How to keep your clients

Jan 24 2013 07:40
*Ed Hatton

WHY do new customers buy from your business, and why do existing ones stay with you?

If you cannot give immediate and compelling answers to these questions, then you are operating blindly.

If you can answer these questions, ask yourself: “If those reasons are really strong enough for them to buy from me, then why don’t ALL the potential customers buy from me?”

The truth is that very few businesses have any kind of clarity about why customers come on board and then stay or go. A great deal of new business development relies on energy and luck.

A lot of customer retention has more to do with inertia and relationships than product and service superiority. Lost customers are blamed on unfair competition.

The risk is that any competitor who finds a really compelling factor to attract customers is likely to grab them all.

This is an unnecessary risk, because the reasons customers join, stay or go are frequently in the business, but the information is not analysed or acted on.

This leads to an ongoing loss of customers for reasons which are little understood, and an inability to duplicate the factors that brought new customers.

It is very similar to the development of a customer database. All the information for a customer database resides in the company records.

The problem is that it is scattered in debtors’ records and cellphone contacts, emais, address books, sales analysis and in notes or in the minds of salespeople and warehousemen. Too often this information is not collated into a database and used.

In exactly the same manner the reasons customers join, stay or go are often available in the business, but unused. For example when a customer is lost, the sales pattern can generate actions to reduce the risk of losing other customers.

Before a customer stopped buying, did his orders taper off or did he stop buying products he previously purchased? Which other customers are displaying the first signs of this trend? It is time to talk to them, they may be looking elsewhere.

Other information about the lost customer can be as easy to use. Was there a change in management? Were there complaints or a change in the pattern of payment? Was a change in price or terms a factor?

When was the previous review with their management? Unless this information is extracted and examined, there is no way of eliminating the causes of this loss and so preventing other customers from leaving.

New customer gains can be made by duplicating the factors that motivated recent new customers to join.

Which products did they buy first? Which manager or staff member was involved in securing the first order? Which competitor did they switch from? Are there patterns? Now duplicate the pattern.

In very large businesses they speak of data mining – extracting valuable business information which is in the records, but not visible.

SMEs can do exactly the same, without the expensive software systems. Make it your mission in 2013 not to miss opportunities simply because you did not look for and collate the available information.

 *Ed Hatton, a business consultant and owner of The Marketing Director wrote this column for the Sanlam Business Tips newsletter. Ed’s business advice blog is here.  

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Steinhoff scandal is a:

Previous results · Suggest a vote