Picture a large wooden bucket with a hose adding water at the top with a constant flow. The water runs continuously, but the bucket is never quite full. Unfortunately, there is a big hole in the bottom of the bucket.

That is how most companies operate. They spend a lot of money on marketing initiatives trying to increase their market share in their particular industry. Meanwhile, long term customers are leaving and taking their business to a competitor.

Many sales incentives and programs are established to draw in new customers with little regard for an existing one. For example, the cell phone industry runs all kinds of promotions to attract new customers. I was a customer of a particular provider for several years. My average monthly phone bill was around $200. My contract had long expired and I was in need of a new phone. I was told there was no way to take advantage of some of the offers available to new customers.

Let’s think about that situation.

• I was a proven customer with a high monthly bill who paid the full amount each month prior to the due date.
• I knew how to use all the features of the phone and did not require any assistance from the customer service center.
• I had been pleased with the phone and service and had been a loyal customer for three years.
  
• I frequently referred friends and family to this provider.

Most organizations would consider me an ideal customer, yet this phone company did not appear at all interested in keeping my account.

For the reasons listed above, an existing customer is almost always worth more than a new customer. I have heard it said that it takes six times more resources to attract a new customer than it does to keep an existing one.

Some companies have started to understand that if they spend a portion of the money previously spent marketing to new customers on keeping current customers satisfied, they will benefit financially.

So why do customers leave? Take a look at the following list and the percentage of people who left for each reason.

• 3% move away
  
• 5% develop other friendships
• 9% for competitive reasons
• 14% are dissatisfied with the product or service
  
• 68% because of an attitude of indifference by the owner, manager, or some employee

Over two-thirds take their business to your competition due to reasons other than the product or price. Customers are fickle! Unless they have no alternative, a customer will leave if they are offended or if their needs are not being met by a member of your team. Your company may indeed have the best product or service, but if not delivered by attentive staff and leadership, a customer is likely to buy from someone who treats them with respect.

As I mentioned in an earlier column, it is critical that you have accountability processes in place. The way a customer is treated plays such an important role in retaining them, so it is critical that every employee on your team be trained to deliver world-class service. You can’t be with every customer at all times, so you must ensure that your staff is delivering the quality of service you would expect if you were personally handling the interaction.

There will be times when a customer decides to leave. On those occasions, it is important to talk to them and identify the core issue that resulted in their decision to take their business elsewhere. It is important that the person soliciting this feedback be objective and not defensive or argumentative. At this point, the most important thing is to learn from this former customer to avoid repeating the same mistakes with current customers.

On rare occasions, you may be able to win the customer back simply by talking with them and resolving their immediate issue. You have a much better chance of retaining your customers if you are able to gather feedback and act on it before the customer decides to go to a competitor.

Remember, in most instances, your current customer is your best customer! -- Content provided by David Reed is the Founder of Customer Centered Consulting Group, which works with organizations of all sizes to improve their effectiveness through enhanced customer service, strong leadership, and simplified processes. For more information, visit: www.cccginc.com.

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