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The value of your customer
By Larry Galler
October 13, 2010
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This is an age of disposables. We have disposable diapers, cigarette lighters, pens, cameras and razors.
I''m kind of a pack rat and have a number of keepsakes: An old Zippo lighter from years ago, back when I smoked; a Brownie camera from my teenage years; a couple beautiful fountain pens that my father used, including a Parker 51 that I understand is quite valuable; and even an old Gillette razor that takes double-edged blades.
I don''t use any of those items, but I enjoy seeing them and appreciate their enduring beauty, usefulness and design. They are not disposable.
Business disposables?
In business, there are also many disposable items — equipment that has become outmoded by the ongoing march of improvement and creativity (I wish I still had my first computer, the one with the 5.25 inch "floppy discs" because it would make a good shelf for the Zippo, camera and razor).
The one thing that is not disposable is the customer.
It''s astonishing that many businesses treat customers as if they were like buses in a large city … one comes along every few minutes.
How many customers are lost forever because of this attitude?
Do the math
New customers are amazingly fickle.
About 50 percent of them defect the first year, and 20 percent of those remaining defect each additional year.
If you do the math, at the end of six years, only 16 percent remain — 84 percent have gone elsewhere.
Sure, some died, some moved out of the area, some are no longer in the market and some are lured away by the competition, but the bulk of them have been lost because of inattention — the belief they are disposable!
Imagine what your sales chart would look like if you could retain just a few more of those new customers each year.
Increasing your retention rate by just 5 percent would increase the number of retained customers by 50 percent in six years.
(If you would like to see my math on this just send an e-mail to: larry@larrygaller.com and put "math" in the subject line).
I can''t tell you how many times I have heard an otherwise intelligent businessperson tell me that their new customers will return because "I did such a good job for them."
Doing a good job isn''t enough. After all, they paid you with good money, so you are even.
You must remind them frequently that you did such a good job for them so that they will want to return.
If you don''t remind them, believe me, most of them will forget who did that good job.
Increase retention with focus
How do you increase retention?
You do it by focusing efforts in service, training, satisfaction, attitude and follow-up.
Develop respect and value for your customers.
Work to develop an ongoing relationship with them. It''s old fashioned, but it works.
Create a systemized follow-up marketing program by mail or e-mail to keep reminding them that it was your company that did such a good job and that you will do just as good — maybe even better — next time.
Use testimonials from other satisfied customers to hammer home your message of quality and exceptional service.
Start off your retention efforts with a "quality control" telephone call a day or two after you worked for them.
In most cases, it will shock your customers that you care enough to make that call.
It will set you apart from your competition and it will act as permanent memory reinforcement in the mind of your customer.
It is also an opportunity for you to get feedback on your efforts from the customer''s perspective.
This is especially useful if you have employees because you will find out what your staff did to make the job especially good, or to discover areas where they could improve.
You can use the "QC" call to tell your customer about additional products and services you have that will enhance their lives and as an opportunity to pre-sell a "maintenance" service or an "annual" service.
If you follow up persistently with seasonal offers, cleaning tips, holiday cards, calendars, etc., they will not forget you and the good work you preformed for them.
If you want to grow your business, the easiest and least expensive — therefore most profitable — marketing and advertising is to your customer base.
If you can retain more of them and entice them to come back more often, your business will grow.
Of course, you still need to attract new customers, but when you realize that most of your competitors think of their customers as disposable, you have a huge advantage.
Few, if any, have a good retention system, so you can capture them, and then your retention system takes over and you watch your business grow on satisfied customers and enduring customer relationships.
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Larry Galler specializes in coaching owners of small businesses to grow their businesses through effective marketing, customer retention programs, and systemizing their business practices. Explore how he can help you during a free coaching session by calling (800) 326-7087 or email larry@larrygaller.com. Sign up for his informative free newsletter at www.larrygaller.com.
