CUSTOMERS ARE YOUR BUSINESS - CUSTOMER CARE IS CRITICAL

Tom Peters, the author of In Search of Excellence and numerous other business books, has developed a formula to figure the true value of a customer. Take the average purchase, and frequency, and calculate how much that customer could purchase in a year, if all purchases of this product were made with you. Then multiply it by 10, for the value of that customer.

This represents the customer's potential purchases over a decade, but doesn't even include referral business that a customer can pull in. A family might spend $150,000 for automobiles, for instance, using this formula. Isn't this customer worth spending time and money on to keep loyal? A grocery shopper may spend $50 per week, which adds up to $2,500 per year, or a 10-year value of $25,000.

Ten Commandments of Customer Service

Yet, few businesses devote much attention, time, or money to keeping customers. They spend tremendous amounts on advertising to attract new customers, but let the old ones slip away faster than the new ones come in. This seems like a foolish way to spend money unnecessarily. Carl Sewell wrote a best-selling business book titled Customers For Life. Here are his "Ten Commandments of Customer Service":

1. Bring 'em back alive. Ask customers what they want and give it to them again and again.
2. Systems, not smiles. Saying please and thank you doesn't ensure you'll do the job right the first time, every time. Only systems guarantee you that.
3. Under-promise, over-deliver. Customers expect you to keep your word. Exceed it.
4. When the customer asks, the answer is always yes. Period.
5. Fire your inspectors and consumer-relations department. Every employee who deals with clients must have the authority to handle complaints.
6. No complaints? Something's wrong. Encourage your customers to tell you what you're doing wrong.
7. Measure everything. Sports teams do it. You should too.
8. Salaries are unfair. Pay people like partners.
9. Your mother was right. Show people respect. Be polite. It works.
10. Learn how the best really do it; make their systems your own. Then improve them.
11. And we'll add one other, perhaps most important: Stay in touch! People resent feeling that they are only important until you sell them something, then they are forgotten.

Maintaining Your Focus on Current Customers

There should be at least as much effort, time, and money expended towards building a long-term relationship with past customers as is spent on attracting new ones. This is after-marketing, and can be done in many ways. Newsletters, special sales for old customers, birthday cards, the list is only as long as the limits of your imagination. Does it pay off? You bet it does, in referrals and repeat business. Customers will even forgive mistakes and heartily recommend you to others, if they believe you care.

Why customers quit:

• 3%—Move away
• 5%—Other friendships
• 9%—Competitive reasons
• 14%—Product dissatisfaction
• 68%—Indifference towards customer by an employee or employees

You can't do anything about the first three percent, and little about the five. Almost all marketing effort by business is devoted to competing for that nine percent who are likely to switch in response to ads or better bargain prices. TQM and other quality measures are devoted to convincing just 14 percent to stay. Yet how many businesses work hard at the changes necessary to eliminate 68 percent of the reason for switching?

Your business can. All that is really necessary is a change in attitude, manifested in a long-term continuing contact program. If you can't manage a customer contact and retention program on your own, there are businesses springing up to do just that for you. A consultant can set up a program for you. The important thing is that you do it.

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