Most clients that I work with want to attract new customers. They talk to me because they want to grow their business – increase turnover, sell more products – get greater bottom-line return.
But almost all of them are ignoring a significant asset – and tool for growth potential that they already possess – their existing customer base. Pretty much everyone knows the truism that it costs at least 5 to 8 times as much to attract a new customer as it does to sell to the one’s you already have – yet most businesses ignore this lucrative source of new business.
And if you can’t confidently answer and quantify the question – ‘Are you losing customers?’ – you could be wasting marketing money attracting customers who will leave in a few weeks, months or years time.
Measure your loss
Until you have quantified the cost of lost customers you are unlikely to do very much about it. But once you do – it could be the only marketing that you do for a given period of time – because once you understand what you are losing here you realise why chasing after new clients is like pouring water into a leaking bucket.
How can you measure whether customers are leaving you? Of course this will depend on what or how you sell – but one simple way would be to take a list of your top 20 or 100 customers (by spend) last financial year and compare it to this year’s spend. Are there any names missing on this year’s list? Are there any significant decreases in spend which might indicate that although they are still buying some things from you they have decided to take other business elsewhere.
Talk to your sales people, reception staff – anyone who would have contact with customers and ask them if they are aware of any customers who have let them know that they are ‘leaving’.
Keep a record of any customers who notify you that they are leaving – and make a note of the lost revenue in each case.
Understand why customers leave
A look at the common reasons that customers leave is enlightening and reveals a startling picture. Most customers leave because they have no reason to stay...NOT because they have a reason to go. In his book How to Win Customers and Keep them for Life Michael Le Boeuf refers to extensive research which shows that far more customers leave due to 'perceived indifference' from the organisation they are doign business with than are influenced away by competitors.
Do you know why you are losing customers? Really why, not just the fact they have gone to a competitor – chances are you’ll never really know if they are leaving because if indifference. So you need to plug up this hole first before you worry about the one’s who have been lost because you’re comp...
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