The Big Mistakes: 14 reasons businesses lose customers
By Blake and Mike DuBose
According to the U.S. Small Business Administration, 50% of businesses fail within five years of opening. Fewer still make it to their 10th anniversary.
Countless reasons for business failure exist, but one of the biggest--and simplest--problems is not being able to pay their bills. Often, this is linked to poor market and consumer research. As Forbes columnist Chad Otar explained, "You can have the greatest product in the industry, an effective pricing structure, and a huge budget, but if no one wants what you're selling, there's not much you can do to save what is destined to become a sinking ship."
We have learned that finding and retaining great clients is critical to success, but it's not easy. Still, it's always surprising how many companies take valuable customer loyalty for granted and end up losing them.
Clients want to know that you care and value them as partners. Based on our 30+ years of business experience in different industries, as well as proven research, here are the top 14 reasons that organizations lose customers:
Poor client screening: If a business is driven simply by profits, rather than carefully assessing if a client fits its strategic plan, vision, culture, and services, it will engage with anyone. It's like that old saying: "Money talks." However, accepting just any customer can allow abusive, cheap, and labor-intensive clients to wreak havoc on the workplace, disrupting its culture and frustrating employees.
Improper pricing: As Otar reported, "Price your product too high and you'll push away potential customers, too low and you won't be able to turn a profit." Using the internet, customers can peruse a variety of attractive offers before making their choices. But be careful: it's possible to offend existing customers if they're not given the same deals that new clients are offered. It's important to study your competitors and continuously refine your organization, finding new ways to improve your products, pricing, and services. As Paul Linnell pondered in an article for CTMAworld.com, "We invest a small fortune attracting new customers, but how should we keep customers coming back for more and ideally, telling their friends to come too?" It's a question all business owners need to ask themselves!
Failure to recognize staff-client relationships: Often, customers form emotional bonds with employees, especially if they have worked together for a long time. Research from the Peppers and Rogers Group found that even very satisfied clients may leave because of staff turnover. When personal relationships end, bonds with the business are broken. That's not to mention that some unhappy departing employees may send negative signals to your customer base.
Not understanding customer attitudes: Many businesses believe they're providing excellent customer service when they actually aren't. Therefore, it's important that companies regularly seek feedback from clients. Ongoing customer dialogue; brief, anonymous surveys; and secret shopper reports can reveal important opportunities for improvement.
Out of sight, out of mind: Minda Zetlin of Inc. magazine recently reported on research from consultant Barry Moltz showing that for every month customers don't hear from you, you lose 10% of your influence with them. Reach out to your partners at least monthly and give them something of value, such as useful information, to keep them interested and engaged.
Being unavailable: To cut overhead, many companies make it difficult for clients to communicate with them. They often push customers seeking a human voice to chat specialists, difficult-to-maneuver websites that hide contact information, and computers that do not recognize their needs. If they ever reach a human after all the aggravating steps and voice prompts, it's usually an untrained person speaking with an accent that's difficult to understand.
Inadequate staffing: An organization is only as good as the people it hires. In order to increase profit margins, businesses often take on more work while keeping the same staffing level, overwhelming good employees with long hours and excessive caseloads. Once they leave, new team members cannot provide the same level of quality care as the experienced staff once did. Growing too fast without the right human resources is one of the top reasons businesses fail.
Slow response times: Research indicates that up to one-third of clients who leave do so because their issues (most of which are small) are not addressed in a timely manner. Maintaining an internal rule of returning customer contacts the same day, having a single point of contact, and offering telephone callback features to avoid long waits all go a long way. DuBose Web set up a 24-hour customer emergency email contact line that reaches all its staff, which has been useful during weekends, holidays, and off-hours.
Excessive bureaucracy: Customers don't care about a company's rules and policies--especially those that slow solutions or force them to jump through hoops. They simply want great service and for their problems to be fixed promptly. While reasonable structure is important, keep your business simple.
Overpromising and under-delivering: There's nothing worse than telling a customer to expect an outcome and having to break promises. Sometimes, you're out after only one strike. The solution: exceed customer expectations consistently.
Inadequate responses: Linnell noted that "research shows that many organizations are very poor at responding to customers who have made the effort to contact them for helpâ€¦ Not only are dissatisfied complainants less likely to continue to buy your products and services, they are also likely to spread the word and tell twice as many people about the bad response they received than satisfied complainants will tell about a good response." Word-of-mouth--including online reviews--can be powerful marketing tools or, on the flip side, deadly poison.
Inconsistency: "In business, and in life, consistency breeds trust. Things that are consistent can be relied upon. And, things that can be relied upon don't need to be worried about," reported Katie Lundin in Entrepreneur magazine. Inconsistent products and service quality are causes for concern to most customers and will eventually drive them away.
Aggressive sales tactics: As Leslie Ye (of DuBose Web partner HubSpot) noted, "The old sales playbook--dragging prospects through a sales process and strong-arming them into a purchase--only worked because there was no better way for buyers to buy." It's important to take the time to learn what your potential and existing clients really want. Then provide value-based strategies that match their needs, back off to let the customer ask questions, and give them time to make well-informed decisions. The customers you truly want will appreciate it.
Rude employees: You can tell it when the person answers the telephone: they seem irritated, impatient, and sometimes incompetent. Your satisfaction is clearly low on their priority list. Weed out these toxic individuals before hiring them by carefully assessing job candidates using a variety of tools. It's far better to spend time on different screening methods in the early stages than to painfully eliminate poor fits down the road.
The bottom line: There is no single path to retaining customers. Rather, it's a combination of carefully crafted team strategies forged into a clear vision, plus great staff who deliver exceptional customer service. Build your organization around your clients, and patiently wait for the profits to roll in.
Mike DuBose has owned the DuBose Family of Companies since 1981. His non-profit website, www.mikedubose.com, features a free copy of his book The Art of Building a Great Business; previously published business, travel, and personal columns; and health articles written with Dr. Surb Guram, MD.
Blake DuBose is president of DuBose Web (www.duboseweb.com) and is Mike's business partner.