Customers today are bombarded with more attractive offers all the time. If they see a better deal based on price, quality or service, they may feel pressure to leave you for a seemingly better offer.
It’s critical for salespeople to come up with the specific reasons why they lose a customer. They may be in jeopardy of losing other customers for the same reasons. Salespeople who take the time to listen to their customers and gather, manage and analyze their feedback may not only survive but may thrive in attracting, retaining and competing for customers. Research shows that gathering customer feedback can increase customer retention by 15 to 20%.
Hidden costs of losing customers
Salespeople have been warned for years about the economic impact of losing customers. With the advent of the Internet, here are new hidden costs that should be considered:
- Negative word-of-mouth, especially with the advent of blogging and social networking where people can now broadcast their points of view to thousands or millions of people.
- Substantial costs involving in trying to recruit and acquire new customers to replace lost customers.
- The amount of time it takes for a customer to become profitable to a company.
- Lost opportunities for customer referrals/recommendations.
- The toll that losing customers take on a company’s employees caused by layoffs and office or plant closings due to lost revenues.
Three reasons
Building relationships with customers that last requires feedback in three areas. Share them with your salespeople.
- Why your current customers continue to do business with you?
- What specific factors are causing customers to leave?
- Which of your products or services do customers care about most?
Here are tips that may increase your customer retention rate:
- Find out what customers think, want and need, and the factors causing them to stay or leave. Survey your existing customers to find out. Are customers unhappy? Are there any changes and/or additions that your company should be making to its products or services?.
- Continually collect and promote customer feedback. Try not to wait until there’s a problem to contact or follow-up with customers. Research shows that gathering customer feedback can increase customer retention by 15 to 20%.
- Address customer concerns immediately. Up to 70% of customers will buy again if their complaint is resolved. That figure jumps to 95% if the customer feels the complaint is resolved quickly. Customers whose complaints are resolved satisfactorily tell an average of five people about their good treatment
- Let customers know whenever your company initiates change as a result of their suggestions or feedback. If you’re not able to use a customer’s suggestion, let him or her know that you heard the suggestion and appreciate their feedback. Measure the results. Study the impact of the changes you make based on customer feedback. Some of the areas you may want to consider include customer retention rate, revenue per customer, customer referrals and customers saved due to feedback.
Adapted from Retaining Customers in Tough Economic Times by Kyle LaMalfa. He is a consultant for Allegiance and can be reached at www.allegiance.com.
