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.]