Search

Service and the Sunk Cost Fallacy

As consumers, we should assume that our investments will generate expected results, especially when the purchase contains high upfront costs. Yet, when we take the time to decide on one product over its alternatives, and that product fails to meet our expectations, we may reframe our perspective to try and minimize a gap between what we hoped for and what we received. When someone continues to use an underwhelming product due to time or money invested, they buy into what is known as the ‘sunk cost fallacy.’ These consumers believe it to be easier to see through the underperforming service rather than accept a loss in valuable time or money and pay the costs of implementing a better option. It is not anyone’s fault for playing into this bias, as it is a common response to loss.


However, companies often leverage this fallacy to retain their customer base while delivering an underwhelming product or service, which is why consumers must be mindful of this bias. Many big box freight brokerages provide technology solutions that involve expensive and lengthy contracted periods. These companies rely on the sunk cost fallacy to create a stagnant customer base, believing the sole intention of customer relationships is to secure them to the service itself.


These companies are not confident in the product they sell, which is why they rely on behavioural patterns, high upfront costs and flashy gimmicks to create their customer ‘loyalty.’ Freightzy, on the other hand, is confident in the service we provide. We allow the customer experience to speak for itself, which is why our transportation management system can be utilized freely by our customers. We have the confidence that our services will meet and exceed what is expected within our industry and we will not fall back on high prices to keep our customers tied to us. We understand the importance of customer relationships, attracting and retaining happy clients from the start to the end without the need to hide behind air-tight legal agreements and constricting price points. We treat customers as people, not as numbers.