"Goodwill for a business is built by good goods, service and truthful advertising." E.R. Waite
Today I am going to talk about a topic that seems to be passe', customer loyalty. Companies used to establish their business standards around the principle of building a client base and maintaining it. Now it seems they are more apt to throw their money into advertising and sales promotions trying to lure clients away from their competitors. Companies are so focused on the procurement of a new customer that they ignore the customer that has already purchased from them.
The greatest case in point of this trend is the communication industry. There are many good deals for a new customer but if you have paid your bill for two years or more? No deals. The list continues with the hotel industry, banking industry, car industry and on and on. There seems to be no benefit for being a loyal customer.
Having worked for major companies most of my life (until deciding to launch out on my own), I know the statistics surrounding this business practice. It costs a company three times as much to obtain a new client than maintain a current customer. It is also true that one dissatisfied customer will tell ten people which translates to a loss of ten potential clients. These facts have not changed in decades and yet companies are further away from the practice of customer retention now than at any other time in history. Companies do not care if you are a current customer.
Let me give you an example. My father worked for a company until his retirement. Two brothers started this company, built it on the reputation of sound business practices which included fair pricing, customer service during the purchase process and strong customer service after the product was purchased. They were very successful and actually expanded the business to be the leader in their area. When the business owners decided to sell the business and retire, the purchaser of the company had the opposite standard of business practice and closed within a year.
The statistics of failed businesses in the country are staggering. The Small Business Administration states that 8 out of 10 new businesses will fail. That is a sad fact. The biggest reason for the failure rate? No one has an open conversation with their clients. Do our products meet customer needs? How can we improve our product? How can we improve our service? You purchased from me a year ago but you are no longer my client. Why? The current customer that purchases from you is your greatest asset. Not only because of their dollar but because you have the opportunity to establish a relationship with them and find ways to serve them better in the future. Here is a Forbes article that talks about why businesses fail.
I have written about this company model before but the amazing success and their customer loyalty/satisfaction rate is amazing. Zappos (on-line shoe sales) began on a hunch that MAYBE there was a market for on-line shoe sales. They took that hunch and built a tremendous business that has expanded and expanded again. I will relate my personal experience. A pair of shoes were ordered and delivered to my home in three days. Each pair of shoes came with a return shipping label. This particular pair was not the right size and did not fit well. I contacted Zappos, returned the shoes with THEIR label and TWO days later the correct size was on my door step. They are quick, accurate, courteous and have a quality product at a reasonable price.
As you work your business today, begin to take a good hard look at your business practices. Do you have a viable product that is unique, well priced? Do you have a strong business acumen concerning the financial aspects of running a company? Do you have the leadership skills to build a strong team of committed individuals to continue your companies success? Do you know your customer, the one who has already purchased your product or service? In a world that seems so impersonal, the truth of all success lies in relationship. Build a client base, maintain it and the customers will come to you.