Loss of sales, reputational damage, and loss of valuable referrals are just a few of the ways your business can be impacted by the loss of a customer. Here we explore the true cost of customer loss (and how to stop customers leaving for good).

Why customers leave — and why we don’t want them to

Plainly and simply, customers leave because their experience with a product or service failed to live up to their expectations. Broken items, broken promises, inaccurate information, too long on hold, calls not returned, a complaint ignored are all classic examples of how to lose a customer.

Customers are the lifeblood of any business. Keeping a slew of contented consumers coming is great for business, building bottom-line, generating word of mouth recommendations and attracting new customers, all supporting profitability and expansion.

But here’s the rub, if a customer has a bad experience, over three quarters are likely to bail on a sale. 

78% of customers have bailed on an intended transaction because of a poor experience. (American Express)

What’s more, customers who have had a negative service experience don’t keep it to themselves.

48% of customers who had a negative experience told 10 or more others. (Gartner)

In financial terms, the cost of bad customer service costs UK companies £37bn, with retail, telecoms and energy sectors receiving the brunt of customer complaints (Ombudsmen Services)

On the flip side, providing a great customer experience pays. And while many companies focus on enticing new customers, taking care of existing customers’ needs reaps the most rewards, building revenue and customer loyalty.

Studies show that increasing customer retention rates by 5% increases profits by 25 to 95%. (Harvard Business School)

Focusing on current customers’ needs means they are likely to use a company again, and once a customer becomes familiar with a company, the riskier it becomes to take their business elsewhere. 

Personal recommendations are the most influential with 83% of people trust recommendations from people they know. (Nielsen)

It is also much easier and cheaper to sell to an existing customer than convert a new one.    

The probability of selling to an existing customer is 60 — 70%. The probability of selling to a new prospect is 5 – 20%. (Marketing Metrics)

As if these figures aren’t compelling enough for strengthening relationships with current customers, customers are willing to pay over the odds for a good customer experience.  
86% are willing to pay more for a better customer experience. (Oracle)

How to stop losing customers (for good)

1.    Regular customer research
Customer complaints take time and energy to resolve, and if a customer vents in person, on the phone, or on live chat, it can be unpleasant for customer representatives on the receiving end. However, the first step for transforming a customer experience into something consumers’ like and want to come back for, is seeing complaints as positive.

A customer complaint, although requiring careful handling in the moment, is a rare gift, with only one in 26 unhappy customers making an actual complaint (Kolsky).

2.    Omnichannel customer feedback
Most businesses have upped convenience by implementing omnichannel customer journeys, giving customers the freedom to pick and choose how they want to connect, from social media to own-brand apps. While the intention is sound, omnichannel has widened the gaps for poor service to occur, fuelling customer churn and losses.

3.    Make customers’ lives easier
Time and again our customer research results show that where Customer Effort increases, Customer Satisfaction decreases.
Reducing customer effort involves navigating the customer journey from their perspective while asking the questions, what works well? What are the stumbling blocks? What could be improved to make things smoother, more effortless?

4.    Listen and respond to what employees are saying:
Employee experience, how staff feel about their employers, role and work environment, feeds into the responsiveness and quality of customer experience. In general, happy employees, equal happy customers.

Research shows highly engaged employees experience 147% higher earning per share than their competitors. (Gallup)                

5.    Keep a close eye on competitors
Developing a strong customer experience means knowing what competitors are up to. Competitor benchmarking and analysis delivers several advantages, including insight into company strengths and weaknesses, identifying points of differentiation and where to develop niche services to keep customer engagement high.

6.    Deal with complaints as they happen
Complaints impact reputation, particularly if they gain exposure, traction on social media or escalate to the press and media. Social media is often perceived as an ‘add-on’ channel but needs monitoring and managing as much as customer phone lines, email and live chat.

53% customers expect a response in less than an hour, which rises to 72% if they have a complaint. (Lithium)

Know your customer inside out

The key to revealing and understanding exactly what makes your customers tick, and developing a seamless, bespoke customer experience that will keep them coming back time and time again, is tailored customer research. And we’re not talking your regular old customer survey either; a well-designed, bespoke research strategy is needed to provide actionable insights into your customers, as well as how to keep them (and win them back) for good.