Knowhow: Keeping Customers | Simple steps to avoiding costly client churn
According to Frederick Reichheld, author of “The Loyalty Effect,” customers are leaving their current providers at an unprecedented rate that is growing annually. Customer defection rates are typically between 10 to 30 percent per year and rising.
Major global corporations now lose, and must replace, half of their customers in just five years. According to research by Chet Holmes International of California, 16 to 30 percent of consumers change brand loyalty in one evening of watching commercials and 74 percent of consumers buy outside of their favorite brands.
The Cause
So, why do customers abandon a product, brand or business? If you think the reason is price, think again. It’s actually perceived apathy. Customers often believe their providers don’t care about their needs and by extension, about them personally. Even if a former customer tells you the reason they left was because of price, chances are they’re not telling you the truth. With the high cost of acquiring new clients, the case has never been stronger to keep your existing customers. In business, some would say that the best offense is a good defense.
Below are six simple steps, what I call the “power recipe,” to make sure you keep your existing customers and fight back perceived apathy.
Step 1 — Figure out what business you’re in.
You’re not in the dry cleaning business, insurance business, accounting business. You’re in the business of creating customers and business development.
Step 2 — Have an out-of-body experience.
Get away from WIIFM (What’s In It For Me?) and get into the shoes of your most cherished and ideal client. Know everything you can about them. OK fine, so you already know what type of car they drive, and how old they are? That’s great, but why do they do business with you? When you do surveys, do you allow them to answer anonymously and offer them a gift or a discount for partic-ipation? If you do, what you’re saying, in the most powerful way is, “I cherish your time and experience.” And please don’t accept the following answers: “Quality, price, done right, etc.” Everyone on the planet expects those at a minimum. That’s merely the ante to play the game of business.
Step 3 — Fire your unprofitable deadbeats and redeploy resources.
Raise prices on the offerings that cause your deadbeat clients to leave or change. Your resources can then go to your more profitable clients that love what your products, services and customer experience do for them. They’re also the ones that will bring others to you — sometimes in droves.
Step 4 — Exceed expectations to create a fan base.
Sometimes, there are things that may cost you nothing that can have the biggest impact on the customer. Give a gift, a personal invite or an introduction. That’s right, a gift in the true meaning of the word. That means with no expectation about getting anything in return. No e-mail address, no “if-then,” no conditions. Small gestures can be the most powerful secret weapons of business development.
Step 5 — Energize your team.
Make sure your team understands how and why your clients do business with you so they can interface with your clients in a consistent manor. Standardize this customer communication by instituting the 2 P's: Policies and Procedures. That way, your business will communicate the right way without you having to be the one doing it.
Step 6 — Innovate.
Think about how you can continually reconfigure your business. Don’t just add more stuff in the hopes of getting more revenue. Instead, focus on serving your most desired customer as effectively as possible. That will bring more customers to you.
George Forde is the president of 10X Group Inc. of Northborough. He can be reached at www.thegrowthcoaches.com.
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