Today’s customers are ready to jump ship for almost any reason, especially price. Some companies have figured out how to keep even the most finicky, price-conscious folks.
Those who are good at customer retention make a special effort to:
1. Find out what customers think, want and need, and the factors causing them to stay or leave. Are customers unhappy? Are there any changes and/or additions that your company should be making to its products or services? Ask customers what they want and need as well as which specific aspects of your products or services they value most.
2. Continually collect and promote customer feedback. Try not to wait until there’s a problem to contact or follow-up with customers. Provide customers with a convenient way to express their concerns, report problems and/or deliver praise you can use for testimonials. Research shows that gathering customer feedback can increase customer retention by 15 to 20%.
3. Analyze customer feedback to find out (a) The type of customer feedback and the percentage in each feedback category (complaints, suggestions, comments, concerns. (b)The underlying drivers of customer loyalty, i.e., the biggest reasons why their customers do business with them. (c)The current strength and depth of customer loyalty. (d) The major reasons why some accounts may be in jeopardy.
4. 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. Some companies collect customer feedback but fall short when it comes to using and acting on the dat
5. Let customers know whenever the 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. Try to explain why you’re not able to act on it.
6. Measure their results. They tudy the impact of the changes made 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.
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.
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.
