A major factor affecting profits is customer retention. Profits tend to be elusive without consistent customer loyalty.
If you don’t have sufficient numbers of loyal customers, it’s important to do a profit analysis to determine your strengths, weaknesses, opportunities and threats.
Then develop a strategic action plan and implement it.
Bear in mind American businesspeople and consumers have increasingly become cost-conscious and look for opportunities to save money.
This trend has prompted many companies to slash prices and to make the mistake of focusing on price in their sales messages.
That means your customers are constantly hit with discount offers.
And they are tempted to change to your competitors because of price, quality and service.
But it isn’t a permanent switch. Such customers will then gravitate to the next low-ball offer.
So advertising to target such low-balling customers is simply not cost-effective.
I’m referring to customers base their decisions on price, only. They constitute 18 percent of buyers.
Therefore, it’s key to target the other 82 percent who can be persuaded to buy based on their five perceptions about value.
My research also shows that you have to reach a prospect with five positive messages before the decision is made to buy your product or service.
Why companies lose customers
When devoutly loyal customers shop elsewhere, 70 percent of the time they feel taken for granted.
Customers will leave you for a myriad of reasons, including failure to properly answer questions, treating them abruptly, making the buying process inconvenient, failure to solve problems quickly and subsequently failing to provide added value to assuage an unhappy customer.
Losing customers also means blown opportunities for word-of-mouth advertising and customer referrals. Plus, social networking and blogs – positive and negative – have changed the marketplace even more.
That’s why listening to customers is so vital – to gather information, to analyze it, and to develop answers.
In large cities, the advertising opportunity costs are high – usually $300 to $400 or more per customer.
If you lose a customer, it will cost you more to attract a replacement. Then, you have to factor in the sales curve – how long it takes for a new customer to become profitable.
So profits suffer in a down economy if you lose customers and can’t easily replace them. That means layoffs, which will hurt you even more.
Fifty-two percent of a customer’s value-perceptions motivating them to buy from you hinges directly on what they think about your people – spokespersons, sales reps and other personnel. (For more on value perceptions, see “The 7 Steps to Higher Sales.”)
So it helps to have ongoing discussions with your staff on these topics: Why customers buy from you, perceptions about poor customer service, and the factors about your service and products they like the best.
Research and other methods
Continually query your customers in formal surveys and in casual conversations using open-ended questions to get solid answers, not “yes” or “no” answers.
Take action steps and make improvements when feasible.
After you get great feedback and measure the results of improvements, tell your customers and express your appreciation.
When customers make purchases, don’t forget to thank them and prevent buyer’s remorse by tactfully reminding them of the value of their purchases.
And explain to your employees why it’s important to stop using the most-trite phrase on the planet: “Have a nice day.” Instead, your employees need to focus on providing an attitude of service and gratitude.
You’ll be creating a happy buying environment for repeat business and customer loyalty.
From the Coach’s Corner, here are related articles:
How to Profit from Word-of-Mouth Advertising and Customer Service — When was the last time you explored options for improving your word-of-mouth opportunities? Here’s a hint: Customer service is the No. 1 key to good word-of-mouth advertising and repeat business. My firm’s research shows that consumers usually respond favorably to marketing after receiving five positive messages. Conversely, they will divorce your company if they have five or fewer unfavorable experiences.
Marketing – Insights for Attracting Millennial Customers — Marketers from fast food to cars are struggling to understand an important demographic – 59 million young adults, aged 23 to 36, according to a published report. Other observers believe there are 80 million millennials, but in a slightly narrower age group. Either way, companies are obsessed with targeting millennials for good reasons.
Understanding Customers — Social Media Humbles Companies — Marketing is the understanding of your customer for the cost-effective process of selling the right product or service at the right time and at the right price. Inexplicably, Verizon joins the list of big companies failing to understand how poor research and judgment would draw fire from their customers and social media.
“Well done is better than well said.”