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.

Thursday, April 5, 2018

It's Just Breakfast

Theories of rational decision-making often focused on a very narrow and informed decision: an individual must choose between two options and has complete information about both – hence he makes a logical decision based on the likelihood of each option to achieve a desired outcome.

In an actual purchasing situation, the customer has a very complex decision and little information.    In a typical American supermarket, there may be 100 or more different options in the breakfast cereal aisle.   The customer is not an expert in breakfast cereal, and knows only a little bit about some of the options and nothing at all about most of them.   

And while the ostensible problem the product solves is nutrition, there are many other concerns: would a young adult male consume a cereal that is primarily marketed to elderly women?  What would his friends think of him if they saw it in his cupboard?

So in the cereal-buying situation, and virtually every consumer decision, the consumer is not able to act as the perfectly rational and perfectly informed individual that are presumed by the logical decision-making process.   

This is not to say it is not possible: one can study about nutrition, learn about all 100 breakfast cereals on the market, document the decision-making process to carefully exclude any subjective or nonsensical criteria, and so on – but it is not at all reasonable to expect anyone at all to put in that level of effort.   

It’s just breakfast, after all.