Why Customers Aren’t Loyal and What to Do About It

Why Customers Aren’t Loyal and What to Do About It

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Selina Marshall
March 10, 2020

From the day the first Millennial got a job, companies have lamented the downfall of customer loyalty. Thanks to unlimited access to information and alternative providers, today’s consumers have grown up in a world where they do not see brand loyalty the same way their parents and grandparents did. Companies that attempt to change that dynamic only meet with heartache as yesterday’s tactics fail to resonate with modern audiences.

Millennials are old news now, thanks to the rise of Gen Z, but younger people feel even less motivated to keep their business in one place. To stay in business and earn the respect of repeat buyers, companies today must not only rethink their views on customer loyalty but on the qualities that make businesses deserving of respect.

New Research on Customer Cancellations

We recently released a new report, The State of Customer Cancellations 2020, to shed light on issues of cancellation and retention. The study provided fascinating insights into why customers leave their current providers, which industries suffer the most from disloyalty, and how companies are working to right the ship.

According to our research, consumers make changes to or cancel services from cell phone providers, gyms, and cable providers more than any others, with internet and cable/internet combo packages not far behind. Customer frustrations about recurring bills should surprise no one. We also found that price (59.8%) matters substantially more than satisfaction with the product or service (21.8%), the second-most cited reason for cancellation.

While bad experiences don’t make up a large component of cancellations overall, they still play a major role. Of those surveyed, 43.4% had left a company over a single bad experience. Bad moments make up a small percentage of the total, but nearly half of customers appear willing to drop a company for a single mistake.

Disloyalty doesn’t just make customers leave, though — it also means they often return. Nearly 60% of those surveyed had returned to a brand they had left in the past, while just over a third claimed they planned to stay separated. Customers who returned usually cited a compelling offer from the business as their reason for rekindling the relationship.

Inspire Loyalty in a Disloyal World

 You cannot turn back the hands of time, but you can help your business stand out in the eyes of consumers who have grown to view most businesses as indistinguishable from one another. By differentiating your brand and investing in your customers, you can overcome the struggles of loyalty and set up your company for a long-term relationship with an adoring audience.

If you struggle to maintain customer loyalty, follow these tips to get started:

Stand for something more than money.

Young people love companies that give back. Whether financially, through partnerships, or directly as part of your company’s mission, make a point to contribute to your community and to causes that matter to your audience.

Don’t pick just any cause, though. Think about the issues close to your industry or your company. Do you have a personal story to tell? Can you engage your audience members and inspire them to join your crusade? When customers see you as more than a provider of products and services, they become more likely to prefer you over other brands.

Master the art of the win-back.

 Rethink the way you offboard customers to lower cancellations and retain more accounts. If you hold people hostage or surrender, replace those tactics with alternatives as soon as possible.

In hostage-holding, companies make it as difficult as possible to cancel, hoping customers will give up. This may limit cancellations in the short term, but when customers finally break free, they will never come back after the horrific experience. Surrender, on the other hand, allows customers to sever ties completely with the press of a button. Find a middle ground and offer incentives instead (special pricing, access to extra services, or the option to pause instead of cancel).

 Make your best customers your loudest voices.

 User-generated content is one of the most effective marketing tactics because people trust other people — even people they’ve never met — more than they trust brands. Social media makes it easy for users to see and share content created by other people, so leverage your social media position to the benefit of your fans. Make people feel like part of a community, and they’ll never want to leave.

If you haven’t done user-generated content campaigns before, try hosting a contest and ask users to submit pictures with a campaign-specific hashtag. Reach out directly to your best customers, find out why they love you, and tell their stories to show others what makes your company better than the rest.

The problem with disloyal customers isn’t their attitude. People will still follow their favorite companies when those companies give them a good reason. In the age of social media and the internet, though, businesses cannot take the lazy approach to customer retention.

Want to read the full report? Download The State of Customer Cancellations 2020