Customer Retention: A Lost Opportunity?

How do you feel when you see Comcast offering service to new customers for half of what you, as an existing customer, are paying? Like many businesses, they spend a lot of time, money and effort to get new customers, and very little on customer retention.

There are huge rewards in paying attention to the customers you have and it is very expensive to neglect them. Consider these powerful statistics:

• It costs 6 to 7 times more to acquire a new customer than to retain an existing one
• Existing customers spend on average, twice as much as new customers
• A 5 percent increase in customer retention can increase profitability by 75%

The evidence is clear: Customer retention can dramatically improve revenue and profitability while freeing up marketing dollars to acquire more customers.

Automobile dealers like to say that while marketing might sell the first vehicle, a good service experience will sell the next 3. Add in word-of-mouth advertising for a good experience, and a few more vehicles are sold to family and friends.

The scariest reality is the pain of a bad experience. A recent study found that many consumers who had a bad customer experience actively tried to disparage the company every chance they could through word-of-mouth, social media and other online channels. Consider this:

• A bad experience typically takes less than 1 hour, and cost less $20 to remedy
• Over 20% of customers are lost BEFORE they make a purchase
• 4 out 5 customers blame people for their negative experience

The key, of course, is your touchpoint employees. Many executives spend money on marketing to establish a positive brand, when in reality their brand is determined by our experience when we walk in the store. Is the facility clean and comfortable? Are your products displayed well? More importantly, are your employees friendly, attentive, and knowledgeable. Are they trained and rewarded for exceptional customer service?

While Comcast can afford to treat existing customers poorly, you can’t! Perhaps the greatest opportunity is to establish a channel to engage with your touchpoint staff to get their feedback on the customer experience. No one in your organization is closer to your customer!

Originally published in the June 2015 Carmel Business Leader.

Categorized in: Customer Service

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