Here's Why You're Losing
Customers
By Tom Egelhoff
 If you've been in business
for a while I'm sure you've heard the old axiom, "It takes
six times as much to develop a new customer as it does to keep
and existing one." In most cases this refers to advertising
expense.
But I think it goes way beyond that. It takes six times as
much of everything. Employee effort, building trust and confidence,
overcoming word-of-mouth, and many others I'm sure you're thinking
of right now.
Why exactly does a business lose customers? As with most business
topics, there is no one cut and dried answer. It may be one thing
or a combination of things. One common overlying theme is that
the business loses track of who it really is and tries to be
all things to all people.
Successful businesses stick to the things they do best and
ignore the rest. We all hate to turn any customer away, but if
you can't satisfy that person there is no other alternative.
Lets start
with what the "experts" say
The experts claim if you want to keep customers give them
"good, great, super, dynamic, overwhelming, unbelievable,
unsurpassed, outstanding, incomparable, off the chart, out of
this world, make them say WOW" service. Bunk!
Is there anyone reading this article that doesn't know the
value of taking care of a customer? I didn't think so. Anyone
want to admit that their customer service stinks? Again, I didn't
think so. If you are in business you know the value of taking
care of the customer. I don't have to tell you to do that. It's
real easy to say on paper just "be better." It's a
lot harder to do that in the real world. (See last week's article: How To Find What Your
Customers Are Really Looking For)
Race cars have tachometers to let the driver know that the
RPM's (revolutions per minute) of the motor are getting to high
and the engine might break down. The driver needs to keep the
needle out of the red zone to protect the engine. The same is
true of service.
There is a level of service that each company can safely maintain.
Try to move that service level into the red and it could spell
disaster for your business. Service is the best service you can
maintain consistently. Sometimes in emergencies you will go in
to the red zone but you can't stay there. Acquaint your customers
with consistent service and they will support your business.
Perception
of your business
I've talked many times on this site about the logic and emotion
of why customers act the way they do. (See:
Understanding Why Customers Buy) One of my rules of business
is that when logic and emotion come into conflict, emotion always
wins. As much as we would like, customers do not sit down and
logically compare two businesses or products and make a logic
decision about where they want to do business.
Customers will develop a perception of your business based
on the information you provide in your advertising and business
apperance. You may be perceived as low priced, high quality,
convenient, or some other niche that your customer mentally creates.
Customers leave when you no longer are perceived to meet their
needs and desires. This commonly happens when a business tries
to "improve itself." You add more services or products
and some customers change their perception of who you are and
what you provide. If you are in this situation be sure there
is strong communication with your customers during this process.
I'll address communication shortly.
Losing
to the competition
Every business loses customers to competitors at some point.
How many are lost is the big question. Don't feel you
have to mimic the competition. If they offer a service, then
you have to. That's not always the case.
Do what you do best, but be aware of what the competition
is doing. Check their ads. Have friends or relatives shop them
from time to time and see what their message is.
You may want to re-read the previous section on perception.
How are you perceived against your competitor. Are you both the
same or are there differences. If so, how can you capitalize
on those differences? (See: How
To Research The Competition)
Don't let
pricing put you out of business
Business owners probably spend more time worrying about their
pricing than any other single business issue. The major reason
for this, in my opinion, is that they don't know how to connect
price to value. This is especially true in new home based or
small start up businesses. They often begin by pricing themselves
too low. They establish a price in the minds of consumers and
find it's difficult to raise them to reflect what their work
is really worth.
Pricing is nothing more than the perception of information.
For example, lets say I had a sealed tin can like you would find
in a grocery store. The can has no label on it. It might be a
can of corn or peas but without a label you don't know so how
much is it worth? You might be willing to take a chance and say
.50¢.
Now I shake the can and it is clearly empty except for something
inside rattling around inside. It could be a coin or just a piece
of metal. So now how much is it worth? To some of you nothing.
