Astoundingly, trust of banks dropped 46 points in the U.S. and 30 points in the U.K over the past 3 years. Only one in four people in these countries feel they can trust banks to do what is right. In 2008, U.S. automobiles were the lowest ranking industry, but they have managed to bounce back with a 17 point gain. Hindsight may be a great teacher here, as we've observed self-centeredness in these industries in recent times. In the interest of maximizing short-term financial performance, these companies seem to have forgotten that relationships are a two-way street. Once trust is eroded, any amount of advertising and sweet-talking tends to have little effect. For so many reasons, it's essential to maintain high trust with your customers. (see graphics at ClearAction Blog http://clearaction.biz/blog)
If you love someone, set them free. Yet, long-term (e.g. 1-year, 2-year) agreements, exclusions, caveats, change fees, extensive fine print, extra steps (hassles), and many other penalties are the norm in several industries. These are examples of bad profits, as described by Fred Reichheld in his book The Ultimate Question: "Whenever a customer feels mis-led, mistreated, ignored, or coerced, then profits from that customer are bad. Bad profits come from unfair or misleading pricing. Bad profits arise when companies save money by delivering a lousy customer experience. Bad profits are about extracting value from customers, not creating value. When sales reps push overpriced or inappropriate products onto trusting customers, the reps are generating bad profits." The 2011 Satmetrix Net Promoter Industry Benchmarks Study reports 1 in 5 U.S. consumers say bad experiences lead them to switch brands. Bad experiences were described by 34% of consumers as interacting with a rude or disinterested employee, and by 20% as unexpected charges or fees; 20% also listed poor product or service quality as the main reason for switching brands. Specific examples are described in a 2010 study by Consumer Reports, which lists the naughty or nice policies of 20 leading consumer companies. (By the way, these concepts apply just as well in B2B, government, non-profit, etc.) Don't let your fear of a few usurping customers lead you to punish all your customers for wanting to give you their money! Re-think the customer-centricity of your sales and service policies, and all your other policies, for that matter.
As Jeanne Bliss explains in her book I Love You More Than My Dog: 5 Decisions That Drive Extreme Customer Loyalty in Good Times & Bad, "Consider the story that the collective decisions of your organization tells customers, employees, and the marketplace. What story is emerging about who you are and what you value? Are your decisions reflecting what you intended? When you make decisions that respect and honor customers you will earn their respect — eventually their love. Are your decisions compelling customers to tell others to try your products and services? Are customers telling your story?" You don't need fancy technology or campaigns to build highly profitable customer retention. You simply need to consistently provide the value that you promise.
When a company is distrusted, 57% of customers will believe negative information, and only 15% will believe positive information. In contrast, when a company is trusted, only 25% of customers will believe negative information, and 51% will believe positive information. A study by the London School of Economics examined the revenue gains by increasing positive word-of-mouth and by reducing negative word-of-mouth. They found that reducing negative buzz pays off 300% over improving positive buzz.