11-25-2013
The revenue pacing compared to last year was not positive. In an economy that was starting to sputter to life again, we were losing business. I looked at the common metrics. Were we making enough calls, were we making enough new business moves, were we in front of enough prospects? In talking with the sales team it wasn?t a lack of trying that was causing the problem, but we were seeing a lack of results.
Frustrated by this, I asked my sales team in our training session to humor me and call five customers each during the next 24 to 48 hours and simply say, ?Thank you for your business. Is there anything I can do for you that I?m not now doing?? No sales pitch, don?t even ask for an appointment, just call five customers and thank them for their business.
You would think in a world of extreme competition with people trying to steal your customers while you?re not looking, that the simple act of showing appreciation would be part of the routine, part of the customer retention strategy, or just the right thing to do. Sadly, we often overlook the simple things and take for granted those who are doing business with us, while we pursue those who aren?t.
As we celebrate Thanksgiving this week, I?d like to challenge you with a question: When was the last time you said, ?Thank you? to your customers? Not a standard email signature that says, ?Thanks? or a note in their billing statement. I?m talking about picking up the phone, calling, and saying, ?I just called today to tell you how much I appreciate your business. Is there anything I can do for you that I?m not now doing?? Most of us don?t do that on a regular and consistent basis. As a customer, when was the last time you were called? Has your cable company, your cellular provider, or your banker called you recently just to say thanks? Mine either.
I love reading Harvard Business Review. I learn a lot from reading the articles and case studies. This past week, I read a piece that really bothered me. It was titled: "A Smarter Way to Reduce Customer Defections." In the article, author Dina Gerdeman says, ?Companies spend significant sums to acquire customers. Once hooked, marketers protect those investments by attempting to keep patrons happy, engaged, and most of all, loyal.? So far so good, right? Then the article took an ugly turn. She quoted new research from Sunil Gupta, the Edward W. Carter Professor of Business Administration at Harvard Business School. Professor Gupta argues that companies often fail to take into account the complete value of customers they are trying to retain.
What?
Gupta says, ?What?s missing from the traditional methods is that they focus only on a customer?s likelihood to churn, but not the overall profitability of that customer.?
The problem I have with the research is that the solution they offer is to identify those who are likely to leave, and provide them an incentive. Gupta warns, however, that some customers aren?t worth keeping given the cost of the incentive you need to offer to keep them.
Measurements, metrics, and incentives. Not a single word about value provided to customers, appreciation shown to customers, or the satisfaction of the customers. The research simply suggested that you?re going to lose anywhere from 10-20 percent of your customers each year. The advice is to figure out which ones are worth saving and offer them an incentive. Frankly, it made me sick to read.
In my experience there are five main reasons customers will leave a company:
1. Product or service fails to perform as promised or expected. I was recently having trouble with my Internet service provider and if I could have I would have left them in a heartbeat. Sadly, I found that we don?t live in a free enterprise system when it comes to cable providers -- it?s a market -- exclusive monopoly.
2. Lack of follow-through or a solution to a problem. Face it, we all make mistakes. It?s what you do as a result of those mistakes that will breed loyalty or cause defections.
3. A perception that a competitor can do it better. Competition is everywhere, (except in utilities and cable providers). Competition usually makes everyone perform better. If you?re not constantly improving your product or service delivery, someone else will get your customers
4. A feeling that nobody cares. Lack of appreciation, no recognition for the business relationship, and a general feeling of ?being taken for granted? all lead to customer defections.
5. Price was better somewhere else. This is last on the list on purpose. Generally when people defect it?s not simply because of price. Price is usually the ?last straw.? If you?re a happy customer and you feel appreciated and that the company you?re doing business with cares about you, you?re not going to shop price or for any other factor.
I learned long ago from iconic sales trainer Don Beveridge: ?You can never maintain a long-term competitive advantage in any business category based solely on product or price. It?s what you do beyond the product that builds loyalty and customer longevity.? Read that again and let it sink in. Then ask yourself: "What am I doing BEYOND the product or service provided, and beyond the price offered to get a competitive advantage?" Are you a source of business advantage? Or are you assuming your products and price are superior to your competitors so you have nothing to worry about? You do.
The results of asking my sales team to call five customers each over a two-day period and just say thank you were nothing short of spectacular. Every single person contacted was impressed and appreciated being called. Comments included, ?Wow, nobody has ever done that before, thanks!? Another line to let sink in. Nobody says "thank you" anymore? In more than half the calls, not only was the customer happy that the seller called, they wanted the seller to come in and talk to them about doing more business. Recall the rule was they couldn?t ask for business or an appointment, they were simply to call and say, ?Thank you.? If the client asked for an appointment they were certainly welcome to accept, and they did.
With all due respect to Professor Gupta, it?s not about metrics, targeting churn likelihood, and cost of incentives. It?s about meeting customer expectations, providing value beyond the product and price, and showing appreciation.
As you enjoy some time off for the Thanksgiving holiday, I would encourage you to think of the last time you said, ?Thank you? to your customers. If it?s been a while, take my advice and make it a point to call as many as you can next week and simply say, ?Thank you for your business, I really appreciate it. Is there anything I can do for you that I?m not now doing?? You?ll be pleasantly surprised with the results. You?ll reduce the threat of someone else stealing your customers, or simply having them leave because they feel like you don?t care.
The responses will hopefully inspire you to make it a regular practice. I?d suggest quarterly at a minimum.
The bottom line is this: Customers whose expectations are being met, customers who feel like you care and appreciate them, are happy customers. Happy customers aren?t going to leave you.
Happy Thanksgiving. I truly appreciate you taking the time to read and respond to my articles. It?s my hope that something I say will resonate and help you grow and achieve the level of success you want and deserve. If you take the challenge and make the appreciation calls, would you please send me an email or call me and tell me how it worked for you?
Think Big, Make Big Things Happen!
Jeff Schmidt is EVP and Partner with Chris Lytle at Sparque, Inc. You can reach him at, Jeff.Schmidt@Sparque.biz, Other ways to connect:
Twitter: https://twitter.com/JeffreyASchmidt
LinkedIn http://www.linkedin.com/in/schmidtjeffrey/
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