According to Frederick Reichheld of Bain & Company, acquiring a new customer is six to seven times more costly than retaining an existing one. So, how do you maintain current relationships and keep your clientele loyal to the business? Answer the following questions to assess where your company stands:
- Is there a customer intelligence plan for staying ahead of your customers’ needs?
- Does the company understand its customers’ customer?
- Is customer service a part of your performance plan?
- Do you reward employees for exceptional customer service?
There are three concepts that prevent the competition from replacing your products or services and estimate what your average customer is worth in time and dollars:
- Customer Magnet measures the strength of the quality of the product or service that makes the customer continually come back to the company. Quality alone is no longer a differentiator; the proof lies in overall support and customer service. Positive experience is crucial. Bain & Company noted that in a recent Harvard Management Update, 60-70% of customers will do business with a company again if it deals with a customer service issue fairly – even if the result is NOT in their favor.
- Barrier to Entry measures the strength of the specific and unique attribute or advantage a company delivers to its customer that competitors can’t duplicate. Every business needs to understand what it is and strive to cultivate their competitive edge.
- Lifetime Value of the Customer measures the strength of the revenue generated by mutual relationship. This critical number will help you focus on identifying marketing resources needed to stay industry top-of-mind.
With all these aspects in mind, the loss of a good customer has the ripple effect beyond finances. Allbusiness.com published the following statistics, “Satisfied customers tell nine people how happy they are. Dissatisfied customers tell twenty-two people about their bad experience.” By proactively keeping your customers from migrating, you will not only minimize possible issues, but will stay competitive and profitable.
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