Customer Retention: The Great Lost Opportunity

We spend much more time, money, and effort on attaining new customers than retaining the ones we already have. Companies in all industries, including ours, are structured around customer acquisition rather than retention.

In his book Never Lose a Customer Again: Turn Any Sale into a Lifetime of Loyalty in Less than 110 Days, Joey Coleman focuses on the long-neglected subject of customer retention. In the book, he says, “Businesses don’t catch as well as they chase.” Think about it: we spend lots of money on marketing, advertising, sales calls, trade shows, travel, and entertainment to acquire new customers.?

Regarding our teams, we pay and reward our salespeople much more elaborately for gaining new customers than we do for retaining our current customers.

In some cases, it’s almost as if we grow bored with our current customers and would rather enjoy the chase of new possibilities for new customers.

From my own experience, I have been known to chastise salespeople who call themselves “relationship managers” and prefer salespeople who say they are hunters and prospectors. While reading this book, I often had to stop myself and ponder whether I was right. Maybe, in some cases, I have not looked at the larger picture.

Let’s look a little closer. Ask yourself these questions from this book:

How much time do you spend wining, dining and courting prospective customers?

How much money do you spend trying to acquire new customers for your business?

How many people in your company focus on marketing and sales?

And now, ask yourself this, which is a much more important question:

How much time, money and energy do you spend on trying to keep your customers?

It's a pretty daunting question, isn’t it? Especially when you consider the fact that it is ten times more expensive to grow your business by new customer acquisition than it is to grow your business with your current customers.

Now, think about how much easier it is to provide your current customers with your best service than it is for a new customer. You have already been through all the growing pains you incurred by learning how to properly service your current customer. The relationship is established; they know who you are, you are on their AVL already, and yes, they will pick up the phone any time you call!

Now, compare that to the months of rejection and anguish that come with customer acquisition. Now, please don’t get me wrong. Customer acquisition is a critical part of running a business and that will always hold true. All I am saying is that we need to spend as much time and effort keeping the customers we have already. Currently, most of our effort is on new customer acquisition to the detriment of keeping our current customers happy.

That being said, let’s turn to why we lose customers. It might surprise you to learn that it has been proven that the single most prevalent reason we lose customers is this:

You lose customers because they feel neglected after the sale is made.

Let’s pause here and think about this. They feel neglected; why is that? Well, it’s quite obvious if you take a moment to think about what most of us are guilty of.

First, we spend all this time, money, and effort treating our prospective customers like royalty, filling them with the hopes and dreams of how wonderful it will be when they become one of our customers. Often these promises are made by a salesperson who will be handsomely rewarded for bringing this customer in.

Now, what happens after this highly rewarded salesperson brings the customer in? He is sent out on his way to get another customer, and the customer is then turned over to inside sales or customer service. Good people, to be sure, but busy people, busy handling the hundreds of customers you already have. This person who is not compensated for new customer acquisition looks at the new customer as just another responsibility on top of the already huge pile of customers she is responsible for keeping happy. The same applies to the rest of the people in the company. The prospective customer who has been treated like royalty for months – in some cases, years – by the salesperson is now just part of a slew of customers who are all competing for your already overburdened non-salespeople. They did not go on the dates; they did not treat the potential customer to all of the amenities that the salesperson did, so yes, they feel abandoned and neglected.

And to make matters worse, if they call their old friend, their old beau, the salesperson, and ask for his help, when he tries to accommodate them, we kick his butt, and tell him to mind his own business, which is to acquire new customers and send him out there to do it again!

It’s only common sense.