Why did they stop using our business?
Today the Small Business Owner blog is joined by Nina Sunday. Nina is Managing Director of Brainpower Training, a people development company with a range of programs in communication, emotional intelligence, knowledge capture, productivity and leadership. Today Nina shares her insights into analysing the reasons why clients stop using a business. Welcome Nina! Naomi 
There are useful lessons to be learned by analysing the reasons clients stop using any business.
A well-known research study * identified five typical reasons customers leave, and here they are:
1. Move away
2. Develop other friendships
3. Price
4. Dissatisfaction with the product or service
5. An attitude of indifference toward the customer by the owner, manager, or some employee
Why not conduct a guessing exercise with your co-workers?
Can they guess which of these 5 reasons was cited more often?
Ask each person to assign a percentage out of 100 next to each reason listed. (And when they tally, their total for all 5 reasons should add up to 100%.)
Price
Did they think price was the most important?
Many people assume most people shop on price, but research shows only 9% of customers are price shoppers.
Price shoppers are not loyal. They switch from supplier to supplier and won’t necessarily stay just because you provide good service.
Dissatisfaction
What about dissatisfaction? Did they consider that might be the main reason to stop using a firm? Not according to the research. Only 14% leave because they are dissatisfied with the product or service.
5% develop new relationships, 3% move away, 1% die. That leaves 68%.
Indifference
The main reason clients stop using a business is indifference by the owner, manager or staff members.
What behaviour is perceived as indifferent?
Lack of eye contact, lack of friendliness, doing one’s job in a neutral, humdrum way is perceived as being indifferent.
Last time I flew with Qantas airline, during the usual announcement, ‘Qantas flight 508 to Brisbane is now boarding through Gate 8′, they added, ‘On behalf of Qantas, we hope you enjoy a pleasant flight.’
That’s an extra statement that’s positive and friendly. It’s something a little extra that comes across as ‘they care’.
If your eyes stay glued to the computer screen, fingers keep tapping the keyboard while responding to someone speaking to you face to face, it sends a message they are an interruption.
Lack of urgency when a client is anxious about a missing or late item is also interpreted as indifference.
The ‘moment of truth’ principle in customer service highlights that with every interaction your client is deciding whether to do business with you or to continue to do business with you.
Observe for yourself. Are all customer touchpoints in your organisation positive and friendly?
Action Summary:
1. Notice next time you go through the checkout at the supermarket. Did the operator make eye contact and smile? Are they personable?
2. When you answer the phone do you sound welcoming and ready to assist?
3. If you can’t say yes to a customer request, can you be creative and come up with a suggestion along the lines of ‘but what I can do is…?’
4. Find reasons to stay in touch with regular clients; demonstrate you value this relationship. Create an SIT (Stay In Touch) list.
* Work cited: This research study was highlighted in Michael LeBoeuf’s 1989 book, ‘How to Win Customers and Keep Them For Life.’ Revised edition: Berkley Trade (2000).
Nina Sunday, Blogger and Managing Director, Brainpower Training
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Great insight Nina. just this morning re established a link between an old time client of ours. They had stopped ordering. Why? My contact had been promoted away from marketing and the role did not involve using my products any longer. The newbie had her own contacts at a competitors.
Great post Nina, a very timely reminder of what’s important and really just how easy it is.
G’Day Nina,
A timely reminder….to say the least. I remember learning years ago that “the person most concerned about the price is the salesperson.’
Following a recent post from Paul about Christmas gifts, I’ll be using Christmas to try to reactivate a particular group of long standing clients who no longer initiate contact with me, although I keep in touch with them direct.
I’ve been working with one client here in Sydney for a decade. They’re a domestic plumbing maintenance business built around an extraordinarily high level of customer service. They aren’t cheap. But they have a fabulously successful customer loyalty program. One of their guarantees is this: “If we’re late, you don’t pay.” and they honour it. They try to create what they describe as a “seamless” experience for their customers.
Remember, this is a business that fixes dripping taps, blocked garden drains, malfunction toilets and all those domestic plumbing jobs that literally hundreds of other plumbing companies also do.
Their customers could never accuse them of indifference.
I think that there’s another reason why customers “move away.” It’s perceived change of business focus. If you’ve built your reputation on being the best domestic plumber in town and you line extend into bathroom renovations and kitchen redesign, you’ll lose plumbing clients.
Customers love to work with specialists. If you don’t agree, look what’s happened to department stores worldwide over the last 25 years.
Thanks again for a great post
Make sure you have fun.
Regards
Leon
Hi Hampers
It’s easy to take current clients for granted. It costs around 5-7 times more to find a new customer than to retain an existing one.
Create a client list according to how much and how often they spend with you annually. Then apply the 80/20 rule; stay in regular touch with your top 20% of clients first.
Hi Leon
You can’t have the very best customer service for the cheapest price. Most buyers realise for a lower price they may be giving up far better service.
Sorry for the hold up, Nina. The System needed to be told who you were. You should be fine now. Thanks so much for your post!
Hi Nina. Thank you for joining us on the Small Business Owner blog and sharing you insights!
Great post, Nina and welcome!!
Yes, top of mind awareness is key and it’s even more effective when your regular contact is of value to your clients and is not just your monthly specials. It’s great being in IT because we get to make contact everytime there is a significant virus or computer glitch to watch out for. Shows that we have our client’s backs, even when all we are doing is giving them free advice about what to be on the lookout for
Points to you Sonia for being creative to find an important reason to stay in touch with your clients that is not merely ’selling’ to them but informing them of important updates.
Customer service can make a big difference but in a world that is going so online and Do It Yourself, price is still a factor. You undertake your research and you then buy online. In many cases you will never even speak to a service representative let alone see one.
However the brand and the knowledge that you can return the good, call up and ask questions can make a real difference, so in that case even in an online world, those personal impressions are important.
From another angle, going online has made it much easier to actually keep in touch with customers eg newsletters and followup emails. Most people realise that these tools can be automated, but receiving an email 2 days after you purchased your new printer asking you how the setup went can make a difference.
Having spent some time in B2B sales of software, most customers move away because the product has not worked as expected and because of a lack of contact, its just as easy to look around for other solutions rather than find out why it didn’t work.
The other thing is that because software usually works with a renewal of 1, 2 or 3 years, leaving your next contact until 60 days before the renewal date is not a great communication strategy.
Services like Twitter and Facebook have however opened new avenues of communication that don’t involve you sending annoying newsletters that don’t say much. Customers at the very least know where you are and can contact you when needed.
I won’t try to steal your thunder, Nina. I just want to say that I’m continually impressed by the calibre of comments we’re lucky enough to receive. Thank you, Arthur!
Good point, Carbonite. It’s a brave new online world where the percentage of price shoppers is likely now to be higher than that original research.
With 40 million visitors a month, tripadvisor.com is shaking up a complacent hotel industry with its warts and all guest travel reviews. Now more than ever a company’s online reputation demonstrates value, creates trust.