4 Reasons Customers Leave and What You Can Do About It

Many small businesses assume that their main marketing goal is to woo new customers to the business. Keeping existing customers is just as important than acquiring new customers.

Today, we have a post from Daniela Baker from CreditDonkey. If you’re just starting out without a customer base, that’s true. But for established businesses, a huge part of marketing isn’t winning new customers – it’s keeping old ones.

As an Inc Magazine article states, it takes about ten times as much work to win new customers than it does to keep old ones – and all that marketing effort seriously eats into your business’s profits.

In fact, a report from the Database Marketing Institute notes that for many businesses, including hotels, gas stations, drugstores, and grocery stores, the bulk of the profits come from the 70%-85% of customers who are loyal to that business, regardless of price fluctuations.

So if most of your profits are going to come from existing customers, it’s obviously important to know why those customers leave and what you can do about it. So here are the top four reasons customers choose to leave (so this doesn’t count things like death or moving away from a local business) and what you can do about it:

Functionality as customer service

Somewhere around 15% of customers say they leave because their needs for a product or service change. These customers sometimes fall into the “you can’t win them all” category. And it’s true. Your business simply cannot afford to meet the exact needs of every single customer who walks through your door.

But on the other hand, there may be some things you can do to better meet customer needs so that you can retain these once-loyal customers. Social media can be a big help here.

Simply make a habit of asking customers what services or products they would like to see you provide – or what they’d like to see you change about your services and products. Then, listen carefully. If there are repeated requests for similar changes, do your best to make those changes – and then let your customers know about it. Knowing they’ve been heard by your business, even if you can’t make changes immediately, can be enough to make some customers with changing needs stick around a while longer.

The effect of price in customer experience

Another quarter of customers leave because of price increases. And yet again, this is an area where you simply can’t afford to please everyone. If you’ve had to raise prices in order to be able to turn a profit at all, then it is what it is. Of course, if you’re price gouging just because you can, you’re going to watch your customers drop like flies.

One way that you can keep from losing customers over price increases is to simply be transparent. If you make specialty handmade jewelry and the increasing cost of precious metals has made your current prices untenable, tell your customers about it. And then, maybe strive to balance price increases on premium products and services by offering new, lower-priced items or service packages. A jeweler, for instance, could turn out a new line of mostly brass or stainless steel pieces, which could be priced lower than pieces made from gold and silver.

Quality customer service

About 1/3 of consumers leave a business because of poor quality. This, obviously, is an issue that runs deeper than your marketing. If you have customers leaving because of the quality of service or product you provide, it’s time to step up the game.

Again, you can use customer feedback to figure out where quality is breaking down in your products. Maybe customers have perceptions of poor quality because some of your marketing claims are overblown, or maybe your products break way too easily. Either way, asking customers frankly about their quality concerns can help you make improvements. And these are improvements that you’ll need to make quickly, even if you have to apply for extra financing to make it happen.

Why bad customer service happens

Here’s the real kicker – a full 75% of customers say that they’ve changed businesses because of a bad customer service experience – or even repeated bad customer service experiences. The software industry tends to be a big example here. Many first-releases of software come out with bugs, and small software companies, in an effort to streamline business, don’t hire enough customer service representatives. As a result, phone hold times are impossibly long, and customer service just plain stinks.

If your business has bad customer service, you’ll hear about it from frustrated customers – or soon-to-be-ex-customers. And when you do hear about it, listen. Change what needs to be changed about your customer service processes, even if that means hiring more people to answer phones or deal with customers in person.

What customers want most from customer service

Really, most customers just want to get through to a customer service representative quickly, and they want to feel like they’ve been heard. In all but the worst cases, meeting these two requirements will make your customers feel like you’ll do what it takes to take care of them – even if customer service representatives can’t really fix the original problem. (Of course, when you can fix the original problem and do it quickly, you can win lifelong customer loyalty.)

So this year when you’re talking about your business’s marketing plan, don’t make it all about finding new customers. Instead, focus on ways to prevent the loss of current customers by focusing on these four areas that are likely to cause customers to choose your competitors next time.

Daniela Baker is a social media advocate and blogs at www.creditdonkey.com, a blog for small business owners. Follow them at @CreditDonkey