Customer Neglect

I can understand, or at least tolerate, that businesses are complacent about churn when it comes to new customers they're notoriously fickle: : a person who purchases a given brand could well be seeking a substitute because they are unable to purchase their regular brand "this time" and are not likely to become regular, loyal customers. However, when long-term customers churn out, it requires greater consideration.

A long-term customer tends to be less demanding and more forgiving. So long as the product, the cost, and the buy/service processes are consistent with their previous experience, they tend to be satisfied enough to repurchase, even if there are occasional or minor shortcomings. And even if there's a "major" problem, they generally will be forgiving if their supplier makes amends.

In order to lose a long-term customer, you have to have done something very wrong - or have at least done a lot of things poorly over a long period of time - such that the customer is shaken from their complacency enough to seek out a different provider (or to be susceptible to the overtures of a competitor).

The problem is not that this is a false perception, but that it is a valid one: vendors have the impression that existing customers can be taken for granted precisely because the customers will continue to give them their business, even when problems arise, and even when quality of service declines.

Said another way, the business is complacent because its customers are complacent. There isn't any need to work very hard to keep a customer, and doing "more" for the customer doesn't contribute a dime to profitability - from a cost-benefit perspective, it's wasted expense. And I don't have the sense that it can be argued otherwise, based on short-term financial results.

But over the long term, customer neglect leads to customer attrition - and attrition of the worst kind: the loss of long-term customers who are more profitable and more critical to the long-term success of a firm than the fickle "new" customers.

Research done in this area, whether surveys of new customers or lost customers, has been frustratingly inconclusive. Most defectors express that they were satisfied with their "old" provider and cite no specific reason for leaving. This would seem to reinforce the perception that customers are "just fickle" - which, in turn, reinforces the perception that there is nothing a company can do to prevent customers from defecting - so why bother?

However, I'd submit that this, itself, is the problem: companies are indifferent to their existing customers, take their business for granted, and do nothing to maintain their loyalty. And this is what makes it so easy for competitors to lure them away.

The example that comes to mind is the "low introductory rate" offered by credit card companies. It's a fairly common anecdote that the offer is sent to an existing customer, who calls the company to ask if the discounted rate can be applied to their existing balance - only to be told that the special rate is for "new customers only." Can there be any more blatant way of declaring that the existing customer is being taken for granted?

But of course, this would constitute one of the rare occurrences when the customer would leave their existing provider for a different one, and would be able to cite a very specific reason for having left. And it would also contribute to another common misperception: that customers are not loyal, but only care about price.

My sense is that most companies are savvy enough to avoid acts of such spectacular stupidity as to blatantly declare their indifference to loyal customers, right to the customer's face - but over the long run, neglecting the customer in lesser ways, on a more regular basis, can be just as damaging to customer loyalty.

As a result, the reasons for customer attrition are harder to identify. A customer can't cite a reason for being dissatisfied, but has a more deep-rooted sense of dissatisfaction that is more difficult to identify, assign, or quantify. It's more of a slow leak than an instantaneous blowout.

The quality of service customers receive from their existing provider isn't something that springs to mind when asked why they made a change - in fact, it was a "typical" level of service that they became accustomed to accepting. There's no specific reason they can give for being unimpressed, and they don't even feel it's fair to say that the service was unsatisfactory.

As such, it's more difficult for researchers to identify, and far more difficult for companies to address, than the few, obvious instances in which customers could cite a specific reason for leaving. So in the end, a company that seeks to retain customers for the long term will need to pay a bit more attention to the 70% to 90% of defecting customers who express no dissatisfaction with their service, and look a bit harder for a satisfactory answer to the problem of customer neglect.