Does one customer voice count? Simple Answer is YES!

We have all probably heard that it cost 5-6 times more money to acquire a new customer than it does to make an existing customer happy, so why do so many companies ignore direct or silent customer feedback. Could they be afraid of building honest customer relationships and intimacy?

Bill Gates ones said that “Your most unhappy customers are your biggest source of Learning"

1 + 11 + 55 Method

If you need to prove someone that Customer Intimacy pays off, you can show how Ripple Effect calculation could be applied on business decision making. This should work also with the most analytical audience. Lets say that you make 1 customer unhappy, what would it really mean? Some companies might argue that it does not mean much. However, here is the math.

Scenario: I use a gym membership as an example. Lets imagine a situation, where your Gym changes something that you, as a customer, have become accustom to. If you become unhappy, here is how much it would cost to your service provider: 

• You become unhappy - 1 Customer and Membership equals to around 1000 dollars per year
• You will share the news with 11 other customers or potential customers, which  equals to 11 000 dollars per year
• 55 more people will eventually hear about the incident through the grapevine, so 55 000 more dollars are at stake
• In total, at least 67 000 dollars of revenue is at jeopardy after one member has been disappointed. To keep this example simple, this amount is just for one year. However, if expected customer lifetime is longer than 1 year, the impact would be much higher. 

Lets say that the issue at hand affects 100 current customers, revenue at jeopardy rises to 6.7 million dollars. In most companies, this amount would be deducted directly from the bottom line as fixed costs providing the service would still be there, when these people walk out and take their business somewhere else. Okay, not all customers would change their place of business, but based on studies 25% might, so one issue could cost the company 1.7 million dollars. Customer Engagement Management can really make or brake Profitability of any Company.

Key Message is "when unhappy customer volume or business value goes up, it affects profitability faster than most companies would dare to estimate" 

From Transaction to Interaction

Preserving and building Loyal Customers Base should be the primary goal of any leading Customer Service company. The loyal customers will not only bring in their money, they will ultimately bring in their friends as well. If any company wonders, why referrals are not playing a significant part of customer acquisition, the answer should be pretty clear. The customer base is just not loyal enough. Therefore, companies should move from transactional business management towards customer lifetime journey based customer relationship management. 

In conclusion, most companies cannot simultaneously afford to lose some of their customers and to acquire new customers to replace them. Therefore, they should put in place systems to monitor and react to all types of customer satisfaction inputs and proactively guide their customers onto new journeys, when changes are taking place. 

Read also my post Time to Learn how to embrace the Moments of Truth in Customer Interactions

Disclaimer: My postings reflect my own views and do not necessarily represent the views of my employer, Accenture