The cost of losing a customer

Wednesday, November 22, 2017 | By Ron Durrant

Most organizations do not fully realize the cost of losing a customer. Sometimes these losses are shrugged off and it's assume that a lost customer can be easily replaced with a new one. However, research by TARP Worldwide estimated that it costs five times more to get a new customer than to retain an existing one. In light of this, focusing on customer retention should be an essential part of any long term business plan. Over the years I have found many lucrative reasons why actively engaging in customer satisfaction initiatives pay off. Some of the top benefits include:

  • Existing customers tend to buy more than new customers.
  • Selling new products and services to current customers is easier because they are already familiar with your products and services.
  • Happy existing customers provide referrals which paves the way for increased sales.

Customers come and go for a multitude of reasons, some of which can never be overcome by good customer service efforts. However, as much as possible, it's critical to understand why a customer leaves so your organization can make strategic changes to enhance retention. Here are some ideas and suggestions to improve customer retention:

  • Know and track your customer retention statistics – Consistently high retention stats can indicate that your business is on the right track. Decreasing numbers can signal a need to reevaluate business performance, products and services, and positioning in the marketplace.
  • Be prepared to spend money on customer retention efforts – Good account managers watching over your existing customers is a necessary and worthwhile investment.
  • Don’t neglect your customers – One of the main reasons customers leave is lack of contact and the feeling neglected. Find ways to stay in contact through regular phone calls, emails, newsletters, blogs, or even a personal visit. Make sure your customer feel that they are important to you.
  • Know your customers business and consistently exceed their expectations – Customers need solutions to their business problems, not just a laundry list of products. To provide solutions you must understand the customer’s challenges.
  • Ask for feedback – Asking the right questions can keep you heading in the right direction and alert you to coming problems.

It is for good reason we have a reputation for providing a high standard of customer service. We have taken the time to make sure our clients feel heard through client forums, conference and frequent calls. We also encourage our clients to play an active role in the development of better products and services because we want to make sure our solutions meet our clients' changing needs. So, if you want more cost effective sales numbers, roll up your sleeves and pay more attention to retaining your customers. It’s money well spent!  

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