Why Your Customers Are Leaving – and How To Win Them Back
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
One of the most important questions facing a business of any size is: why do your customers leave?
It doesn’t matter if you are a part of a Fortune 500 firm, or if you are a local plumber that works out of a van. This question should be important to you, because it has a huge impact on your livelihood.
Oddly enough, it turns out the answer to the question could be deceivingly simple. Businesses just don’t seem to care enough about their customers.
Even if your product is mediocre. Even if you are technologically behind your competitors. Even if your prices are higher – if you actually care about your customers, you will still have a chance at keeping them on board.
That’s because people want to work with companies that have “skin in the game” with their clients. They want you to fight for them, and to be noticeably invested in their success.
Yes, you still have to deliver on your promises, but just showing your ongoing commitment to their problems will go a long way.
Here’s the Disconnect
If you are thinking that the above fact is obvious, then you are not alone.
There are thousands of companies across the world that have deemed customer service to be their big competitive advantage. They have company rallies where they talk about putting the customer first, and their internal messaging is all around how being “customer-centric” is the engine behind the company’s success.
The problem (and the opportunity) is that although everyone says they are focused on solving the problems of their customers, nobody actually executes on this promise successfully.
Consulting firm Bain & Company calls this the “Delivery Gap”:
It’s like a New Year’s Resolution. Almost everybody makes them, but no one actually keeps them.
But it’s a huge opportunity. If everyone says that they are customer-centric but only very few actually deliver, that means that clients are rightly skeptical about such a claim. It’s your opportunity to turn their outlook upside-down by unexpectedly hopping right into the trenches with them.
Once they see you fighting for them on a personal basis, it will make a world of difference.
The Proof is in the Pudding
These types of customer relationships translate to real success, even in the stock market:
This is the American Customer Satisfaction Index (ACSI) long/short portfolio. Basically it represents the idea of buying equity in companies that have high levels of customer satisfaction, while betting against the companies that customers hate.
The end result? Consistent outperformance against the S&P 500 over the last 16 years.
Real customer service translates to real wins, and it will likely allow you to decrease client turnover, while upping the lifetime value of each customer.