To others they might still want to take a chance that is might
be something of value in that can but it is a risk because they
don't have enough information yet.
Now, suppose I tell you that inside the can is an ounce of
pure gold. Now how much is it worth? Quite a bit at current standards.
The point is that each time I gave you information about the
can your perception of the value of the can changed. And that's
all pricing is.. creating benefits and value that outweigh the
amount being asked. (See: Pricing
Methods and How To Use Them) and (How
Pricing Affects Your Business)
You won't lose customers based on price if you know how to
connect value to your product or service.
How's your quality control?
I've always felt that quality is directly related to customer
service. Most mistakes happen when you are trying to deviate
from the norm. If a customer is in a rush for a product or service
that requires speed or special handling there is a much greater
opportunity for mistakes to happen.
Another reason quality suffers is that by trying to cut costs
because of pricing issues, the product becomes inferior. Most
businesses have checks and balances to make sure that whatever
the product is it must be of a consistent quality. Do you maintain
some form of quality control checks?
Customers expect a certain level of quality in exchange for
their hard earned dollar. If you disappoint them too often they
will leave.
Is your
business flexible?
This section flies in the face of the previous section. Didn't
we just say mistakes happen when we change from our ridged rules
and become flexible? Well, there are times when it's beneficial
to your company to do so. Your competitors may be locked into
certain procedures that can't be changed at the local level.
The part to avoid is to increase quality control for this
special order and not let it affect your normal procedures. Sometimes
being flexible can uncover ways to be more efficient and find
better ways of performing the task in the future.
Communication
is the key
When your business decides to take on a job for a customer
there should be no further discussion about any difficulty that
job may impose on the company. For example, a local business
here lost a customer simply by telling the customer how difficult
it was to produce their job on time. That's not the customers
problem... that's your problem and any discussion about how difficult
it is should be kept in-house. Learn from the difficulty and
try to find ways to be more efficient next time.
Would this customer feel comfortable bringing the same job
back to this company knowing the grief they will receive? I don't
think so and I can hardly blame them for leaving.
If you make the decision to take the job that should be the
end of the story. If you don't feel you can do the job on time
then that's another story.
The last
word on losing customers
We've covered a lot of ground on this topic but this is just
the tip of the iceberg. There are literally thousands or reasons
why your customers go elsewhere. If there is a secret to retaining
them I think it would be consistency.
You can walk into a McDonalds Restaurant anywhere in the country
and pretty much know what to expect. You are going to get a consistent
level of service, quality of food and consistency of establishment.
Usually no more or no less. I can't name a McDonalds where I
received good, great, super, dynamic, overwhelming, unbelievable,
unsurpassed, outstanding, incomparable, off the chart, out of
this world, make them say WOW" service. I get what I expected
to get.
We have two McDonalds here in Bozeman. I don't say, "I'm
going to drive across town to the other one because it's better."
They are consistent.
(Return
To Small Town Marketing.Com Main Menu)
Listen
to a radio interview with Tom and Entrepreneur Magazine - Click
Here!
This article may be reproduced for your non-profit
group or organization provided it is not altered in any way and
the following is attached:
©1998 - 2004 Eagle Marketing PO Box 271 Bozeman, MT
59771-0271
http://www.smalltownmarketing.com - (406) 585-0219 - Toll FREE
(888) 550-6100
email: tommail@smalltownmarketing.com
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your
Business Or Service In A Small Town, and The
Small Town Advertising Handbook: How To Say More And Spend Less.
He is also a seminar and workshop presenter
and trainer. He may be reached at 888-550-6100 or PO Box
271 Bozeman, MT 59771-0271
Can't
find what you're looking for?
Click here >  < Click here
Our Search Engine From Right Now Technologies
is amazing. Take a Test Drive.
The best small
business guides in print today! I guarantee it - 100%!!
Haven't you done without them long enough?
Decide
which order option below is best for you.
|
1-888-550-6100 FREE
Shipping
