Thomas Dewey, a famous New York District Attorney, once said “I never worry about what answers I’ll get when I’m looking for the truth; I worry about what questions need asking!”
And so it is with customer retention. Studies show that even the smallest increase in the customer base can lead to tremendous profits. And the reverse is true as well; when the customers stop ordering the red ink starts flowing like a bad wound. It doesn’t take much to drive away steady customers; a few broken promises and a constant feeling of neglect will send even the most loyal customer into the arms of a competitor in less time than it takes to say ‘bankruptcy.’ So the smart business person is going to start in early with asking legitimate and probing questions about how their customer service is working, or not working, and what plans are in place to build customer retention on a continuing basis.
Every business has its weaknesses and potholes -- some of them are well known to owners and managers, and some are only known by certain employees, or maybe not even known by anyone in the company -- but clear as a bell to disgruntled customers. “So ask, ask customers, ask staff, ask vendors; ask what is being done right, and what is being done wrong. And make sure to listen to the answers and take time to analyze them,” says a representative at merchant cash advance firm Evolocity. Here’s the kind of queries a successful business person is going to be asking when customer retention stats are flat or falling:
When did the exodus begin?
Like Sherlock Holmes, don’t begin with the ‘why’ but begin with the ‘when?’ When did the customers start to disappear? Can a date be put to that query? During the holidays? Summer? Winter? Was there a national disaster at the time? Pinpointing the ‘when’ of a customer exodus will usually lead directly to answering, at least in part, the ‘why.’ If you see things going wrong and take action, you can avoid any accusations of wrongful trading, if you don’t want to keep pushing the business and increasing your customer base, perhaps it isn’t for you and the MVL process may be better. It will also help affix the blame, if any blame is needed. Most often finding out when customer retention started to slip bears a surprising correlation to things like budget cuts in marketing, price changes, and an influx of new employees.
What’s the competition been doing lately?
Every business owner has to expect that their competition never sits still, but is always busy thinking up ways to both improve their own product and image and downgrade everyone else’s that is in the same business. This can be a good thing, because it keeps competitors on their toes, looking for ways to service their customers better and keeping prices in line. But when customers start disappearing it’s time to take a really close look at the competition to see if their prices have been discounted or their marketing/advertising staff augmented. And don’t be afraid to examine their products and services to see how they are doing things better. It may hurt the ego, but learning that a product is inferior means it can be fixed all that much quicker.