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High customer churn shatters entrepreneurial ambitions

According to a study by Bain & Company, to increase your business’ profits by 25% to 95% you just need to increase your customer retention rate by 5%.

Evidently, your existing customers are more valuable than new ones.

High customer churn is nevertheless a persistent problem for many small businesses.

Here are some of the reasons why you are unable to retain your customers.

1. Inconsistency

If you are such a chameleon that customers don’t know what to expect they’ll soon leave you in search of consistency.

Think about it.

You most likely have a favorite restaurant, clothes shop, shoe store, dentist, plumber, and so on.

For whatever you require it is likely that you have a go-to person or place that immediately comes to mind when the need arises, one that you have given your business to for years perhaps.

This wouldn’t be the case if the service offered was not of consistently good quality. You’d have explored your options long ago if you didn’t perceive the service provided as value for money.

Customers therefore need to see consistency in your small business. They love to know that they can expect a consistent quality of service at your establishment come rain or shine.

They also love to know that this will still be the case when you expand the business. This is the reason why giant franchises like McDonalds are hugely successful.

2. Operating incognito

If your business doesn’t stand out customers may very soon forget that it exists.

Given the crowded nature of the marketplace your small business must jostle with the competition for customers’ attention. Your failure to do this is akin to operating without an identity and is really business suicide.

Today’s customer has lots of options to choose from and if you don’t stand out chances are that you’ll be easily and swiftly forgotten.

As such, you need to find effective ways of reaching out to your target customers on a regular basis.

3. Pushy behavior

Don’t overdo it; customers despise desperate pushy salesmanship.

Smart spending is the name of the game today. Customers are also well knowledgeable about what they need.

While upselling is a smart way to make more sales, going about it blindly may be one of the reasons why a good number of your customers have been steadily disappearing.

Knowing what a regular customer needs, you should strive to meet those needs – period.

Perhaps the only suggestion worth making has to do with introducing a new product/service that is clearly an improvement on what the customer is used to.

Anything else will feel pushy, something that customers really detest.

4. Failing to reward loyalty

Expect loyal customers to start trooping away if they feel you are too much of a scrooge to appreciate them.

While you may need to offer incentives and/or discounts in order to land new customers, you shouldn’t forget those regular customers whose continued business support is what is enabling you to make such gestures.

Regular customers develop a sort of entitlement and rightfully so.

Failure to reward their loyalty every now and then will only cause them to feel unappreciated.

Once this feeling morphs into resentment there’s little you can do or say to make them stay.

5. Your insistence on charging the lowest prices

Unfortunately, solely competing on the lowest price will likely have the rumor mills abuzz with doubts about your products.

Customers love a good bargain and getting good value for their money. Accordingly, the price has to feel right.

This in turn requires a combination of factors including service quality and the buyer-seller relationship, in addition to the price tag.

Basing your competitive advantage solely on the lowest price therefore just won’t do.

Furthermore, customers are typically skeptical about such prices as they are associated with low quality products, knockoffs and stolen merchandise.

Once doubts are cast about the quality or source of your product you are bound to start losing customers.

6. High turnover of key employees

With the loss of key employees comes the risk of losing customers…and sales volumes and opportunities

In most cases it is a business’ employees who deal with customers. Key employees therefore get to create and sustain relationships with customers. These employees typically have long lists of contacts which include the customers who bring you much business.

Accordingly, frequently losing such employees won’t augur well for your business.

Given that such employees tend to move with their contacts to their new workplaces, your business is bound to suffer the effects of high customer turnover regularly.

The onus is on you therefore to make contingency plans for key employee turnover.

7. Ignoring customer feedback

Your business just can’t afford to ignore customers’ feedback!

Every now and then people talk about where they spend their money. They speak highly of a business where they enjoyed the shopping experience and vice versa.

The conversation is even bigger online. A single positive review can help to bring you new business from people across the globe. Likewise, a negative remark can result in a considerable loss of customers.

You must therefore always be in the know about your customers’ feedback. This way you can promptly and appropriately issue suitable responses and/or take action.

8. Ineffective problem resolution

If customers think you are unable to solve their problems promptly and decisively they’ll soon find someone who can…

Problems involving customers often arise in business and when they do they need to be resolved with speed and decisiveness.

Quite nothing irritates customers like a long drawn resolution process for a problem or complaint whose solution feels rather obvious.

Customers hate being inconvenienced – some will wait, some won’t.

One thing you can be sure of though, you’ll probably never see them again.

9. Inflexibility

Don’t be excessively rigid with your policies; try to accommodate your customers needs and keep them happy.

Having and sticking to certain business procedures and policies is all well and good but may in some cases prove to be counterproductive.

Perhaps you prefer to sell a certain minimum level of product or make deliveries only to a certain distance radius. It could be that your customer service procedure is too bureaucratic and slow for customers’ liking.

Some of your customers will obviously take their business to your competitors who aren’t likewise restricted.

10. Inefficiency and excuses

Customers truly hate inefficiency and excuses – try to exceed their expectations instead…

When customers bring their business to you they trust that you can get the job done.

Your failure to complete the job within the agreed-on time and budget raises a red flag for customers but if the reason for this seems logical they may be willing to cut you some slack.

Several delays later your reasons become excuses – you can be sure that the concerned customers are already telling themselves “Never again”.

Don’t panic when you don’t see them again; 71% of consumers have ended their relationship with a company due to poor customer service.

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Finding customers to sell to is at the heart of owning a thriving business. Even better is the ability to retain your customers thus ensuring that you can enjoy repeat business.

Today’s entrepreneur is privileged to have access to more business-enabling assets, including information, resources, tools and skillsets, as compared to any other era in the long history of entrepreneurship. While it is now much easier to…(Read the entire post here)

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Posted: May 21, 2015 in Uncategorized

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