Article

Identify and Eliminate Customer Complacency That Costs You Profitabale Growth

I have always found that the world pretty neatly divides itself into those who understand and act on optimizing performance of almost everything they come into contact with . . . and those who ignore optimization. Maintaining automobile and motorcycle tire pressures is a good example. Keep your tires at the right pressure and you gain advantages: The ride is smoother; your brakes work better; you are less likely to have a blowout; fuel economy is better; and the tires last longer. Many filling stations offer free air to inflate your tires. Invest about a dollar into an air pressure gauge, and you have everything you need to benefit. It will help, though, if you remember that air pressure varies with altitude and temperature. You will need to deflate tires when you suddenly encounter hot days in the mountains and inflate tires when you experience cold days at sea level. How much time will it take? You will probably spend less than 15 minutes a year unless you have a leaky tire. Yet most people can be observed to be driving around with tires that are over- or underinflated. Why? The sources of this harmful complacency are many. Some older drivers grew up during a time when almost every filling station would check and automatically adjust tire pressure. Having enjoyed that benefit, these drivers unconsciously rely on automobile service people to do the same today. Some places where you have your oil changed will do this automatically . . . and some will not. Such drivers are assuming that all such service organizations do. Wrong! Other drivers grew up in families where one person in the family took care of all mechanical aspects of cars, trucks, and motorcycles. Then these drivers married spouses who had the same history. Neither spouse takes care of mechanical issues until the vehicle literally won't move. Some drivers feel so rich that they would rather wear out tires than take care of them. It's psychologically easier for these people to think about buying new tires than tire care. Interestingly, the time it takes to pick out and purchase tires and retorque the lug nuts on a new set of tires is usually longer than just keeping the proper pressure. But if you purchase or lease a new car every year, it's not a problem. The depreciation cost of such rapid trade-ins often amounts to over a third of an average person's annual income. If the main reason you change cars is to avoid vehicle maintenance, that's an expensive way to save time. You could save enough money to enjoy the equivalent of paying yourself several thousand dollars an hour to provide or buy the services you need. Some drivers avoid checking tire pressure because they are fastidious about their clothing and cleanliness. Unless you keep some hand cleanser in your car and are careful when you kneel to check the tires, you can definitely pick up a little grime. As a result, many people check and inflate tires when they have on their old clothes while doing errands. But those who are concerned about their appearance at all times will just avoid the whole thing. Some drivers are just unaware. What tires? "My tires work just fine," replies the oblivious driver when asked about tire pressure on her virtually flat tires. The basic problem in each case is that the person doesn't know or care enough about the potential benefits of proper tire pressure to do something about it. One of the major limitations of the human brain is that it has a hard time accurately imagining anything that hasn't been experienced yet. If you have ever had a tire blowout at high speed, you definitely will go to some effort to avoid another one. But if you haven't had such a blowout, you assume that it won't happen and that it won't be that bad if it does. If you do have a blowout due to improper inflation, you will probably assume that your tire vendor sold you a bad tire and start thinking about contacting a lawyer. It will probably never occur to you that your failure to maintain the proper tire pressure was the primary cause of the blowout. What's missing? In each case, those who are knowledgeable and can easily provide the needed service should educate and encourage drivers to take care of tire pressure. Oil-change providers are the obvious place for this educating to occur . . . assuming that you are dealing with drivers who change their oil. Some people ignore even that necessity. But the places that tout such oil change services often charge 50 to 75 percent more than places that don't mention that they check and adjust tire pressure. The inexpensive providers could probably eliminate the expensive competitors with a prominently advertised maintenance-checking program that adds little extra cost. Here are questions designed to help you identify the major sources of customer complacency about your organization and its offerings: -In what costly or harmful ways do beneficiaries and customers misuse your offerings? -What bad assumptions are customers and beneficiaries making about your offerings? -What valuable attributes of your offerings are beneficiaries and customers ignoring? -Why are customers and beneficiaries ignoring those valuable attributes? -What are inexpensive ways to educate and encourage beneficiaries and customers to overcome these sources of complacency?

About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage.

Source: http://www.articleswire.com/

Companies Target

So what do the companies actually target?

And what do the companies actually do target?

