I have just signed a new mobile phone contract with my existing supplier that gives me a lesser package at a higher price than I could have got from a competitor. Fact is, I accepted a plan that will cost me almost 40% more and has fewer benefits; so how did they persuade me to part with my cash and why was I happy to do so?
In simple terms the downside of moving my contract to a new supplier outweighed the benefits they were offering.
Here are some of the reasons I stayed:
- inertia (well I’m only human!): I was looking for reasons to stay with my existing supplier as I didn’t really want the hassle of changing. This meant that I was receptive when they offered me an incentive to stay. As it turned out, it didn’t even need to be a particularly great offer to retain my business
- good service: I have always had good (though not outstanding) service from my existing supplier
- value added offers: My existing supplier has sent regular offers and incentives over the years, which have continued to remind me that I am a valued customer
- brand familiarity: I don’t consider myself to be a particularly brand loyal person, but having trusted in this brand for some 10 years, I certainly feel I know what I’m getting.
In contrast, I did decide to move my broadband contract a few months ago. In this case I felt that my existing supplier offered a mediocre service at a high rate and made absolutely no effort to add value or to retain me as a customer!
While this example relates to a highly competitive market dominated by big organisations, the messages translate to small, medium and even micro businesses. Whilst I certainly wouldn’t advocate building a customer retention model based on the premise that your customers can’t really be bothered to move to a new supplier, your aim should be to ensure that they don’t want to move. If your existing clients are happy with you, you will have a fighting chance of keeping them regardless of what tactics your competitors are using to try to poach them.
Existing customers are a really valuable asset to your business so make sure you are looking after them well.