A little while ago, I saw a LinkedIn® post stating that 89% of customers have stopped doing business with a company after experiencing poor customer service.* Being a glass half-full type of gal, I quickly calculated that 11% of customers would give the offending company another chance, or the opportunity to rectify the situation.
Although I consider myself an optimist, I keep getting pulled back to the sobering statistic of 89%. As a business owner or senior executive, what does this mean to you? How quickly can your leading-edge, thriving business fall by the wayside, or even worse, be forced to close, because you didn’t care enough about your customers?
As a business owner, I know what a loss of 89% of my customer base would mean. I would take down my shingle and hand the key back to my landlord. Can any business afford to lose 89% of its customers and still prosper?
Many optimists will tell you that you can rebuild. You can get new customers to replace the 89%; you can, in fact, continue on. Logistically, that may be true. But at what cost?
Recently, I had a client, Alex, share with me that he had lost a good customer. “What happened?” I asked. “Not sure” was his response. “He just stopped placing orders. He wasn’t a big account, but he placed an order every month, like clockwork.” I decided to probe further. “So, over the lifetime of your relationship with him, what would say is the value of his account?” Alex was quiet. “I never really sat down to figure that out.”
We pulled out our phones and a note pad and did some quick. simple calculations:
What was the price of the average sale to the customer - $7500/month
How many purchases per year did the customer make? - 12
Approximately how many years had he been a customer? – 6
Already we were at $540,000. I decided to press further.
Did this customer refer anyone to you, who then became a customer? Alex responded “Yes, he referred twocustomers. They were slightly smaller accounts at $3500/month, but still, it was monthly revenue that the company counted on.”
Alex was silent, as the numbers stared back from the page. Was it possible that the referrals who his customer brought in, could also be persuaded by his customer to go to a new supplier? “I need to get to the bottom of this,” Alex said. “It simply costs too much money to go out and get new clients.”
A couple of days later, I got a call from Alex who had just met with his customer. It seems that Alex’s delivery driver was late to the customer’s warehouse. The driver had been stuck in traffic, and was already late for his four-year old daughter’s first dance recital. The customer, in turn, had learned earlier that day that a long-time friend had been killed in a traffic accident, while on vacation. Emotions raw, tensions high and nerves stretched, the ensuing interaction between the driver and the customer was not pleasant. In that instant, the customer made a snap decision to change suppliers.
I asked Alex what he was going to do. “First,” he said “I’m going to meet the customer for lunch and apologize.”
“Second?” I prompted.
“Second,” Alex said, “I’m going to get customer care training for every member of my staff. Customer care isn’t just for the order desk. It’s for everyone who may come in contact with a customer. My customers are worth it; and it’s a lot less expensive than going out and getting new customers.”