All businesses, product and service based, have customers. The lifecycle of customers for your business varies by industry, but some attrition is natural, which means that businesses are always in pursuit of new customers.
This means you must constantly refer to and refine your marketing plan to determine how you will spend your advertising money to attract new customers.
How much does it cost to get a new customer? The low end estimate is that it costs five times more to get a new customer than it does to keep an existing customer.
I have a client who did a bulk mailing within a targeted zip code to 10,000 homes. The cost was $2,500 or .25 per household, which is a reasonable price for that method of advertising. He estimated that he gained eight new customers as a result of the mailing. That means that he spent $312.50 per new customer.
Simply put, businesses need to work harder to keep the customers they have, and customer service is the key.
I really dislike the saying “the customer is always right.” Anyone who owns or has owned a business will tell you that isn’t true and that sometimes customers are unreasonably demanding, irrational or just plain wrong.
Regardless of whether the customer is right or wrong, what is important is what you do to make it right when a problem arises.
Does your business have a formal customer service policy? You may know how you want to resolve customer disputes, but do your employees? More importantly, do your customers know what your policies are?
A great example of this is an SBDC client who had a strict 100 percent no-return policy. Tasteful signs were posted in her dressing rooms as well as at the checkout point. Proper care instructions were given and explained with each product sold.
Before completing the transaction, employees told the customer that returns were not allowed for any reason. It didn’t matter if you had been there once or 10 times, every single customer was informed of the no-return policy before payment was collected and the policy was clearly printed on the receipt.
Customer service issues often escalate when there is no formal policy and things are initially handled improperly. Always address the issue as quickly as possible, and if you need more time to resolve a problem, tell the customer that you have heard and understand their concern and that you are diligently working on a quick resolution.
It is important that you have really heard the problem or complaint. Listen to the complaint and then restate it to the customer. You could say, “I understand that you are not happy with this product because…..Is this correct?”
Misunderstandings often occur when people are upset, so this is a great way to clarify and also diffuse the situation. Most people are content to wait for a resolution if they feel they have been listened to and treated with respect.
Being cold, condescending or apathetic will always make it worse and is usually a guarantee that you will lose the customer.
A customer may leave your business for many reasons — 1 percent die, 3 percent move away, 5 percent develop other relationships, 9 percent leave for competitive reasons and 14 percent are dissatisfied with the product or service.
The remaining 68 percent leave because of rude or discourteous service. It is impossible to make everyone happy all of the time. But, if you want to maximize your bottom line profit, work harder at keeping the customers you have so you can decrease the amount of resources spent to replace them.
Becky Brownlee is a business consultant with The University of Georgia and Georgia Southern Small Business Development Centers and can be reached at firstname.lastname@example.org.