Why Companies Lose Customers

Watch what people do, not what they say because that reveals their true preferences.

Measuring customer loyality should folow the same axiom. Where does the customer spend his or her money, not what does he or she say on satisfaction szrveys and yet still have customers defect. That is because satisfaction measures the past, while loyality attempts to measure future.

Most customers are relucatant to give the firm the real reason why they left, so they tend to respond by saying, „ You were to expensive.“ Yet, the revealed preference shows the majority of defections occured because of service deficiencies, and the impression the company did not care about them, a sort of perceived indifference.“

The fact of the matter ist hat most defections are the result of human failings and perceptions of indifference, rather than price or technical quality. In other words, it is how people are treated – or mistreated- that determines their willingness to remain loyal. This is especially true for professional service providers, such as lawyers,doctors, accountants, architects, and so on.

This has important implications for you firm´s value proposition, pricing policies, and developing key performance indicators. For our purpose here, and as it relates to the value proposition, it should be apparent that you want to compete based on service, not price or quality, unless your strategy ist o be low- price leader ( like Wal –Mart)

Marketing Professor Thedore Levitt offered This analogy in 1983:
"The sale… merely consummates the courtship, at which point the marriage begins. How good the marriage is depends on how well the seller manages the relationship. The quality oft he marriage determines whether there will be continued or expanded busieness, or troubles and divorce. The era oft he one- night stand is gone. Marriage is both necessary and more convenient." (Hart and Bogan, 1982)

No company has a right to attract new customers if ist existing customers are not delihted with its service.

You company´s best customers are your competitors best potential customers and you should always act as if they are at risk. By providing a value proposition that differentiates you from the competition, you can begin to lock the customer in golden handcuffs- increasing their switching costs- making it difficult for any competitor to offer more value. Customers will continue to patronize those businesses that give them the reason tob e loyal and your company will get the behavior it rewards.