Many businesses try to attract new customers by offering them a better deal. Is this a good idea?
The strategy works on the assumption that most existing customers will not invest the time to continuously check for better deals. There is also a degree of friction in switching some products and services, this inconvenience stops people changing supplier. Finally, in some cases existing customers are bound to supply through a contract.
In the short term such strategies may work. However, in the longer term existing customers may become disgruntled and lack loyalty tot he business. Indeed, the customers attracted by such short term deals are more likely to switch at the end of the deal. Therefore, such short term strategies may backfire in the medium to longer term.
This blog was inspired by our recent response to a Quota question on the topic.
Lew
Developer of www.businessplanquickbuilder.com
