Customer service and customer care

Estimates vary but most agree that it costs between five and six times as much to gain a new customer than to retain an existing one, so having invested so much in winning the customer, for heaven’s sake look after him!

As you win more customers you will see the 80/20 rule come into play: Often 20% of your customers provide 80% of your business. (You need to be aware of numbers as well as percentages here to ensure that your customer base is large enough and that your business remains profitable should one (or more) big customer defect to the competition or go out of business).

There can be a natural but dangerous tendency to concentrate the majority of your time and resources on keeping your key customers happy whilst ignoring the smaller ones (and not going after new ones at all). However, it takes time to develop a relationship with each customer so it may not be immediately obvious which ones have the most potential over time.

A startling potential result of this can be found in a book called “Keeping Customers For Life”, by Richard F Gershon. In it he states the reasons why companies lose customers as the following:

  • 68% are upset with the treatment they received
  • 14% are dissatisfied with the product or service
  • 9% start to deal with the competition
  • 5% seek alternatives or develop other business relationships
  • 3% move away
  • 1% die

Don’t you find it frightening that nearly five times as many customers go away because of the way they are treated rather than being dissatisfied with the actual product or service on offer?

You don’t necessarily need expensive software or systems to manage your customer relationships. Just give them that extra little bit of professional, polite attention and see how well you are rewarded!

Don’t forget to add your comments – or you may have a story you’d like to share that illustrates or refutes my thoughts…

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4 Responses to “Customer service and customer care”

  1. […] How many many of them even know that 68% of customers “lost” by them is as a result of being upset with the treatment they received? […]

  2. […] Leigh Wallinger from Arteka commented on our Customer service and customer care article. […]

  3. Hi Leigh

    Thanks for your well thought through comments and I agree with your suggestion.

    Let’s talk some more.

    All the best


  4. Linda,
    These statistics are a wake up call to all businesses that take their customers for granted. Have a look at books by Frederick F. Reicheld which look into the economics of customer loyalty – The Loyalty Effect and Loyalty Rules!.

    Loyal customers give referrals, which reduces the cost of acquiasition of new customers.

    Loyal customers are repeat purchasers, reducing the need to win more new customers.

    Loyal customers spread good karma when they are networking.

    A 5% improvement in loyalty rates can have a massive impact on the bottom line, according to Reichheld. Everyone should be looking at their “disaffected” customers and finding creative ways to get them to re-engage.

    How would I do it? A customer satisfaction survey will be a great way for you to find out everything you are doing wrong. Take their comments on board, promise there will be no re-occurrence of these problems and then deliver on your promise.

    You’re right Linda, there’s no need for expensive software. Just engage person to person and build customer loyalty to levels that keep your competitors out.

    Leigh Wallinger
    Arteka Limited – providing outsourced sales for technology companies

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