Why do customers defect?
The reality is that many businesses lose a significant number of customers of their
customer base every single year and either don’t know who these customers are, why they are leaving or spending less.
Why are customers lost?
Price – while it may be important in attracting new customers it would seem that it is a minor issue in developing loyalty and retaining customers. Most of the research on price puts it as only relatively important as it accounts for only about 15% of the reason why customers switch.
Physical factors – Such physical factors as a more convenient location are also ranked quite low, as are competitor action and invention. Marketing and competitor activity and relationship with a competitor are a bout 15%. The competitor products advantages account for further 10% to 15%
The most important and common reasons for customer switching is the indifference and inattention of the business and from the customers point of view the lack of any real reason to stay.
Customer sophistication – customers not only expect and demand more they are also more articulate in saying so. Twenty years of dramatic social change have changed the way most of us select the businesses we use.
Complexity – buying the most simplest product or service can, if the customer wishes be a very complex decision making process. The blurring of differences between brands, products and companies.
Competition – in almost every market in every developed country of the work, competition has increased dramatically in the last ten years. Globalization and advance manufacturing technology have resulted in businesses becoming faster and improving product quality.
Costs – costs play a significant role in understanding the economic trends and changes in recent years. The economic downturn of the early nineties gave birth to the business customer and the personal consumer which showed that markets can go down as well as up. Therefore it is very important to ensure that we get more value for money in purchasing and choosing suppliers.
Here are some of the key reasons why customers switch:
· Too little contact
· Too little individual attention
· Poor quality attention – especially when problems are