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Monday, October 17, 2011

When online connections go from lifeline to leash

An interesting story in yesterday’s New York Times explains how many customers who’d like to fire their bank end up staying… because it’s too complicated or inconvenient to switch around the various automatic payments and deposits that are a part of their account.  Click here to see the story.

Implications:   We often refer to this as a complexity cost... because burden of changing providers is greater than staying with one you’re not happy with.   But the danger of this scenario is relative, and quite subjective; at any time, the consumer (or lots of consumers) could say, “Okay, enough is enough,” and devote a Saturday to tracking down each of those online/automatic relationships, and severing the account.

If you’re the bank, how do you make people stick with you… because they want to?!  Or, if you’re a competitor, how could you make switching easier… and become the destination for unhappy customers?  (Think in terms of the “15 minutes could save you 15%” campaign from Geico, or Progressive’s “We’ll give you our price, and the rates of all our competitors.”) 

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

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