Relationships are tough. That’s what customer service is all about: relationships. The world is filled with relationships; from casual dates to wedding ceremonies to saying goodbye. And saying goodbye is the hardest part of all.
If there is one thing businesses need to be afraid of, it’s break-ups. And we’re not talking the boy-meets-girl, Hollywood-and-heartbreak kind of break-ups. We’re talking about business-customer break-ups.
Unlike the romantic comedies that flutter across our screens in a formulaic haze of romantic reds and blues, break-ups with customers don’t have a happy ending. Customers are far less forgiving than your generic Kate Winslets and Rachel McAdams’s, because they can detach themselves completely from you. They have no romantic obligation. They know their value. And if a competitor can give them what you can’t, you can be certain that they’ll be with them before you can utter a single apologetic word.
Learn the Word “Retention”
What has this got to do with the growth of your business? Well, actually, quite a lot. You see, according to data collected by Flowtown, the cost of gaining a new customer can be up to seven times more than the cost of simply retaining an existing one.
That is quite a hefty mark-up.
In the dating world, this is kind of what you would expect. Why would we think any differently in business?
Compare going on a date with a new relationship prospect, and put yourself in the shoes of the wooer. You’re looking to make a good impression. You want to look the part. You check your wardrobe and find yourself a little embarrassed with what you find, so you head out and buy yourself a suave new get-up.
You’ve also booked the nicest restaurant in town. You arrive with your date with a table for two waiting for you at The Savoy. At the end of the night, you get a kiss at the door.
Sure, it’s nice, but man is it expensive. Research suggests a similar trend in business. In US telecoms, for example, the average cost of gaining a new customer according to Entrepreneur Magazine is a staggering $315 (£185), while the financial industry pitches in with a mean of $175 (£100).
All that time, all of those resources; they are a waste if that person leaves a few weeks down the line. When that happens, you have to do it all again.
Keeping Is Gaining
The word ‘retention’ might seem at odds with the contemporary “expand and conquer” ethic that corporations seem to have adopted. But it isn’t. In fact, in the grand quest for profit, keeping customers actually rakes in a lot more revenue than you would think.
So, what would happen if you boosted your customer retention rate by just 5%? Profit happens. Flowtown’s research revealed that this small change can increase your profits by up to 95%.
That is a huge return on investment.
If you want your company to share the wealth, there are a few steps you need to take. Remember that customers are more practical than love interests, so you’ll need to win them over first by proving that you care about them. Invest into your customer services team, not only financially but also with your time. Happy employees are far better at being compassionate with unhappy customers.
Sometimes, the quality of your customer service isn’t the problem. You can be brilliant at customer retention, but this eventually leads to more customers (yes, customer retention is also a sales tool: happy customers will tell their friends), sometimes too many for your in-house team to handle.
In these cases, it’s worth taking some time to set up some way of dealing with overflow calls. If hiring more in-house customer service executives isn’t feasible, consider outsourcing calls to an independent calls management company.
Not only will customer satisfaction rates climb if their calls are answered straight away, but your employees will be under less pressure, meaning they can perform better.
In real life, it’s the couples that stick together through thick and thin that go the distance. It’s not about winning their hearts; it’s about keeping them. That is how you’ll get your happy ending.