‘Designing Strategies’ Newsletter
July – August, 2013 Volume 10 – Issue 54
It is sometimes difficult to put your arms around actual costs related to losing a customer. That said, the fact remains the impact on your bottom line can be significant. There is a good chance dissatisfied customers will not bother to say goodbye. Nor will they tell you why they are unhappy. Neither of these situations is a good position for your firm to be in. The extent of customer influence in your marketplace is something you need to be aware of.
Not long ago, pre-Internet and social media, an unhappy customer was likely local. They would come in person or call on the telephone to let you know they were dissatisfied. If you were unwilling to make good on the problem, you’d know immediately if they were angry. Anger comes in many levels, some far worse than others. The more angry the customer is, the more likely they will share their displeasure with anyone who will listen. Today, that number can be far greater than it was in the past. The Internet and social media have extended our reach exponentially around the globe.
It is common knowledge that retaining existing customers is less expensive than courting new ones. Once a dissatisfied customer leaves, taking their business elsewhere, you have lost control over the situation. You don’t know if they will be back or buy from you again. Some companies won’t even realize dissatisfied customers have gone.
You cannot count on them remaining silent about their issues with your company. They may not tell you why your company, your product or service fell short, but they will tell others. Statistics show each disgruntled customer will tell 8 to 16 others. In a world of social media, that number can increase, spreading bad news in a nanosecond. Their dissatisfaction will become costly unless you intervene quickly.
Let me share a situation that clearly shows how much more reach customers have today because of the Internet and social media. A young man involved in customizing cars ordered special parts from an Internet operation. The parts arrived in poor condition, due to the way they were packed for shipment. The box arrived with no external damage, but the parts inside had obvious paint damage from rubbing against each other in transit.
He contacted the company about exchanging the parts, only to be given the runaround for nearly two weeks. They cited their policy of only allow customers 24 hours to notify them of problems. When the package was delivered, he happened to be out of town, so the box was received by someone else. With no obvious damage to the shipping carton, the package was set aside. When he returned several days later, the 24-hour policy time frame was already long past.
After a number of phone calls, plus e-mails with images of the damage, the company finally agreed to take the parts back — at a 25% restocking charge. They even asked him to repack the individual parts in bubble wrap (which they never did) before shipping them back. Really. You can’t make this stuff up. What are the odds this experience will bring him back in the future? Slim to none comes to mind. Do you think he shared his experience with friends and colleagues in his car customization circle? Of course he did.
What the auto parts company didn’t know was this particular young man is a moderator of two online car forums. One of the forums has nearly 20,000 members, the other has over 6,000. Helping each other with their customization challenges is a big part of their daily discussions. They also often ask each other where they can order needed parts for their projects.
What costs will be felt by that parts supplier when this customer shares his unpleasant experiences with other car enthusiasts on those forums? Do you think their run around was worth the risk? Most parts for car customization don’t come cheap. If they lose just one potential customer, that restocking charge they demanded will amount to pocket change in their register. When the mistake is obviously yours, own up to it and make good on it. In the long run, the minor cost will be insignificant compared to the value of a happy customer.
You need to be aware of what mistakes are made serving your customers. You should be on constant alert to what problems exist. Otherwise, your firm will continue to alienate customers. To ensure the continued success of your firm, know that your customers are being treated in the very best manner. When customers share information about your company you want to know it will be positive.
Satisfied customers can bring even more customers to your door. Happy customers won’t just buy from you once, they keep coming back. Price is not the only thing that bring customers to your door. Customers want to do business where they are treated well. They want to deal with companies that are interested in them and their satisfaction.
If you don’t have a customer service policy, it’s time to get one in place. Set up reasonable return or replacement policies that will keep customers not only coming back, but telling others to buy from you. Develop processes to get constant feedback from customers. Consider social media sites like Facebook to handle customer issues in a timely manner. Set policies for handling negative situations.
Set up an ‘alerts’ program to watch for comments about your company, your products and services. You can’t afford negative comments spreading across the Internet without the opportunity to rectify situations and keep customers satisfied. Plan now to devote time and resources to not only develop your customer service procedures and policies, but to train all of your staff about how to deal with dissatisfied customers.
