• Why do customers leave you?

  • Does someone in your business ever-so-often ask, “Whatever happened to (fill in the name) and how come he doesn’t shop with us any more? Several surveys asking this same question were taken through the years by (but not limited to) the American Society for Quality Control, the Harvard Business Review, U S News & World Report — even the Swedish Post Office titled “Satsa pa kunden” (“Focus on the customer”).

    Each survey was done independently from the other and yet, amazingly, all came with nearly identical responses.

    • 14 percent left because of complaints not taken care of.
    • 9 percent left for the competition.
    • 9 percent moved out of town.
    • 68 percent said they left for “no special reason.”

    In other words, seven out of ten people who were “steady” customers said they left for “no special reason.”

    I don’t believe that. I think there was a reason. I think the reason was the business did not keep in touch with their customers. They took them for granted. And when someone is taken for granted they don’t feel important and are susceptible to the next mating cry. Having the customer repeat buying from you means doing more business with you. Good selling depends heavily on repeat business.

    Here’s why: It is far, far easier to sell more to the customer you have than to sell a new customer. And yet the average business spends five times as much time and money searching for a new customer than they do on the customer they already have. If they keep following that path they will soon discover the customer they thought was locked up, committed and loyal has…disappeared.

    The national average of customers who leave you every year is about twenty percent. That’s one out of five of your current customers! If that trend continues for a few years you will be out of business if you don’t go in one of two directions: (1) Find a way to have 20 percent new customers or (much better) (2) Recapture some of the ones that left.

    A study by Bain & Company in Boston said if you can cut that 20 percent defection in half you can double your bottom line profit!

    • Because of the money you spent to secure them the first time.
    • Because they will spend more as the years go by.
    • Because their income increases.
    • Because their family (or business) grows larger.
    • Because they tell others to buy from you.
    • The longer you keep a customer the more money you make. An auto service company said their expected profit from a customer that stayed with them for four years was more than triple the profit the same customer generated their first year.

    John Romero, the premier direct marketer in the casino industry tells of the time a senior executive came to his office and said, “We need new business.” John’s answer: “What’s wrong with old business?” His point: businesses overlook the once productive customers they once had still hidden away in the company’s database. His question: “Why would you spend years developing a customer then ignore him because he stops coming? There’s pure gold in that file of names waiting for you to dig it out. It¹s the best new business you can find.”

    How do you know when a customer is about to leave? New computer programs can track your customer’s behavior past and present. When their pattern begins to vary greatly with fewer sales, smaller sales, less contacts, you should start hearing warning bells ringing. Their pattern is changing. Time to contact them and ask if everything’s all right.

    Here’s why this is important: Accounting systems don’t list the value of a loyal customer. Most businesses don’t recognize, know about or pay attention to this phrase: “The lifetime value of a customer.”

    I remember talking to Stew Leonard at his famous supermarket in Norwalk, Connecticut who explained it simply: “The lifetime value of a customer in a supermarket is about $246,000. Every time a customer comes through our front door I see, stamped on their forehead in big red letters: $246,000! I’m never going to make that person unhappy with me. Or lose her to the competition.”

    Some businesses ingratiate themselves to their customers to the point where they almost become a part of the owner’s family. Customers are greeted warmly as old friends when they arrive and your conversation picks up from the last time they were with you. There’s an old speaker’s phrase: “No one cares how much you know unless they know how much you care.”

    Some businesses succeed because they simply persevere, like the salesman who called on me to sell me ties. His products were made of synthetic fabrics. All our ties were natural fabrics: silk, cotton, wool. One year when he appeared, I said, “Phil, we don’t carry ties made out of polyester or synthetics. When are you going to stop calling on me?” He looked at me and softly said, “Depends which one of us dies first…”

    For those who say, “Well, it worked for others but it won’t work for me. I tried and gave up.” But why give up? Persevere!

    Remember the words of Winston Churchill in his 1941 address at the Harrow School: Here’s almost his entire speech: “Never give in. Never. Never. Never. Never. Never. Never.”

    Article by Murray Raphel

    Murray Raphel is one of the world’s leading speakers and consultants on direct marketing, advertising and promotion with an emphasis on taking care of the customer.

    Murray speaks to business groups, associations and international corporations on how-to-do-more-business. www.raphel.com

    Marketing Tip of the Month

    Really understanding your customers or clients, and their needs, is crucial to keeping them. It’s not only their business that needs to be understood, but also a whole range of non-tangibles, including:

    • How do they make decisions?
    • How quickly do they make decisions?
    • How can their perceptions be recognized and (perhaps) influenced?
    • Who are the influencers of the decision?
    • What is their typical lag time for making a decision?
    • What are the factors that they consider when making a decision?
    • Can you influence their needs to create a demand for other products or services?
    • What needs to be done to positively mould their attitudes towards you?

    Building the foundation upon which a decision is made is as much a part of selling, as the selling process itself. That foundation building process is called marketing. It is a crucial part of the overall selling process that develops the environment that makes selling easier, or in many instances, possible.

    Make sure that your marketing and selling efforts are in alignment. If they aren’t, the process of selling could be as tough for you as it is for a fish to swim upstream. Just ask the fish: doesn’t he find it easier to swim WITH the current?

    Read also: Customer service is more about what you don’t do

    Neville Pokroy from the marketing company Mastermind Solutions consults in the areas of strategic marketing planning, as well as in the development and execution of marketing strategies and plans. He assists companies who require marketing expertise to plan and fully execute marketing programs.   He helps them make good choices, particularly with regard to the emerging technologies.  If you want to have more choice in marketing your business, set yourself apart, and increase the odds of generating additional revenue for your business, visit our website or call (905)886-2235.  Please follow me on Twitter: @smaaketer

  • 3 comments

    Hello. fantastic job. I did not imagine this. This is a remarkable story. Thanks!

    Reply

    Of course, what a fantastic website and instructive posts, I definitely will bookmark your blog.Have an awsome day!

    Reply

    My brother suggested I might like this web site. He was entirely right. This post actually made my day. You can not imagine just how much time I had spent for this information! Thanks!

    Reply