Why do customers stop doing business with a firm / company?

Often the business owners / managers feel that the customer’s primary criteria to stop buying a product or hiring a service are its price. Again and again, the experience and research studies indicate that a customer abandons a product, service or a company not because of the price; it is because their needs are not met and also their needs are dealt with indifferently.

A decade back one McKinsey Quarterly reported the reasons industrial companies (B2B), lose their customers. According to their study the reasons customer s leave in a B2B situation are ….

Indifference to the customer’s need - 68%

Product dissatisfaction – 14%

Price – 9%

Development of new relationships elsewhere – 5%

Relocation – 3%

Death of a Key individual – 1%

In a B2C situation too this pattern seems to be followed.

Yesterday, my friend reported an experience at a factory outlet of branded shirts / men’s apparels. Many popular and premium brands of shirts and men’s apparel are available here at a discount price. A young man and women, of about same age say around 21 years, came at a time when the show roo is scheduled to be closed. As soon as they came in, one of the floor representative told them it is about to be closed and it is not possible to buy anything today. The boy said he is about to attend an interview next day and need some formals. Now the floor manager stepped in and confirmed that the shop will be closed at exactly at the scheduled time and they do not have time for searching for the product and do the billing formalities. The customer boy humbly requested again to allow them to choose an apparel. Now the shopkeepers got really irritated and waived him to go off. The boy then asked from where else he will get the apparel in the vicinity. They frowned and said bluntly they do not know.

The young pair walked out disappointed from this ornately merchandised, adequately human resources, optimally promoted shop. What is the use of investing so much and not being able to treat a prospective customer with care?

If this happened to you, will you visit such a shop again?

Mostly, this is how customers are lost.

contributed by Sasikanth Prabhu

Listening to a Professor from IIM, A

I had an invitation to attend a dinner meet with a professor from IIM, Ahmedabad, organised by CBRC (Centre For Business Research and Counseling) at Kochi on 26th January 2010. He has about 25 years of experience in management education, but looks younger in spirit and in body. One of the dinner participant mentioned an observation that rarely the Professor's elder family members have grey hair.

It has been a great experience listening to the unfiltered and authentic dialog with the Professor. We the small gathering from CBRC were immersed in the discourse by the Prof. for almost two hours.

The Professor highlighted the themes of value creation and the importance of intellectual capital in a B School. According to the Prof. every B school must differentiate itself from others through the demonstration of their unique intellectual capital. He suggested a B School must build intellectual capital by taking up sponsored research projects from governments, Industries and other funding agencies, by providing Executive / Management development programs and by doing consulting projects with the industry. A B school should be a sequel to these activities. He informed us that IIM, A was fully engaged in Executive development programs before starting the Post Graduate Program.

He said one of the key aspect of education at IIM, A is that the students are put to such experiences so as to develop independent thinking and ability to bring new perspectives to the issues under consideration. He confidently said that any student who attend the PGP at IIM, A will achieve this state by the end of first year.

By interacting with Professor, we were all able to experience a slice of stimulating life at IIM, A. It was a very engaging and fruitful evening. Thanks to the Professor for spending time with us.

contributed by: sasikanth prabhu