“You don’t need a big close, as many sales reps believe. You risk losing your customer when you save all the good stuff for the end. Keep the customer actively involved throughout your presentation, and watch your results improve”. – Harvey Mackay
In the last article, we mentioned the reasons for customer churn. The fact is that the decision to leave a company is rarely an overnight one on the part of a customer. Customer churn simply means that a company did not do enough to identify at-risk customers and it may actually have been the reason that some customers leave. It has been mentioned repeatedly that while attracting and gaining customers is essential for the growth of the company, the other side of the same coin is being able to retain the existing customer base. It is essential that a company monitors and proactively understands its customer base and pays close attention to at-risk customers. These are the customers, who could simply be waiting out and would switch to another company without warning, leaving your company with one less customer and devoid of that portion of the revenue. On-going and recurring revenue is critical for any company and sudden dips in the cash flow, caused by at-risk customers who eventually move out, could prove highly problematic.
By monitoring and understanding your customers, not only would you ‘unearth’ at-risk customers, but would be able to cap other possible problems, thereby raising the overall satisfaction levels for other customers. Companies must use at-risk customers as opportunities to improve – the fact that an unsatisfied customer is still with them, could mean that the customer is still interested in giving the company a chance to get better. It would wise to take the opportunity while it lasts – often, such disgruntled and at-risk customers never come back once they leave. In addition, they are most vocal when they do leave and would be very likely to share their poor experiences via social media and word of mouth. The damage control required in such cases, often leaves companies drained and ‘running for cover’. It would be a lot wiser to monitor closely customer behaviour, such that any negative changes could lead to an understanding of the at-risk customers and the company could swing into action to prevent customer churn. At-risk customers are a serious threat to any business and the revenue potential – too many of such customers could drastically hamper growth and lead to the company’s downfall.
We have discussed several times in the past that not all customers are equal – this means that there are some customers worth holding on to, while it would be best to let the others go. While identifying at-risk customers, a company must analyse whether it would be better to let them go or put every effort to keeping them. In any case, at-risk customers do not happen overnight – it happens over the course of the ‘customer’s journey’ with the company. It is possible that early on in the relationship, the company did something to mess up, but the customer stayed on either hoping for things to get better or for want of better choices. Whatever the situations that lead customers to becoming at-risk customers, a company must first look internally to find the reasons. Even if the company may not want to hold on to a customer, it must be understood, at-risk customers that do leave, can prove to be serious threats to a company’s survival and should not be taken lightly.
Without constant monitoring, a company could very easily miss the signs of at-risk customers and it would seem sudden when these customers actually walk out the door. Without the ‘warning’, your company would not only lose revenue, but would be left wondering as to the reasons, which would waste a lot of time and energy. To make things worse, your company would then need to spend another set of resources to fill the gap left by the exited customer, while trying to expand the remaining customer base. By keeping a check on the behaviour of customers, it would be a lot easier to identify at-risk customers and put in measures to ensure that not only do they not leave but also become more profitable and loyal over time.
In most companies, a relatively small number of customers (about 20%) would contribute to the chunk of the revenue (80%), and if there are any at-risk customers in this portion of the customer base, a company could be in serious trouble. There is no doubt that a company needs to gain loyalty and support from the overall customer base, but it is critical to understand this section of the customer base at an individual and personalized level. A company must know what it would take not just to retain these customers, but also know how to increase loyalty, amount of spends and what would drive these customers away.
It is a known fact that the cost of replacing customers is almost twice as much as retaining an existing customer. Hence, if your company does not have a system in place to identify at-risk customers, it could end up spending huge amounts of time and money just replacing lost customers. This would also mean that the company would have no resources left to expand its customer base. Understanding the customer base is one portion, but equally important is following up the observations with specific and time-bound actions to ensure that customer problems are alleviated at the earliest. This would help a company to remove as many of its shortcomings, enhance its strengths, and fix issues for the at-risk customers. Many such customers often go on to becoming a company’s best brand advocates. Would it not be wise to have less at-risk customers and more customers who would be willing to spend more and bring in others to do business with you? The answer is obvious.
In the current competitive scenario, a company’s good reputation would be essential to its growth. Loyal customers would enhance the reputation while at-risk customers would have an opposite and detrimental effect. The aim should not be to prevent at-risk customers, but rather to make as many customers as possible, loyal and happy. Irrespective of the size of business from a customer, the potential of their spending to grow are always a possibility – it depends on how well your company treats them. Every customer expects to be treated well and with respect – if your company does have at-risk customers, it is highly possible that your company has given them reason. Rather than lay blame, it would be better to find solutions to get those customers back to becoming satisfied and then move on to loyalty and brand advocacy. Even at-risk customers would be contributing to the company’s revenue – even if a small amount. Rather than forcing them to take that revenue to your competitors, it would be prudent to do away with the reasons that would make them leave.
The power of even one unhappy customer must never be underestimated. A single poor comment via highly visible platforms could dent your company’s image and put chinks in the trust and dependability others may have. Customer trust is extremely fragile – “It takes a lifetime to build a good reputation, but you can lose it in a minute.” – Will Rogers. It would be best to put all your efforts to preserving and increasing the ‘life’ of this highly ephemeral yet invaluable asset.
The fact is that customers constantly provide feedback – verbal and non-verbal. Companies that pay close attention would always know what their customers think of them. Invest resources in directly asking customers what they think – the answers your company receives would be a good starting point to understand your customers. Those customers with several negative and unhappy comments would be your at-risk customers, and it would be wise to first approach and manage them. Any business’ growth is fuelled by happy customers who would stay with the company and provide repeat business. To keep your customers happy, you must understand how they feel and do whatever possible to move at-risk customers to happy and repeat business ones. Fix the issues now or else your at-risk customers could become insurmountable problems that could bring your company down.
