Customer attrition is normal in all businesses. No business can expect to keep 100% of its customers for years and years. Many times, losing a customer is something completely outside of your control, and may have nothing whatsoever to do with the quality of the product or service you provide.
On the other hand, you don’t want to delude yourself into thinking that all the customers you lose are not your fault. I probably don’t have to tell you that retaining existing repeat customers is far, far more profitable than chasing down new ones. (Though your business should be doing both; keeping good customers and always be adding new ones.)
You have a 1 in 16 chance of making a sale to a new prospect but a 1 in 2 chance of making a new sale to an existing or repeat customer. Existing customers are ridiculously valuable. You do not want them to leave.
Let’s attach some real numbers to why customers leave you so we can get some insight into this. Speaking in general, across all industries, businesses lose repeat customers because:
- 1% die
- 3% move away
- 5% follow a friend or relative’s advice to switch to their provider
- 9% switch because of a better price or product even though they had no major dissatisfaction with the current product
- 14% switch because they were dissatisfied with your product/service or the poor customer service they received.
That covers 32% of the customers you lose. All the rest, the other 68% leave for this reason alone:
- 68% switch because of indifference from your company
68% of customers switch to a new provider because of what they perceive and describe as indifference from the merchant or merchant’s organization. They felt unappreciated, unimportant, and/or taken for granted.
I’m sure you’ve had this experience, because I certainly have. You purchase a product or service from a company, and while they don’t treat you badly, they don’t really pay any attention to you. They don’t show that they value your patronage. They act like they’re too busy to care.
The good news is that as a business owner, this is a very simple problem for you to fix. Always, always make the customer feel appreciated. Heap praise, service, free gifts, and/or free content onto your customers at all times. Make him/her feel valuable to you. Because they are.
You can’t do much about that first 18%, but with a little effort you can turn that remaining 14% and 68% into 0%.