The 2 questions that need to be answered as I come to the end of the blog-a-thon on this topic. So considering the existing scenario, all companies do talk about increasing retention. This can be done in 2 ways.

One is the positive way which is by making consumers stick to your product/service by making it best in terms of quality, cost, ease of use, etc. Basically a consumer should get the best value for money from the product/service. This will lead to satisfaction. And this past experience will induce repeat purchase and in turn customer retention. They may also spread goodwill by word-of-mouth publicity and actually help increase the customer base.

The other way is by preventing customers from switching to a product/service (brand) offered by an existing or upcoming competitor. This is basically the same process but deals with positioning the product/service offered as best available in the market. The customer is left is no other option but to stick to that brand. Also, it is targeted to make customer complacent and hence increase retention.

So company can adapt either of the 2 ways – make customers happy & aware or make customers complacent.

Demographics v/s Complacency

Demography is the statistical study of all populations. It can be a very general science that can be applied to any kind of dynamic population, that is, one that changes over time or space. It encompasses the study of the size, structure and distribution of populations, and spatial and/or temporal changes in them. Demographics or demographic data refers to selected population characteristics as used in government, marketing or opinion research, or the demographic profiles used in such research. Commonly-used demographics include race, age, income, disabilities, mobility (in terms of travel time to work or number of vehicles available), educational attainment, home ownership, employment status, and even location. The term demographics as a noun is often used erroneously in place of demography, the study of human population, its structure and change. Although there is no absolute delineation, demography focuses on population structure, processes and dynamics, whereas demographics is most often used in the fields of media studies, advertising, marketing, and polling.

I have tried to analyze the complacency scale for most of the demographics. [Please note that these are conclusions and inferences from personal experiences and secondary data available on the internet in form of articles and blogs.]

· Age: The complacency scale if plotted against age will take the form of an “Inverted U-Shape”. As a child and when a person becomes old, due to risk aversion qualities, the complacency will be high. When a person is young, he doesn’t mind taking risk and tries to experiment with new products. Also by then he has gained some knowledge and is more likely to make wise, rational decisions

· Income: With a higher income, a person is more likely to experiment with new products and switch between brands as he can always revert back considering money isn’t the factor. But a person with low income might not be willing to experiment and instead will tend to stick to the same brand of product/service

· Education: Education and complacency are inversely related. Once a person is educated about sex, health, finance, management, etc he is more likely to take calculated risk and not be complacent

· Location: The people in WEST or rather from developed countries and above poverty line are more likely to experiment considering the range of products & services available to them. Where as a person from developing nation might not have many options and hence would stick to the available brand

Reasons/Factors for Complacency

Complacency does not relate only to blindness concerning the future. It can also indicate a smug satisfaction with the current status quo, and a resistance to creative techniques such as lateral thinking. This complacency can cut off paths of development and growth even when are no threats in the future.

There are many reasons why complacency occurs.

· Some people have an aversion to taking risks
They tend to stick to the current situation or carry on the currently followed processes out of fear of loosing and taking risk. This is generally evident amongst senior executives who are just elected. What counts for them is continuity and survival and hence it results in complacency. There might be a new/better product in the market which isn’t used that could have otherwise helped in increasing the operational efficiency/profits for the organization.

· Others are frightened of creativity and new ideas because they are unsure of how to deal with them
There are many people who don’t know how to handle creative stuff. For example an innovative product introduced in the marker, will not be bought by all people even on knowing its characteristics and advantages over existing products. The people who do try are called innovators and they become opinion makers whom the others – followers follow.

· Past Experience
The past experience a person had might keep him away from trying new things. This would in turn result into complacency. “Once bitten, twice shy” is an apt phrase for the same. For example, there might be a person who bought a newly introduced product and because it was detected with defects later wouldn’t want to try out new things in future. He would instead stick to products/services he uses or switch only after severe persuasion and after providing testimonials.

· Arrogance also plays a part in complacency
Then there are people who tend to stick to the products/services they buy or have already bought. This is because it would hurt their ego in letting it go. For example there might be a person who wanted to be an innovator/opinion maker and bought a new gizmo first up from the market. And because he has spent so much money, he would stick to it even though there is a better cheaper product available.

