Used car salesman (courtesy of Chaka Raysor)
I am always puzzled why companies spend a lot more energy and focus on trying to sell rather than pleasing their customers. If you don't already know, customer retention is a far more profitable strategy than customer acquisition. That, plus the fact that word of mouth is taking off more than ever in this ad-saturated age of increasingly powerful social networks. Here are some sobering statistics which tells you why you should pamper your existing customers rather than court new ones:
- A typical dissatisfied customer will tell 6-10 people about the problem. A typical satisfied customer will tell 1-2 people.
- It costs 6 times more to attract a new customer than it does to keep an old one.
- Of those customers who quit, 68% do so because of an attitude of indifference by the company or a specific individual.
- About 7 of 10 complaining customers will do business with you again if you resolve the complaint in their favor.
- If you resolve a complaint on the spot, 95% of customers will do business with you again.
Studies have also shown that a Customer's Lifetime Value (CLV) can be far greater than that of a single transaction. In fact, 70% of a telco's revenue comes from 30% of its customers: those who stay for years and purchase increasing levels of service. There is a nifty way to calculate CLV here.
Now shouldn't you start paying more attention to those customers who made you who you are?