Salespeople have been warned for years about the economic impact of losing customers. With the advent of the Internet, there are five new hidden costs that should be considered, according to Kyle LaMalfa, a sales consultant:
- 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 million of people.
- Substantial costs incurred in trying to recruit and acquire new customers to replace lost customers.
- The amount of time it takes for a customer to become profitable.
- Lost opportunities for customer referrals/recommendations.
- The toll that losing customers takes on a company’s employees caused by layoffs and office or plant closings due to lost revenues.
Five tips for customer retention
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.
- 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 feedback can increase customer retention by 15 to 20%.
- Analyze customer feedback to find out:
- The type of customer feedback and the percentage in each feedback category (complaints, suggestions, comments, concerns).
- The underlying drivers of customer loyalty, i.e., the biggest reasons why your customers do business with you.
- The current strength and depth of customer loyalty.
- 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 complaints are 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.
5. 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 suggestions and appreciate their feedback. Try to explain why you’re not able to act on it.