Article - Results of Consumer Complacency

UK Market Ripe For Fraud: Unisys Research Reveals Consumer Complacency and Poor Security Education Breed Ideal Conditions for Identity Theft and Fraud

Business Wire – August 3, 2005 LONDON -- Unisys Corporation (NYSE:UIS):

Unisys UK Consumer awareness survey into identify theft reveals:
· 11% of UK consumers have been the victims of identity theft and fraud
· 58% have no desire to be educated about fraud
· 61% have no concerns about the safety of bank or building society accounts (only 9% worry a lot compared to almost twice that for U.S. consumers)
· 73% of consumers have never been contacted by their banks to discuss potential fraud
· 50% would not switch banks or building societies if offered better security protection

Survey results Unisys Corporation (NYSE:UIS) launched today reveal that UK consumers' apathetic attitude to fraud could be helping to perpetuate the rapidly growing identity theft industry, which is now estimated to be costing UK businesses GBP 1.3 billion per year.

The independent study, commissioned by Unisys, surveyed 1,000 UK households to investigate the incidence of and attitudes towards financial fraud. The findings revealed that more than one in 10 UK consumers (11 percent) have now been the victims of fraud.

Despite these statistics, 61 percent of respondents stated that they have no concerns about the safety of their money kept in their bank or building society. The survey followed a similar study Unisys conducted of U.S. consumers in August 2004, which found that only 49 percent of U.S. respondents were not worried about their money.

Of those U.K. households surveyed, the research revealed that significant proportions are now banking online, with up to 30 percent of consumers using the Internet to check their balances or conduct routine transactions. Overall, men are more likely to bank online than women (34 percent vs. 26 percent), and the 25-34 age group is the most likely to bank online.

The research reveals that despite the high incidence of identity theft, most consumers are not interested in proactively helping to manage the risk of fraud. Fifty-eight percent of respondents surveyed admitted that they had no desire to be educated about banking security or fraud protection. Fifty percent of consumers would not switch their bank or building society to obtain better security or protection.

Consumers also showed low levels of interest for additional security services. Sixty-six percent of respondents declined when asked if they would pay for better fraud protection. When asked what they personally can do to help protect their identity and prevent card fraud, the most frequent response was to destroy personal information, such as bank statements, more carefully (80 percent). Interestingly, responses did not vary significantly by age or gender, except for those over 65, where 22 percent indicated that they believed there was nothing they could do.

The banks and building societies appear to be doing little to overcome consumer apathy, with three out of four consumers (73 percent) claiming that they had never received personal contact to discuss potential fraud alerts or to verify transactions. When asked if they were aware of the security phenomenon "phishing," only 9 percent of consumers had heard about "phishing" from their bank or building society.

Commenting on the findings, Nigel Moden, Retail Banking Partner at Unisys, explains, "UK consumers appear to be happy to continue banking blindly, regardless of the threat of identity theft. This laissez-faire attitude not only encourages increasingly audacious and industrial-scale fraud but also translates into millions of pounds being stolen each year from customers in the UK. At the moment, consumer self interest and the interest of the banks is not aligned, as the financial risk largely rests with the financial institutions. The real challenge and opportunity is for the banks to better combat fraud before it happens through improved fraud detection technology. At the same time, there needs to be a renewed commitment to effective consumer security education, with the financial institutions potentially incentivising consumers to join the fight against fraud."

Moden concludes, "At the moment, many financial institutions' fraud systems are unprepared to address sophisticated forms of identity theft. What started out decades ago as leading technology at banks is now a convoluted patchwork of systems. Banks and any company that collects data need to get much better at integrating knowledge and information across all channels - branch, online, telephone, etc. - to create a fraud monitoring 'ecosystem' that holistically addresses the problem. Only with stronger, more coordinated systems can banks continue to safeguard the trust customers put in their brand."

http://findarticles.com/p/articles/mi_m0EIN/is_2005_August_3/ai_n14843828

Example-5: Education

After social causes and socialization, let us look at an example all of us might have gone through. Education was one field where complacency was prominent and evident and we being literates, thought was a good example to quote.

So firstly talking about the school level. We might have seen complacency of parents not wanting to change schools of their children. This is in spite on reported reviews by the child about the school not being good. May be parents don’t want to get involved into the hassles of admission procedures at other schools. Also they would have to develop relationship with teachers and think it would be tough for the child to adjust in a new environment. In this case, quality of education gained by children is affected by complacency of parents. May be, after certain age, even a child’s complacency might lead to a compromise.

