How often have we decided to dump our mobile service company for poor service, the time it takes to resolve our problems, which are almost always about billing, or because of frequent loss of connection? And what about finding that new dry cleaner for a better service? The list is endless.
They all seem to take us for granted when, on our part, we are too lazy to find a reliable new service provider, or, perhaps, as is the case with the healthcare industry, we do not have many choices.
Yet, quit we all do at some point. It is the time span that varies. And, many a time the companies do not have a clue why customers drift away.
Understanding why consumers leave or drop a service relationship is critical to managing long-term profitability for a company but customer retention models do not account for customers' future considerations.
In their article, "Dynamic Customer Relationship Management: Incorporating Future Considerations into the Service Retention Decision", Katherine N Lemon, Tiffany Barnett White and Russell Winer propose that this omission means that these models now in use are incorrect and, more importantly, the strategic marketing decisions based on them are less than optimal.
Customers are evolved planners and forecasters as well as evaluators of services, and the expectations of their behaviour are the key in the decision to keep or drop a service.
When marketers understand that consumers take future considerations into account when making decisions about the firm, that information should influence all elements of the traditional marketing mix. Firms which ignore this consideration will miss key opportunities to manage the customer relationship.
In simpler terms, the intangible service business could be measured by the firms with a simple SERVQUAL model, which makes it much more “tangible”.
The SERVQUAL model looks at five dimensions of facilities, responsiveness, empathy, reliability and assurance. The scores provide a good direction as to where the company should put its money in improving the service quality. It identifies the most important issues.
The idea is to measure customer expectations and perceptions on all the five dimensions at a regular frequency and eventually compare the same with the competition. This would provide a solid base for future customer experience management programmes.
Know what they will want
If a firm wants to retain customers, their expectations of future benefits should be a primary focus and marketing managers must consider how such expectations can be managed.
In addition to customer satisfaction, firms should measure customers' expected future benefits (such as anticipated use and expected future changes) and customers' current levels of use.
Marketing strategies for both new and existing customers should consider how each marketing-mix element, including changes in the service, marketing communications and pricing strategy, might affect customers' current use and future use expectations.
For example, will a new service attribute encourage customers to use the service more–say a free data pack by a mobile service provider? Marketing actions that either increase customer expectations of future use or increase actual use also should increase customer retention.
In addition, whether or not customers will regret the relationship in the future significantly influences the decision to keep or drop the service, which presents exciting marketing opportunities. How often have we all experienced regret of having responded to an advertisement only to find that the person answering the call didn’t have an idea about the advertisement?
Marketing managers may find it useful to integrate anticipated regret into marketing communications and other customer interactions. If they can reach the customer before they decide to keep or drop a service, the company may get a second chance to turn a dissatisfied customer into a satisfied one or retain the trust of a customer who would have quit.
Marketing strategies, especially those designed to maintain or enhance relationships with customers, should consider how other aspects of strategy (such as communications placement and content, service enhancement announcements and internet strategy) might "prime" anticipated regret.
As firms develop and manage relationships with customers, they must understand customers' past and present and learn to manage their future considerations in their strategies.