“The purpose of business is to create and keep a customer.”
-Peter F. Drucker
Over ten years ago I found I needed to travel three to five times a year to the mainland for personal business. Until this point almost all my travel was booked and paid by my employer. Suddenly I needed to select an airline based on my personal needs instead of simply using the airline that met my employer’s needs. After looking over several features important to me I settled on a single airline that provided the most frequent flights to the two primary locations involved in my travel plans, I signed up for its frequent traveler program and began booking flights almost exclusively with the same company.
Several years later I ran into a problem rebooking a flight on this same carrier after my flight was canceled based on mechanical problems. After seeing two people and spending almost two hours to get things straight I was rebooked on a different carrier the next afternoon. When I arrived to check in, the other carrier had no record of my rebooking and sent me back to the original airline to take care of the problem, I felt fortunate the same person that took care of the issue the previous evening was back on duty. You can image my surprise, disappointment and frustration when the person denied having helped me the evening before, denied the mistake made in rebooking me on the other airline and turned me over to someone else to resolve the issue. After checking the computer it became clear that he had indeed helped me and made the error. After being reassigned to correct the problem he talked with the other airline, straightened out the problem, but hardly said a word too me in the entire process. He was clearly upset with having to deal with the correction.
Following this experience I advised my employer to book me on other airlines when possible in the future, I told a lot of people about my bad experience and what I saw as a lapse in integrity on the part of the airline employee and I selected a different airline for my personal travel needs. Today I still avoid this airline based on this single experience. Have you ever had an experience with a company that caused you to go somewhere else? The sad part is in many cases is the losing company never finds out why you left.
Don’t underestimate the need to satisfy and retain customers. Most businesses put too much money, time, and effort into chasing new customers/prospects and far too little resources trying to keep their current ones. However, we all know that you can’t fill up a bucket if you don’t plug the current leaks. Real profits and stable revenue streams come from long-term relationships and repeat business with your current loyal, profitable customers. Some experts declare that 80% of a company’s future growth comes from existing clients, if served and cultivated properly. Customer satisfaction and retention should be your #1 priority.
Again, the purpose of a business is to attract and retain customers. You can’t grow and remain in business without keeping the customers you currently have. First, you must measure your current attrition rate (loss of customers) and set a goal to dramatically reduce this rate. For example, let’s say, on average, that you lose 20% of your customers every year. A realistic goal would be to reduce this attrition rate to 10% per year. Bottom line, it is easier and nearly eight times cheaper to serve and retain current clients/customers than to pursue new ones.
Once you have plugged the holes in your attrition bucket, you want to provide better service and solutions and build stronger relationships with these profitable and valued customers. You want to better understand their needs and then fulfill as many of these needs as possible with additional products and services. Continually communicate with your customers. Meet and exceed their needs. Give them solutions. Focus on them and their needs, not on your products/services.
“When you stop talking, you’ve lost your customer. When you turn your back, you’ve lost her.”
-Estee Lauder
Communicate with them in person, in letters, in faxes, in emails, through your website, with brief newsletters, etc. Don’t worry, you can’t over-communicate with your customers. Like employees, keep them informed, involved, and inspired to continue doing business with you. Also, repeatedly ask your customers:
- “How are we doing?”
- “What other needs do you have?” and
- “How could we become more valuable to you?”
Your purpose is for them to see you as more valuable each time they interact with you and as a result, you will benefit with more profits. Never sell a customer only once. Real profits come from repeat business. Set goals to increase the frequency and size of repeat business. You want ongoing relationships and ongoing sales.
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
-Sam Walton
Here are some questions to help you get started on a plan for retaining and growing your current customers.
- Do I know how many customers I lose each year?
- Do I know how many lost customers have simply moved out of the area rather than stopped doing business with me?
- Have I made an effort to contact lost customers to find out why they left? Often this is more insightful than asking current customers what they like about doing business with you.
- Do I take action based on finding out why a person left to regain that customer and to prevent losing my current customers?
- Do my employees know how I expect my customers to be treated?
Take some time to answer these questions honestly and write your answers down. Remember keeping current customers excited about doing business with you is the most cost effective way to grow your business.
“A satisfied customer is the best business strategy of all.”
-Michael Leboeuf
I welcome your questions and comments on this column, please contact me at Bobbi Collins, The Growth Coach, 808-282-8328, B.Collins@TheGrowthCoach.com.
