Estimated reading time: 4 minutes

It’s Only Common Sense: The Cost of Keeping a Customer

Experts estimate that we spend hundreds of dollars, if not thousands, acquiring new customers. When you think of all the money we spend on marketing, advertising, trade shows, websites, salespeople, and their travel and other expenses, you know these experts are right. I’ve read that a single sales visit will cost over $500! I have also calculated that in our business, the cost of adding a single customer to our customer list can cost well over $5,000! Pretty amazing, isn’t it?

I’ll tell you something else that’s even more amazing. After we spend all that money, all that time, effort, sweat and tears, we lose customers by the bucketful. And we are casual about it, saying things like, “Oh, well, that’s the board business.” Many companies in our industry are literally losing customers as quickly as they are bringing them in. Why is that? I know of one shop owner who has told me that his customer list is a mile long and an inch thick, meaning that they have no real relationship with any of their customers.

Certainly, the cost of keeping a customer is far less than acquiring one in the first place. Think about it. What do you have to do to keep a customer? How much money do you have to spend to retain your customers? Do you really need to spend much or any money at all to keep a customer? All you really have to do once you have acquired a customer is service him properly. So why are we losing them so easily? The answer to that question lies in the fact that we do not as an industry perform very well.

Think about what it takes to keep a customer. It’s not that complicated. To keep our customers happy, we have to give them a fair quote, make it easy for them to place their orders, build and deliver quality boards on time, all the while being courteous, helpful, and valuable. In other words, doing what we are supposed to be doing in the first place. No company ever lost a customer by providing them with excellent service. An argument can even be made that there really is no cost to keeping a customer. In fact, the formula for keeping a customer is the very same formula for making money. Just deliver good product on time and you make money, and the bonus is you get to keep your customers. So, here is the one big secret to customer retention: Do what you’re supposed to do, and you will keep your customers.

Here’s another idea: Treat your customers like the gold that they really are. Bring great service into the picture. Take your service to the highest levels possible. Deliver product early if it’s a quick-turn order. Always give your customers more than they asked for or expect. Constantly show them how important they are to you and your company. Show them the respect, admiration, and yes, if need be, the adoration they need to be happy.

Make sure your people are trained in customer service. Give them some leeway when dealing with their customers. Some smart thinking companies give their customer service people a certain monetary allowance for giving customers refunds at their discretion when they feel that the situation warrants it. And one more thing your customer service team should be trained to do and that is to always err on the side of the customer.

And finally, a great opportunity to keep customers is when you have a problem. That’s right, there is no better time to demonstrate great customer service than when you have a problem. Certainly, no customer is going to be happy that there is a problem with your product. The way you handle that problem, the way you treat your customer while having that problem, and the way you solve that problem, can make you legendary in the end. People love telling great customer service stories. Like the true story of the Nordstrom’s store that took back a set of snow tires, even though they did not sell snow tires. Or, the one about the Saturn dealer who personally delivered a new front seat to a customer…in Alaska, and he came from Tennessee! See what I mean? These stories took place over 20 years and ago and we are still talking about them!

I have worked with many companies, and the best customer relationships I’ve seen were forged in adversity, often having a problem in the initial stages of their relationship with those customers. Here’s why: When people have to call to complain about something, they brace themselves for the worst. They expect at least rude behavior, if not an out and out fight. They just know that it will a terrible experience.

So, when the person designated to handle that problem is polite and helpful and most importantly will go to any lengths to solve the problem, the customer is not only pleasantly surprised, she is over the moon with delight. In fact, she is so pleased that she will run out and tell everyone she knows about the great customer experience she received from your company. And you can bet your bottom dollar she will remain your customer for life.

It’s only common sense.