Time to turn back toward keeping the customerPublished 11:15am Monday, October 3, 2011
I was no further than the primary grades when a wise teacher told us that no less a figure than Benjamin Franklin had laid it down that “a penny saved is a penny earned.” She saw no need to explain this to young children, because its wisdom is self-evident. I recognize an equally self-evident reality that is missed by some business owners and operators. A customer saved is yet more important than a customer earned.
Effective advertising, marketing, publicity and sales promotion are crucial in almost any business in order to gain customers and built the business. However, failing to gain a new customer is less important than retaining an existing customer. To put it negatively and, perhaps, more poignantly: Failing to gain a new customer is bad, but failing to retain a customer you already have is disastrous. You cannot build a business without a continual inflow of new customers, but you can’t keep a business if you lose customers.
It cannot even be said that gaining more customers than you lose is growth or that gaining as many customers as you lose is survival. For every customer you lose, a business owner must gain at least two new customers. A quantitative study will probably show the number is greater yet.
A customer lost takes away from a business more than a new customer adds to it.
I recognize many causes of customer loss that are no fault of the business but they still hurt. Building confidence in and appreciation for the business’ product or service may have taken some years to grow. Winning the loyalty, trust, and goodwill of this customer may well have taken more years yet. If a new customer drops in the same day an old customer says good-bye, you have still lost business until you bring this new customer up to speed. The proprietor shouldn’t kick themselves for anything like this, but such customer loss is still business loss, and the assertive business person will develop compensation.
When a business loses a customer because of a defective product or inadequate service, moreover, the operator is at fault. This is more than a simple loss of business; it destroys business. A seriously dissatisfied customer does infinitely more harm to a business than a satisfied customer does good.
Moreover, it is not merely that one customer has become dissatisfied. The consequent damage depends upon how disturbed is the customer and what the retaliation becomes. If the individual is personally liked by other present or potential customers, is socially influential, or respected in the type of the business, we have no way of measuring the potential damage. This can occur for no more serious reason than that people learn the individual has stopped doing business there.
If the person talks freely about disappointment, it hurts the more. If the person is determined to hurt the business, he can hurt it disastrously. If the lost customer has valid reasons for dissatisfaction and is respected for competence in making a judgment about the product or service and feels a moral obligation to others to oppose the business, you may as well close the doors.
Or win the person back. But, of course, it is exponentially more difficult to win back a lost customer (or even one in the process of being lost) than it is to keep a customer.
With all these considerations understood, why do so many businesses think more of their product or service — or even of themselves — than they do of their customers? Why do they spend thousands of dollars on advertising and then treat indifferently the new customers the advertising brings in? Why do they fawn over new customers and take continuing customers for granted? Why do they presume just because a person has done business for years that he will necessarily be back tomorrow? Why are they in business and why did they ever open a business?
The customer remains the most important factor in any business, whether it offers product or service.
“The customer is always right” is an oversimplification or, at least, misapplied. What counts is that the customer is right there. And he or she stays there.