Why do you need to identify your hostage customers?
Hostage customers provide the most valuable insights if you can identify them.
Caught between the devil and the deep blue sea, is how I describe the situation of hostage customers. They could be hostages to your locational advantage—compelled to buy from the only nearby source for certain products and services. Call them convenience hostages.
Or, they may have signed up for a certain measure of goods or services, may be even entered into a contract for delivery or paid an advance. Such customers are hostages to pre-negotiation.
Or, they may simply not see a ‘better’ competitor worth the effort of shifting provider. Label them category hostages.
Essentially, hostage customers face very high barriers to leave the business.
But make no mistake, there is no love lost between hostage customers and their provider. If they had a choice, hostage customers would walk out the door before the business can say ‘Stay’.
So, why am I talking about hostage customers?
Several reasons, actually.
Companies see customers—hostage and otherwise—for the economic value they bring with no perspective on the reasons for their loyalty.
When hostage customers eventually leave the fold, and they are always looking for escape routes, they could take along some neutral customers—because they love to share their newfound freedom of choice and revenge has been uppermost on their mind.
On the bright side, dissatisfied hostage customers are a source of great learning.
In well-populated markets for products and services, studying competitors’ business models can show up the gaps in one’s own offering. Businesses that operate as monopolies have no such yardstick to compare themselves against.
When contractual relationships lock customers into buying, complacency can set in. Then, hostage customers can pin-point where the business has room for improvement. They can even yield new business ideas to gain a stronger foothold in the market.
Dissatisfied customers can pin-point product shortcomings, and tell why it doesn’t match customers’ needs to a tee. What product extensions would enhance the value proposition of the business?
They can identify service gaps such as the lack of choice in payment channels, poor access to customer care agents, delivery drawbacks, etc. Customers might want a drop box facility or voice contact to resolve complaints.
Think of hostage customers as being ahead of the curve. Their insights come from their being well travelled or exposed to what’s on offer in different cities or countries. Or, they could be the demanding type—hard to please customers usually have plenty of ideas! Or, they could be the innovative type, people who want same category products or services but with a twist—edgier designs, personalised service, and so on.
Marrying three sets of data can help identify hostage customers. Overlay customer purchase frequency/value data with customer satisfaction data as represented by their customer satisfaction score. On the resulting matrix, hostage customers will show up as those with high purchase frequency/value and low customer satisfaction scores. Add on negative sentiment analyses expressed on social media to gain a whole new perspective.
Taking action to correct issues niggling hostage customers can convert the hostage-like hold on them to a healthier hold based on positive experiences. Rewarding their patience and loyalty can help hostage customers open up to a long-term relationship with the business—first for themselves and then for others. This in turn helps increase the company’s customer satisfaction scores.
Addressing matters of concern to hostage customers makes businesses more competitive and better prepared for when the market opens up, as invariably happens sooner or later.
Investing in releasing hostage customers from bondage is always a good idea and a best practice to boot.