We often spend copious amounts of money trying to get customers to choose us. We then have a large chunk of them decide not do business with us again, and we spend more money trying to bring in new ones. What’s wrong with that picture?
I believe their are 4 key reasons people don’t purchase from us again and, as such, I think it is critical to get a handle on which of the 4 spins customers out of your business:
1) They are PRICE shoppers and want cheaper products or services,
2) They don’t like the quality, selection, location or some other aspect of your PRODUCT,
3) They DIE, move, or stop buying products or services in your category, or
4) They just did not like your SERVICE.
Fortunately, only a small percentage of people are pure “price buyers!” This is a hard and fickle group to capture. Unless your strategy is to be the lowest price provider in your category, you will never build loyalty from this customer group and you will always be trimming your margin when faced with other bargain basement competitors.
As evidenced by the detailed Right Now Harris Interactive 2010 report I provided in my ”Nov 11th What you don’t know will hurt” blog, most customers are “relationship buyers.” For a relationship buyer, product and price matter but they will pay a premium (some times only a small one) for better service and more importantly they are substantially prone to leave over bad service.
Think about it, if you are going for a deal (like Black Friday – the day after the US Thanksgiving holiday for my international readers) you will tolerate long lines, limits on the quantity you can buy, and even surly sales staff. That’s not the case under reasonable pricing conditions. Quality service is factored into a fair product price.
So here’s the payoff!
Of the previously stated 4 reasons customer leave, the one you have the most control over is the service level your people provide (most of us can’t decrease the number of deaths of our customer. However, if your product is killing your customer I would take care of that first).
So, why don’t you share today’s post with your team and explore what service behaviors are most likely to drive your customers away? Have some fun with it, exaggerate the worst case examples of “relationship” eroding service.
Even Sam Walton (founder of the substantially price driven company- Walmart) said “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
My dad, known for his brevity, would just say “remember son, the door swings both ways.”