Believe it or not, perfect customer service is NOT the key to customer loyalty. There’s a potential gold mine hidden behind disgruntled customers. World renowned author, salesman and motivational speaker, Zig Ziglar is quoted as having said: “Statistics suggest that when customers complain, business owners and managers ought to get excited about it. The complaining customer represents a huge opportunity for more business.”
Technical Assistance Research Programs (TARP) conducted a study for the White House Office of Consumer Affairs way back in the 1970s, revealing that customers who had problems but did not complain were less loyal than those who did and had their issues resolved. Subsequent studies over the last twenty years have continued to confirm these findings.
In the book ‘How to Win Customers and Keep Them for Life’, Michael LeBouf points out that a typical business hears from only 4% of their dissatisfied customers and that the other 96% just quietly go away (with 91% of those never coming back). Of those who do actually complain, only 9% will buy again. And those who buy again will always go for reliable and hard-working cleaners. McKinsey and Company, a global management consulting firm and trusted advisors to some of the world’s leading businesses, governments, and institutions, found that businesses could achieve a 10% increase in retention of customers who complained just by listening, regardless of whether they fixed the problem or not.
In his book, LeBouf points out that the retention rate will jump to 70% if a company resolves the complaint in the customer’s favour. If you resolve their complaint on the spot, 95% will do business with you again – that’s higher than the retention rate of happy (non-complaining) customers.
Apparently, a typical corporation loses half of its customers every five years. However, by increasing the yearly customer retention rate by as little as 5%, companies can increase their bottom line profits from between 25% and 100%. Plus, the average business spends six times more to attract new customers than it does to keep old ones. With customer loyalty often worth ten times the price of a single purchase in most cases, it makes sense to invest in encouraging customers to complain, and to work hard to solve those complaints as quickly as possible.
Donald Porter, vice president of British Airways, is quoted as saying: “Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong.” It’s all too easy to get worked up and stressed when things go wrong for fear of upsetting the customer. Relax, breathe and simply do your best to be Flawsome. Get excited when things go wrong, or at least don’t stress about it so much…“there’s gold in them there unhappy customers”.