problem that occurs when UX becomes trendy is that people who don't understand it attempt to do it, without actually learning anything about it, and the results are tragic.   This may be an individual practitioner who wishes to add a trendy new acronym to his resume without having any training or credentials, or a department manager who insists that his people can take on this task, even though they lack knowledge and credentials.

What facilitates this hubris is that UX is so poorly described - its nothing new, but an attempt to mash together two distinctly different disciplines:  user interface design (UI) and customer experience management (CX).  The first is concerned with usability (can a person use software on a computer or mobile device) and the second is concerned with usefulness (does a customer derive value from interacting with an organization).   

The relatively new field, or fad, of UX ttempts to encompass both - such that practitioners who have expertise in one area attempt to do the other.  The result is a compromise that leaves one of the two tasks sorely neglected: a person with a marketing background who knows a few tricks in Photoshop feels he can also do the design work, or a designer who can kludge together a survey feels he can do market research – so with an ample supply of narcissism and hubris, each believes he can do the others’ job as well or better than a bona fide expert.    Like stewardesses who think that their extensive flight experience makes them qualified to fly the plane.

That said, the guilt is not always with the employee, and is very often on the side of the employer.  I have been in contact with several UI practitioners who feel they are being forced into the UX space by their employers - who, without providing any instruction or resources, expect someone with an art-school degree to do marketing work ... or else.  So it's also true to say that, in their greed, firms wish to save the salary of a pilot by ordering the cabin crew into the cockpit.  

Whether they just wish to be trendy or have a desire to find a competitive advantage in saturated markets without making significant investment, they have forgotten the lessons taught by Adam Smith a few centuries ago, or Xenophon a few millennia before that, about the division and specialization of labor.   

Ironically, the lesson has only recently been remembered, or re-rembered, by IT departments, who are slowly recognizing that the generalist "unicorns" have burdened their systems with mountains of amateurish, inefficient, and poorly written code that will take many years and dollars for specialists to clean up.  So perhaps this delusion has simply migrated to the design/marketing wing, and one can expect it will drift elsewhere when that discipline finally comes to its senses.  

But while inefficient code can lurk for decades in the back-end systems, causing relatively minor problems that frustrate system users who are mostly employees, an ill-conceived experience is thrown directly into the faces of the customers - who have little tolerance for sloppy and inefficient service, and who are for most organizations the chief source of revenue.    The results of a poor UX are far more damaging, and potentially devastating to the firm.  

Thursday, May 31, 2018

Dissatisfaction and Psychological Motivation

The greatest and most certain source of customer dissatisfaction is the failure of a product to satisfy the need for which it was purchased – which in turn has many possible causes, the first of which is the misidentification or misunderstanding of need and the criteria by which the need will be fulfilled.  This occurs more often where the product is a good (which the customer lacks the skills to successfully employ, or even to select the right good) but is also quite common in services (when the customer has provided incorrect or insufficient information for the service provider to take the correct action).

The problem begins in the process of selection: the customer is unable to choose the correct product because he does not know what will solve his need – sales can be of some assistance, but because sales tends to focus on “selling” it’s rare to encounter a sales professional whose ethics can overpower his mercenary interest in talking to the customer out of buying the wrong product.   A perfect product, proficiently employed, cannot result in satisfaction if it is the wrong product in the first place.

To back it up another step, to select the right product to serve a need, one must understand the need – if the need is not understood, everything after it (the purchasing and use process) cannot succeed except by accident.

Where needs are practical, satisfaction of need is fairly straightforward because the problem can be objectively diagnosed and the results objectively assessed – the use of the product effected the exact change that was desired.  I would propose that for the great majority of products in the present day. 

But where the needs are psychological, satisfaction of need can be extremely difficult.  Who can say, with certainty, what will cause a desired change in emotional state – to make a person happy, or to mitigate their anger, even when that person is oneself?   And how can person who means to serve another know what their psychological state is and how it can be positively affected?  

It seems a trivial thing, but it likely has a very large financial impact on developed markers.  Given the evolution of customer services, we are as a culture extremely good at diagnosing and correcting functional problems – and I would posit that, with some exceptions, the “kings” have been worked out of most product experiences insofar as their ability to satisfy the customer’s functional need - they at least have the capability to solve the need if selected and employed appropriately, by objective and observable criteria.