Board exams are very significant for all students. Once a student passes them and gets into a decent college he gets complacent. Feels college is for fun and he has done his part by making it through. Same think might be visible amongst students here at IIMK. Its only about getting into an esteemed institution for some. This complacency exhibited by students may adversely affect the quality of students that pass out of the institution. Also the quality of work will suffer at the organization they work in.

And leave only students, their complacency can affect many more batches to come in an organization. The laid-back attitude and complacency leads to them not giving proper feedback about the teachings of professors. This might affect the quality of education imparted to future batches. [The professors can be viewed as products and institution as the company offering the product. Students are the customers. If customers don’t give proper feedback about the product, the company will never know what changes to make in the product.]

Example-4: Miscellaneous

On giving a further thought to the prevalence of complacency amongst people, I realized that it wasn’t entirely true to blame only the house wives. We, youngsters belonging to the Gen-X also show complacency in many aspects.

Am not saying that it is true for everyone in this generation. In fact, I think the entire population is divided. There are a few who have accepted defeat and lost all hope. They feel that India has a lot of negatives like illiteracy, corruption, red-tapism, poverty, etc and the future is only dark. There is nothing much the country can do with people not willing to change. They feel that its almost impossible to change the mindset of so many people and make them work in sync to make India reach greater heights. Then there are some who actually feel that there can be a bright future for India but are complacent enough to let the politicians bring about the change.

Not only regarding the future of the country, but many in our generation dont even care to bother & voice their concern about a sub-standard product or service they received. This is mainly to avoid the long procedures in the existing bureaucracy and the feeling of complacency that nothing would change even if they did complain. This complacency leads to the company maintaining the same quality and customer receiving the same.

Also when you are throwing a party, to reduce the risk you tend to go to a well known, previously tried out restaurant/café/disc. Also, once there, you would avoid complaining about the sub-standard quality of food or service as its you own party and you would want the thing to go as smoothly as possible.

I haven’t mentioned the examples of television serials, cigarettes or such other things because they are more of addictions than normal things.

Example-3: Day-to-day life

Hello Readers,

Had mentioned in the previous post about the next post but couldn’t post it earlier as was stuck with academic work. I apologize for the delay and hope the quality of this post would be good enough to compensate for the wait. So without adding to any further verbosity, will get on to the topic as promised.

So talking about recent times, people might feel that complacency was a thing of past and it no more exists. There are a few incidents like rebellious movies, changing governments, filing of petitions, issues raised in public, etc. which are used to support these claims. But what they fail to look at and understand are the very normal, day-to-day activities that we do and our behavior towards products and services offered.

A typical case study would revolve around a middle aged house wife who does most of the shopping herself. She is a frequent buyer of domestic/FMCG and other perishable products. They tend to exhibit the maximum loyalty and an upcoming company/brand is always concerned about breaking this loyalty and attracting these customers to their product/service offering. It is indeed tough to make them switch brands.

I was thinking about brand of soap at our place and its been Lux for many years now. Don’t know why we haven’t shifted to other brand even though there are many more options available now compared to what were available earlier. In fact there might be many brands which would be providing a better value for money. Same goes with many other products like tea, oil, shampoo, etc. Then I realized that the only reason for retention was complacency. The house-wives being complacent didn’t switch to other and may be better brands. There seemed to be a strong relationship built up between the customer and the brand.

Example-2: Politics

From a firm, we then discussed about a much bigger scenario. We discussed about the nation overall and the people who run it – the politicians.

Earlier there weren’t many political parties and there wasn’t any need for coalition. That was because people who were aspiring politicians were complacent and didn’t care about setting their own identity. Instead what they tried was to match their own characteristics with the political party they wished to join. This led to very few parties across the nation and strong prevalence of a single brand name across the country. The contestants who got elected were also happy with the workings of the party they joined and didn’t propose much change. They being in a position of power could do a greater good but they neglected that too and stuck to the political party’s ideologies. Due to lack of options, they also stuck to the same party. This also led to retention of members by political parties. In this case, the political party is the organization which offers its product – membership to its customers – aspiring politicians.

