These days, brands are looking for loyalty wherever they can find it. With consumers increasingly careful about discretionary spending, brands need to hold onto as many customers as possible. However, our recent work in tech and health care suggests that renewals may lull brands into a false sense of customer loyalty.
 
Think about it. Uninstalling software is a hassle. A program has to be truly disruptive or counterproductive to motivate users to go to the trouble. That’s why so many software companies spend big bucks to come pre-installed. Subscription renewals might be interpreted as a sign of renewed customer commitment. On closer inspection, however, the conclusion doesn’t hold up.

In conversations with consumers last month, we heard an earful about the trials and tribulations of various “infrastructure” software packages – think anti-virus, internet security, etc. It seems only a few people actually like the package they’re running, but most are willing to put up with bothersome features. These users seem content to simply wait until they buy a new computer, and see what price point-feature-brand options are available at that point in time.

The incumbent software providers have a vested interest in lulling users into inaction. However, upstarts have a real opportunity here to shake things up, rousing users from their inertia by offering drop-dead simple product installations that automatically uninstall old programs.

Health insurance is another category where renewals have historically been more a habit than an active choice. Every year, employees face Open Enrollment – the one time they can change plans or providers, if their employers offer options. If a new PC purchase is the main trigger for thinking about antivirus software, changing jobs is what leads people to consider new insurance providers and plans. Back in the day when people rarely changed jobs, they also rarely changed insurance providers. In fact, we spoke with consumers recently who have had the same insurance coverage for decades. However, job longevity is quickly becoming a thing of the past.

When it comes to health insurance providers, there are big obstacles to overcome. Consumers are skeptical of the motives of most players in the category (insurance companies, drug companies, employers), find it difficult to understand the total costs of treatment under different plans, and prefer anonymity for fear of repercussions on-the-job at renewal time.

By identifying triggers that are truly motivating – like getting married or starting a family or by providing or publicizing coverage options consumers really do care about (e.g., wellness and preventative care) — shrewd marketers will have an opportunity to take share in the health insurance category.

Software and health care are not generally known for brand innovation, and customer inertia may have been taken for granted, historically. That could change if competitors capitalize on new triggers to enable consumers to easily act on their dissatisfaction with incumbents.

Have questions or comments? Let me hear it!