What Loyalty? High-End Customers are First to Flee
by Julia Hanna
HBS Working Knowledge
16 May 2011 | Research & Ideas
Companies offering top-drawer customer service might have a nasty surprise awaiting them when a new competitor comes to town. Their best customers might be the first to defect. Research by Harvard Business School’s Ryan W. Buell, Dennis Campbell, and Frances X. Frei. Key concepts include:
- Companies that offer high levels of customer service can’t expect too much loyalty if a new competitor offers even better service.
- High-end businesses must avoid complacency and continue to proactively increase relative service levels when they’re faced with even the potential threat of increased service competition.
- Even though high-end customers can be fickle, a company that sustains a superior service position in its local market can attract and retain customers who are more valuable over time.
- Firms rated lower in service quality are more or less immune from the high-end challenger.