One of your employees comes to you with a customer issue and wants $200 to resolve it. Do you say yes or no? I know… it depends.
Let’s presume you say, “NO we can’t afford to spend that amount on this customer… they aren’t one of our top customers.” As it turns out they are a solid customer but not one on your top 20%… and you religiously follow the 80/20 rule of only making exceptions for your top customers. The customer is upset because their experience wasn’t great and you didn’t help the situation by not offering any concessions… they left. The customer decided they must not be important enough to you, based on how they were treated, so they decided to go check out your competitors.
Something else happens along the way and another customer isn’t happy with their experience and another employee wants to fix the situation by offering them a concession. They, too, aren’t in your top 20% and so you don’t offer any relief to this customer… they leave as well. For similar reasons, they decide it’s time to check out the competition to see if they offer a better experience and are easier to work with than your company.
It happens again… and for similar reasons. Now management decides this isn’t a good trend to have happening so they want to gather the team of 10 people together (from marketing, sales, customer service, and product) to assess the situation and try to figure out what is going on here and how they can stop losing customers.
Let’s do some simple math… some customers defected because of the poor experience and this might have cost you a few thousand dollars. Getting a team of people together for several meetings also has a cost to it… both for their time and the opportunity cost of what they don’t get to do while they are in these meetings.
At the end of the meetings, the outcome will most likely be to figure out how they can improve their customer experience so they don’t have to give concessions to customers… and they should have given the concessions to these customers because it was the right thing to do. Did you really need a meeting to figure this out or could you have just looked at the trends?
The other question to answer is, “What is the “cost of acquisition vs. the cost of retention for the company.” Acquisition has always proven to be a higher cost than retention. Now the company is out the revenues of the “solid customers” they just lost and now you have to invest far more money to acquire new customers to make up the revenue shortfall. Overall this is going to be an economic drain for a period of time since the revenue stops immediately but the acquisition effort takes time.
The final question to answer is, “What are the customers that just left going say about you in the market… in-person and on their social networks?” Nothing good… in fact it’s pretty much guaranteed it will be bad because of the way they felt they were treated. So now the loss is far more than a few customers that left… it’s the future loss of all those who will most likely never become customers because they trust the opinions of the customers that just left. We live in a time where 90% of the people believe the recommendation of a friend or connection. This means if a future customer talks to one of your lost customers, 90% of the will trust their opinion and not want to do business with your company. This is not a good scenario no matter how you look at it.
When you break down some of the potential costs a company can incur by not having a great experience and not working with their customers to deliver an incredible experience, they add up very quickly. Your customer costs are well out of sync with the budgets you have available for supporting, acquiring, and retaining them. Somehow that $200 for each of these customers pales in comparison to these actual costs you most likely will need to incur to fix the situation.
Two key issues and solutions jump to light in this situation…
First, it’s important to market and sell the right “Personas” for your desired experience. The famous phrase, “You can’t be all things to all customers” is more relevant today than ever before. If you are selling to your desired Personas and customers in different Personas come along, you are better off to let them go to your competitors because of the “ripple effect” described above. So the key issue is not identifying and understanding your desired personas. The Solution is to strategically identify and fully understand the Personas you want to have as customers so there is no misunderstanding about who you want as customers today and into the future that will help you grow your business.
Second, regardless of the type of customer, fix their issue and give them the best experience possible… until you can figure out if they are the right Persona. Given how expensive customer acquisition is these days, you are better off finding ways to make them happy in the interim while you figure out if they are your ideal Persona or not. If you are going to “fire” them as a customer, you can do it strategically down the road and minimize the negative impact.
The key issue is to not force them to leave until you have figured out they are not the right Persona for your organization and you have a plan about how you are going to fire them. The Solution is to invest the time up front to identify your desired Personas and know how you can best help them get what they want so they help you get what you want. If they don’t fit into your strategy, the second part of the solution is to determine the best way to fire them. Determine the best way to let them go where there aren’t going to be serious repercussions down the road, if possible. If they are truly the wrong Persona for your business, then there is less danger of them talking to your ideal Personas since they probably don’t interact with each other.
Both of these solutions will help you keep your Customers and Budgets in alignment and in sync… not to mention the likelihood minimizing the loss of revenue. This will give some more time and opportunity to develop a strategy to find the best way to move forward and identify your ideal customers. Now you can develop a solid plan for how you are going to create an incredibly awesome experience for your desired Personas… while not losing significant revenues or reputation.
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We used to get excited about moving our companies from being GOOD to being GREAT… but today, being GREAT isn’t good enough… it’s a commodity. Today, if you aren’t on a path to move your company from being GREAT to being REMARKABLE and MEMORABLE, you don’t get talked about.
My PASSION and MISSION is to help INSPIRE, GUIDE, and HELP you move your company from being GREAT to being REMARKABLE… and create Word-of-Mouth on STEROIDS so you get talked about… a lot.
I have a model that helps get you to REMARKABLE. In the core of the model is creating unbelievably incredible amazing and awesome Customer Experiences… you can learn about it in my book, “Creating and Delivering Totally Awesome Customer Experiences.” With this as a foundation, you are well on your way to being REMARKABLE.