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In some industries this leakage is as high as 80 percent.
The cost, in either case, is staggering, but few businesses truly understand the implications.
Virtually every business loses some of its customers, but few ever measure or recognise how many of their customers become inactive.
Most businesses, ironically, invest an enormous amount of time, effort and expense building that initial customer relationship then they neglect to nurture that relation because they think the customer is already hooked.
In some cases they even lose interest as soon as the sale has been made. Even worse, they abandon the customer as soon as an easily remedied problem occurs, only to have to spend another small fortune to replace that customer.
The easiest way to grow your business is not to lose your customers.
Once you stop the leakage, it’s often possible to double or triple your growth rate because you are no longer forced to make up for lost ground.
Many people do an excellent job of making the initial sale, but they later become complacent and start chasing more business.
Your selling has actually just begun when someone makes that initial purchase decision because virtually everyone is susceptible to buyer’s remorse.
To lock in that sale, and all of the referrals and repeat business that will flow from it, you should thank them and remind them again why they have made the right decision to deal with you.
Always put a system in place to sell to them again, constantly proving that they made the right decision.
Loyalty schemes contribution
Some customers contribute little to company’s profits. A customer who comes to buy the most expensive gadget once in a while is much more profitable that those that buy little things everyday but they are probably less loyal to the brand than the later.
Contrary to common perception, the most profitable customers should not be the main focus of a loyalty programme. Loyalty programmes have a way of stopping customers from defecting.
Commitment
Some customers defect for perfectly good reasons. Other customers who may be about to leave may be saved by a loyalty programme.
The idea behind headroom is that there is potential for a customer to be more valuable in the future.
Customers who are already buying from you have little headroom.
Developing new services or going online becomes a new way for you to extend headroom. Headroom is vital to a mature loyalty scheme.
Championing
Customers with little headroom can become ambassadors for the brand. Championing the brand can be as simple as word of mouth.
A customers’ use as an ambassador can rise initially when the programme is launched. It is possible to have customers that act as mentors.
The long-term value of a low cost customer may be in recruiting high value customers. Old sisters may tell younger sisters.
Some customers may be low value customers but have great potential to become champions. Neighbours who regularly get discounts from the supermarket pass on the secret. It’s not everyone that has few customers. Some people or businesses have the challenge of having too many customers in instances where demand grows above expectation.
This could lead to serious shortfall in customer service. Don’t be too sophisticated, strip out complexity when dealing with customers.
Till next week, may God richly bless you!!
Shelter Chieza is an advisor in management issues. She can be contacted at [email protected]
Online Reporter