Why You Need to Hang on to Troublesome Customers

We’ve all been there at one point or another in business: dealing with a mean, snarly, over-bearing, impossible-to-satisfy customer that seems hell-bent on milking every last dime of profit from your business.

As a business owner, it’s so easy to focus on these “PIA” customers: concluding that telling them to “hit the bricks” is the only sensible solution. They exist in your world only to waste your time and money, and generally put you and your employees in a bad mood.

Nagging customer

The good…

Mr. Jones makes his purchase and you never hear from him again until he lavishes you with yet another order every month. It can’t get easier than that, right?

The bad…

Then that old battleaxe Ms. Cratchet comes along. She makes a small one-time purchase for a minimal amount of money, then becomes an unbearable headache for your staff. She spent her hard-earned money and now seems only satisfied with lavish freebies and/or massive discounts. When this customer buys something for $2, she wants $20 worth of value in return.

If you’re like most sensible business owners, you eventually come to a point where enough is enough. Heck, there’s over 7-billion people on the planet, right?

“Take a hike Ms. Cratchet, we’re better off without you.”

Not so, according to plenty of verifiable, irrefutable data that says otherwise:

  • The cost of replacing a customer is 600 – 700% higher than it is to hang on to a current (even seemingly unbearable) one
  • Increasing your customer retention rate by as little as 5% can increase profits by more than 120%
  • On that same note: increasing your customer retention rate by as little as 2% has the same cost-saving impact as reducing your business expenses by 10%
  • A 2011 study by Harris Interactive showed that 89% of dissatisfied customers will be making their next purchase from your competitor
  • 15% “might” tell others about the great service they received; 24% will most certainly spread the word about poor services (and this hinges on their opinion and expectations, not what you think or what some book or manual tells you!)
  • Market Metrics, a leading market research firm in the investment and insurance industry found that you have up to a 70% chance of selling to an existing customer, whereas a new customer only offers a 20% probability at best

This fact is the real kicker for me:

  • Only 4% who are unhappy actually complain; the rest, you’ll never hear from again!

On one hand, we could say that 4% is a mere pittance. Good riddance!

However, customer service is so often defined by how you deal with problems; not how well your CSR answers inquiries on the phone, or how snappy the navigation features are on your website.

So that 4% who do stand up and say something (literally or figuratively told to “go away and don’t come back”) are your best chance to build your brand and tell all past, current, and future customers that you’ll go out of your way to give them the best experience possible.

Even if that means replacing an expensive product, or providing extra services at no extra charge, just to make the customer happy. Spending $60 now to give the customer a free month of service will cost you $360 – $420 in new customer acquisition costs.

On a related note to the paragraph above: the fast-dying cable & television service industry could really benefit from this kind of advice, am I right?

So, are they worth hanging on to?

You really have to try everything before refusing to do business with a customer. There are countless stories out there of beleaguering customers who seemed like they could never be pleased, only to turn around after being swayed by overwhelmingly good service. Kill em’ with kindness!

If you go the other route and dismiss anyone who seems like they might cost you a few bucks in profit to make them happy:

  • You have to turn around and spend 6 or 7 times that much to corral another customer and start all over.
  • The customer will spread word about their negative experience: how many social media profiles does the average person have, how many friends/followers, how many consumer report-type websites exist online that anyone can post to freely?
  • Your competitor will get even more loyalty from the customer you angered, by treating them the way you should have in the first place.

Sure, they might be just looking to get an extra gadget for free, or some no-charge work from you because they feel your web design or consultation fees are too expensive. But those are the breaks.

Most people are inherently good. And if you move over to the dark side of providing bad customer service, it’s a dead-end road.

As long as they’re spending money, they’re generally worth keeping around.

More reading:

Photo credit: fs999

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