"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.
One of the most challenging tasks when desiring to start your own business......IS TO START. There are many out there who need the extra income from a business, still others that no longer desire to work for anyone else and then finally those who just need an income of any kind! The ideas come, plans are laid out, research done, products and resources are located and then comes the real task...launching out.
Somewhere in the process fear rises up. Will the business succeed? Will anyone buy the products? Is this all just a pipe dream? Everyone deals with those little nagging doubts....EVERYONE. It is how we deal with those voices that will set the course for success or failure. While everyone is familiar with the fear of failure, not everyone has given much attention to the fear of success. You see if the business launches, is successful and grows then more responsibility, larger resources and more people become dependant upon your success.
The way to overcome this specific type of fear is to build slow and steady. Think of building a house. First the foundation is dug, the foundation walls put in place and all the ground utilities brought in or a way made to let them flow out. Everything done in the beginning stages of building a home sets the foundation for the building of the rest of the structure. Start by building a strong foundation. Make sure that you have strong, reliable suppliers, strong accounting practices and strong process for creating what you want to sell. When the time comes for growth, everything will be in place for expansion and building and will relieve some of the stress and pain of growth.
The other part of the success equation comes from you. If you believe you can you will. If you believe it is only possible to have limited success you will. If you believe that you might start off well but eventually fail, you will. You get to choose. I will leave you with these selected portions from an article from Rabbi Jonathan Sacks titled "Confidence":
One of the fundamental tasks of any leader, from president to parent, is to give people a sense of confidence: in themselves, in the group of which they are a part, and in the mission itself. A leader must have faith in the people he or she leads, and inspire that faith in them. As Rosabeth Moss Kanter of Harvard Business School writes in her book Confidence, “Leadership is not about the leader, it is about how he or she builds the confidence of everyone else.”4 Confidence, by the way, is Latin for “having faith together.”
Harvard economic historian David Landes, in his The Wealth and Poverty of Nations, explores the question of why some countries fail to grow economically while others succeed spectacularly. After more than 500 pages of close analysis, he reaches this conclusion:
In this world, the optimists have it, not because they are always right, but because they are positive. Even when wrong, they are positive, and that is the way of achievement, correction, improvement, and success. Educated, eyes-open optimism pays; pessimism can only offer the empty consolation of being right.5
I had an incredible 22 year career in the hotel industry. It was the perfect balance of energy, adrenaline, variety and creativity. I was privileged to create amazing events, destination weddings, high profile product launches and serve amazing clients but the day came when I was done. The time comes in most peoples life when you need a change and you have to stretch yourself, take a plunge and try something new, maybe even something you have never done before. Those life changes are scary and exhilarating, motivating and paralyzing at the same time......but if you don't do it.....you begin to die inside. The most successful people agree that if you can't face doing the same thing anymore.....CHANGE IT! And you will feel alive again.
Steve Jobs: "When I was 17, I read a quote that went something like: 'If you live each day as if it was your last, someday you'll most certainly be right.' It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: 'If today were the last day of my life, would I want to do what I am about to do today?' And whenever the answer has been 'no' for too many days in a row, I know I need to change something."
Read more: http://www.businessinsider.com/steve-jobs-quotes-2014-4#ixzz33XlhnWnT