Thus considered, it is the emotional criteria that are the most likely cause of the greater proportion of customer satisfaction in the present day.   It is not that the product does not deliver its functional purpose, but that its employment does not address the psychological need for which it was sought, not was the correct product even selected because the need was not sufficiently understood.

Thursday, May 24, 2018

Finance: The Third Level of Consequence

Where economics focuses on financial outcomes, it is functioning at the third level of consequence, ignoring two levels of consequence that precede it.  This may be the reason that the financial approach to economics finds itself so often frustrated, unable to form a reliable model or explain the phenomena that naturally occurs in the market.

The first level of consequence is corporeal: the human being is a mind that is contained with the fragile case of a body.  Therefore, the first consequences of concern at the prospect of any human action is the jeopardy it poses to the integrity of the body and mind of the actor.   Any injury or debilitation in pursuit of a specific goal is a permanent consequence, whose cost must be factored into the greater “budget” of life.  In general, we expect that we will maintain our present state – to emerge from any activity in more or less the same condition in which we entered into it.

Costs to corporeal integrity may be objectively calculated according to the projected value, accounting for the risk of damage and the value that is placed on the type of damage inflicted.   But while it is easy enough for an actuary to put a dollar value on the debilitation of another person, it is not so easy for a person to assess the value of their own debilitation – nor is accepting the actuary’s figures a sign of assent or agreement of value.  

The second level of consequence is social: the human being is a social animal, who benefits from participation in society.   There is no method to reliably quantify the degree to which we value the engagement with others nor the value that can be placed upon our identity and esteem in a social context, but they are nonetheless valued.   And just as we expect participation in an activity to have no effect on the integrity of our bodies, so do we expect participation to have no effect on our social standing.

It is likewise futile to attempt to monetize human relationships.   We may decide to engage in some activity that will harm our esteem by the same vague estimations of potential outcomes: how will our esteem and relationships suffer as a consequence of our involvement, and what is the likelihood of our involvement being observed or detected?   But what is the financial value of damaging a social connection?

It is only on the third level of consequence that we begin to consider anything that can be assessed financially.    On this level, we begin to consider the consequences an effect will have on property: whether we will gain or lose value, or the fundamental nature of property will be changed in an undertaking that decreases or augments its value to us.

Even then, assigning a monetary value to property is a highly subjective matter – even when one attempts to objectivize it, this is generally done by the market value of the property were it offered for sale.  That is to say, the value is considered to be that placed upon it by someone who does not already own it, not the value placed upon it by the owner – which is always greater.   If it were not so, we would choose to possess nothing, the money offered in exchange for it being more valuable to us than its possession – hence to possess anything at all is to value it more than its market price.

Thursday, May 17, 2018

The Meaning(lessness) of Life

A paradox to consider: we speak of time as being a precious commodity, but also as a nuisance.   We find that we have too much time on our hands, but in other instances we feel that we have too little.   Is this merely a an academic meandering, or are there practical implications to this duality in our perception of time as a commodity?

Perhaps the most undesirable time are the scraps of time that are spent waiting for something else to happen: you arrive at the doctor’s office on time for an appointment, but the doctor is running “a few minutes” late, so you are relegated to the waiting room.   Ten minutes pass, then twenty, then half an hour, then longer – and your irritation grows with each passing moment.  Most often, this delay is inconsequential – there is nothing else on your schedule and you had no better use for the time.  It’s simply the sense of being trapped for an interminable amount of time that creates irritation.

But even when the time is know, it is a nuisance.  Let’s say that you don’t arrive on time, but instead fifteen minutes early, and the appointment takes place at the proper time.   What do you do with those fifteen precious moments of your life?   Fiddle with your phone, pick up a magazine and read an article you’re not interested in, or make small-talk with your fellow temporal prisoners?   

Nothing that you do during this time is particularly meaningful or pleasant.   You usually don’t have the equipment to do something worthwhile, there isn’t time to leave and come back, there are few tasks that fifteen minutes is sufficient to complete or even make meaningful progress, and you often cannot give your full attention to something for the risk of missing your turn.

Daily life is riddled with these scraps of time – when you are ready but it is not yet time to go, when you have arrived and it is not yet time to start the activity you came for.  Our “standard” daily routine is arranged to minimize scraps of time, but any activity outside the usual is often accompanied by these “not yet” moments of waiting.   Think about a day when you must travel by airplane and check into a hotel for a meeting the next day – practically the entire day is spent waiting on something to happen.