Then there is a common man’s perspective. As a citizen of the country and analyzing our political history, it amazes me to see that a single political party (without coalition) was in power for so many consecutive years even when the economy of the country was in a bad state. When I ask the people from that generation as to what may be the reason, the first answer I get is “complacency”. People didn’t want to vote in the first place as they were complacent about the current state of the country and the way things were going. Then amongst the people who voted so as to at least indicate what they felt, didn’t want to risk getting another political party into power due to lack of past record and trust. This again led to them voting for the same party and them winning.

Thus we can see that even the complacency related to the Indian Economy, Political Scenario, etc led to retention of power by the same political party.

Considering the alternate terms of 2 major coalition (political) parties in the country, one might feel that complacency doesn’t exist anymore. But the next post will change this perception too.

Example-1: Job as a product

The first example that was discussed has been explained in details below. The example was considered to be most relevant and accepted by both. It also had an influence of a post (Job as a product) by fellow batch mate on his blog.

Let us consider the jobs offered by a company as the range of products they offer. A group of companies offering similar jobs/roles would be the competitors. The employees would be their consumers who choose a particular job from the various options available. Now, a customer would select a product based on its characteristics and value offered by the company. Similarly the selection of a job by a customer might be based on salary offered, working location, job profile, growth in the company, brand name, etc. These criteria and their weights depend on the individual customer, in this case an employee.

What happens is that once recruited, the customer checks the value an employee adds to the organization. If its considerable enough, the organization treats him/her well and makes sure to retain them. Once an image is built and impression created, the organization doesn’t easily get rid of such employees. This was very prevalent earlier in family run businesses and when global competition wasn’t very intense. The companies got complacent with the human resources they had. Also downsizing had a great negative effect on the firm. So the company retained even the non-contributing employees who weren’t adding any value to the organization but instead were liabilities for the firm.

Then there is the customer’s (employee) perspective. How do they get used to a product (job) and in turn grow complacent. An employee might get complacent due to one or many of the product characteristics. These may be the work he is doing or the perks offered. He tends to accept the current job as his fate and continues to work for the same organization rather than looking for growth opportunities and switching companies. There might be other factors too like work location, brand image of the company, family pressure, etc. But from personal experience and what I interacted with people, complacency sets into the minds of people which makes them stick to the same company. Thus complacency is a major factor contributing to employee retention in companies.

The Conversation

There were a lot of questions raised after the last post. Though none of them appear in the comments section here, people had pinged me on gtalk and mailed me about the same. Also when I had a talk with a Marketing/Branding Manager from CEAT (the place where I did my summer internship), he gave me a completely opposite or rather a very different perspective.

So the funda is fine that “Complacency” and “Retention” are related. But what kind of relationship is it…? Is complacency or retention just a consequence or an (un)intended side-effect of the other…?

For me, it is a cause and effect relationship where “complacency” is the cause which leads to the effect – “retention”. But then not many were ready to believe it. Many raised oppositions and amongst them, one of the most interesting and comprehensive talk is mentioned below. Its basically a summary of the discussion we had.

So I told Nitin about my interest of writing a paper on whether Complacency could be a root cause of retention. He immediately asked me about the subjects I had in this term as he knew that there would be something related to consumer psychology or behavior that made me think in this direction. But he also did remember that I had a marketing project (during summers) to understand the brand switch and brand retention drivers of high end truck tyre customers. So thought it might be a good option to carry forward the work already done. He was actually happy on knowing my intentions to write a paper but didn’t completely agree with the topic, the terms and the proposed relationship between the 2 terms. He didn’t think “complacency” was the right word. Also, he said these 2 don’t have a cause-and-effect relationship. Companies look for ways to make customers complacent. The target is to provide up-to-the mark product/service and make the customer stick to their brand. I did agree to some point that they want the customer to be satisfied. But then again the definition of complacency says that the customer is satisfied with himself/herself rather than with the product/service. I told him that a company targets customer service and it was because of their lack of enthusiasm to experiment, that they stick to the same brand. A few examples that we discussed will be mentioned in following posts to –

1. Inform the readers in detail about the discussions so that they can take an informed decision &

2. Justify my viewpoint and support the theme with examples.

The Relation

So, after describing the concept of “customer retention” and its growing importance in today’s times, its time to explain complacency and how exactly am I planning to relate the two.

