Well, this made me think, the really big question companies should be asking is: “What makes existing customers go away?” So I thought weíd better find outÖ
From customer experience research weíve conducted for more than ten years in multiple industries, we see three big reasons why companies lose customers, and fail to get positive referrals:
- Reason 1: When customers encounter problems doing business with the company:
In many industries weíve found that itís common to find a 25-35% drop in loyalty when customers have experienced a problem or concern while doing business with a company.
- Reason 2: When customers find it too hard to make contact to ask for help:
You would think that with call centres, email, web sites and snail mail, customers would find it easy to get in touch to ask for help. But, most of the time they donít. It ranges from one industry to another, but it can often be as few as 5-10% who will formally make contact with a company to complain or ask for help with a problem. They typically tell us that they find it too hard to make contact and donít believe anything would be done anyway. For customers who donít make contact, the company gets no opportunity to sort out their problem and recover their loyalty.
- Reason 3: When customers get a poor
response from the company, having asked for help:
Our research shows that many organisations are very poor at responding to customers who have made the effort to contact them for help. Loyalty amongst dissatisfied complainants can be 75% lower than customers who havenít experienced a problem. Compare this to satisfied complainants who can often be more loyal than customers who havenít experienced a problem. Not only are dissatisfied complainants less likely to continue to buy your products and services, they are also likely to spread the word and tell twice as many people about the bad response they received, than satisfied complainants will tell about a good response.
For many businesses, the combination of these three reasons has a serious impact on revenue, and profitability. For many public sector organisations, these three issues have a serious impact on operating costs, regulatory compliance, and support from customers.
This is why so much of the work we do with clients, focuses on measuring and fixing these three key areas.
Over the next few months Iíll be sharing some of the insights, tools and techniques we use with out clients to understand and address these risks. For example, why is it that even though many organisations try really hard to satisfy their customers, so many bad customer experiences still take place. Check out our thinking on this topic where I describe the “Four alternate realities of the corporate/customer universe”
From time-to-time we also run workshops, masterclasses, roadshows and online training courses to help organisations accelerate their progress towards being tuned success. Please check here for information about our upcoming public events.
About the author: Paul Linnell
Paul Linnell is a service improvement champion, working internationally with senior managers and their teams to help them achieve business success, reduce risk and build customer loyalty and advocacy by improving service to customers. Paul specialises in the design and deployment of customer experience measurement, service quality improvement, complaints handling and preventive analysis programmes. For most of his career he has worked in Europe and North America and for the past 10 years Paul has been based in New Zealand, continuing to serve clients globally.