Customer loyalty should be a key focus in any business, with good reason. Estimates suggest it can cost six times as much to get a new customer as it does to keep an existing one.
A business that is not paying proper attention to this is like a farmer milking a cow with a hole in the bucket. You have to work even harder at milking while the leak continues. Working out how big the hole is for your business is the first step to take in improving your customer loyalty, the next is understanding how and why they are leaving.
Working out how many customers leaked out is not just simply comparing the No. of customers you have now as compared to how many you had this time last year; that would give you your net gain/loss of customers.
The formula for working out how many customers you have lost in a given period is:
Total No. of Customers =
(No. of Customers at the start of the measuring pd.) X (No. of Customers at the end of the measuring pd.) + (No. of new customers added over the pd.)
So to measure how many customers you have lost, you really have to measure how many you have gained!
It is important to find out why do customers leave? The six main reasons for customers taking their business elsewhere are:
* 1 % Death
* 3% move away
* 5% buy from a friend
* 9% sold by a competitor
* 14% product/price
* 68% perceived indifference
The biggest reason of all is perceived indifference i.e. the customers don’t think that you care about them or that they matter to you. If this is the reason for them leaving, then it is a really tough job to win them back. The key focus should be to keep them happy while they are a customer very much a case of prevention being better than the cure.
These days with the abundance of alternative options available to customers, you really have to focus on keeping them satisfied. Simply providing them with the product or service is not good enough
Here are seven tips for providing that extra bit of attention that will make your customers want to keep coming back:
- Master delivery. Deliver on time every time. Inform you customer if there is a problem and explain how you are going to be dealing with it. And then follow up and make sure that everything turned out ok. Make sure your invoices are correct and delivered in a timely fashion.
- Thank you notes thanking them for their order or business.
- Follow up calls to find out if everything is ok (like they do when you have a meal in a restaurant)
- Prior notice of new products or of an upcoming sale.
- Deliver your product with an unexpected gift.
- Send cards. Birthday, anniversary or any other date relevant to the customer.
- Depending on the product, a follow up call to offer them another or a refill or an add-on.
Most of these things are not difficult to do. Yet very few businesses do them. Make them a part of the way you do business and you will have made a very important and valuable improvement to your business.
Brad Sugars founded the brand Action International in 1993 when he realized there was a disconnect between business advice and implementation. The answer was Action! Brad Sugars created a business coaching company so that business owners throughout the world can realize their goals in business. Today the company is known as ActionCOACH. To learn more about business, visit Brad Sugars Review blog