As a small business entrepreneur, a primary goal is to find new customers, and it’s one of the best ways to grow a business. You must walk a fine line, though, keeping your current customers happy and eager to continue buying from you, at the same time as you dig for new customers. All the while, you and your business might be under great stress – including financial stress, workload stress due to the number of “corporate hats” you’re wearing, product and production challenges that keep the alligators nipping at you, and in general, from numerous directions you’re being pulled.
While all this is going on, it’s easy to take current customers for granted, assuming they’re totally happy with your business and its goods/services, assuming they’re going to be around forever as paying customers. In today’s world, your goods and services aren’t as unique and indispensable as you might think, and to keep these customers you need to be winning them with as much energy and resources as you do for gaining new customers.
Recently, while checking over my monthly cable TV bill I was upset at the cost. I did a quick Google search on how to lower the bill and came across several articles that suggested a negotiating tactic – threatening to terminate service and go to a competitor. I tried that, and sure enough, they came up with a new subscriber package that reduced my bill by $90/month. Now you have to ask yourself, if I’m such a good customer that they’ll reduce my current bill to what a new subscriber is paying, why didn’t they automatically do this for me when they introduced the new subscriber deal??? In other words, why am I – a longtime customer – not as important as a new customer?
Here’s a situation that I stupidly created with my own company’s best customer, and for the life of me I’m flummoxed at why I let it happen. When I first started my tiny one-person software training company I relied heavily on one customer – a very large multinational company, and they subcontracted my training services to their end-customers. They had grown to represent 85% of my company’s total revenue – and without that business, my company would likely have folded in a month or two.
One day the technical manager who oversaw my subcontract asked me to stop by to discuss something with him. At that meeting he suggested – not aggressively, not in a demanding way, but quite politely – that I make a modification to my training that would help their customers. The trouble was, it would help his company, but it wouldn’t be quite as good for either the end customers or for me. Rather than keep calm, take a deep breath, and figure out a way to explain this, I felt an irrepressible anger welling up in me. In an instant, I lit into him with a fury that I couldn’t contain. About three sentences into it, I realized that I’d gone off the deep end – and directed towards a guy who was responsible for my company staying in business. In other words, I had just dumped on my own best customer. Luckily, I managed to catch it in time and smoothed it over before any lasting damage was done, but only by a whisker.
Here’s a worse example. Years later, my software company had the privilege to market our software through an extremely important IBM Remarketing Agreement, where our software was listed in IBM’s catalog of products as if it was an IBM product. A couple of years into the agreement, an IBM sales rep was struggling to close a deal for my company’s software with an end-user, and after many days of negotiating, he called me asking if I would discuss some of my software’s maintenance terms directly with the end-user. I agreed, and we got the manager on the line who was responsible for signing off on the deal. Obviously this is a situation that demands utmost diplomacy and I had been called on dozens of times to do this. At some point, though, the end-user manager said something that lit my fire, and I suddenly declared that it was imperative for the deal to be signed immediately or the deal was off. Well, having blown it like that, yes, the deal was off and we lost the software sale. Not only that, but the end-user subsequently told IBM never to bring this vendor (my company) in on a deal again. When that word got up the chain of command, I came within a whisker of losing an incredibly important arrangement with the likes of IBM.
How can stuff like this happen? In both cases I had become too close to my most important customer, taking that customer for granted, in ways that I would never do in negotiations with a potential new customer. (It’s sort of like treating your spouse poorly, when you’d never do that to a friend – actually, maybe it’s another example of the very same situation.)
In these examples, I had spent huge amounts of time and energy building up the customer relationships, and at the point where my company was highly dependent on them, I hit the destruct button that almost destroyed it in an instant.
What to do about this is a conundrum. Any rational person would say that good customer service is one of the most important things for your business, especially if it’s one of your best customers. But saying it and doing it are two different things, particularly when you’ve let yourself take these customers for granted.
Here are some thoughts about how to ensure it doesn’t happen:
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How much are your current customers worth? Some are wonderful; others are a pain in the butt; still others just stay in the background as if they aren’t there at all. Regardless, develop information (a report from your accounting info) about the annual revenue from each customer – obviously, this is each customer’s worth to your company. Then, create a metric that shows how much you’re spending to gain each new customer (direct outlay of money, time, sales staff, promotions, trade shows, etc). This isn’t to convince you to forsake one over the other, but to cement it in your mind that both are beneficial and extremely necessary – current customers for current revenue (i.e., your ability to remain in business), and future new customers to fuel growth.
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Your current customers pay your bills – and don’t forget that for one moment! This includes all salaries (including yours), day-to-day business expenses, inventory purchases, and paying down business debt. And they likely fuel most, if not all, of your business growth. Factor the loss of one or more customers into your Budget/Cash Flow spreadsheet, and you can readily see the effect whenever lose one.
Customers do more than just pay bills. They are an important source of referral, whether it’s word of mouth, or bmitting an online review. They are a tremendous source of product/service suggestions . . . suggestions that add value for improvements that you never thought of. They can be great for keeping you honest – letting you know when your business or product/service standards have begun to slip (assuming they don’t leave first).
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Build employee awareness of the importance of keeping current customers. This is what customer support should be all about, but it’s really more than that. While you might have a dedicated Customer Support organization to communicate with your customers, more importantly, your entire company should be one big customer service organization – where that perspective permeates every aspect of your business.
If a customer reports a difficulty (or disappointment) with your company for any reason, respond appropriately, and treat it as a good opportunity to improve. Make sure all of your employees know this is what’s expected of them, and reinforce that expectation at every opportunity.
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Go into every customer interaction – current and new customers alike – with the perspective that the customer might not always be right, but the customer is always the customer. You don’t have to agree with everything they say or demand, but you must always treat them as someone you value and whose business you want (or want to keep). You don’t have to bend to their will, but if a disagreement arises, it’s imperative that you keep hold of your emotions, treat them with respect, and then work with them for a resolution.
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Reward your frequent customers with more than a thank you (if you’re even doing that now). Customer loyalty programs aren’t just a fluke – it’s been shown dozens of times that customers often go out of their way to bring repeat business specifically to earn these program perks. And tailor your program in creative ways – a punch card that rewards with a free one after you buy ten is a 10% discount, but the program can be more valuable if you tailor it with unique perks that are beyond what your business provides. Get creative, and then monitor it for effectiveness.
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Spend time with your customers. Find out why your customers are buying your products/services, and get them to tell you anything additional they’d like to see in your products/services. Most importantly, make sure you fully understand what really matters to your customer. In other words, do everything possible to show them you really care about them
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You have various sales meetings – where great effort is devoted to new sales, and hopefully, equating to new customers. That’s all good, but also commit to holding current customer loyalty meetings and use this opportunity to create ways to show your existing customer base that you love them, that you value their business – and particularly that you want them to remain as loyal customers. In these efforts, lip service isn’t good enough. Existing customers are the source of your profitability, and just as you use that profit to drive new sales, you need to allocate some of it to keeping existing customers.
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Consider dedicating a sales-level person to current customers – someone who spends the majority of their time in communication with current customers, ensuring they are happy with your products and services, discussing ways you can make them even happier. You might be surprised at how much this leads to even more sales revenue from these customers.
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