There is also the time we spend in activities that are not meaningful in themselves, but are done in preparation for more meaningful things.   Take the travel example, the entire day is spend in activities that are not meaningful except as a means to do something else – the meeting that will happen the next day.   Or consider college education, which is four years of activity that is merely in preparation for getting a job in which you will do meaningful things.

And even on the job, are the things you do every day really that meaningful?   They are routine duties, done to earn a paycheck.   Does balancing the ledgers or counting the stock have a meaningful impact on the life of the worker?   Aside of receiving his wage, is there any motivation to do these things, or to do them well?

And even for meaningful work, is it meaningful to the worker?   Let’s say you are the doctor that others come to see, or a surgeon who daily performs life-saving procedures.   Aside of the salary you receive, is this meaningful work?   It is certainly meaningful to the patient – but is it meaningful for you?

It was not my intention here to go on a nihilistic rant, though it seems to be headed in that direction.   All of life is not meaningless, and there are in fact meaningful moments where the things that we do have an impact on our lives in some significant way.   But most of life is spent on those moments in-between – when we are waiting for something to happening, preparing to do something, or doing something that is valuable to someone other than ourselves.

None of these moments in time are meaningful, and as such most of them are entirely undesirable.  We may take some satisfaction in the good we do for others, and we may even take satisfaction in finding some way to pass the time – but the moments in life that are precious to us, those for which we seem to have not enough time, tend to be few.

As a general principle, paradoxes do not exist.   When you seem to have encountered one, you must check your premises.   And the flaw in the premise of the paradoxical value of time is that it is a commodity – that one second is the same as the next.   And in this regard, time is not a commodity: some moments matter, some don’t.  In all, I’m led to the conclusion that most simply don’t.

Thursday, May 10, 2018

The Newness of Personal Finance

In my studies of personal financial management, it has occurred to me that money and wealth are relatively new things.   Human beings have roamed the planet for about 200,000 years, developed agricultural settlements perhaps 10,000 years ago, and have only been handling money and wealth for about 100 years.

In the modern day, 92% of people (in the US, a developed economy) have checking accounts, and 76% of them hold investments (stocks, bonds, etc.) though generally only in their retirement accounts.  So money and investing seems entirely normal, but things were not always thus.

During the early twentieth century, only 8% of the (US) population lived in towns and cities. Even as late as the 1950s, 45% of the population was still rural, living in isolated agricultural communities that, in an economic sense, had not changed much since the advent of agriculture itself.

Granted, “money” has existed for longer than that but it was not part of daily existence for the vast majority of people.   Most people lived on self-sustaining estates, producing and handling the goods they consumed without engaging in trade.   Only the heads of estates and the merchant class routinely engaged in trade that would require the use of money.   

And even when money found its way into the hands of the working classes, it was seldom held for very long.   The worker’s wages were paid to landlord, grocer, clothier, and other vendors – sometimes the same day they were received, but seldom longer than a week.  Few people amassed wealth, and living hand-to-mouth was considered entirely normal.

Therefore it has only been since the 1950s that people have worked in professions in which they are paid in money, and had sufficient income to have money “left over” at the end of the monthly consumption cycle.   It was only since the 1980s, with the creation of personal retirement accounts (IRA and 401k) that most people became involved in investing, or even considered the necessity of saving money to pay for their own retirement.

So it is little wonder that people are so woefully unskilled at managing money and investments – it is something that is very new to most people, and not something that they can learn from their elders (even their grandparents lived in the hand-to-mouth age).  Given that the academic world is disdainful of financial topics and discussion money is considered a social taboo, there are few venues through which a person can learn to manage their money and investments.   

We are, for the most part, ignorant primitives doing our best to handle some new and unfamiliar technology without any instructions or guidance, and no established authorities that are willing or qualified to guide us.

Thursday, May 3, 2018

Drawing the Line

In the context of professional relationships, there are clearly defined boundaries for interaction – lines that it is socially inappropriate to cross, given the context of the relationship.   In general, these boundaries are drawn by functional necessity: if any interaction is not functionally necessary to success are the professional encounter, then it is inappropriate to the professional relationship.

