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This is one of those things where once you see it, you start to see it everywhere. Your internet bill creeps steadily higher once that initial yearlong promotional offer ends. The same thing happens with car insurance and cellphone plans. Your credit card interest rate is probably higher than when you opened the account, and your bank account savings rate may be lower now, too. After a few adjustments to the reimbursement rate, those airline miles don’t go as far as they used to, either.
In this day and age, it’s par for the course for things to become more expensive over time. The newbies often get better deals, and the long-term customers get screwed. Companies lean on switching costs and take advantage of limited competition to keep people on the hook, and they make a pretty penny in the process. In an era when workplace loyalty is dying, maybe consumer loyalty is on the way out, too.
From: Consumer Loyalty Is Dead: Companies Charge Longtime Customers More – Business Insider.
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When I call up Peter Fader, a marketing professor at Wharton who focuses on consumer loyalty and customer value, to talk about the loyalty penalty, he first explains that some of what I’m describing is not, in his mind, true loyalty. True loyalty is “your inclination to stay with something despite good reasons and good capabilities to switch to something else,” he says. “It’s not just the fact that you repeatedly do a thing, it’s the fact that you aren’t locked into doing it.” In other words, it’s when you can easily go grab a banana, but you’re sticking with oranges, or eating only Chiquita bananas despite a generic brand sitting right next to them. Or in a non-banana example, you know, like marriage.
What many consumers are facing is coerced loyalty — barriers that keep people from changing things up or trying out competitors.
From: Consumer Loyalty Is Dead: Companies Charge Longtime Customers More – Business Insider.
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Snippings 