If business leaders thinks that the global crisis is over and that the future financial performance should be okay, a word of caution is that all businesses are suffering from a more serious and enduring problem that has hidden beneath the recent turbulence.
Is traditional customer loyalty a thing of the past?
The high degree of customer loyalty which was normal in the “good old days” is now just a pleasant memory of times gone by. Now customer loyalty is disappearing in a hurry.
Throughout the history of buying and selling, purchase has been a challenging experience for both buyers and sellers because purchase is a lengthy progression with three phases:
Buyers have always been in control of their consideration phase and sellers have always been in control of negotiation and transaction because they “owned” every bit of valuable information relevant to the purchase.
Do customers no longer care who they buy from
Over the past several years, selling and marketing has been changing rapidly because the buyers are changing. No longer is the salesperson needed to educate the prospect and marketing is having an increasingly difficult time breaking through the noise to capture the prospect’s attention.
With the immense amount of information every prospect has at their fingertips, many times the prospect knows far more about their issues and potential solutions than the salesperson they’re dealing with. This has led to a profound shift in the buyer – seller equation.
Digitization makes everything transparent
The world is becoming more and more digital. The fast adoption of smartphones and tablets has further enhanced transparency. Today, more than half of the consumers use their mobile devices to compare prices while shopping. If a company or brand doesn’t provide a clear added value then consumers will shop for price. The online world has made price transparency very accessible, a trend that spells danger for any company out there.
Technology has empowered buyers and “ultimately their loyalty died” because of the immense number of choices they now have along with an enormous amount of detailed comparison information, along with the ability to purchase anytime, day or night, and from a growing number of vendors, all vying for their business.
Everything becomes a commodity
Digitization has created a rift between the consumer’s expectations on the one hand and what the average company is offering on the other hand.
The ever-increasing transparency is turning nearly every industry into a commodity industry at a record pace. The problem with a commodity industry is its high focus on price. Some sectors even find themselves competing against a free alternative. For instance, free online content is becoming the bane of the printing industry.
Rising consumer expectations
In recent years, declining customer loyalty has been an issue for most companies in spite of heavy investments in service improvement. This is because the consumers’ pattern of expectation is evolving even faster. Consumers don’t compare a company to where they were a year ago; rather, they compare companies to the “best-in-class”.
The best examples create expectations across all sectors. Companies with a certain history and an older infrastructure have trouble coping with today’s rate of change.
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