By Thomas Murrell MBA CSP, International Business Speaker
Is your business a leaky bucket?
This is a question I always ask small business owners who attend my marketing seminars.
The reason I ask is because many businesses are so focused on attracting new customers they forget about retaining and providing good customer service to their existing clients.
Many are also unable to quickly identify who their most profitable customers are.
In the leaky bucket example we have two businesses in the same industry. Both businesses attract 10 per cent new customers each year. Not a bad effort considering the increasingly crowded and competitive industry they operate in.
Business number one has a 95 per cent retention rate and 5 per cent slippage, while business number two has a 90 per cent retention rate and 10 per cent loss of customers.
Not bad figures to have, but after 14 years business number one has doubled in size and business number two has stayed the same size.
This business is just treading water because it suffers from a ‘leaky bucket' with too many customers slipping through the holes in the bottom of the bucket.
Much of this is due to poor customer service. And they don't even know it!
For example, the research shows a typical business does not hear from 96 per cent of unhappy customers.
For every complaint there are 26 others with the same problem and the average person with a problem tells 9 or 10 others. Thirteen per cent will tell more than 20 people.
So that is the cold hard reality of poor customer service.
But it is not all bad. If complaints are resolved those people tell 5 people and it is usually a positive message.
For example, complainers are more likely to do business with that company again compared to non-complainers, and this rate goes to 95 per cent customer retention if the complaint is dealt with quickly.
Everyone makes mistakes, the key is to learn from those mistakes and act on them quickly and you will have even more loyal customers.
Keeping your customers happy will help fill the holes in your leaky bucket and lead to a more profitable and successful business.
Want to learn more? Discover how to keep more customers in your bucket with our SMART Marketing, SMARTER Profits The 12 Principles to Attract, Win and Retain Even More Profitable Customers seminar being held in Perth on Thursday June 16th from 9am to 12.30pm. Book here.