A Diminishing Customer Base

“Treat your customers like they own you. Because they do”. – Mark Cuban

What is implied by this quote is scary but true. Each person in business and every company probably knows this to be a fact but some ignore it for reasons best known to them. When you ignore some key facts with regard to customers it should come as no surprise that you have a diminishing customer base. Repetitive as it sounds, customers are the very reason you are in business and it is necessary to retain the current set that you acquired through hard work, resources and effort. Isn’t it a scary thought that your steadily diminishing customer base is probably leaving you for competition and soon you probably won’t have any customers? Another reason for being petrified is the huge costs that would need to be incurred to attract and gain new customers – all studies and research has conclusively proved that it is a lot easier to sell to current customers than to acquire new ones. The reports show that in terms of cost – it is at least 6 to 7 times more expensive to attract even one new customer. Retaining existing customers has a whole lot of other benefits too – customer loyalty, enthusiastic brand ambassadors and hugely influencing customer testimonials. If you want to increase your bottom-line, retain your customers!

If as a business person or a company you have at some point noticed a diminishing customer base, what did you do? Did you notice some changes in customer behaviour, increased effort for your company but reduced revenue? Since customer attrition may not be as obvious when it begins to happen, most companies probably consider it a normal phenomenon in business. In fact some customers that do go are probably the ones you wanted gone and were happy to see them be your competitor’s problem. However, what if this is not restricted to one or two customers but rather an indication that your customers don’t like you any more and believe that your company’s offerings and customer service are at an all-time low and may never recover? This will be tough to recover from for sure.

– Customers are changing. Their buying habits are changing and their use of technology to gain information is increasing unabated. To avoid a diminishing customer base, your company must change faster and pre-empt customer expectations even before they think of it. Introduce changes in your company, upgrade the technology being used and service your customers via all the channels now available – rejig your outlook to customer service and revamp your strategies before customers change their loyalty. There is no easy way – to survive and to ensure that you do not have a diminishing customer base offer them things and services that no else does. Unless you stand out, you will be made to bow out.

– Some customers complain and others remain silent but leave and you can never know what went wrong. If customer complaints are increasing you can be sure that your company is doing a shoddy job, to the point where customers become angry enough to shoot off fiery complaints and also post their negative experiences on social media sites. This has got to hurt your business and the profits. As the negative word spreads, the irate customers are able to adversely influence other customers as well, raising the number of complaints and lead to a steadily diminishing customer base. Customer service must remain a pro-active function – before customers let fly a barrage of undesirable emotions, talk to them, get their feedback, innovate, find out what is bothering them and fix it and do whatever you can to get from satisfactory service levels to delightful ones. Keeping customers happy is your responsibility.

– With the rise of social media, everyone knows how convenient it is to provide feedback, post comments, solicit suggestions and gain industry knowledge. Customers believe other customers more than they would the company in question. The sad truth is that sometimes a vengeful customer could start a rumour about your company and its service via a communication channel while maintaining anonymity. The thing about rumours is that they spread – no one really cares to check the authenticity of statements since it is easier to believe what’s written. Before you know it, these rumours become larger than life making it extremely difficult for companies to arrest the spread. The next thing you know – a diminishing customer base. As a customer you too would rather do business with a company not embroiled in a controversy, right? Instead of fighting a losing battle, get down to facing the customers, who seem to be getting influenced by the rumours, solicit the help of your long standing customers to defend your position and reputation. It is unwise to ignore customer statements even when there is not a strand of truth in them. Never let fly negative comments but rather deal with it sensibly and definitely quickly.

– To run an effective company for your customers, your employees must have the drive to provide great service and also have faith in its offerings, strategies and policies as a whole. If your employees are leaving you, it is a sign that something is not right. Sooner than later, customers get a whiff of this instability and from an employee exodus your company would soon be facing a diminishing customer base. If ‘your own people’ are leaving you, it is unlikely that people (read customers) who don’t interact with you daily, will have faith in you and stick with you. Fix your internal problem first. Find out why your employees are unhappy, put more effort into keeping your employees happy and make them feel appreciated. The fact is loyal and happy employees are at least in part responsible for loyal and profitable customers. A diminishing customer base however, should not be the only reason for taking care of your employees. It is just part of work ethics and your responsibility as a company to take care of the people who work hard to keep your company’s image intact and also increase profitability for you.

The fact is that a diminishing customer base is a sure sign of a problem and will affect your company’s profits and growth. If your customer base is reducing at a certain pace and you still manage to replace the lost customers, there is no way you will be growing or be profitable – again – it is more costly to attract new customers, almost double the cost and also new customers take a long time to become profitable and it would be many years before they can be as profitable as the customers that left. This back and forth is sure to kill your business ultimately.

No company will ever want to have lesser customers than they had even a year back. The prime focus of running a business is to grow it and increase profitability. A diminishing customer base works in the complete opposite direction. In the current competitive scenario it is not acceptable or wise anymore to lose even a single profitable customer since recovering from the cumulative loss may not be possible after a while, irrespective of the size of the company. Rather than act when you see a diminishing customer base, it would make great business sense to put processes and strategies in place to keep a sizeable customer base that comprises of happy and profitable customers.

These are just some ideas to keep your customers with you. Each company would be able to formulate many more such tactics to ensure that their customers don’t head for their competition.

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