As mentioned in the first post, complacency, as defined by Wikipedia, means “The feeling you have when you are satisfied with yourself “. Had written a post earlier about complacency on ‘blogspot’ and thought would be good to post it here. This, with examples, will help in explaining my understanding of complacency.

“And its HOPE, that keeps me going on... and its HOPE, that makes me carry on…” that’s what a song by Shaggy said. I think that’s the case with most of us and am sure most of us would be able to relate to it. After all, the entire world runs on HOPE.

So this India Poised campaign has reinstalled the Hope in the Indians and especially in the youth who wanna make a +ve change. But then, my mind can’t stop wondering as to why suddenly the youth seems to be having stimulated brain cells with an urge to fight for the right. Why suddenly 2007 be the Year of India. What didn’t happen in past 60 years of independence suddenly seems to be happening and that too at a fast pace.

Till now there existed people with extreme beliefs. One who thought that our country – India was doomed and heading downwards. It couldn’t ever emerge from the deep pit of corruption, illiteracy, poverty and over population. Instead it could only sink further in. The others were the rigid ones who believed that India was the best planet on planet Earth because of our culture and traditions which dated way back.

What seems to be the change is the emergence of people with belief other than these two and more and more such people are coming forth. They are the optimistic ones who accept India with all its negatives but look forward to eradicating them. Shah Rukh Khan in the film Swades very nicely said, “Main nahi manta Bharat duniya ka sabse mahan desh hai, par ha, hum mein mahan banne ki shamta zarur hai”. There are problems which can’t be ignored or rather shouldn’t be ignored. But again, u just can’t sit at a tea-stall and crib about the status-quo. What the film Yuva taught us was that you need to make a change yourselves. “Everybody says (Indian) politics is a gutter but no one wants to go down and clean it” said Anil Kapoor in the film Nayak.

Complacency which was wide spread amongst people seems to be evaporating quickly and more people in their youth are working to make the country better. This can be elaborated by comparing our mindsets now and then. Earlier we used to be happy enough by comparing ourselves by comparing ourselves with our so called enemies Pakistan and other neighboring countries. But now we compare India with USA, the most powerful nation in the world. We aim high; we want to be at the top. With a growth rate of over 8% and with IT, Telecom, Service Sector booming, there is only one way India is going… UP.

The most important thing for a country to prosper is that every citizen should be proud of the country themselves. National Anthem, National Flag and even our PM and President should be respected. People should be patriotic and that doesn’t mean singing the National Anthem or getting into the army to fight at the border. Spreading education, planting trees, preventing people from littering, reducing land, air, water pollution, shutting down automobile engines when not in use and saving resources, etc are all patriotic atcs. So as the campaign says, “ITS TIME TO FLY”, so see you up there.

Quotes on Complacency

"These are days when no one should rely unduly on his competence. Strength lies in improvisation. All the decisive blows are struck left-handed."
Benjamin, Walter

"Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth."
Chapman, John Jay

"In all life one should comfort the afflicted, but verily, also, one should afflict the comfortable, and especially when they are comfortably, contentedly, even happily wrong."
Galbraith, John Kenneth

"They believe that nothing will happen because they have closed their doors."
Maeterlinck, Maurice

"America is a hurricane, and the only people who do not hear the sound are those fortunate if incredibly stupid and smug White Protestants who live in the center, in the serene eye of the big wind."
Mailer, Norman

"They act as if they supposed that to be very sanguine about the general improvement of mankind is a virtue that relieves them from taking trouble about any improvement in particular."
Morley, John

"I cannot help fearing that men may reach a point where they look on every new theory as a danger, every innovation as a toilsome trouble, every social advance as a first step toward revolution, and that they may absolutely refuse to move at all for fear of being carried off their feet. The prospect really does frighten me that they may finally become so engrossed in a cowardly love of immediate pleasures that their interest in their own future and in that of their descendants may vanish, and that they will prefer tamely to follow the course of their destiny rather than make a sudden energetic effort necessary to set things right."
Tocqueville, Alexis De

