Harvard Business Review on Increasing Customer Loyalty

Companies and the Customers Who Hate Them

by Gail Mcgovern and Youngme Moon

ONE OF THE MOST INFLUENTIAL propositions in marketing is that customer satisfaction begets loyalty, and loyalty begets profits. Why, then, do so many companies infuriate their customers by binding them with contracts, bleeding them with fees, confounding them with fine print, and otherwise penalizing them for their business? Because, unfortunately, it pays. Companies have found that confused and ill-informed customers, who often end up making poor purchasing decisions, can be highly profitable indeed.

What follows is a cautionary tale. Some companies consciously and cynically exploit customers in this way. But in our conversations with dozens of executives in various ...