Understand (and Minimize) Customer Turnover Think back over the last year or two. Is there anything different about your customers?
When you lose a customer, it not only represents a loss in revenues, it may reflect a problem in your business. That’s why it’s important to analyze customer turnover patterns and identify ways to minimize attrition.
For example, one entrepreneur I know owns a martial arts studio. In the past, he’d require that students register for six months of classes at a time. Back in the good old days, customers signed-up without thinking twice. Today, registrations are plummeting.
Yet he’s still sticking to his six-month rule, because, he says, “I have to pay my rent.” Yes, he has to pay the rent. But getting the rent money one month at a time beats not getting it at all. He’s operating by an outdated assumption.
The problem is, customers are increasingly unwilling to commit to six-month programs. What if their kids lose interest? What if the parent loses his or her job? What if…?
His classes haven’t changed, but his customers have. They’ve become commitment-shy. And if he wants their business, he’ll find a way to accommodate them.
For example, he could offer month-to-month memberships. Or, he could take a cue from the auto industry and guarantee tuition refunds if someone loses their job.
Now, what about you? Are you operating by obsolete “rules” that discourage customers from buying?
How to Keep Tabs on At-Risk Customers
Here’s an ongoing exercise you can use with existing customers to assess their loyalty. When you’re talking to them, ask them how likely they are to recommend you to a friend, using a scale of 1-10. (10 means they’re most likely to recommend you). s:
Ratings of… Mean…
9-10 These are very good customers.
7-8 These are satisfied customers, but they still might leave you.
1-6 These are unhappy customers. You are in danger of losing them if you don’t act.
Remember, “just” satisfied customers are as likely to leave as unsatisfied customers. Any rating lower than 8 requires action on your part.
Ray Silverstein
Cultivating Business Success
PRO, President’s Resource Org.
Business Owner Peer boards
raysilverstein@gmail.com
Call/Text 312 593-5133
Author: Best Secrets of Great Small Businesses & The Small Business Survival Guide
You can go further with this information by contacting Ray to help you go deeper into this subject of the Value of Membership in a Peer Advisory Board. He’s always happy to help Small Business Owners, Presidents, and C-Level Executives strengthen their businesses and take them to the next level.
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