Crowning the Customer

When I run my Leicestershire based marketing seminars, I always tell delegates that whilst most people focus their marketing activities on winning new business, they should really be spending between 25 – 50% of their marketing budget on their existing customers. Why? Because if you look after your existing customer base well, you will hardly need to look for new business because your existing customers will stay with you for longer, spend more with you and be happy to refer you to their contacts.

If you have an unhappy customer base who think badly of your company, you will forever be recruiting new customers. Every customer who leaves you for your competition will take with them their harsh words and resentment. How much better is it for your business to have kind words and repeat business?

Over the next few blog entries, we will look at 37 ways to assist you in:

• Keeping your customers for longer• Making customers keen to spend more with you • Making customers want to refer business to you Imagine what a difference these 3 changes will make to your company, so start thinking about how important it is to put your customer first in your organisation at all times.What is a Happy Customer Worth?But first, I want you to consider - how much is new customer service worth to you?

Let’s start with an easy question. How much one does badly handled phone call cost you? Perhaps the enquiry is for a simple job - it isn’t worth much. You, or your receptionist, are busy and the caller doesn’t receive the attention they deserve. They decide to go elsewhere and use one of your competitors. You already have plenty of customers anyway, so it’s no big loss.

How much has that cost you? £100? It’s no big deal.

Here is another way to look at it.

Imagine that call is handled well and the customer orders from you. Because you did a good job, they then continue to order from you again - say on average, twice a year. This pattern continues for the next ten years. Let’s also assume that, because of the good service they receive, they recommend your services to just two people a year who also become customers.

The first year, this totals £200 from the original, customer plus £400 from the other two new customers - £600 in total. Not quite so easy to shake off. Perhaps a few more minutes on the call would have been justified?

The second year, the customer still spends £200, and recommends you to an additional two customers, plus the two recommended from the previous year. This now comes to £1,000 worth of business.

By the end of year ten, this now totals £4,200 worth of new business generated by that one original customer. In fact, over the ten year period this works out at an amazing £24,000 worth of business. From one neglected phone call.

The really amazing thing is that this does not take into account the extra business that the additional recommended customers bring in if they start to recommend your service to friends and colleagues. If each of the recommended customers kept on recommending you at the same rate to people who spent the same amount, by the end of year ten you would have 19,683 customers and total sales over the ten year period of £5,904,800, with a turnover of £3.9 million in year 10 ! And that’s without inflation.

Now, not everybody will recommend your services, and not every customer will stay with you for a decade, but as you can see in this illustration, even by year two, the customer was effectively spending ten times as much with you as you thought they were initially worth. So, it pays to make sure that the phone is answered properly, and that any new enquiry is treated appropriately. Each customer, or potential customer will then be given the attention they deserve.

Just to flip this argument on its head, in 1996 I had a problem with a computer printer from a well known high street computer retailer. I had never been impressed by their customer service in the past, but on this occasion they surpassed themselves. Mild mannered chap that I am, I ended up having a major argument with the Branch Manager because he refused to swap my faulty printer as it was more than three months old. As a result, I have never walked inside one of their shops since. I’ve spent a lot of money on cameras, computers and the like in that time, so the attitude of that one badly trained and rude employee could easily have cost the company thousands of pounds over the years - and will continue to cost them. I have also told many friends about the incident, It’s probably very petty of me, but you can be sure that many people hold grudges when they are badly treated, and they are quite happy to tell anybody who will listen about their experiences.

Do you appreciate now how important it is getting customer service right?

The Ideal Marketing Company supports Leicestershire and Northamptonshire companies as well as companies from across the UK with marketing, PR and direct mail. The Ideal Marketing Company helps support companies with marketing consultancy in order to generate new business wins as well as making the most of existing customers.