This may be considered a function of economics: the time and effort that a person must spend in a professional encounter represents a cost that is laid out for whatever benefit is derived from the contact.   On the business side, we seek to minimize the amount of time employees spend serving customers in order to maximize the efficiency of the funds spent on wages.

This is also considered from the customer side as well, though the “hassle” of service is seldom monetized, people do consider the amount of time they must invest in a purchasing or service encounter.   It is not that they desire quickness, but they abhor wastefulness of their time.   

Hence it is desirable to both sides for the professional encounter to be as brief as possible.

Of course, this is a rather inhuman method of measuring the value of an interaction.  While those on the business side would be entirely satisfied by a minimal and sterile encounter between their front-line employees and the market, the “market” is composed of human beings, social creatures whose functional needs may be met by an encounter with an automaton, but whose social proclivities require something more than the bare necessities of a functional encounter.

The question is: where to draw the line?

On one extreme, an encounter with a sterile and officious service provider is unpleasant – and while such an encounter is very respectful of the customers’ time, it is an affront to their humanity.   On the other extreme, an encounter with a service provider who is overly social becomes equally loathsome – friendliness is pleasant, but if it is overdone, it can become overbearing and customers expect a certain professional distance from those who serve them.

One factor is likely the duration of the service: when making a retail purchase, it would be very awkward for the checkout clerk to engage customers in extended conversation.   But when getting a haircut, it would be equally awkward for the barber or stylist not to engage in conversation with the customer.

Another factor would be whether the service is recursive.  One generally does not expect a waiter to be overly friendly, but a customer who has lunch in the very same restaurant every workday and sees the same waiter five times a week will accept and perhaps expect a greater degree of social interaction with the service provider.

Another factor might be the nature of the product.  To provide assistance, a service provider must have a better sense of the context in which a product is used: a clerk at a grocery store might ask what meal is being prepared and how many are being served, one at a clothing store might ask about the occasion for which an outfit is being purchased, one at a hardware store might ask about the home and lifestyle of the client.   Arguably, these are functionally necessary questions for the service, but there is often a but of non-functional conversation that arises in due course.

Another factor is the level of service required or desired of the service provider.   In the previous example, a customer might welcome a higher level of service from the grocery clerk, who might presume to offer advice about the meal that the customer is preparing.   In other instances, the customer does not welcome such advice – he knows what he wants and just needs help finding an item.

Another factor is the degree to which the product relates to the esteem (social or self) of the purchaser or owner.   It can be generally observed that service at high-end stores is more “personal” than service at low-end stores.   Hence buying an expensive pair of shoes at a boutique is a far more social encounter than buying a cheap pair at a discount retailer.

At this point, I’m getting the sense I may have scratched the surface of a topic that goes much deeper than a blog post will accommodate – and likely there’s need for study in the domain of social psychology.

Thursday, April 26, 2018

Common Practices Aren’t Best Practices

It pains me, still, that imitating the competition is still rampant even in innovation efforts.   Inevitably, someone says “let’s see what other companies are doing” as a means to generate “new” ideas, generally followed by the insistence that it’s “new to us” when someone points out the obvious.  And all too often asking if any other company is already doing something similar is the first sign that an innovative idea is headed for the scrap heap without any further consideration.

The same problems arise at most firms – their attempt to distinguish themselves leads instead to the practice of imitating one another, and doing so mindlessly.   As a consequence, the common practices in any industry are seldom based on an examination of the results they achieve, but merely on their being done by others, on the assumption that they wouldn’t be doing something if it weren’t getting good results.  

Not only are the common practices adopted without question, they also tend to be practiced without question.   There is no question of their foundations, no research into their soundness, and no testing of their performance.   They are adopted without inspection and perpetuated without validation, often in spite of evidence that they are unproductive or even harmful.  This is not merely egregiously unwise, but reckless.

Compounding the problem, many firms turn to agencies and design firms, who have even less knowledge of their industry or their customer, to show them the way.   There is a great deal of bluster and precious little knowledge in these firms, yet their opinions seem to be regarded as reliable advice from reliable professionals – until the numbers come in sour, and then the firm hires a different agency to repeat the same cycle.  And given the recent shortening in executive tenure, even the decision-maker who engaged the firm is long gone by the time the damage is done.

