Are you losing customers? Today’s podcast will solve your problem and help you increase the value of your customers!
I want to talk about why we lose customers.
Let me just give you a business principle.
It’s easier to keep a customer than is to get a new one.
It’s less expensive to keep a customer than it is to get a new one. We serve about 1000 customers in one of my businesses and that has eight divisions. Two to three people a year, we can’t make happy, and they’re just not a customer that we can continue to serve. They violate one of our principles in that they’re either too much work, they exhaust my staff, they are too hard to get paid by, or you can just never make them happy. You just always feel like you’re short and that becomes exhausting. Other than that, there are 997 customers that we want to keep and we want to make happy. Our whole business model is about making them happy.
I want to take you through two quick stories that I experienced in the last seven days.
One, I was trying to buy carpeting for my home from a company that had been servicing my company. I’ve spent a lot of money with this company and basically they get my business at default. I’m extremely loyal and I don’t nickel and dime. You’re not going to lose my account for 4% of something that’s small. Maybe if it was a million-dollar order it’d be different, but I don’t pitch my vendors overboard.
I believe in the end that they’re allowed to make money and that’s fine and I’m not asking them to always be the cheapest, but in this situation, I want to just take you through my experience. Twenty years ago, they would have done anything for my business. This is 20 years later, it’s not a huge sale but it’s going to be a $10-15k sale, which in the carpeting business is good money. They know I’m going to pre-pay, they know I’m not going to beat them up on price. They have a sale waiting. They’re supposed to be at my house at 8:30 AM last Wednesday at 9:15 I text, “Where are you?” “Oh, I’m at another estimate. They just showed up, Can I come this afternoon?” So I had to reach out to them to find out why they weren’t at my house. This one went back and forth and then eventually they came for the estimate, and then they email the estimate to the wrong email address, which means they didn’t send it. Then they want to call me on the phone and leave me a voicemail, giving me the price, assuming that’s all they had to do and taking my business for granted. This has been a five-day process and they’re probably not going to get my business because they’ve taken advantage of it.
Now, OUR Business Model
Fifteen years ago, I was trying to solve a problem for a customer. I always say that I try to solve problems and give great ideas. That’s my business model. I don’t look at a lot of things anymore, but I showed them how to kind of turn a room into a library. It’s pretty simple. It wasn’t rocket science when I did that, but they wanted me to come back last Friday. I write books, I do podcasts, but I still work, and I don’t mind that my business partners know that I’m going to give this amount of time and look at certain things that could have an upside for us and/or if they’re a customer of mine and I just want to go back. So this was one that had been a customer of mine. They didn’t spend a ton of money, about $3k 10 years ago, and it was probably a 40-minute estimate.
I spent the same 40 minutes last Friday and walked away with over $200k.
Forty minutes, 10 years ago, $3k spent. Forty minutes, 10 years later, $200k. We’ve done stuff in between them, but our company has earned their business. When I walked in there, I pretty much knew they were going to say yes, but I thanked them for their business and I’ve continued to thank them for their business. I continue to give them great ideas and solutions. We continue to be one of the most expensive companies in what we do but people know what they’re going to get.
We have a great business model of making people happy, and we walked out with over $200k. It makes no sense to lose customers and to keep thinking you can bring on a new one and make them happy. You come through the door and we just want to make you happy. We want a front door and no back doors.
Let me tell you why businesses lose customers.
They Take Their Business for Granted
I have learned a very simple phrase. When I see my clients at restaurants, sporting events, and all that, I don’t take their business for granted. I say thank you. I want to thank you for continuing to do business with my company. We are grateful for your business, I don’t care if you spent $85. You know why? Because I’ve had $85 clients come back and spend $100k because I don’t take their business for granted.
They No longer Value the Customer
This is when I’m talking about service after the sale. This is where money is made. This is the one thing that I have to work on with my partners when they start. They get all excited about the sale and then I always ask our staff when I walk in, are there any customer issues and they know never to hide these from me. They are not allowed to protect any of the partners. My partners know they will be thrown under the bus, and they’ll say to me, Mrs. So-and-so has reached out to so and so, and she’s really not happy. I call that client and I ask that client what’s going on. I encourage them to come to our office and meet and I tell you what, my business partners, who listen to his pockets, they know that is not a fun meeting. Me in the conference room with an upset customer is nothing you want to experience as an adult because I’m telling you we are backing the bus over you! I tell them before we have this meeting that my experience is this never goes in your favor, and they’ll be like, “No, I’ve got my documentation…” Man, I got a partner, just got whooped in that conference room where I had to step in and basically do everything I can to make the customer happy and look at my partner and tell him I’m very disappointed. I don’t think this was handled very well, and I immediately take care of it. Now, my partners know that it’s the service after the sale.
Example, customer spends $100k with you and they call about a warranty item, you don’t put that job off 30 days from now. You are just as excited as you were to go get that contract. You need to be excited to go do the warranty issue. We prioritize warranty work.
They Don’t Reward Their Business
Give them a reason to buy from you. Reward their business. We send Starbucks gift cards to our customers. We give them two free hours of service, which is worth about and $170-190. We still mail a traditional thank you letter to every single customer with a survey card in it. It’s pre-stamped with only four questions. They refer us business and we reward them by sending them a gift certificate to the nicest restaurant in our town.
They Don’t Make Buying Easier for Them
I have two phones, one’s a business phone. It is an absolute million-dollar hotline. Whenever it rings, it is a dollar sign. I joke with my family that it’s a human cash register. I probably have a thousand customers that can shoot me a text and if my staff can take care of this, take care of that. A lot of times I actually look at it myself, because I’m not above that,. I try to do something every day to generate profit for my companies, so I don’t mind that. I’m making buying easier. I’ve got some exceptional clients that have my direct number and they’re allowed to use it.
They No Longer Have a Competitive Advantage
There’s no reason to buy from your company over the competition. You got slow and lazy, and there’s just no reason to buy from you.
There is No Reason to Be a Fan of Your Company
Man, I do a lot of advertising for no other reason than for my customers to say, “Yeah, I do business with them, and they’re great!”
I run testimonials on five radio stations and radio does not give me the quick sell. I do what’s called layered marketing. I own a digital marketing company. I do digital marketing and TV ads. I run a Super Bowl ad regionally which costs a fortune. I run TV ads on MSNBC, CNN occasionally, and Fox, because it’s an election year. And then I run radio ads. I love radio ads because they’re one minute long, so my customer can give their story. It’s nothing but them raving about how amazing we are.
I want to give them a reason to join the team, to be a fan of our company. Are you giving your customers a reason to be a fan? Remember when you started the company, how excited you were? I mean, I’m telling you, I’ve kept that momentum for over 20 years. I’m still excited about the $85 customer because that$85 customer leads to a $200k customer.
They Don’t Express Their Customer’s Role in Their Success
I always share why I started the company. What was the genesis of it? And then when I’m meeting with a repeat customer, I share with them,
Miss Smith, I’m so grateful for your business over the years, it’s been customers like you that have allowed our company to be so successful, you referred to so and so and so and so and so and so. And we’re just grateful for this. It’s just funny now that your kids use us, Hey, your daughter got married and she just had us do such and such.
I express their role in our success.
People want to support a local business
So why do we lose customers?
- You take their business for granted.
- You no longer value their customer
- You don’t reward their business.
- You don’t make buying easier for them.
- Yu no longer have a competitive advantage.
- You’re just not giving your customers a reason to buy from you over the new people that’s come in town.
- You don’t give them a reason to be your fan.
- You simply don’t express their role in your success.
Your business is stuck. I just shared with you a lesson that can get it unstuck on why you’re losing customers.
