Free Critical Thinking On Why Customers Matter

The objective of this paper is to discuss the main takeaways from the topic and question on why customers matter, drawing upon the lectures presented throughout the duration of the course. The focus of the discussion would be on providing real life examples of scenarios wherein customers become any one of the four broad categories of customers that businesses keep namely: Hostages, Apostles, Defectors, and Mercenaries.
There are four broad categories of customers within the framework or context of customer loyalty and retention and they are: hostages, apostles, defectors, and mercenaries. The reason why the name of each category was chosen is pretty much self-explanatory but for clarity, it would be important to identify and characterize each. Apostles, in this case, appear to be the most ideal form of customers because they have high levels of loyalty but demand high satisfaction. Hostages can easily come in as a close second, especially for businesses that continuously aim for a high level of market share, because they are characterized by high levels of loyalty but require only low to medium levels of satisfaction. Mercenaries would be on the third place because these are the type of customers that require a high level of satisfaction but yields only low to medium levels of loyalty. The least desirable type of customer would be the defectors because they are tend to defect easier than the defectors (i.e. lower levels of loyalty) .
An example of an apostle would be customers of a car brand. A car is arguably one of the costliest expenses that an individual can make and therefore, their choices are pretty much limited to the ones that they have already tried. If, for example, the customer has been pleased with his first purchase, the chances that he would immediately become an apostle of that specific car brand would be high. This can be manifested by actions such as still choosing to buy from the same manufacturer the second or any succeeding times he or his family buys a car. Hostages are those that are in a market that is dominated by one (i.e. monopoly) or a few businesses only. A perfect example would be the telecommunications industry. Because of the sheer size of the costs involved in starting up a telecommunications company, the industry has been practically open to giant corporations who have the capacity to finance the huge demand for capital expenditure only. In the United States, examples of these companies would be AT&T and Verizon. As a result, they tend to have a higher level of controlling power than their customers because of the simple fact that they (i.e. customers) have no choice, regardless whether they are highly satisfied with the quality of the services they are receiving or not. An example of a product where typical customers tend to be mercenaries would be the computer market. Every year, a new version of a computer product (i.e. notebook or desktop computer) gets released and this presents as a window of opportunity for customers to switch product brands. Often, the decision to switch is fueled by benchmarks and other performance metrics that almost always translate to product quality. And lastly, a perfect example of a product where customers tend to be defectors would be the consumer electronics market (i.e. smartphones, feature phones) where a new and often upgraded version of the same product gets introduced in as early as a couple of months after the latest release. For mercenary customers, this presents as a window of opportunity for customers to deflect and switch to a new brand, for whatever reason that the customers may have.
Now, this all starts and ends from the main concept that Chief Executive Officers (CEOs) of businesses and corporations often raise: that it all starts with the customer , that the customer is the most important stakeholder of all because they are the ones that pay the bill and therefore the catalyst that keeps the business running . Research suggests that these executives say the same thing about their customers. However, the problem is that they often become too uninitiated in living up to the expectations that are set by their statements; that is, they do not walk the talk. Nonetheless, knowing what types of customers a business is likely to deal with should still be considered important.

References

Datta, H., Foubert, B., & Heerde, V. (2015). The Challenge of Retaining Customers Acquired with Free Trials. Journal of Marketing Research, 217-234.
Raybould, S. (2016). Service Loyalty Models. Slide Share.
Sasser Jr., E. (2002). Why Customers Matter Lecture Text. Harvard Business School, 01-10.