Tag Archive: customer_loyalty

Knowing When to Let Go: Identifying Customers That Aren’t Worth Saving

Knowing When to Let Go: Identifying Customers That Aren’t Worth Saving. by Jen Hickey.

Breaking up is hard to do. But, as in life, some business relationships aren’t meant to last. For a small business, especially a new one, each customer has a measurable impact on the bottom line. You try to make every customer happy by offering top quality products or services, but there’s always a few that never seem pleased. The more time and effort devoted to those “high-maintenance” customers, the less there is for the rest. You must decide early on whether such customers are worth the trouble. If not, then it may be time to part ways.

Before calling it quits, look at the ROI of a “problem” customer. Are they really worth keeping when considering intangibles like time and employee morale? Andrew Blickstein, chief visionary officer[JH1] of HomeRun Media, a media buying, research, strategy and planning company, calls this the ‘[garbage] metric.’ “It used to be if a client was paying us a lot of money, we’d deal with whatever [garbage] they threw at us,” says Blickstein. “Now, I measure by how much [garbage] I’m picking up.”

Blickstein recalls the first client he ‘fired.’ “Every conversation with this client was a struggle,” he says. The final straw came when the client ignored a memo from Blickstien that gave a detailed analysis of his campaign and the significant internal resources it took to provide. “I realized that this client did not respect the work we did and was never going to,” says Blickstein. “I thought, do I really want to do business with someone that doesn’t respect what we do?”

Blickstein called a few days later to sever the relationship. “The client was shocked because he was still paying me,” Blickstein recalls. “I wished him well and promised to continue servicing him until he could find replacement.”

Whether a customer is a drain on resources should also be calculated into the ROI. “The bottom line is the bottom line,” Blickstein notes, adding that his staff understands his preference to work with customers who don’t erode profitability due to high-maintenance demands.

For customers that may be worth saving, however, try to lay out parameters to help change their bad behavior. “In writing, present three ways to fix the problem. It’s important to offer them choices, but also limit those choices,” notes Beverly D. Flaxington, co-founder of Advisors Trust Advisors, and author of “Understanding Other People” and “Make Your Shift.”

PQ_CustWorthSaving.jpgIf that doesn’t work, it’s time to have the talk. “If you’re bending over backwards for a customer and there’s no strategic reason for keeping them, you need to offer them an alternative,” says Flaxington. “The client isn’t always right, but the worst thing you can do is to get defensive or try to show them the error of their ways.” It’s important to remove emotion from the conversation. Frame it as a business decision: Your company is moving in a different direction and can no longer meet their needs. Better yet, offer to refer them to a competitor and service them until they can find a replacement. “Give them the option to go,” says Flaxington. Often times, the customer will agree and maybe even be relieved.

Sometimes customer expectations are beyond the scope of your business. “We learned quickly the importance of knowing your target audience and what you can offer,” says Flaxington. “You start to get pulled away from other clients when all your energy and time is focused on pleasing the difficult ones.”

For a startup, saying no to any customer, even a difficult one, may seem risky. “Every client’s a percentage of our business at this stage,” notes Brett Brohl, who co-founded scrubadoo.com, a virtual one-stop shop for medical uniforms, in 2009. “If you lose one client, it hurts.” But Brohl has ceased business with two clients since going live just over two years ago. One was a large medical practice, with multiple locations and doctors that ordered lots of products. But the client continually sent requests to match or beat prices of lower cost vendors.

Brohl realized he was getting away from what differentiated his business from other medical uniform suppliers. “We are first a customer service company,” Brohl explains. “It was tough to turn away from a big client, but competing on price is not what we’re about.” When he stopped matching price, the client stopped placing orders. And it turned out to be the right decision. “Not only were we making a very slim gross margin, but this client consumed more time than any of the others,” notes Brohl. “It’s been positive in that it’s freed up time to do more selling and bring on new clients.”

If a high-maintenance customer is part of an overall strategy to expand into a new business segment, or a referral from a high value client, consider pricing the additional time and services into their bill. “If you’re a small shop with 100 clients and 10 of them are fairly low return and require a lot of time, we recommend that our clients use a price tier for services,” says Flaxington.

