Disposable Customers

I read today that it costs a cell phone company $4 to acquire a new customer and about $50 to do a support resolution with them.  (sorry, lost the link)  Which explains a lot I think about quality of service with cell phone companies.

Not debating if that is a good long term strategy or not, but in most of our businesses this is not the case.   If you want to retain your best customers (remembering to send your worst ones to your competitors) having a customer advocate is a great thing.

There are three companies I always like to do business because of this.  The first one is American Express.  No matter what, they'll investigate if you ever have a problem.   I always use them when buying over the Internet, or dealing with other large companies.

The second is Amazon.   I would rather buy through a merchant using Amazon then directly with the merchant.  Again, because I know Amazon will stick up for me.

And lastly my local branch of Chase bank (formally Bank One).  They know who I am and I always get the benefit of the doubt.

So ask yourself, would you rather be viewed by your customers as being in the company of Cingular or American Express?

Comments

[Mary Schmidt]

Bruce,

The missing calculation is X time $4 versus $50.00. The churn in the cell phone industry is incredible (I forget the exact % number, but it's way up there.) Doesn't take long to make customer retention look like the better business deal. And, then there are those silly things like loyalty and positive word-of-mouth.