Customer satisfaction key to loyalty

In the past few articles, I have been writing about how to increase the number of leads your business receives and how to convert more of them into clients.

In the past few articles, I have been writing about how to increase the number of leads your business receives and how to convert more of them into clients.

Today, I want to summarize some past ideas and continue the discussion on how to retain the clients you already have worked hard to get.

Customer loyalty should be a key focus in any business, with good reason. Estimates suggest it can cost six times as much to get a new customer as it does to keep an existing one.

Loosing established clients is like filling your gas tank with a hole in it. Think of the extra cash, and the extra time you have to work, to pay the increased cost to drive your vehicle.

How do you track clients? Is this a practice that your business even undertakes? It should be.

The first step is working out how big the “hole” is for your business. In order to improve your customer loyalty you have to understand how and why they leave.

Tracking the number of customers you have now compared to the same time last year gives you a net gain/loss of customers. But it’s important to know the number of repeat clients as well as new clients.

If you create invoices for each sale, you already know how many clients you have, the net gain or loss and the average dollar sale.

Some retail stores that have cash sales use loyalty cards to track sales, recording both the date of each sale and the dollar amount. This way they know the number of times you buy within a time period, your total purchase and your average dollar purchase.

To measure how many customers you may have lost, you also have to measure how many you have gained over a specified period.

Consider the following example. Your business started with 150 clients and ended with 200 for a net gain of 50. However, you added 75 new clients.

The difference between 75 new and the net gain of 50 is 25. That means you lost 25 clients over the period. The formula is (number of beginning clients) + (number of new clients) – (number of ending clients) = (number of clients lost).

It’s critical to learn why customers leave. Statistically, the six main reasons customers take their business elsewhere are: move away — three per cent; buy from a friend — five per cent; sold by a competitor — nine per cent – product/price — 14 per cent; perceive indifference — a whopping 68 per cent.

This means that a majority of clients have not been satisfied with their buying experience. This makes it personal. Customers are irritated with poor customer service — slow, impersonal, rude, delayed attention.

If this is the reason that they’ve left your business, it is then really tough to win them back.

There are many options available to customers, so you really have to focus on keeping them satisfied. Simply providing them with the product or service is not good enough.

By providing that extra bit of attention, you will keep customers coming back:

• Statistics indicate that clients return to a business because of the relationships they’ve developed. Eighty per cent of business transactions are based on relationships, with 20 per cent based on issues. Another way of interpreting this is that 80 per cent is emotion-based versus 20 per cent logic.

• Master your delivery; deliver on time, every time. Inform your customer if there is a problem and explain how you’re going to deal with it. Personally follow up to make sure that everything turned out OK.

• Consider delivering your product with an unexpected gift (i.e. a Tim Hortons card).

• Be sure that your charges/invoices are accurate. If you agreed to a certain price or a discount in certain circumstances, it must be reflected in your invoicing.

• Establish a system to thank your clients for their business. Writing a thank-you note takes extra time, however this simple act always is appreciated. Take time to make a personal call to learn first hand the level of customer satisfaction. If you have a well-established relationship, acknowledge business anniversaries as well as other significant dates.

• Follow up in a timely fashion to gain feedback from the customer. Retail stores, even grocery stores, now make a habit of asking customers at the cash register if they “found everything they were looking for.” Many times these conversations not only lack sincerity, but are held at times when it is too late. Why not have staff ask this while people is actually shopping when the help is needed?

Most of these things are not difficult to do, yet very few businesses do them. It’s more than customer service. It’s the one system that will have made a very important and valuable improvement to your business.

ActionCoach is published on the second and fourth Tuesday of every month in the Business section of the Advocate. It is written by John MacKenzie, whose Red Deer business ActionCoach helps small- to medium-sized organizations in areas like succession planning, systems development, sales and marketing, and building/retaining quality teams. MacKenzie can be contacted by email at or by phone at 403-340-0880.