But back on topic, the common practices of an industry may not yield good results at all, and even if they happen to be based on sound reasoning, it doesn’t mean they are practicable or applicable given the unique nature of your firm, goals, and market segment.    No-one can say for certain what will work for a given firm, and often it is not questioned whether it had positive results elsewhere.  The result seems to be the death of innovation, while under the banner of innovation we see a frenzy of imitating with reckless abandon.

Thursday, April 19, 2018

The Customer as a Brand

Consider this: every customer is his own personal brand, and his non-functional purchasing criteria (those that pertain to the social and psychological aspects of consumption) may be understood as curating activities.    That is, the customer has a brand that he wishes to uphold, or one that he wishes to modify, and selects products as a means to associate himself to brands that correlate with the desired perception of his own personal brand.

This may be more or less true of any product – where consumption is conspicuous, it is assumed that nonfunctional qualities play a more significant role because they impact social esteem.   But even products consumed in private impact self-esteem, and in this regard the latter may be more significant.

Where brands attempt to go beyond consumption and convince individuals to advocate on their behalf, the alignment of the brand to personal brand becomes even more significant.  A person will carefully consider which brands align to the desired personal brand, and will not espouse any brand that does not satisfy both social and psychological criteria.

Wrongful promotion, like any unwanted social advance, results in a negative reaction – the more aggressive the assault, the more aggressive will be the defense.    Where a brand is seen as ill-fitting, promotion can only cause it to become undesirable, even repugnant, to an individual who feels the brand does not align with his own.

There are also no universal qualities of brand.  Even those that represent youth, wealthy, sophistication, or other qualities with widespread appeal do not necessarily correspond to personal brand.  Status-seekers may wish to “pose” with a brand that represents qualities they do not possess, but most people are not so narcissistic and instead seek brands that correlate with their own true brand, or a brand that is only slightly and plausibly elevated from their present station.

And finally, it’s worth remembering that the maker does not determine the qualities of his brand – it is the perception of the brand by the market that causes it to have those qualities.   The individual who seeks to align with a brand is not seeking a relationship with the maker, but with other individuals in his society, regardless of whether they are consumers of that same brand.

The customer chooses the brand of the product, and it is that individual’s personal brand that creates the perception of the product brand among other prospects.   A product that is used by or otherwise associated with the “wrong kind” of person is the wrong brand, regardless of what the maker wishes the brand to represent.

Thursday, April 12, 2018

Everything That Has a Beginning Has an End

It’s been observed that marketers put an inordinate amount of focus on acquiring new customers and are often neglectful of providing the service necessary to retain existing ones – but there is one part of the relationship that is altogether ignored.  There is virtually nothing in the literature about bringing a customer relationship to a graceful conclusion.

It could be argued that ending customer relationships gets so little attention because it is not profitable – but the profit motive is not applied consistently, vis the lower importance given to retention than acquisition where retention is considerably more profitable.  

And to suggest that ending a relationship well is of no value is to ignore the value of word-of-mouth: ending a relationship badly leaves a very bad last impression, one which may overshadow the merits a brand earned earlier in the relationship when the individual is asked by others about his experience with a brand.   The reluctance of customers to enter into service contracts likely does not arise from previous customers’ experience in signing the contract or using the service, but from the antics of firms that do not handle the end of the relationship well.

There is also the damage done to the customer himself, as termination of service is seldom forever.   A person may become irritated with a service provider, terminate the arrangement, and switch to a different provider – but when the new provider’s service is found to be inferior, the customer may return.  The manner in which termination of service is handled may significantly impact his willingness to return.

It is more likely a matter of arrogance and denial for a brand to assume the customer will always need it and that there will never come a time that the customer can do without the product.   I ran into that attitude repeatedly in the auto insurance industry – the refusal to acknowledge that there is any situation where the customer will no longer need the product (such as old age) or would wish to do without it even temporarily (such as moving to a city with excellent public transportation) led to a complete neglect of the termination experience.

And there is likewise too much emphasis placed on customer retention – the desperate scramble to avoid losing future business from a customer who wishes to terminate.    There seems to be the belief in the existence of some magic phrase that will make a customer who no longer needs a product think that he does, nor instantly dispel the series of offenses that caused them to wish to switch to a different brand.  

Where the customer has reached the natural end of their consumption, or where the behavior of a firm has been so egregious that the customer seeks to terminate the relationship, there need to be plans to say “goodbye” gracefully – in a manner that leaves a  positive last impression that will win referrals and cause the brand to be considered should the customer need it again.