What is the biggest reason customers give for leaving one company for another?
Jim Thebeau, CEO, presents during the Expert Edge Seminar Series
I answered that question in a recent presentation on customer loyalty and satisfaction for about two dozen members of the Iowa City/Coralville Chamber of Commerce Expert Edge Seminar Series.
The biggest reason: Feeling neglected or under-appreciated is the number one reason customers leave a supplier. In fact, that’s the reason given by 68% of respondents in a survey about why they depart. That’s a large number.
Other reasons for customers leaving are small, percentage-wise, by comparison:
- 17% are dissatisfied with the product
- 11% leave because of competitive reasons
- 4% die or move away
Dig beneath the numbers and you’ll find that, for the most part, customer satisfaction is directly related to employee happiness and engagement. Meaning our employees play a major role in customer retention. It is management’s responsibility to teach employees appropriate customer service skills BEFORE putting them in front of customers.
Keep in mind that it costs 5 – 7 times as much to gain a new customer as it does to retain an existing one. In that context, every customer contact is a golden opportunity to deliver a positive experience – the ultimate goal of great customer service.
Research shows that loyal customers spend 68% more than a new customer. So, one thing to focus on is the lifetime value of a customer. For example, one study found that the lifetime value of:
- A local pizza restaurant customer is $8,000
- A Cadillac customer is $332,000, and
- A typical supermarket customer is $380,000
It’s quite surprising, really, when you look at a customer that way. And it makes the prospect of keeping that customer ever more appealing.
Bottom line: Do what you say you are going to do for a customer when you say you will do it. And ‘Hang on to That Customer.’