How Behavioral Principles Affect Consumer Loyalty | Deloitte Insights - www2.deloitte.com  ## Metadata - Author: **www2.deloitte.com** - Full Title: How Behavioral Principles Affect Consumer Loyalty | Deloitte Insights - Category: #articles - Tags: #humans - URL: https://www2.deloitte.com/us/en/insights/focus/behavioral-economics/how-behavioral-principles-affect-consumer-loyalty.html ## Highlights - Know thyself: Proactively implement relationship guardrails to avoid repeating self-induced lock-in traps The best indicator of the future often comes from looking to the past. If you have had a history of staying in relationships longer than you should have, consider proactively—ideally, before a relationship commences—putting in place the following guardrails: Hesitate before acting upon referrals from friends or colleagues. Avoid entering into business relationships with friends or family. Set boundaries to prevent business relationships from evolving into personal friendships. Decline special perks, favors, or services from providers; instead, compensate providers for these additional services if they are something you truly desire. Establish explicit relationship agreements and exit clauses (for example, a “pre-nuptial” agreement or termination clause). - What got you here will not necessarily get you there: Beware of the lure of familiar, long-standing relationships Relationship length is a powerful influence on our non-exit decisions. Just because something worked for you in the past, however, doesn’t mean it is the best solution moving forward. Sadly, the tendency to stick with the status quo—a tendency that gets stronger over time—legitimizes firms’ propensity to abuse existing relationships for the sake of new prospects. Many firms commonly allocate more resources toward new prospects and pull back on the resources allocated to existing relationships. Consumers can help themselves recognize when long-standing relationships turn sour by having a heightened awareness of this business tactic - Carrots keep us in positive relationships; sticks keep us in negative relationships. While less prevalent overall as lock-in reasons, carrots represented many of the top reasons for study participants’ staying in positive relationships. As your organization allocates resources toward strategies that prevent consumers from leaving, consider the overall effect of sticks versus carrots on consumer attitude. - Those who value the consistency of existing routines may fall victim to the status quo bias. - Reciprocity theory describes situations where we feel guilty about the idea of moving on to someone else after being on the receiving end of a “favor.” - The zero-price-effect occurs when we systematically overvalue an item that is presented to us as “free.”