“The least satisfied customers, those in the bottom 20 percent, generate 16 times more complaints than customers in the other 80 percent,” notes Betsy Kruger, owner of Strategic Power and author of “Top Market Strategy: Applying the 80/20 Rule.” “Successful businesses are ones that specialize and focus on their loyal heavy users, those in the top 20 percent, and do not try to be all things to all people.”

Kruger recommends automating services for the bottom 20 percent of customers or moving them off the books by discontinuing that market segment or introducing them to a competitor. “Figure out how can you best serve those that delight in your business and bring in more customers just like them,” says Kruger. “Referrals from your top customers are really going to multiply your business. Focus on what you do best and who really appreciates that.”

In return, offer extras designed to keep those top customers loyal. “Reward high volume customers with loyalty programs, reduced fees, and customized products,” advises Kruger. “Give them personalized attention.”

In the end, if a customer’s calls inspire dread, it’s probably time to call it quits. “Deep down inside the client usually knows that, too,” says Blickstein.

5 Things You Shouldn’t Do if You Want to Keep Your Customers Happy

customer serviceGood customer service is essential for a survival in today’s economically. Whether it is having your Starbucks Frappuccino redone because your order was wrong the first time or the convenience of free shipping and returns at Zappos.com, good customer service is the lifeblood of any business and something consumers never forget. Unfortunately, the same is also true for bad service. In fact, it takes 12 positive service experiences to make up for one negative experience. Moreover, research has shown that a dissatisfied consumer will tell between nine and 15 people about their experience. Thanks to technology and an increase in social media use, consumers are able to voice their opinions faster and easier than ever. By using sites such as Facebook, Twitter and Yelp, consumers can reach thousands of people in nanoseconds.

Ironically, while companies often invest heavily in attracting new customers, they usually don’t do nearly as much to keep them. According to a Customer Experience Impact Report from Harris Interactive, 82 % of consumers quit doing business with a company because of a bad customer experience

On the other hand, companies that get customer service right are rewarded with bottom-line building loyalty, positive word-of-mouth (likely the most powerful form of advertising in today’s age of social influence) and even the opportunity to charge a premium. The Harris Customer Experience report also that found that 85% of customers would be willing to pay more over the standard price in order to ensure a superior customer experience.

For small businesses, delivering great service poses a unique challenge. Consumers may expect a more personal approach. However, while the flexibility to treat customers as individuals, make concessions and resolve issues quickly can be a valuable differentiator, small businesses could be disadvantaged by limited resources for customer relationship management, such as CRM technologies and perks, like free shipping, used by bigger organizations to enhance service delivery.

Five Cardinal Sins of Customer Service

While there are many nuances to great service and every industry has different expectations, it is a sure bet that any of the transgressions below, especially if repeated, can sabotage your effort to make and market great products.

1) Check your mood at the door – No one is immune from stress. However, personal problems and good service do not mix. You and your employees should maintain a polite, friendly, helpful and positive disposition at all times. This means employees (and you) should never complain about their jobs and always remember to say please and thank you – even to difficult customers. Equally important, make sure that you and your staff have intimate knowledge of all your products and services, including options to modify or substitute if the exact item or service the customer is looking for is not available.

2) Silence is not golden – One common complaint about large companies is that they do not respond quickly or at all – to customer emails. You should do your best to set and keep a time goal for responding to customer inquiries, comments, or orders. Keep your inbox open all day and make sure it is synched to your smartphone. Also consider using Twitter and Facebook as alternative means to be accessible, share information and address customer concerns.

3) Don’t sell, solve – Helping a customer meet a specific need rather than just making your own registers ring is the cornerstone of an authentic customer service mindset. For example, if someone comes into your store to buy a birthday gift, ask questions about the recipient and budget that will help you tailor your recommendations, rather than just proposing generic ideas. Shifting the mentality from selling to solving eliminates pressure, makes the customer feel you have a genuine interest in them and translates into a positive, rewarding experience and repeat visits.

