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Tuesday, April 8, 2014

I Seem to Have Lost a Customer Someplace!

by John Berry, Extension Educator, Lehigh Co.

How much is one customer worth?  How much does it cost the business to lose one customer?  More than you want to know, and probably more than you can measure in real dollars.

Most people only measure the dollar loss of a sale, or how much revenue was lost for the year.  Big mistake.  For openers, multiply that times 20 years.  Losing a customer once could mean they never shop with you again.  And don't even begin to count the people the could have recommended.

The loss of a customer is more than the
dollar amount on one sale.
Then the real losses begin to pile up.  Besides telling everyone in the immediate vicinity, they will tell all their office mates, everyone at the next association meeting, everyone at the next annual trade show and convention, and - if you do a real bad job of recovery or service - report it to people in local media.

The real cost of a lost customer is the different between "cost of lost" and "cost to fix."  Now measure that against the cost of servicing, fixing, discounting or replacing the situation, defect or problem when you first learned of it.  Seems like a pittance compared to the paragraphs above.

The painful part comes when you ask yourself "How did this happen?" "Could I have prevented this from happening?" and "How can I prevent this from occurring again?"

If you have ever lost a customer you aren't alone.  It's not a one person battle.  It's not a one-idea solution.  You need specific facts before any ideas on how to minimize the issues can be formulated.  Start by switching places with the customer.  Try to use your stuff in their environment.  Try to call yourself from their office.  Wear their shoes, and walk around in them for awhile.  Ask your customer brutal questions.  The ones you don't want to hear the answers to.

Get closer to the customer's "real" life.  Meals and ball games can reveal relevant truths that arms length relationships won't uncover.  How do you do this with your existing budget?  You can't.  You must have a "win back" budget.  Funds that are earmarked to fix problems, create resolve, and build goodwill.

When you get back in - thank the customer for dumping you.  Tell them that without the loss of their business, this innovative solution would never have been possible, and you are willing to offer some (major?) concessions for a re-try at the business using these changes.  Notice we have not apologized or groveled.  Customers are less interested in apology than they are in great ideas, recoverable actions, and solutions to their problem.

And finally, get real.  Know the difference between a problem and a symptom.  Losing customers is a symptom.  Poor service, poor product, late delivery, or back-orders are problems.  Remember, it never costs as much to fix the problem as it does to not fix the problem.

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