Thoughts & Observations

Why Your Customers Break Up with You

Reprinted from Jessica’s “The Practical Business Radical” column in The Business Press

No matter business you are in, over the past year, you have probably had at least a few of your customers break up with you. Maybe it was more than a few. Each of those lost customers has cost your company money. You do not need anyone telling you that it is almost always bad to lose customers. You get that part. The bigger question is: what are you doing to find out why? Fortunately for you, unlike in real dating relationships, the answer is probably not as incurable as “he is just not that into you.”  So, why do your customers leave?

You can keep your customers for a while by trying to offer superior product. Studies show, however, that only 14% of customers leave because they are dissatisfied with your product.  You can also try winning the battle for customers through price, although continually lowering your price isn’t necessarily the best option. The same study also shows that only 9% of your customers leave because they are lured away by a competitor. Why then do customers leave? Studies show that 68% of customers leave due to the indifferent attitude of a company employee.

If you have heard that statistic before, then what are you doing about it? I had heard it before too, but an ah-ha moment the other day made the statistic finally come alive for me. I was having an interesting conversation with a Zappos.com employee when we got on the subject of volunteer retention. For Girl Scouts, and many other organizations who rely on volunteers, volunteer retention and customer retention are one in the same. As I talked to him about what we do to retain our customers, I realized something incredibly important: when we really look at why our volunteers leave the organization it is not because they stopped caring about girls or that they stopped caring about our mission (our product). They leave because the costs start outweighing the benefits. They have to complete too much paperwork or they do not get a response to their question in a timely manner or they do not feel supported enough.

The customer of a business gets benefits from being a customer: a product they like, a price they can afford, a tool that make their life easier. The problem is that those benefits can be easily overtaken by the costs. If the customer has to wait in a long line or receives unfriendly service or waits too long to get a call back, the benefits start to shrink in comparison to the costs. Despite the customer still liking your product or your price, they are no longer willing to be your customer because the costs now outweigh the benefits.

This is why it is so important to understand why your customers leave. When we started asking our customers about what they were most frustrated with, an overabundance of required forms and paperwork was at the top of the list. As we continue to ask questions, we are able to work specifically on fixing the things that most often tip the cost benefit scale in the direction of the customer leaving. This level of listening is incredibly important.

An article by Anna Thibodeaux in CRM Weekly summarized a recent study: “According to a 2006 survey released by a group within the Wharton School of the University of Pennsylvania, a typical business only hears from 4 percent of its dissatisfied customers; the other 96 percent leave quietly. Of that 96 percent, 68 percent never reveal their dissatisfaction because they perceive an attitude of indifference in the owner, manager or employee. But a typical dissatisfied customer will tell eight to 10 people about their experience. One in five will tell 20.” You want your customers to tell you about why they are unhappy, not 10 of their friends.

If someone were to break up with you in the dating world, you would want to know why. You should be asking your customers why as well. You could even go one step further and start asking questions and listening before the relationship turns sour. Which is a good practice no matter what type of relationship we are talking about.

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