Whether you choose to implement a loyalty rewards program, offer discounts, or even set up a referral program, building loyal customers is something that comes with time and trust. As a new business, it can be tough to first establish loyal customers, but there are many inexpensive marketing strategies you can use to better reach and communicate with your customers. Businesses use this strategy to their advantage to create a competitive advantage.Īchieving loyal customers can come from a number of different reasons. The higher the switching costs, the more difficult it is for the customer to leave. These are examples that show both tangible and intangible switching costs. This is an example of high switching costs. In this case, the switching costs associated with changing grocery store is time, distance, convenience, and even gas costs. You might choose to just pay the extra price for the grocery store closest to you, if you think it is not worth it to travel the distance for slightly lower prices. In the next nearest town from you, you can find more grocery stores that are not as expensive as this one. This grocery store is considerably expensive. Imagine you live in a little town with only one grocery store close by. In this case, the switching costs are associated with the time and effort you will spend trying to learn and familiarise yourself with this new product and system. If you suddenly decide to change to a Macbook computer, you will find that it is a completely different operating system. You are familiar with the product and the operating system. Imagine you have a Windows computer, and have been using Windows for most of your time. Here are two examples that show different type of switching costs, in different settings: Risk (financially, psychologically, and socially). ![]() ![]()
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