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 "Our Take"
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"Our Take"
"Our Take" is a collection of daily
vignettes covering a wide range of CRM topics. It's an attempt to add our own spin to the world of CRM. We will use the column to share our perspectives, opinions,
epiphanies, web nuggets, or quite frankly anything that moves us. Get ready to expect the unexpected. And, don't be shy about sharing your thoughts.
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6/7/06 - Do "Switching Costs" Count as Good Retention Strategy?
This week we have been exploring the idea of appropriating corporate budgets between investments to acquire customers versus investments to retain customers. One retention strategy that many companies employ involves the creation of switching costs.
Switching costs are those hurdles placed in front of customers to make it more difficult to switch. A few examples include electronic bill pay from the banks, annual contracts from the cell phone companies, award programs, etc. But do these clever programs belong in the retention category?
To tell the difference, you have to make a value judgment. Here's the distinction I make: If the program adds value to your products/services without "handcuffs," it is a retention program. If it makes it more frustrating for a customer to leave a vendor, it is not a retention program but merely a ploy to keep lazy customers unwilling to invest in swapping vendors.
Gary Lemke, Publisher
(Share your thoughts)
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