Competition has been growing among companies due to fewer competitive barriers as a result of globalization. The rising number of market players means consumers have more choices now, thus, it is even more important for companies to take care of their customers and strengthen brand loyalty. In order to ensure customers stay loyal to them, companies need to understand the factors that cause customers to switch to the competition so that they can address these particular causes. Three of the causes that lead customers to the competition are dissatisfaction, service quality, and boredom.
Dissatisfaction among customers arises when a product or service fails to meet their needs, expectations or both . Sometimes the dissatisfaction may occur not from the actual product but the overall customer experience. For example, a customer of tablet device may be dissatisfied not because the product offers significantly inferior value as compared to the competition but because the company’s customer service is extremely poor. A company can try different strategies to make sure customers are satisfied. First of all, the company needs to understand the needs, wants, and expectations of its customers. Unless the company knows what exactly its customers need or expect in a product or service, it won’t be able to design a solution that satisfies them. Similarly, the company should also keep watch on the competition in order to make sure its products or services offer better if no comparable value otherwise the customers may be lured by the competition.
Use your promo and get a custom paper on
"Customer Switching Behavior".
Customers also switch to the competition because of service quality issues. A study by RightNow Technologies and Harris Interactive found in 2008 that customers now don’t just expect good customer service but demand it and sometimes place even higher emphasis on service quality than the product quality and price factors. The study also found that 87 percent customers left a business because they received poor service and half of the customers claimed they pay for better customer service, even in a poor economy . This shows that the customers are not focused on product on service only but the overall customer experience. The companies, thus, have an opportunity to set themselves apart from the competition through superior customer service. Competition usually lowers companies’ pricing power and, thus, profit margins but superior customer service can help them improve pricing power and profit margins because most of the customers would be willing to pay higher prices for better service quality.
The third reason customers switch to the competition is boredom. The product and service experience may become less rewarding and engaging to them and as a result, they will look for new experiences and variety. Companies can take different measures to ensure customers do not get bored and stay engaged with the product and/or service. One strategy may be to provide surprises to the customers to keep them excited. Another strategy may be to keep providing them with new experiences as well as changing the product and service more frequently. This strategy is often employed by Facebook which keeps adding new features and even changing the website template from time to time.
It is more important than ever to retain customers because customers have more choices than ever. Thus, companies should research what their customers want and why they switch over to the competition. This insight will help them design products and services which are superior to the competition and will also allow them to take measures to keep customers engaged and loyal to the company.
- Fenn, Donna. Keep Your Customers Engaged, Even When They’re Out of Sight. 26 April 2010. 6 December 2013
- Kokemuller, Neil. Concept of Consumer Switching Behavior. 6 December 2013
- Sims, David. Study: 87 Percent of Customers Leave Due to Poor Service. 8 October 2008. 6 December 2013
