How do we measure business success? Usually by profits and growth. But should we be making more effort to measure our customers’ experiences? Some of the facts in this blog may take you by surprise – it seems that positive customer experiences and client retention are the keys to increasing profits and growth.
Some of the most revealing facts included these gems*:
· It’s poor customer service, not price, that is most likely to cause customer churn. I know this is true from dealing with power companies; I don’t think about my provider until a problem arises – then I’m primed for a competitor’s advertisement to lure me away.
· For every customer who takes the time to actually make a complaint, there are 26 additional unhappy customers. It could even be higher in New Zealand, where we don’t like to complain – we tend to vote with our feet and take our money elsewhere.
· It’s a lot more expensive to gain new customers than keep your current ones – up to seven times more expensive. I often notice that companies create incentives around gaining new business, but nothing for retention. This leads to situations where sales people will happily let an old customer go, because there’s nothing in it for them, while frantically chasing new customers. It may increase a sales person’s commission, but it’s hurting the company.
· Over half of customers (55%) would be prepared to pay more if they could be guaranteed better service. This underscores the fact that customers aren’t as obsessed with price as we often think.
· Those customers you keep the longest are the most valuable, as the profitability of each customer increases as the relationship continues – partly because you’ve long paid off the investment required to gain the customer. The longest-standing customers are the ones you are making the most money from; are you taking them for granted?· This one is really startling: improving your customer retention by just 2% has the same positive impact on a big business as reducing costs by 10%. I think most of us would rather spend time on building positive relationships than on cutting corners in expenditure.
Does your business have KPIs that reflect just how important it is to treat your customers like the gold they really are? We’ve been working with many of our clients on developing KPIs that measure and track customer satisfaction, and this has been extremely successful for the companies which have put it into action. Talk to us about putting more of a focus on your customers and driving your business to new heights in 2015.
(*Sources for all these facts can be found here in the original blog.)
By Satish Babu