Anyone ever hear this phrase…I heard it all the time from my dad. Whenever there was some maintenance to do on anything (car, house, bike, or anything else) he would always remind me that while it might cost you $100 today it was worth the investment so you didn’t pay $1000 tomorrow to get something fixed.
It has stuck with me my entire life…doesn’t mean I always follow it, but it is always in the back of my mind…especially when I don’t do the maintenance. This relates to a whole host of things in life…it is one of those nagging phrases we wish we never heard but can’t get out of our minds.
Take your CUSTOMERS for example…investing in them now (keeping them as a customer) is considerably less expensive than trying fix things that broke (trying to win them back). If you are the leader of any kind in a business you know this to be true. Yet all too often we ignore this age old saying and end up spending a ton of money and time to “CURE” the issue…winning our customers back…instead of spending the time and money up front to make them feel incredibly important.
Why is this?
When I do a “CUSTOMER AUDIT” for a business we try to identify in which category their customers fit and what percentage of their customers fit into these categories. Here are the four categories…
- Unhappy Customer and/or Customers who have left
- Satisfied Customer
- Loyal Customer
- Advocate
Once we identified the criteria of each category we determine the percentage of customers that fit into each category. For a smaller business with fewer customers you can actually do this audit by customer based on the predetermined criteria for each category. If you want to learn more, just shoot me a message and I can give you some more details on the process.
Here’s what upsets business owners and leaders…when they see the numbers they usually freak out because they realize that most of their customers are AT RISK.
For example, we all know that the “UNHAPPY” customers have pretty much left…at least mentally and just waiting to move on at some point. We also know that “SATISFIED” are simply “waiting for the next best deal/experience” from someone else and then they will leave so they are in a holding state until this comes along (which happens much more quickly today). The “LOYAL” customers are those that like what you are doing and offering so they stick with you as long as you treat them well. These are the customers that give you “second chances” when you mess things up for them and don’t just leave right away. Finally, we have the “ADVOCATES” which are all the people that love you (and their experience) so much they go out of their way to “tell others” about you. THESE ARE THE GOLD IN THE LIST.
Back to the issue of RISK. Unfortunately, when we identify the criteria and start putting customers in one of these four categories, the numbers often times end up like this on average…
- Unhappy Customer and/or Customers who have left – 20%
- Satisfied Customer – 55%
- Loyal Customer – 20%
- Advocate – 5%
Your numbers might differ significantly but this isn’t too far off for most businesses…when they do an honest evaluation. If you follow the above criteria, this would mean that 75% of your customers would be at risk of leaving. This is the number that scares business leaders. Especially in today’s market where businesses are rapidly getting “commoditized” and so they are at much higher risk of losing customers based on price or terms.
BUT THERE IS AN AWESOME SOLUTION TO CHANGING THESE NUMBERS…
For the companies who have made AN INVESTMENT (an OUNCE OF PREVENTION) in building the customer experience their customers not only love but want to talk about, they change these numbers significantly. For example, here are the numbers of a company that INVESTED in their customer experience BEFORE they ended up with the 75% risk factor…
- Unhappy Customer and/or Customers who have left – 5%
- Satisfied Customer – 20%
- Loyal Customer – 60%
- Advocate – 15%
This lowered their risk to only 25% …which was also being reduced based on their new Customer Experience Journey. Their 15% Advocates were also increasing and this increase of 10% is worth an incredible amount of business…because they are helping to do their marketing for them at little to no cost! A small increase in Advocates is worth a significant benefit in increasing revenues and lowering costs…more on that in another post.
The OUNCE OF PREVENTION is to change the way you think about your business. Put the customer first in the Vision, Mission, and Strategy of the company and build your company around your customers rather than your products and services. By creating a CUSTOMER EXPERIENCE that is incredibly awesome and remarkable, you get WOW…you get LOYALTY…you get to the holy grail of ADVOCATES.
This is a GAME CHANGER and one where you can change the “Customer Audit” numbers significantly. How would you, the business owner, feel if you were to lower your RISK from 75% to only 25%? While you might still believe 25% is too high (which it is) you are well on your way to being the dominant business in your industry. Even if you lose some of the 25% of customers, your competitors are at risk of losing most of their 75% of customers at risk…which is what will put them out of business…no one can sustain that level of loss of customer base…at least none I have ever met.
Lowering your risk proactively and building a strong loyal base of future ADVOCATES is a recipe for success in the new economy. It sets up a direction for your company that the top consulting and research firms are telling you is the path to success in the Digital/Internet Revolution…CREATING AND DELIVERING A REMARKABLE CUSTOMER EXPERIENCE AND BUILDING ADVOCATES.
Now it’s up to you…are you willing to invest an OUNCE OF PREVENTION so you don’t end up spending massive amounts of time and money to fix the issue of a mediocre customer experience…at the risk of losing the business? This POUND OF CURE could be more expensive and exhaustive than most companies can afford to spend. Now’s the time to put this old adage to work for your business and set yourself up to lower your risk and become a leader in your industry. It’s far easier and involves much less time and money…today is DAY ONE.
