There's an old saying in retail – “The customer is always right…”
In the crazy eighties of retail, many retailers decided that some customers just weren’t worth the inconvenience and burned bridges with the 20 percent of the customers that caused them 80 percent of their headaches.
Can we get away with that today? Not a chance! Apart from the hyper-competitive environment we face, there’s another issue we face when it comes to our customer base.
Technology has created on line networks for individuals, and the importance of these electronic networks is even more profound with younger people.
Cell phones, text messaging, websites, emails and blogs can connect individuals to hundreds of people in their network within minutes. Moreover, people still chat face to face and share their good and bad shopping experiences.
Human nature, being what it is, people tend to complain TEN TIMES as often as complimenting about someone or an experience. According to studies, primary experiences are verbally broadcast to up to as many as ten personal friends and acquaintances. Secondary experiences, that is, those we hear about from friends can be passed on to as many as 5 new friends. You can see how the bad news spreads exponentially.
So if you lose a unhappy customer for life you certainly lose all their business as well as most of their business in their network. After all, with all the buying options out there, why shop at your store when a friend of theirs has lamented about their terrible experience with you? Besides, right or wrong, people will embellish and exaggerate their turmoil at your store. Your refusal to return the product they bought from you three years ago may be portrayed as a neat death experience by your fleeting customer.
What have you lost? Perhaps very little or perhaps a great deal. The truth lies somewhere in the middle. This is because when you lose a customer for life you also lose a par or all of their network.
If your average customer visits twice a month and spends say, $85 a visit, that’s about $1,000 a year. Over a 20 year customer span, that’s $20,000 in lost sales if they never return. What about their network? If they tell 10 people who perhaps share the story with another 5 more, that’s at least 50 more people with a bad opinion about your store or company. With 50 lost customers, you’ve now lost over ONE MILLION in future sales to your competition!
Care to dispute these numbers? Double them, cut them in half, make up your own. It doesn’t matter. We all must agree that the losses can be in the hundreds of thousands of dollars or perhaps even in the millions. This can stretch over decades, and it all started with one bad customer experience!
TAKE ACTION TODAY:
Go through this exercise with your store managers at your next meeting. Determine what your organization can lose with the effects of just one disgruntled customer. Extend that loss out into their personal network and determine a total long term loss. Impress your team on the importance of customer satisfaction. Decide if this exercise may change specific customer service policies in your organization.
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