Albert O. Hirschman’s Exit, Voice, and Loyalty is an excellent book. Hirschman looks at decline in organizations and how members/customers react to decline. He merges theories from two fields, economics and politics, to explain the decisions that members/customers make regarding whether to stay or go.
It has long been thought that exit is the best barometer of the quality of a product. If the quality of a given product by a particular company declines too much, customers will stop purchasing it and move on to a competitor. Seems pretty straight forward, but as Hirschman points out, it is much more complicated than that. Customers don’t act in one unified way. Some have a greater tolerance for decline in quality than others. That is often linked to their mobility in the market, the availablity of alternatives, and the cost (perceived or real) of making a change. These factors combine to present a strata of customers, unequally distributed, that will react to decline in very different ways.
Those with high mobility and low change cost will often exit to another product at the first show of quality decline, if there are available alternatives. Their exit may go unnoticed as this group of people is often small. Those with low mobility and low change cost will exit only after quality has taken a significant downward turn. This is a much larger group and will likely have an impact on the company’s profit margin. Depending on the rate of decline, the rate of exit, and the company’s ability to make changes in quality for the better, it may be too late for the company to change the product quality in time to retain this group.
In politics, Hirschman observes a similar spectrum regarding voice. Membership to organizations and institutions often has a higher up-front cost than product loyalty. For this reason, constituents tend to vote with their voices, not their feet. Similar to exit, though, when vocalization related to a decline in quality occurs depends on a number of varying factors. The outcome is similar: there is a spectrum upon which members express their dissatisfaction related to a decline in quality. Institutions often find out about this dissatisfaction too late to make any sustainable change.
What Hirschman does next is cross apply exit and voice. He looks at how voice can be used more effectively in the marketplace to stave off exit related to quality decline, and he looks at how exit from institutions (especially from members with high mobility and a low change cost) figures into the effectiveness of voice. Paying attention to these variables, Hirschman asserts, will lead to higher loyalty.
That is what Hirschman does so well in this book. He describes a process for developing member/customer loyalty that will enable a company or an institution to become aware of an impending losses from a decline in quality before that decline results in a major loss. Acting on this awareness creates even greater loyalty and will allow the organization to whether inevitable periods of quality decline without necessarily jeopardizing the organization’s long-term future.
As I read the book, I reflected on my experience working in churches. Often I would see “high-capacity” volunteers (Collins’ Level 5 leaders) silently exit the church when there was a drop in delivering on the church’s mission. The unfortunate part about this for the church is that if the people who exited had first voiced their concern or displeasure, the source of the decline would likely have been addressed by the leadership. Their voices could have made a change, but for some reason they believed that nothing would come of such vocalization, so they left. In larger churches with higher turnover and greater partcipation in local membership transferrence, their exit was not felt for too long.
How can a church create a culture in which voice is valued? Is it possible, or even necessary, when there seems to be a steady stream of disgruntled people exiting church A in favor of church B and vice-versa? Should we even try and create loyalty to a local church?