"A Frenchman is self-assured because he regards himself personally both in mind and body as irresistibly attractive to men and women. An Englishman is self-assured as being a citizen of the best-organized state in the world and therefore, as an Englishman, always knows what he should do and knows that all he does as an Englishman is undoubtedly correct. An Italian is self-assured because he is excitable and easily forgets himself and other people. A Russian is self-assured just because he knows nothing and does not want to know anything, since he does not believe that anything can be known. The German's self-assurance is worst of all, stronger and more repulsive than any other, because he imagines that he knows the truth -- science -- which he himself has invented but which is for him the absolute truth."
Tolstoy, Count Leo

The Vision

4Ps (7Ps in Services Marketing), STP, BCG Matrix, Product Mix, Length, Width and similar stuff are fundas of past. So needed to come up with something which is considered important right now and link it with something in psychology. And Customer Retention Marketing is a tactically-driven approach based on customer behavior.

So what exactly do I mean by “RETENTION” in the topic of my discussion/research.

We did not get to hear about terms like ‘Brand Switch’ & ‘Customer Retention’ earlier in monopoly markets. But with increasing competition, a customer now has many options of products/services to choose from to satisfy his/her needs. The companies now realize that if a customer switches from their brand to some other competitor’s brand, it becomes very difficult to bring them back as damage once done is tough to repair. The switch drivers, even if analyzed, are difficult to address and win customer confidence again.

Other than this there are reasons why Customer Retention is more important to a business than ever before one of them being that it costs much lesser to retain an existing customer than to acquire a new one. The logic is that because a customer is aware about the company, the brand, the product/service offering, etc, they are more likely to buy again from the same company.

Why It Works?

Customer retention programs are the most cost-effective form of marketing. Customers already know the brand, and the company, in turn, knows something about their needs and buying history from information gleaned from sales transactions, warranty registrations, service calls, and satisfaction surveys. With this data, the company can make informed estimates about their future readiness to purchase the same product again as well as forecast the potential to cross-sell or up-sell them additional products and services. If managed effectively, existing customers will find it increasingly convenient to buy the same brand.

A personalized customer retention program may be ongoing like a newsletter or pegged to an event like a special offer or after-purchase follow-ups. The most important element is planning-one wants to achieve the best match up of business offerings and customer needs. Results get even better when a campaign uses both sender and recipient personalization, optimizing the advantage of your existing relationship.

So the basic theme is “Speak to your customers personally, and they are more likely to listen. If they listen, they are more likely to buy from you.”

Various factors to be considered when measuring customer retention are time between purchase, average transaction value, customer lifetime value, frequency of purchase, and transaction recency. Each of these metrics will tell different things about company’s relationship with a customer and its ability to retain them.

Some Programs that might work for an organization are Brag Letters (Company brags about recent accomplishments), Newsletters (Perceived as benefit provided for free by the sender), Greeting Cards, Post Purchase – Thank you Card, After Sales Questionnaire, Call Centre, etc.

The Need

Hello Readers,

Was going through my blogs and realized the last time I posted something other than my business idea was last year in December of 2007. This was surely against my reputation of spammer on IP in college and slogger-blogger on o3.indiatimes.com. So here is the news – I AM BACK!!!

Now don’t know whether this news is good or bad for you but I do hope to keep up the frequency of the posts. But wait, what should be the topic of the blog…? I, being a marketing enthusiast, had to justify the majors I had opted for – Marketing & Strategy. And what better to mix a bit of psychology into marketing. Looking the world from buyer’s and seller’s perspective would be fun and make things interesting. Am hoping to discover a lot of things/fundas while thinking about and eventually writing posts on this blog. But in this quest, hope I don’t bore you and loose my readers (the so called fan-following).

So without playing any more games let me tell you more about the topic of the blog. It is “Complacency – The root cause of retention in India???” There is a subject called CONSUMER BEHAVIOR in marketing in 2nd year curriculum that I have opted for in the 4th term. It is taught by a very knowledgeable professor who makes every class interesting. Thought it is a good time to write a blog as can get inputs from Him.

Had to select India as a country because of the nationalist I am and also the ease of getting data. Retention is something I worked on during the 2 month tenure in the marketing department of Ceat Ltd. Complacency is defined as “The feeling you have when you are satisfied with yourself” and it being related to psychology, thought would do some research if these can be related.

Hope I am able to do justice to the topic, the subject, the professor and most importantly to you – the readers.