What happens when you lose a customer? If you think you can just ramp up lead generation to compensate, you may want to reconsider. According to research by client engagement tool CLIENTpulse, it costs five times less to keep an existing customer than it does to gain a new one.
The CLIENTpulse survey found that 90 percent of customers who leave a business never return, which is pretty bad news for businesses who take the "we'll just get new customers" approach. On the other hand, customer loyalty grows by 30 percent if a client's problems with your company are resolved, so it makes a whole lot of sense to put customer retention on the top of your priority list.
The problem is, by the time your customers voice a complaint about your company, they may already be thinking about leaving your business for a competitor. Scott Stratten, the co-author of "UnSelling: The New Customer Experience" (Wiley, 2014), said that one of the most common reasons for customer losses is that companies treat the consumer as an afterthought once they've made the sale.
"As businesses, we tend to court new customers with feverish enthusiasm, but once we get the client, we're off to chase for the next, new one," Stratten said. "We ignore customer service, treating it as overhead and inconvenience. In doing so, we contradict the well-known fact that the best form of new-business acquisition is referrals from happy, current customers."
Instead of treating customer relationship maintenance as another to-do list item, David Niu, founder, and CEO of CLIENTpulse's parent company TINYhr, advised keeping tabs on customer satisfaction by collecting feedback regularly, and really taking the time to analyze and learn from it.
"One question we ask on a consistent basis is, 'How likely are you to refer us to a friend or colleague?'" Niu told Business News Daily. "Over time, if a client rates [this question] a 9, [and] then it becomes 8, 7, etc., something is [not right] in his or her mind. You need to talk to them immediately. When they tell us reasons why they're not happy, we have a blueprint to make them more satisfied."
Stratner recommended asking three simple questions in surveys to figure out exactly what your customers want: "What would you like us to stop doing? What would you like us to start doing? What should we continue doing?" These questions will help you figure out key issues in the customer experience and provide a starting point for improvement.
Rita Tochner, head of corporate marketing at contextual marketing firm Pontis, said that it's important to have strong systems in place to help identify when a client's needs aren't being met. [Related: See our reviews of the best CRM software.]
"Having regular interactions with customers will result in more relevant engagement consistently optimized by your business," Tochner said. "What this allows is a complete picture of your client, a 360-degree view as dynamic as the individual, showcasing trends and giving actionable insights to enhance their customer journey."
"Stay in front of the customer [to build a relationship]," added John Copenhaver, senior vice president of sales at lead generation company Salesgenie. "Invite customers to participate in company events, surveys, releases, sneak peeks, etc."
If you collect feedback from your customers and believe one of them might be at risk of leaving, it's best to take a proactive approach to the problem.
"If we see [an issue] happening multiple times over, it is a chance to reach out, communicate, engage and fix," Tochner said. "This type of dialogue between the company and the customer is important because it creates a level of trust and appreciation, opening the door for a much more loyal, mutually beneficial relationship."
Niu agreed, noting that responsiveness and gratitude will go a long way to prove you're truly committed to customer satisfaction.
"Take their feedback, and regardless of what you do, thank [the customer] and share it with your team," Niu said. "Close the loop. [Show them] you're not just paying lip service, but you're doing something about it."