Question

Does the cable company become known for poor customer service?

Answer 1

The key to understanding how switching costs is a theory. Like it sounds, these are the cost of finding a new provider in time and money. There are some markets that really cost a lot to switch; broadband is one of them. A classic cost is to overcome a problem of compatibility. Well, for starters, the name of the existing provider is likely to appear in the personal e-mail address of the homeowner. It is also not easy to decide whether a company offers a better value with bundled products or tiered pricing.

Fear of change also comes into play, including the −rational fear that the service will be even worse for a new provider. And nobody is looking forward to the home visit for installation of new equipment, followed by the time of not understanding how to use it. What cable and internet providers have often sought is to use low promotional rates to attract a customer and then rely on the expense of changing to keep them. Then the monthly charges can be upgraded.

New channels are being added and new services are being added which may include throwing residential telephone service into a bundle, and the perceived switching costs are also increasing. Such high switching costs must make us somewhat wary of the terrible customer satisfaction ratings in the industry, explained George John, professor of marketing at the University of Minnesota's Carlson School of Management. Researchers found that if consumers feel trapped, they are more likely to be unhappy with a product, he said, even though it might not be that bad.