4) More jargon than they bargain for – Customers want to build relationships with authentic brands they can trust. Excessive and confusing marketing mumbo jumbo is a turnoff that can work against its intended purpose. Instead seek ways to add value to content on your site, blog, Facebook page – e.g., offer tips on relevant topics, share appropriate articles, etc.

5) Staying wrong and strong – To err is human, to recover is good service. Mistakes happen, but what can make or break a business is what happens next. Sticking to your guns and not taking responsibility for an error will just escalate anger and make the situation worse. If your customers see you making an honest effort to rectify the situation rather than being defensive or offering boilerplate apologies, they are less likely to take their.

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5 Innovative Ways to Generate New Business

In his great book The E-Myth, Michael Gerber says that many small business owners spend too much time working in their business and not enough time working on their business. Why is working on our business so important?

Because clients and customers leave.

They leave for all sorts of reasons – maybe they don’t need you anymore, or they found what you do somewhere else that is more convenient or cheaper, or they moved, or whatever. Working on your business means it is not a crisis when a customer leaves.

Here then are five innovative ways to work on your business – to grow your business – without breaking the bank:

1. Tap into the Power of Testimonials: Satisfied customers can be one of a small business’ best marketing tools. A testimonial impresses potential customers because it is an independent third-party validation that a business really is as good as it claims to be.

So get out there and ask some of your best customers to write you some letters of recommendation on their stationary. Then you can take these testimonials and:

Put them in your shop window
Add them to your website
Add them as an email tagline
Use them on your blog or e-newsletter
Use them in sales presentations

What about adding a video testimonial to your website? Talk about making an impact.

2. Boost Your Word-of- Mouth Advertising: We all know that word –of-mouth is the best sort of advertising there is. But aside from just waiting or hoping that a customer passes your name along, you can:

Create a referral reward system that gives customers a discount when they refer you business
Encourage comments on your Facebook page, blog or website
Ask your best customers to recommend you

Finally, check out the organization Le Tip; a group whose purpose is to foster word of mouth referrals.

Click here to read more articles from small business expert Steve Strauss.

3. Stay in Touch: One way to make a one-off customer into a loyal, repeat customer is to remain top of mind. If you want to get repeat business, your customer has to think of you when he or she has a need. They will more likely think of you if you gently, consistently (but not too often) stay in touch with them.

Here are two ways to do this:

Social media is all the rage for a reason: It works. Creating a Facebook page for instance is easy, and through contests and great content, you can get people to “like” it. Thereafter, that page becomes a friendly place to stay in touch. Tweeting can also be used.
Email marketing is a great way to stay in touch because it is permission marketing, that is, by signing up to receive your e-newsletter; customers are giving you permission to stay in touch with them.

4. Sell gift certificates and gift cards: You see gift cards for sale everywhere these days – at the market, in department stores, heck, I even saw some for sale recently at my car wash. Bottom line: Gift cards sell, it is estimated that up to 10 percent of all holiday sales now are in the form of gift cards.

Gift cards cannot only be used by large businesses. Any small business can and should create them as well. Also, if you currently accept debit and credit card payments, check with your card processor to see if they offer a gift card program.

5. Up-sell, but do it right: As you likely know, up-selling is the art of having a customer buy more than their initial purchase. Up-selling, when done wrong, is annoying, but when done right can help both you and your customer. The key is to offer the item in a helpful, non-aggressive way, i.e., “Did you know that if you buy two more gift soaps, we throw in another one for free?” If they say they are not interested, don’t pursue it any further, or you may be seen as overbearing and pushy.

What types of approaches do you use to get new business? What have you found that works/doesn’t work? Share your tips with the SBOC community below.

About Steve Strauss

Steve Strauss is one of the world’s leading small business experts. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. Steve is also the author of the Small Business Bible and his latest book is Get Your Business Funded: Creative Methods for Getting the Money You Need. A popular media guest, Steve is a regular contributor to ABC News Now and frequently appears on television and radio. His business, The Strauss Group, creates unique, actionable, entertaining, and informative multi-media small business content.

You can read more articles from Steve Strauss by clicking here.