Avoiding the Tipping Point

Everybody has a tipping point. That moment where an equilibrium is broken and the trend is reversed. Look at any election. What will cause a voter to “switch” from one particular choice to another? That ’cause’ is the tipping point.It is when the reasons to change become stronger than the reason to stay. The weight has shifted on the scales. The tipping point is reached and the scales sway in the other direction. It is the final nail in the coffin. The last straw. The moment of realisation.
With Customer Loyalty, the same is often true. Customers will follow a particular buying pattern or behaviour until they reach a tipping point. If loyalty to the brand or product is low, it does not take much. Buying fuel is, to me, a commodity. Out of habit, I tend to buy petrol at my cheapest local petrol station. However, if I’m running late, I may choose to go somewhere even closer but slightly more expensive. It’s not a big deal. I have no particular loyalty to a particular brand or petrol station. Being a bit cost conscious, I fill up habitually at the station offering the cheapest fuel around but the price differential is not that great. Therefore if I am time poor, I may shop closer to home and pay just a bit extra. Low tipping point. Low loyalty.
However, most Marketeers will tell you that creating a brand is everything. The brand has an intrinsic value that causes customers to perceive it differently and value it more. Brands attract loyalty, but that loyalty also has a tipping point at which that loyalty will be tested once too often or too far and the customer will subsequently defect to another product.
So the goal of most organisations dealing with customer loyalty is to do two things. Firstly, create brand loyalty. Secondly, ensure the tipping point is never reached. The Customer Experience has a major impact on both of these factors and partially explains why there is an increased focus on it. The latter is equally hard to do yet, in my opinion, gets less organisational attention.
Ironically, organisations cannot always wholly control the tipping point. Virgin Blue, the Australian airline, has a pretty good reputation for creating customer loyalty. Partly through its Velocity Frequent Flyer Programme but also by differentiating on attempting to improve all stages of the customer experience. Just over a week ago, Virgin Blue’s ticketing system crashed causing the cancellation of the majority of flights and leaving passengers stranded. It took several days to rectify and had a major negative impact on the brand from a reputational point of view. Ironically, the Virgin system at fault is not their own: It is (apparently) an outsourced solution. Not that this is any comfort to the thousands of irate passengers last week. My point, however, is that Virgin could not wholly control this “tipping point” although they could mitigate the risk. The dilemma facing Virgin Blue now is the longer term impact on its loyal customers. How many of them may regard the problems of last week as their personal tipping point? It will be a real test for the strength of the brand.
Organisations must always be on the look out for these tipping points. Years ago, people joined a bank and tended to stay with that bank for life. Nowadays, banks have made it easy and enticing to switch and, with customer expectations increasing over time, the tipping point is more easily reached than in yesteryear.
The same is true of many services, yet the tipping points are not always studied. How many organisations conduct ‘exit’ interviews on defecting customers? How many organisations attempt to identify weaknesses in their service offerings to proactively remove potential tipping points?
Consumer choice and awareness creates the potential for churn. Yet, often people buy for emotional reasons, whether it is habitual, a remembered good experience, what your parents did or even a familiar ‘name’ heard through mass media. With such a fragile recipe for loyalty, is it any wonder organisations should spend as much time protecting the brand from churn as they do in building the brand in the first place?

Advertisements

Author: Nick Davey

Evangelist, Strategist, Leader, Implementor, Author, Speaker and all round nice guy, Nick has built his entire career on improving the management of customers both from a customers perspective "looking in" and from within an organisation "looking out". You might call it CRM. Customer Relationship Management or, as Nick often says, Constantly Realigning Misconceptions. Nick reiterates that his comments are his own personal comments and do not necessarily reflect the opinions, strategy or views of any previous employer or customer.. He is delighted to be impartial and able to share ideas with open minded and collaborative professionals around the world. Outside of his passion for CRM, Nick pursues other less demanding passions such as Scuba Diving, Native Wildlife (e.g Wallaby) Rescue and Rehabilitation, Amateur Flying and watching as much Sport as his long suffering wife will permit.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s