A CUSTOMER DEFECTION ANALYSIS FOR:
LIBERTY TAX SERVICE
Presented to Dr. James Walker for
February 27, 2013
TABLE OF CONTENTS
TABLE OF CONTENTS i
EXECUTIVE SUMMARY ii
Background Information 1
Literature Review 2
WORKS CITED 9
APPENDIX A 10
APPENDIX B 11
A customer defection analysis was carried out for Liberty Tax Service, referred to as Liberty Tax, to determine why customers had defected and provide recommendations on how to retain current and future customers. The ...view middle of the document...
In today’s highly competitive marketplace, being customer-focused is essential. The value of customer focus is often overlooked by top management because it is hard to quantify customer satisfaction and the lifetime value of a completely satisfied customer. A company that wants to fully satisfy its customers must have an understanding of its customers’ expectations and be aware of reasons that customers choose other companies. Liberty Tax Services is a company that wants to satisfy its customers and be successful. However, it had around 280 customers defect in the last year. Therefore, research was conducted to find out what caused customers to leave and the results were evaluated to give Liberty Tax recommendations to help it fully satisfy and retain customers in the future.
Liberty Tax Services is a nationally franchised organization that offers professional services to prepare customers’ tax information. One of its franchises was opened by Mr. Drew Kunkel on Frederick Boulevard in St. Joseph, Missouri. After a successful year of providing tax services to clients, Mr. Kunkel opened a second location on the Belt Highway in St. Joseph and a third location in the Maryville, Missouri Wal-Mart. Liberty Tax offers a variety of locations in order to satisfy more customers. The company is known to offer every client with a paid hotel vacation and has used that advantage to attract new customers. Since Mr. Kunkel’s franchise is a new service, it is important to him to understand what may be causing his customers to choose other tax service options. The best time to identify and fix problems and avoid profit loss is now. However, Liberty Tax has a disadvantage to other analyses because the company is a seasonal business. This means that customers only need the services of Liberty Tax once a year and the period of time to satisfy each customer is very short. Therefore, it’s important for Liberty Tax to understand how to fully satisfy its customers in the short time it has to serve them.
The study of customer satisfaction and retention is extremely important to determine the well-being and sustainability of any company. According to studies, it is most profitable to retain current customers. In a study conducted for Fortune magazine, it was found that a five percent increase in retention could lead to a seventy-three percent increase in profit over the customers’ lifetimes (Oliver, 2000). There are several reasons why customers may leave a company. For example, if the customers are not part of the company’s target market they cannot have their needs and wants met by the company (Jones and Sasser, 1995). Another reason customers may leave a company is from dissatisfaction. Understanding what caused customers to become dissatisfied and leave an organization can help a company correct problems and improve services to retain customers in the future.
However, customers who leave...